Appendix 1

Hampshire County Council

Capital Strategy 2006

1 Introduction

1.1 This Capital Strategy has been approved by the County Council and the Corporate Management Team. It brings together the Council's key policies for managing all its capital assets, including land, buildings and roads, by:

· focusing attention on the most effective and efficient use of the Council's capital assets

· linking directly to the Council's Corporate Strategy, to the Hampshire Community Strategy and the priorities in the Hampshire Local Area Agreement

· improving the management and use of capital assets alongside the Council's policy and service objectives

· providing the strategy for the preparation of the Council's corporate asset management plan (AMP) and capital programme, and for reviews in the Corporate Review Programme

· developing a procurement strategy and creating long-term relationships to ensure value for money and continuous improvement.

1.2 Core data on the background to the County Council's Capital Strategy are attached as Annex 1.

2 The Vision and Priorities for Hampshire, Community and Corporate Strategies

2.1 The Capital Strategy has been prepared within:

· the Council's Vision

· the Corporate Strategy

· the Community Strategies developed at both county and district level

· the priorities identified in the Hampshire Local Area Agreement.

2.2 The County Council is a full partner in the eleven district level Local Strategic Partnerships (LSPs), which have published community strategies for each district area. A county-level Hampshire Strategic Partnership has been established and a Community Strategy for Hampshire published which is complementary to the district strategies. The priorities identified at the county level, along with those from the district LSPs, are reflected in the Capital Strategy.

2.3 Hampshire has also recently signed a Local Area Agreement with the Government identifying eight key priorities for the area. This agreement includes the targets agreed with Government in the second Local Public Service Agreement.

2.4 The key priorities identified in the Hampshire Local Area Agreement are to:

· improve the life chances for children and young people

· deliver first class support to businesses, promote skills and workforce development and address barriers to employment

· improve the co-ordination of transport and access to services

· improve access to housing and accommodation

· tackle crime and anti-social behaviour, recognising the harm of drug and alcohol abuse

· promote and improve the health and well-being of people in Hampshire

· use material resources more efficiently

· empower local people to have a greater voice and influence over decision making and the delivery of services.

2.5 The County Council's Corporate Strategy represents the direction for the County Council over the next three years and is a response to these priorities. There is one over-arching and two supporting priorities for the County Council which provide the focus for all the Council's activities:

· Hampshire safer and more secure for all

· maximising well-being

· enhancing our quality of place.

2.6 These priorities have implications for the Council's capital assets. Schemes are not included in the capital programme unless they contribute to meeting one or more of the priorities. For example, during the current financial year, the Council will:

· complete the Enhance project to provide 500 nursing care beds by the autumn of 2006

· start work on the replacement of the Sundridge Behavioural, Emotional and Social Development (BESD) school and Woodlands Education Centre, which will provide state of the art facilities for pupils with special needs and those attending the pupil referral unit for South East Hampshire

· undertake major condition repairs at over 100 service units ranging from resurfacing playgrounds to major structural repairs of timber-framed buildings

· continue work on the new £6.5m Winchester Cultural Centre, funded partly by offsetting capital receipts

· begin remodelling and refurbishing the Ashburton Court buildings at the Council's headquarters in Winchester which are reaching the end of their economic life. The project will be financed from reduced office costs elsewhere, including rentals, as well as lower future repair and maintenance liabilities. Capital receipts from other land disposals will also be used so that no additional costs will fall on the council tax. Initial work will be funded by unsupported borrowing

· invest in over 80 local transport schemes to improve safety, traffic management and accessibility including use by cyclists and pedestrians.

3 Framework for managing assets and the capital programme

3.1 The County Council approves the Capital Strategy, the corporate AMP and capital programme following consideration by the Cabinet. All these documents are subject to scrutiny by the Council's scrutiny and policy review committees. Responsibility for asset management within the Cabinet is allocated to the Executive Member for Policy and Resources. The Buildings, Land and Procurement Panel advises the Executive Member on buildings, land and contracts issues.

3.2 At officer level, senior representatives of service departments, as well as the officers responsible for preparing the Council's Community Strategy, make sure that all the strategies are fully integrated in the preparation of the Capital Strategy and the corporate AMP.

3.3 The Director of Property, Business and Regulatory Services (PBRS) manages and monitors the implementation of the capital programme for building works, together with service chief officers, in line with the Council's financial regulations, standing orders on contracts and the conditions agreed by the Council when the capital programme is approved. Project appraisals are prepared for major schemes at feasibility and design stages, before contracts are let. Regular reports monitoring the capital programme are considered by the Executive Member for each service. The overall progress on implementing the programme, including the resources to finance it, is reported to the Corporate Management Team and the Executive Member for Policy and Resources.

3.4 Chief officers responsible for individual capital schemes work with colleagues from other services and disciplines to maximise the benefit for all services from capital investment. The involvement of other departments is a key part of the project appraisal process for capital schemes. This makes sure that solutions that cut across the boundaries between services are identified at an early stage.

3.5 Significant developments have taken place over recent years to establish integrated working teams through new procurement arrangements and creating long-term partnerships with consultants and contractors.

4 Existing strategies on capital matters

4.1 The County Council's approach to managing its assets and planning the capital programme recognises the corporate and integrated nature of asset management, with a framework based on a `corporate landlord'. The Executive Member for Policy and Resources is responsible as landlord for the Council's land and buildings. Users and occupants similarly have responsibilities as `tenants'. The Capital Strategy builds on this existing platform to provide high quality and effective assets, in support of the delivery of services, that are safe and fully accessible for all users and the public.

4.2 The Council considers that maintaining its existing assets is very important. Under its Strategy for the Built Estate, the Council identifies properties for which there is a long-term need and then invests in their maintenance to make sure they are maintained to appropriate standards. Planned programmes are then carried out to maintain their condition and deal with outstanding maintenance liabilities. Budgets for all the Council's repairs and maintenance of buildings, both capital and revenue, are controlled centrally as part of the Strategy. All community schools and an increasing number of foundation schools buy-back a comprehensive revenue property management service through a service level agreement. A particular issue at present is the repair and refurbishment of system-built buildings which are nearing the end of their life. Having completed a 10 year programme to replace the heating systems, the Council has approved a medium-term strategy for re-cladding, re-roofing and structural repairs to the earliest marks of these buildings.

4.3 In June 2006, the Buildings, Land and Procurement Panel undertook a detailed review of the Council's management of the backlog of repairs and maintenance in the built estate. With the liability over the next five years estimated to stand at £400m, as set out in Annex 1, the Executive Member for Policy and Resources has agreed the Panel's recommendations that approval should be given to:

· the existing strategies for repair and maintenance of buildings, summarised in this Capital Strategy

· continuing the current levels of funding for repairs and maintenance for school buildings at least until the Government's Building Schools for the Future programme for secondary schools starts for Hampshire in 2011 and the outcome of the Government's consultation on its Every Child Matters programme for primary schools is known

· identifying future levels of funding for capital repairs for the non-education sector to alleviate the repair and maintenance pressures.

4.4 A planned approach is also adopted for the structural maintenance of highways assets within the context of the Council's local transport plan as set out in paragraph 5.3.

4.5 The Council has clear objectives for holding land and property and these provide the context for a rolling programme of property reviews. This systematic review started six years ago and the current evolution of this process is the Strategic Property Review launched in 2006. It will cover all the Council's land and buildings over the period to 2009. At the centre of the review is the need to achieve significant efficiencies in the operating costs of the Council in relation to its office accommodation and to identify land and buildings that can be promoted for disposal and development after 2009. As the capital receipts from the Council's development land at Merton Rise in Basingstoke reach their maximum, the Council will then be in a position to bring into play other major land holdings that can be prepared for the market and subsequent disposal.

4.6 The Strategic Property Review involves a series of reviews to consider the core attributes of the estate, linked to current and future usage and alongside new models of delivery. In addition, a range of thematic reviews of particular uses (for example, office accommodation) is now underway, together with a range of area-based reviews. As always, opportunities for the re-use or disposal of surplus properties, rationalisations and issues regarding the suitability of premises for future service delivery are priorities, taking account of fitness for purpose and maximising efficiency. Where disposals are possible, sale proceeds are reinvested in the core building stock or other corporate priorities. The Council continues to give incentives to services to encourage them to recycle assets by allowing them to retain part of the proceeds for reinvestment. This makes sure that assets are suitable for their purpose, meet corporate and service objectives and are used efficiently and effectively.

5 Service plans

5.1 The strategic approaches adopted within each of the Council's service areas for capital investment and asset management are derived from the Council's Corporate Strategy and this Capital Strategy. The level of investment planned over the next four years for the main service areas is summarised in Annex 1.

Children's services

5.2 An education AMP has been prepared, working closely with schools and governing bodies under the Council's Management Partnership arrangements. The key aims are to:

· contribute to raising educational standards, including new provision for early years education with private and voluntary sector partners

· optimise the use of capital and other financial resources

· reflect the current and anticipated future needs of the curriculum

· underpin the County Council's strategy for the maintenance, repair and improvement of school buildings

· address the capital funding implications of falling school rolls.

Transport

5.3 The County Council's second full local transport plan was forwarded to the Government in March 2006. The new plan sets out the County Council's targets and proposed investment plan for the period 2006 to 2011.

5.4 It explains how the proposals fit within wider and longer term policy objectives as well as demonstrating how the proposed programme, together with other interventions, will enable the Council to make progress on the key `shared objective' areas of congestion, accessibility, safety and air quality as well as public transport and highway maintenance.

5.5 Funding allocations for the local transport plan have been set by Government formula but additional `reward funding' may be available if outcome targets are achieved. In addition, there is capital investment in transport projects funded through developers' contributions.

Adult services

5.6 The priorities for the Council's adult services assets are:

· making sure that all facilities comply with the requirements of the Care Standards Act 2000

· using the Council as lead agency to assist the development of supported housing with district councils, in pursuit of the `Supporting People' objectives of independent living and social inclusion

· modernising services for people with learning disabilities in line with the objectives of the White Paper `Valuing People'

· meeting the requirements of health and safety, disability discrimination, equality and other legislation

· developing an integrated community equipment service

· providing 500 nursing care beds in new homes and extensions to existing care homes which will also be refurbished.

Other services

5.7 Other significant schemes in the Council's capital programme include:

· provision of infrastructure for the Council's development land at Merton Rise, Basingstoke, which will be financed by capital receipts released by the development

· remodelling and refurbishing the Council's headquarters, as described in paragraph 2.6, including the use of capital receipts from Merton Rise.

Information Technology

5.8 Investment in information technology systems underpins the delivery of services. The Council's financial and business systems have been replaced in recent years using SAP technology in a major capital investment known as the Enterprise Project. The construction procurement system was replaced within SAP during 2004 and the next phase of integrating land and building information is well under way.

5.9 The core systems used by adult and children's services have also been replaced by the SWIFT system in a £5.2m project. This conforms to the Department of Health's `Information for Social Care' specification and will assist with the achievement of Local PSA targets. The integrated new systems will improve the collection and dissemination of performance management information. SWIFT will also provide the basic building block for an Integrated Children's System (ICS), as required by the Department for Education and Skills, and a full Electronic Social Care Record (ESCR) required by the Department of Health. Implementation of the ICS is in progress and the development of the ESCR has begun.

6 Cross service plans

6.1 Equally important are county-wide strategies including:

· the Hampshire County Structure Plan 1996-2011 (Review) and the emerging South East Plan, which identifies areas of significant growth in new housing over the next ten years. Schools, transport and community facilities will be needed and included in future capital programmes and bids. Substantial levels of additional resources will be required

· the Corporate Sustainable Development Strategy, which promotes policies and actions to achieve sustainable development. Agenda 21 principles underpin the Council's actions and services, including capital investment. In addition, the regeneration of older urban areas and country towns supports the Council's policies for long-term land use and travel, improving the quality of life in those areas

· the Corporate Water Action Plan. The Council adopts the best practice in the effective and efficient use of energy and water in its own properties

· the Corporate Equalities Plan and Race Equalities Scheme, including access to services and facilities

· the Council's e-government strategy for delivering local government online across all of its services

· the office accommodation strategy, which makes sure that all offices are fully used

· the land disposal strategy, investing in roads and other infrastructure where these advance works will maximise returns. The Council also retains control over developments through the quality of the design and the use of planning policies to fulfil its environmental stewardship aims.

7 Links to the Performance Plan

7.1 The County Council's Corporate Review Programme is set out in the Performance Plan. This programme incorporates all strategic review activity across the Council, and focuses on delivering value for money. The Corporate Management Team and departmental managers are informed by the Capital Strategy in determining whether capital issues feature in reviews. Relevant outcomes from reviews are fed back to the Capital Strategy and the capital programme, along with recommendations from audit and other independent inspections.

7.2 In meeting its targets under the Gershon efficiency agenda, the Council has reviewed its capital plans in identifying the potential for efficiencies. The scope for ongoing efficiencies in procurement of capital schemes is covered below in section 12.

8 Working with partners

8.1 The County Council works closely with all partner organisations on service matters that affect capital issues. These include district councils, neighbouring local authorities, the police and fire authorities, school governing bodies, the diocese, community and voluntary bodies, the health service, the lottery boards, national organisations such as Sport England, as well as the business sector including developers.

8.2 The joint working with district councils and others to develop and implement the Community Strategy and to move towards delivery of the Local Area Agreement reinforces the wide range of existing partnership arrangements concerning capital schemes. The Council's close links with district councils and the neighbouring unitary authorities in Portsmouth and Southampton include the provision of community and leisure facilities in schools, local area transport strategies, a joint office strategy, the regeneration of older urban areas, integrated waste management facilities, coast protection, museums, special needs housing, community safety and disability discrimination. All involve capital investment or the use of assets. As an example of community planning in practice, the relocation of the John Hunt of Everest Community School in Basingstoke is being implemented in close co-operation with the local district council to make the redevelopment of the area of Merton Rise more viable, sustainable and inclusive, as well as providing extra housing to meet existing Structure Plan targets. The concept of Discovery Centres has been developed with partners and is now being implemented to provide library services, adult learning and community use in one building, leading to wider service use of existing assets for longer hours.

8.3 The partnership between the Council's adult services and the health service over the use of assets is long established. Current examples include:

· the joint initiative to provide 500 new nursing care beds by 2006

· a jointly-funded extension and modernisation of the respite care unit for people with learning disabilities at Highfield House, Bishopstoke

· development of information systems to support joint mental health services across Hampshire

· entering into a lease for the joint occupation of office premises provided by a Local Improvement Finance Trust (LIFT)

· development of an integrated community equipment service

· the establishment of joint mental health and learning disability team bases.

8.4 The voluntary and community sector continues to play a key role in many of the Council's capital projects. The One Compact for Hampshire, developed with voluntary and community bodies, sets a protocol for joint working and includes other statutory bodies such as the Primary Care Trusts and district councils. Examples of the voluntary sector's involvement include community and leisure facilities, village halls, local transport and adult services facilities. The Council is also working with voluntary and private sector partners to provide early years education and, in particular, in the development of Phase 2 of the Children's Centres programme, which will establish 54 centres.

8.5 The Council is developing new partnerships with industry, including the use of longer-term contracts. It will also continue to work closely with specialist suppliers and contractors including, for example, the framework for major schemes and programmes which has now been operating for three years. The Quality Partnerships with bus, rail and freight operators are improving public and freight transport in the County. The Council also plays a leading role in the Hampshire Economic Partnership, which brings together local government, central government and training organisations to promote key economic development.

8.6 Another important partnership is with central Government itself, and many of the Council's capital schemes result from close working with Whitehall departments and the Government Office for the South East (GOSE), as well as the European Union.

9 Consultation with the public and partners

9.1 The County Council consults widely with the public, its partner organisations, the business community, the voluntary sector and the Council's staff as part of the process of developing the Community Strategy, Corporate Strategy and Local Area Agreement. This includes focus groups, opinion surveys, Citizens' Panel, response cards enclosed with the Council's magazine for the public, `Hampshire Now'. The Council also consults residents' groups, trade unions and the business sector about the budget, including the capital programme. Following discussions with representatives of the business community in July 2001, it was agreed that the key objectives in the business plans of the Chambers of Commerce should be matched with the Council's Corporate Strategy. The priorities for business are skills, employment, transport, infrastructure, housing and the constraints of planning on enterprise. The Chambers confirmed their involvement in consultation on transport including via the Hampshire Economic Partnership.

9.2 An important part of the Council's consultation processes are the extensive and innovative discussions held at the planning and feasibility stage of each capital proposal with all partners and stakeholders. From these detailed, ground-level consultations, and from those on service plans, vital and practical information is drawn together to build up the Capital Strategy, supplementing the more broadly-based `top-down' consultations.

9.3 All these consultation processes are ongoing. The Council will continue to analyse the results and they will influence the content of future strategies.

10 The capital programme

10.1 The County Council prepares and publishes a rolling four-year capital programme within limits set by Government borrowing allocations and the Council's assessment of available local resources and the revenue implications of the proposed programme. The Council uses the later years of the programme to plan and prepare schemes. This includes work on design, land acquisition, and obtaining planning approvals and Government support.

10.2 The Council has refined its techniques for assessing priorities between schemes, evaluating options for capital investment that make the best use of its assets in terms of the benefits for services and financial returns. All schemes are developed to meet needs identified in the Capital Strategy and corporate AMP process, and must contribute to meeting the Council's key priorities as set out in the Corporate Strategy. If necessary, the Council top-slices resources to protect essential parts of the capital programme. Final judgement on political priorities, in the light of public consultation, are made by the County Council. This process has been applied to all schemes in the current programme as well as those currently being considered for inclusion. Full details of the process for assessing priorities are set out in the corporate AMP.

10.3 Linked to the four-year capital programme, the Council has incorporated the key financial elements of the Capital Strategy in its Financial Management Policy. It has also revised its financial control procedures, including the project appraisals and progress monitoring. This makes sure that the need for each scheme and its links to the Corporate Strategy and Best Value are fully considered by members of the Council before approval is given.

10.4 The Council has also adopted the best practice advice in the development of its investment appraisal of capital schemes to make sure that whole life costing is used where appropriate. This brings together best value appraisal techniques before the contract is let and best practice procurement arrangements post contract.

10.5 The Council's existing capital assets are reviewed during the preparation of the corporate AMP to see if they are still appropriate and give value for money, taking account of the investment necessary to maintain those assets.

11 Resources for capital

11.1 The Council will maximise the use of capital resources from other bodies, provided that the proposed schemes are compatible with the Capital Strategy and the Council's overall financial strategy. This will include submitting bids to central Government, the European Union, health authorities and the National Lottery. The Council will encourage partner organisations to reflect their involvement in capital schemes by contributing to the costs, where appropriate.

11.2 The Council will continue to make full use of its own resources to finance the capital programme, primarily from capital receipts and by using revenue finance mainly for capital repairs and structural highway maintenance. The rolling programme of land reviews will continue to identify land and buildings no longer required which can be sold to provide resources for reinvestment. Where appropriate, the Council will undertake invest-to-save projects, especially in new IT technology. Following the Government's reforms of its capital control system to allow additional borrowing within prudential limits, the Council will use such loans for suitable invest-to-save and in/out projects, subject to appropriate business cases and revenue costs being contained within cash limits. A detailed strategy was agreed by Cabinet in November 2003 for the use of `unsupported' borrowing.

11.3 The County Council has previously used in full Government borrowing allocations on the basis that the Government would provide revenue grant support to meet the annual loan charges. But in 2006/07 the Government changed the way in which it calculates that grant support. For local authorities that are subject to the revenue support grant's floor mechanism, such as the County Council, there is now no marginal benefit in terms of revenue grant from additional borrowing allocations. As representations to the Government to reverse this change have not been successful, the Council plans to restrict its use of Government borrowing allocations from 2007/08 onwards to a level that will limit the growth in annual loan charges to the overall increase in the Council's revenue budget [subject to agreement by Cabinet on 24 July 2006]. As a result, £12.5m of the £44.5m of Government borrowing allocations for 2007/08 will not be used.

11.4 As part of its culture of partnership, the Council works closely with other organisations to maximise benefits from their capital investment. This includes joint transport investment by the Highways Agency, bus companies and the Strategic Rail Authority. For example, the Council is improving the infrastructure for the A3 road, in conjunction with Portsmouth City Council and a bus company, to provide new buses and services for the route. The joint schemes listed in paragraph 8.3 reflect the close working of health authorities and adult services.

11.5 The County Council will be looking for substantial additional resources from the Government over the next ten years to help provide the facilities required for the significant growth in new housing in the existing Hampshire County Structure Plan and the emerging South East Plan.

11.6 As outlined in paragraph 4.3, the Council has recently undertaken a significant review of its management of backlog repairs and maintenance in the built estate. The liability over the next five years is estimated to stand at £400m. In order to reduce the backlog liability at schools, it is essential that the Council continues to receive Government grant funding under the New Deals for Schools modernisation programme, together with new funding at the earliest opportunity from the Government programmes for Building Schools for the Future for secondary schools and Every Child Matters for primary schools.

12 Procurement

12.1 The Council will consider all methods of procuring and financing its capital programme. It may adopt a public-private partnership (PPP) approach, including the private finance initiative (PFI), if this can be shown to be the best value for money and consistent with the Capital Strategy. This could include larger schemes that generate an income stream. A proposal for PFI support for the replacement of street lighting columns in Hampshire is currently being considered by the Government.

12.2 The Council has continued to develop its procurement strategy in line with the Government's policy set out in the National Procurement Strategy for Local Government and is the construction lead for the South East Centre of Excellence (SECE).

12.3 The key elements of the new procurement strategies are:

· collaborative working arrangements with contractors leading to earlier identification of all project risks and enabling more effective management and predictable outcomes. Partnership working also removes the adversarial approach by giving the team common objectives which, in turn, reduces or eliminates claims and disputes

· greater involvement of the supply chain in the design process to allow identification of best value solutions and longer term relationships with supply chains, allowing them to deliver more predictable products with associated quality and value gains. This also preserves learning and potentially opens up further opportunities

· combining individual projects into programmes of work reduces the number of bespoke components, reducing design times and providing opportunities to generate volume discounts from the supply chain.

12.4 The Council is leading on the construction workstream for the SECE. Following successful development of framework arrangements for procurement of major capital programmes, over £170m has been procured through the frameworks to date. The Council has just tendered a major framework for SECE and is about to appoint the first contractors to the arrangements. The framework will be in place until after 2012 and has the potential to create significant efficiency savings. These arrangements can be accessed by any of the seven county, twelve unitary and fifty five district councils in the South East region as well as any local public service provider. The Council will lead the development of these arrangements which will be capable of delivering in excess of £250m of construction work per annum. The SECE Major Framework is a national demonstration project of a scale not previously attempted.

12.5 The Hampshire Procurement Model is being developed to allow broader collaboration through:

· second tier frameworks for projects up to £2.5m

· frameworks for smaller projects and packages of work

· collaborative arrangements for planned and reactive building work

· renewal and improvement of term engineering contracts

· specialist frameworks for landscaping and roofing

· specialist arrangements for work such as asbestos removal

· specialist supply chains and strategic sourcing initiatives

· long term consultancy partnerships in all disciplines.

12.6 Evidence of greater efficiency in construction procurement is demonstrated through a range of performance indicators which capture data on the underlying trends. With increasing numbers of projects procured through best collaborative routes, which include negotiated, partnered and framework projects, the results indicate an improving performance trend over time, as shown in the following table.

Average Key Performance Indicator Score
Pre 2004/05	17 projects		78%
2004/05	17 projects		79%
2005/06	13 projects		85%

12.7 The Council recently undertook a detailed review of all its procurement arrangements for building work and identified significant improvement trends. Efficiency savings of 10% are being achieved on major aggregated programmes, such as the Enhance project to provide 500 nursing care beds. Savings are also being identified across a range of other services. For example, costs on external redecoration works have been pegged at 7% below inflation rates since 2001.

12.8 In addition, a recent analysis of 30 benchmark projects has shown a 9% saving in professional time for best value procurement as compared with project won through lowest price competition.

12.9 Looking forward, the intention is to extend the `Hampshire' procurement template, based on the principle of aggregation through longer term partnerships with the industry, to around 70% of overall activity over a two-year development period. Greater efficiency will be generated through increased early contractor involvement linked to a process of continuous improvement across all services.

12.10 Long-term efficiencies should accrue through the Council's work in leading the construction workstream for the South East Centre of Excellence, in particular:

· collaborative frameworks across councils

· establishing and sharing good practice across councils

· alignment of supplier capacity with long-term regional and sub-regional demand

· common processes and procedures to minimize progressive costs and maximise the benefits of greater standardisation

· the provision of strategic and high level design and operational advice.

12.11 Major supply chains are vital to the success of capital projects, as most of the physical work on site is undertaken by them. On many Hampshire schemes such as Enhance, as well as involving the Major Framework contractors with design development work, key supply chains have been appointed early in the design process. Integrated teams are then formed who deliver:

· better design co-ordination - fewer changes during construction (improved cost predictability)

· more effective programming and planning (time saved)

· added value (improved product)

· simplified processes (time saved)

· improved management through better understanding (more effective risk management).

12.12 In supporting the Kyoto accord, the Council has additionally pledged support for a reduction in carbon emissions. The Council also signed up to Aalborg Commitments in 2004, which unites the Council with European local governments in a campaign to achieve European Sustainable Cities and Towns.

12.13 Sustainability proposals for the built estate in 2005/06 to support the UK climate change agenda include:

· identifying those buildings with low environmental credentials

· working with schools that currently show a pattern of high energy use and developing a programme of energy efficiency measures

· monitoring water consumption and identifying water conservation measures

· implementing, on a trial basis, the Building Research Establishment's `Smart Waste' system to selected major capital projects

· working with BREEAM, a new Environmental Assessment Method, for designing and managing new school buildings.

13 Performance measurement

13.1 The Council has adopted the national performance indicators (PIs) for property published by the Government in March 2001. The results for these PIs have been calculated for the third year and published in the corporate AMP during 2004. In addition, the County Council has continued to publish the results for its own local property PIs, which include user satisfaction, contractor performance, energy and water use, asset performance and, as described in section 12, procurement. These local PIs are used in conjunction with the national PIs for benchmarking with other providers. This includes the Egan construction indicators and use of the National Best Value Benchmarking Scheme. The local performance framework has been reviewed for 2004/05 and beyond, with new performance targets established. PI information continues to be shared with SECAMP, the South East County Asset Management Plan network, enabling comparisons to be made with other county councils in the South East. Specialist consultants are commissioned as appropriate to undertake benchmarking exercises prior to letting contracts.

13.2 The results for all property PIs are reported regularly to members, service managers and partners as appropriate. Once completed and in operation, capital schemes are evaluated with users and lessons fed back to the preparation of future schemes.

13.3 The next phase of integrating land and building information is well under way as part of the Council's Enterprise Project using SAP technology. For the first time, detailed information about land, buildings, and legal agreements relating to them will be held in one place. It will integrate with the existing SAP functions of the new procurement system, including the asset register, accounts payable and receivable, and the energy management system. As well as better quality information, accessibility will also be greatly improved by the Geographic Information Systems (GIS) user interface. All this will provide a new platform to embrace further the strategy for integrated land and building information by replacing other systems and supporting the Strategic Property Review.

Annex 1

Capital Strategy - Core Data

1 Revenue budget 2006/07

	£m
Gross revenue expenditure	1,488
Net expenditure after income and specific grants	586
Budget requirement	568

2 Assets

	Number	Gross Floor	Value
		Area (GIA)	31 Mar 2006
		sq m	£m
Operational assets
Children's services
Schools	465	1,059,000	2,336
Residential homes and day centres	51	26,000	29
Adult services
Residential homes and day centres	76	81,000	124
Offices and administrative buildings	79	78,000	62
Libraries	52	35,000	58
Museums and art galleries	27	33,000	18
Other land and buildings	40	57,000	74
	-------------	-------------	--------
Land and buildings	790	1,369,000	2,701
Vehicles, plants and equipment	-	-	55
Infrastructure - roads and bridges	-	-	334
Community assets - parks etc	27	29,000	12
	-------------	-------------	--------
	817	1,398,000	3,102
Non-operational assets	68	154,000	58
Work in progress	-	-	54
	-------------	-------------	--------
Totals	885	1,552,000	3,214
	-------------	-------------	--------

3 Maintenance liabilities - land and buildings

	Total	Priority levels
	Cost	1	2	3
		Urgent	Essential	Desirable
		to prevent	within	in
		closure	2 years	3-5 years
	£m	£m	£m	£m
Children's services	301	-	201	100
Libraries	10	-	6	4
Adult services	30	-	15	15
Offices	40	-	20	20
Other services	20	-	12	8
	----------	----------	----------	----------
Total	401	-	254	147
	----------	----------	----------	----------

Maintenance liabilities - roads and bridges

	£m
Roads	169		see note below
Footways	25
Highway drainage	67
Street lighting column replacement	50
Bridges	7
Road signs and markings	3
	--------
Total	321
	--------
This is an assessment of the amount that would need to be spent to eliminate the backlog of maintenance work that has reached critical `intervention' level of deterioration, ie, where failure to carry out maintenance works will result in disproportionate increases in future maintenance costs. The information used to make this assessment is based on local condition information and locally determined compound rates approximately three years ago. New methods for estimating the value of the assets and depreciation are being launched nationally this year. The new methods will then be used to recalculate the assessment to a national standard.

4 Capital programme

4.1 The County Council's four-year capital programme for 2006/07 to 2009/10 is summarised on the following page. Full details of the programme are published in the Council's Budget Book for 2006/07. The estimated capital payments on the programme and on schemes already in progress are also shown together with details of how the County Council expects to finance them.

Capital programme - value of schemes in 2006/07 to 2009/10
	2006/07	2007/08	2008/09	2009/10
	£m	£m	£m	£m
Children's services	76.2	52.3	52.3	52.3
Local transport	37.4	43.8	30.5	41.7
Libraries, museums, arts, countryside, sport etc	0.8	0.8	0.8	0.8
Adult services	1.4	1.4	0.7	0.7
Capital repairs of buildings funded from the
County Council's own resources	15.5	21.6	15.5	14.5
Regeneration of older urban areas, household
waste recycling centres and other schemes	4.9	4.8	4.6	4.6
Ashburton Court, Winchester refurbishment	40.2	-	-	-
Development land	-	-	5.0	-
	----------	----------	----------	----------
Total programme	176.4	124.7	109.4	114.6
	----------	----------	----------	----------
Capital payments and financing
	2006/07	2007/08	2008/09	2009/10
	£m	£m	£m	£m
Payments on the programmes for 2006/07 to
2009/10 and works in progress	175.3	168.4	152.6	121.6
	----------	----------	----------	----------
Financed by:
Loans	65.4	58.5	60.8	44.5
Capital receipts	38.3	20.5	14.4	7.4
Grants and contributions	52.5	48.7	44.7	42.0
Contributions from revenue and reserves	19.1	40.7	32.7	27.7
	----------	----------	----------	----------
Total financing	175.3	168.4	152.6	121.6
	----------	----------	----------	----------

4.2 The plans shown in the above table are before any changes to restrict the use of Government borrowing allocations from 2007/08.

5 Unsupported borrowing

5.1 The Government introduced a new prudential capital control system from April 2004 that allows local authorities to raise additional loans for capital purposes, unsupported by Government grant. The County Council has agreed that unsupported borrowing may be used to finance invest-to-save projects that generate ongoing savings to cover the additional costs of borrowing and reinvestment or in/out projects for which the replacement asset is required in advance of the capital receipt.

5.2 Schemes using unsupported borrowing approved so far include:

· an accommodation unit at Calshot Activities Centre, to be repaid from additional income or lower spending

· provision for early years children with special needs at Nightingale Primary School, Eastleigh, to be repaid from the sale of part of the school site

· the replacement of the John Hunt of Everest Community School in Basingstoke and the development of land at Merton Rise, to be repaid from sale proceeds

· a new sports hall and associated facilities at Crestwood Community School in Eastleigh, to be repaid from the sale of part of the school site

· the amalgamation of infant and junior schools in the Buckskin area of Basingstoke to form Chiltern Primary School, to be repaid from the sale of the former infant school site

· the amalgamation of two pairs of infant and junior schools in the Waterside area to form two primary schools

· a contribution to the costs of providing the new Sundridge BESD school in Havant

· a number of schemes at primary schools in Hedge End in advance of capital receipts and developer's contributions

· the refurbishment of Ashburton Court, Winchester including the acquisition of Capital House for the temporary use of staff displaced during the refurbishment, to be funded from savings as a result of vacating leased offices, capital receipts from Merton Rise and the disposal after the refurbishment scheme of Capital House, and a reduction in future capital repairs

· investment in IT infrastructure, to be repaid from charges to IT Services' users.

5.3 Unsupported borrowing of £20m has also been used as part of the overall funding arrangements associated with the Enhance scheme to provide additional nursing care beds. It was also used on a temporary basis to fund general capital expenditure in 2005/06 in advance of capital receipts expected in 2006/07.

6 Hampshire - profile

6.1 Hampshire is a large county of 367,900 hectares with a mixture of significant urban and extensive rural areas. Although less than 10% of the county is urban, 77% of the population lives in urban areas, with another 10% living in rural towns.

6.2 Hampshire's population of 1,253,400 (mid 2004) ranks as the third largest for shire counties in England. The age-profile is similar to the national average.

6.3 Between 2001 and 2011, the population is forecast to grow by 5.5%, assuming rates of development consistent with the proposals in the Draft South East Plan. The population aged under 45 years is expected to decline by 0.6% during this period, while the population aged 45 and over is expected to increase by 14.1%, including a 40.1% increase in the population aged 85 and over. The number of households in Hampshire is forecast to increase by 10.5% between 2001 and 2011, almost twice the projected increase in population.

6.4 Further details of Hampshire can be found in "A Profile of Hampshire" published by the County Council in May 2005.