Archived decisions
Appendix 10
Capital spending and financing 2005/06
1 Introduction
1.1 This appendix reports:
· the size of the capital programme started in 2005/06
· the individual schemes not started in 2005/06 for which approval to carry forward to 2006/07 is requested
· the level of capital expenditure in 2005/06 and the proposed method of funding it
· the amount of borrowing for capital purposes proposed in 2005/06, including borrowing under the Prudential Regime for which Government grant support will not be available
· the level of capital receipts from the sale of assets in 2005/06 and proposals for allocating shares of those receipts to services for reinvestment.
2 Capital expenditure
2.1 Table 1 below shows that nearly 85% of the capital programme for 2005/06 was started in the year. It also shows the value of schemes and associated cash limit for which approval to carry forward to 2006/07 is requested.
Table 1 - Capital schemes started in 2005/06 | ||
£000 |
% | |
Approved value of the capital programme for 2005/06 |
200,323 |
100.0% |
Schemes started in 2005/06 |
169,523 |
84.6% |
----------- |
--------- | |
Balance of cash limit at 31 March 2006 |
30,800 |
15.4% |
----------- |
--------- | |
Schemes for which approval to carry forward to 2006/07 |
||
is requested |
20,236 |
|
Schemes already approved for carry forward |
10,599 |
|
Balance of cash limit remaining |
-35 |
|
----------- |
||
Cash limit to be carried forward to 2006/07 |
30,800 |
|
----------- |
||
2.2 The majority of the capital programme is controlled on a `starts' basis in which the full estimated cost of the scheme is charged against the service's capital cash limit for the year in which the scheme is started. Some schemes, such as lump sum provisions and block votes, are controlled on an `expenditure' basis, whereby the amount actually spent in the year is charged against the cash limit. The total of £169.523m shown in Table 1 for the schemes started in 2005/06 is an aggregate for both `starts' and `expenditure' schemes.
2.3 An analysis by service of the figures in Table 1 is provided in Annex 1.
3 Carry forward of schemes not started by 31 March 2006
3.1 The Executive Member for Policy and Resources agreed in April 2006 that capital schemes that were planned to start by 31 March 2006 but which, for various reasons, will not start until 2006/07 should be carried forward to 2006/07. This agreement in principle was subject to the cost of such schemes being accommodated within services' approved programme limits. Details of the schemes that it is now proposed should be carried forward in accordance with that decision are included in Annex 2.
3.2 The total value of schemes to be carried forward is £30.8m. This includes £10.6m of Children's Services schemes which have previously been approved for carry forward to 2006/07 during the course of the year.
3.3 Adult Services have requested that schemes costing £0.861m should be carried forward to 2006/07 even though the combined value of these schemes and those actually started in 2005/06 exceeds the service's capital cash limit for 2005/06 by £0.808m. The main reason for this excess is higher than planned expenditure on minor works, furniture and equipment in residential and day services premises (£0.235m) and on information technology (£0.501m). A further report will be made to Cabinet in July 2006 setting out proposals for funding the Adult Services capital programme, including the shortfall of resources that has accumulated over a number of years. In February 2006, Cabinet deferred approval of the Adult Services capital programme for 2006/07 to 2009/10 pending that report. Approval to carry forward schemes to the value of £0.861m is also subject to the outcome of that report as the authority to carry forward schemes is subject to the availability of resources within the service capital programme to undertake them.
3.4 As Table 2 shows, the proportion of the 2005/06 programme that has been started in the year, at 84.6%, is similar to the level achieved since steps were taken during 2001 to improve the delivery of the programme.
Table 2 - Percentage of capital programme started | ||||||
2000/01 |
2001/02 |
2002/03 |
2003/04 |
2004/05 |
2005/06 | |
£m |
£m |
£m |
£m |
£m |
£m | |
Value of projects |
||||||
- started |
70.5 |
128.7 |
110.6 |
212.6 |
144.7 |
169.5 |
- carried forward |
34.7 |
20.4 |
22.5 |
29.2 |
23.1 |
30.8 |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- | |
Total programme |
105.2 |
149.1 |
133.1 |
241.8 |
167.8 |
200.3 |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- | |
Percentage started |
67.0% |
86.3% |
83.1% |
87.9% |
86.2% |
84.6% |
4 Reasons for schemes not starting by 31 March 2006
4.1 The full reasons for not starting each scheme during the year are listed in Annex 2. Some are dependent upon specific negotiations and arrangements being made with third parties. In total, approval is now sought to carry forward 55 individual schemes and block provisions, in addition to the eight Children's Services schemes for which approval has already been given.
4.2 With the exception of Adult Services, the schemes listed in Annex 2 can be carried forward to 2006/07 subject to the latest estimated costs of the schemes being accommodated within the overall starts limits for 2006/07.
5 Capital expenditure and financing 2005/06
5.1 Total expenditure actually incurred in 2005/06, arising from the capital programme for 2005/06 and earlier years, was £184.8m. This is £2.0m or 1.1% lower than the revised estimate. The timing of capital expenditure flows is often difficult to predict and an outturn within 1.1% of the estimate is a good result. It is consistent with the monitoring forecasts reported to Cabinet and the Executive Member for Policy and Resources throughout the year. An analysis of the expenditure of £184.8m by service and type is included in Annex 3.
5.2 The proposed method of financing this expenditure is set out in Table 3 below:
Table 3 - Capital financing 2005/06 | ||||
Adjusted |
Actuals |
Variation |
Actual | |
revised |
funding | |||
estimate |
||||
£000 |
£000 |
£000 |
% | |
Government supported borrowing |
41,462 |
40,908 |
-554 |
22.1% |
Unsupported borrowing |
||||
- for capital schemes |
10,256 |
12,892 |
2,636 |
7.0% |
- repayments |
-2,250 |
-2,250 |
- |
-1.2% |
- to meet temporary shortfall |
9,325 |
1,861 |
-7,464 |
1.0% |
Government capital grants |
45,411 |
46,521 |
1,110 |
25.2% |
Contributions from developers |
||||
and outside agencies |
42,487 |
38,556 |
-3,931 |
20.9% |
Capital receipts |
5,530 |
10,720 |
5,190 |
5.8% |
Capital reserve |
3,615 |
3,615 |
- |
1.9% |
Revenue reserves - trading |
||||
units, on-street parking and |
||||
insurance |
240 |
1,277 |
1,037 |
0.7% |
Revenue contributions |
||||
- General corporate provision |
29,674 |
29,674 |
- |
16.1% |
- Set aside by schools |
1,039 |
986 |
-53 |
0.5% |
----------- |
----------- |
----------- |
----------- | |
186,789 |
184,760 |
-2,029 |
100.0% | |
----------- |
----------- |
----------- |
----------- | |
5.3 The revised estimates of capital expenditure flows and capital resources agreed by Cabinet in February 2006 showed that it would be necessary to use temporary unsupported borrowing of £9.3m in 2005/06 pending the receipt of capital resources in 2006/07 and later years. In the event, the need to use unsupported borrowing to meet the temporary shortfall of resources has been reduced to £1.861m This reflects the lower payments in 2005/06 (£2.0m) and the completion of a planned sale of land (£5.2m) a few months earlier than had been assumed in the estimates.
6 Borrowing
6.1 Since 1 April 2004, local authorities have been permitted to borrow for capital purposes without specific approval from the Government, provided their actions meet the requirements of the Prudential Code for Capital Finance introduced by the Local Government Act 2003. Such borrowing does not attract any support from the Government towards the repayment and interest costs, which fall wholly on the County Council's own resources. Cabinet agreed criteria for the use of `prudential borrowing' in November 2003 and since then has approved the use of such borrowing for a number of capital schemes, primarily on an invest-to-save basis. It is proposed that a total of £12.9m is borrowed in 2005/06 for these schemes, as summarised in Annex 4.
6.2 The Code includes a number of indicators intended to illustrate whether local authorities are acting prudently. The County Council's latest position on these prudential indicators following the 2005/06 outturn is summarised in Appendix 6. It shows that the County Council continues to be in full compliance with the requirements of the Code.
6.3 In addition to the prudential borrowing, £40.9m of loans have been raised in 2005/06 that should attract revenue grant from the Government towards the repayment and interest costs. However, 2005/06 is the last year in which Government `supported' borrowing will attract additional revenue support grant. The Government changed its methodology with effect from 2006/07 for calculating the minimum floor level of grant for authorities such as the County Council whose grant increase falls below a floor threshold. Grant entitlements arising from the use of Government `supported' borrowing approvals in 2006/07 and future years will no longer automatically be added to the floor level of grant. The Cabinet will reconsider the future use of `supported' borrowing approvals in the light of this change in Government policy later in the year.
6.4 The Government has also given £46.5m of capital grants towards expenditure in 2005/06.
7 Capital receipts
7.1 Capital receipts from the sale of land and property totalling £10.7m were obtained in 2005/06, as summarised in Annex 5. Services can retain 25% of capital receipts from the sale of their assets, with up to 100% for approved in/out schemes. Receipts from development account and most county farm sales are retained for corporate use. In accordance with this policy, services are entitled to £3.195m from the capital receipts in 2005/06. Cabinet has previously approved the addition to the capital programme of £2.983m from this amount, leaving a total of £0.212m to be allocated to services now, as set out in Annex 5.
Annex 1 | ||||||
Analysis of capital programme 2005/06 and requests by services to carry forward capital schemes to 2006/07 | ||||||
(1) |
(2) |
(3) |
(4) |
(5) |
(6) | |
Approved |
Schemes |
Schemes |
Schemes |
Cash limit |
Cash limit | |
value of |
started |
for which |
already |
available |
carried | |
programme |
in |
approval |
approved |
for carry |
forward to | |
2005/06 |
to carry |
for carry |
forward to |
2006/07 | ||
forward |
forward |
2006/07 |
(columns | |||
is now |
3+4+5) | |||||
requested |
||||||
£000 |
£000 |
£000 |
£000 |
£000 |
£000 | |
Adult Services |
2,908 |
2,855 |
861 |
- |
-808 |
53 |
Children's Services |
95,568 |
77,623 |
6,756 |
10,599 |
590 |
17,945 |
Environment |
45,636 |
43,005 |
2,631 |
- |
- |
2,631 |
Policy and Resources |
46,596 |
37,274 |
9,322 |
- |
- |
9,322 |
Recreation & Heritage |
9,615 |
8,766 |
666 |
- |
183 |
849 |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- | |
200,323 |
169,523 |
20,236 |
10,599 |
-35 |
30,800 | |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- | |
Annex 2 |
Capital Programme 2005/06 |
|||||
Schemes not started by 31 March 2006 |
|||||
Schemes |
Value |
Latest |
|
Reasons for Delay | |
|
£000 |
Start Date |
|
| |
|
|
|
|
| |
Adult Services |
|
|
|
| |
|
|
|
|
| |
Older Persons Day Centre, |
375 |
Not known |
Balance of funding to be identified | ||
Challenger Way, Hythe & Dibden |
|||||
Furniture and equipment in office |
23 |
Various |
Linked with building works scheme | ||
bases |
|||||
Mental Health services |
425 |
Various |
Balance of allocation | ||
Information management systems |
38 |
Ongoing |
Balance of allocation | ||
Total Adult Services |
861 |
29.6% of schemes approved to start | |||
in 2005/06 to be carried forward | |||||
Children's Services |
|||||
Stanmore Primary, Winchester |
263 |
December 2006 |
Location of new kitchen / dining facility | ||
to be confirmed with new headteacher | |||||
North Basingstoke Schools |
1,125 |
To be confirmed |
Awaiting progress of housing | ||
development and strategy for provision | |||||
of future places to be determined | |||||
Bridge Centre, Eastleigh |
1,002 |
December 2006 |
Finalising brief together including mental | ||
health service requirements | |||||
Specialist status |
|||||
Cams Hill, Fareham |
100 |
) |
) | ||
Cowplain Secondary |
100 |
) |
) | ||
Crofton Secondary, Fareham |
100 |
) |
) | ||
Fernhill Secondary, Farnborough |
100 |
) |
) | ||
Mill Chase, Bordon |
100 |
) Various |
) Developing briefs with schools, many | ||
Quilley School of Engineering, |
100 |
) |
) of which are part of larger projects | ||
Eastleigh |
) |
) | |||
Testbourne, Whitchurch |
100 |
) |
) | ||
Warblington Secondary, Havant |
100 |
) |
) | ||
Winton School, Andover |
100 |
) |
) | ||
Children's Services - continued |
|||||
Block votes |
|||||
Education other than at school |
30 |
Various |
Funding unallocated and carried forward | ||
facilities |
to add to the provision for 2006/07 | ||||
Furniture and equipment |
197 |
) |
) | ||
Health and safety |
200 |
) |
) | ||
Management of falling rolls |
659 |
) |
) | ||
Replace temporary Early |
276 |
) Various |
) Funding unallocated and carried | ||
Education units |
) |
) forward to the provision for 2006/07 | |||
Secondary 14-19 Agenda |
222 |
) |
) | ||
Staff facilities |
20 |
) |
) | ||
William Price Trust |
45 |
) |
) | ||
Integrated children's systems |
35 |
) |
) | ||
Schools Access Initiative |
|||||
Portchester Secondary |
300 |
July 2006 |
To be used as part of a larger project | ||
Other schemes |
839 |
Various |
Brief for the works is still being agreed | ||
|
|
|
with the schools | ||
Early Years |
|||||
Early Years & Childcare facilities |
100 |
) Various |
) Funding unallocated and carried | ||
Sustainability Capital |
543 |
) |
) forward to the provision for 2006/07 | ||
Total Children's Services |
6,756 |
|
|
7.1% of schemes approved to start | |
|
|
|
in 2005/06 to be carried forward | ||
|
|
|
|
|
|
|
|
|
|
| |
Environment |
|
|
|
| |
|
|
|
|
| |
Structural maintenance |
|
|
| ||
- locally resourced |
1,303 |
|
) to be added |
) Balance of provision for schemes | |
- Government supported |
453 |
) to provisions |
) controlled on an expenditure basis | ||
Air quality and noise monitoring |
16 |
) in 2006/07 |
) to be carried forward to 2006/07 | ||
Recreational cycling |
19 |
) programme |
) | ||
London Road to Newbury Street, |
150 |
May 2006 |
Late amendments to design required by | ||
Andover |
district council | ||||
Environment - continued |
|||||
Lyndhurst to Ashurst Cycles |
490 |
September 2006 |
Land issues and English Nature | ||
requirements | |||||
Basingstoke Route 3 Quality Bus |
200 |
August 2006 |
Changes to design following local | ||
Partnership |
consultation | ||||
|
|
|
| ||
Total Environment |
2,631 |
|
|
5.8% of schemes approved to start | |
|
|
|
in 2005/06 to be carried forward | ||
|
|
|
| ||
|
|
|
| ||
Policy and Resources |
|
|
| ||
|
|
|
| ||
Aldershot Enterprise Centre |
64 |
|
2006/07 |
|
Discussions with possible provider / |
|
|
|
partners are in hand | ||
Fort Gilkicker |
100 |
|
2006/07 |
|
Ongoing negotiation to secure disposal |
Coastal defence works |
26 |
|
May 2006 |
|
Works delayed by further survey |
Land management minor schemes |
44 |
|
2006/07 |
|
Consultation period extended |
Rowner Youth project |
150 |
|
May 2006 |
|
Not started on site |
Office accommodation |
187 |
|
Various |
|
Resources retained to have strategic |
|
|
impact when opportunity / need arises | |||
Capital repairs |
1,225 |
|
2006/07 |
|
Various schemes to be carried forward |
|
|
|
to 2006/07 | ||
New Deals for Schools |
5,742 |
2006/07 |
|
Government funding requires that | |
|
|
|
resources are spent by August 2006 | ||
Advantageous land purchases |
499 |
|
2006/07 |
|
Resources retained to have strategic |
|
|
|
|
impact when opportunity / need arises | |
Disposal of sites fees |
90 |
2006/07 |
Resources retained to have strategic | ||
impact when opportunity / need arises | |||||
Advance fees |
45 |
|
2006/07 |
|
Expected to be required in 2006/07 |
IT - investment in infrastructure |
644 |
|
2006/07 |
|
Balance of approved investment |
programme | |||||
Business units: |
|
|
|
| |
Supplies |
225 |
|
2006/07 |
|
Various reasons |
Hampshire Transport Managem't |
281 |
|
2006/07 |
|
Various reasons |
Total Policy and Resources |
9,322 |
|
|
20.0% of schemes approved to start | |
|
|
|
|
in 2005/06 to be carried forward | |
Recreation and Heritage |
|||||
|
|
|
|
| |
Countryside and Rights of Way |
88 |
|
Autumn 2006 |
|
Operational reasons |
improvements |
|
|
|||
Discovery centres and library |
143 |
Summer 2006 |
Delays in finalising schemes | ||
improvements |
|||||
Disability Discrimination Act |
57 |
|
Summer 2006 |
|
Operational reasons |
schemes |
|||||
Staunton Country Park |
13 |
Summer 2006 |
Assembling funds from other sources | ||
Grants to village halls |
175 |
|
Unknown |
|
Assembling funds from other sources |
Outdoor centres |
48 |
|
Autumn 2006 |
|
Assembling funds from other sources |
Product development |
34 |
|
Summer 2006 |
|
Delay in finalising scheme |
ICT development |
49 |
|
Summer 2006 |
|
Operational reasons |
Museums and Archives |
59 |
|
Summer 2006 |
|
Operational reasons |
improvements |
|
|
|
||
|
|
|
|
| |
Total Recreation and Heritage |
666 |
|
|
6.9% of schemes approved to start | |
|
|
|
|
in 2005/06 to be carried forward | |
|
|
|
| ||
Total all services |
20,236 |
|
|
10.1% of schemes approved to start | |
|
|
|
in 2005/06 to be carried forward | ||
Add: Children's Services schemes |
|
|
|
| |
previously approved for carry |
10,599 |
||||
forward to 2006/07 |
|
|
| ||
|
|
|
|
| |
Total schemes carried forward |
30,835 |
|
|
15.4% of schemes approved to start | |
|
|
|
|
in 2005/06 to be carried forward | |
Add: balance of cash limit carried |
|||||
forward |
-35 |
||||
Total cash limit carried forward |
30,800 |
15.4% of schemes approved to start | |||
in 2005/06 to be carried forward | |||||
Annex 3
Summary of capital payments 2005/06
Analysis by service
£000 |
% | |
Adult Services |
29,827 |
16.1 |
Children's Services |
80,474 |
43.6 |
Environment |
53,864 |
29.2 |
Policy and Resources |
14,289 |
7.7 |
Recreation and Heritage |
6,306 |
3.4 |
----------- |
-------- | |
184,760 |
100.0 | |
----------- |
-------- | |
Analysis by type of expenditure
£000 |
% | |
Land |
8,065 |
4.4 |
Construction work |
138,678 |
75.0 |
Fees and salaries |
28,434 |
15.4 |
Furniture, equipment and vehicles |
9,583 |
5.2 |
----------- |
-------- | |
184,760 |
100.0 | |
----------- |
-------- |
Annex 4
Unsupported borrowing in 2005/06
For specific capital schemes |
£000 |
|
Nursing care accommodation |
934 |
|
Calshot Activities Centre accommodation unit |
98 |
|
Nightingale Primary School, Eastleigh |
606 |
|
Crestwood School sports facilities |
2,106 |
|
Chiltern Primary School |
1,749 |
|
Waterside Primary School |
233 |
|
John Hunt of Everest replacement school |
624 |
|
Dowd's Farm Primary School, Hedge End |
615 |
|
Kings Copse Primary School, Hedge End |
569 |
|
Capital House, Winchester |
5,195 |
|
Ashburton Court, Winchester |
163 |
|
--------- |
||
Total - specific schemes |
12,892 |
|
Use of the LPSA Reward Grant to repay unsupported borrowing in previous years for LPSA projects |
-2,250 |
|
Temporary borrowing to meet the funding shortfall in 2005/06 |
1,861 |
|
--------- |
||
Total unsupported borrowing in 2005/06 |
12,503 |
|
--------- |
||
Annex 5
Analysis of capital receipts 2005/06
(1) |
(2) |
(3) |
(4) | |
Net |
Shares from in/out |
25% share of | ||
capital |
and other schemes |
qualifying | ||
receipts |
- previously |
- now |
receipts | |
added to |
available to |
now due to | ||
programme |
be added to |
services | ||
programme |
||||
£000 |
£000 |
£000 |
£000 | |
Adult Services |
- |
- |
- |
- |
Children's Services |
3,552 |
2,125 |
100 |
- |
Environment |
120 |
- |
- |
30 |
Policy and Resources |
||||
- Development account |
5,865 |
200 |
- |
- |
- County farms |
288 |
- |
60 |
- |
- Other |
211 |
- |
- |
- |
Recreation and Heritage |
684 |
658 |
22 |
- |
----------- |
----------- |
----------- |
----------- | |
10,720 |
2,983 |
182 |
30 | |
----------- |
----------- |
|||
Total now to be added to services' programmes |
212 | |||
----------- | ||||
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