Contact: Anne Hibbert, (01962) 847533, [email protected]

1 Summary

1.1 This report proposes the capital programme for 2007/08 to 2010/11 (shown as Appendix 1).

1.2 Decisions on the capital programme will support the County Council's corporate priorities, as indicated in the detailed capital programme attached at Appendix 1.

2 Locally resourced capital programme

2.1 The following guideline limits were confirmed by Cabinet at its meeting on 18 December 2006 for the locally resourced programme for Policy and Resources.

2.2 The guidelines include an addition of 2.5% for inflation, in line with the non-pay inflation assumption for the revenue budget. They also include a reduction of £0.1m per year to reflect the reduced take-up of supported borrowing allocations via the Government's single capital pot which are used to support the locally resourced capital programme.

2.3 Executive members may vary the guidelines between years provided their total four-year guideline is not exceeded and bunching of payments in any one year or front-loading is avoided.

2.4 Executive members may propose supplementing their capital guidelines under the `prudential framework' agreed by Cabinet at its meeting on 24 November 2003, thereby integrating more closely decisions on revenue and capital spending in support of corporate priorities. The additions may include:

· virement from the executive member's revenue budget

· temporary unsupported borrowing, to provide bridging finance in advance of capital receipts or other contributions, with the cost of servicing the unsupported borrowing in the interim being met from the executive member's revenue budget or existing capital resources in the years in which cost is incurred.

3 Proposed capital programme 2007/08 to 2010/11 - locally resourced schemes

3.1 The programme proposed for 2007/08 to 2010/11 is based upon the allocation of resources between priorities in the current 2006/07 to 2009/10 capital programme. The main corporate priority continues to be the maintenance of the core buildings in the County Council's built estate through the capital repairs programme, which supports the delivery of services countywide and specifically aims to address the priorities identified in the Corporate Risk Assessment. The proposed programme for capital repairs reflects the re-phasing of these works between 2007/08 and 2008/09 as agreed by the Buildings, Land and Procurement Panel in April 2006.

3.2 The Cabinet agreed in July that the Policy and Resources capital programme for feasibility studies should be increased from 2007/08 by up to £500,000 per annum, but an increase in the overall Policy and Resources guideline is dependent upon the availability of additional capital receipts to fund an increased capital programme. An increase in the annual capital programme guideline of £500,000 is proposed based on an equivalent increase in the target for capital receipts to support the locally resourced capital programme.

3.3 The locally resourced guidelines can also be enhanced to include any approved business unit schemes funded from business unit reserves or from prudential borrowing. Hampshire Transport Management is proposing in its business plan the development of workshop facilities costing £607,000 in 2007/08. These will be funded from the business unit's reserves.

4 Proposed capital programme 2007/08 to 2010/11 - schemes supported by Government allocations

4.1 Cabinet agreed on 25 September 2006 to extend the restrictions on the use of Government supported borrowing allocations from 2007/08 to the remaining three years of the proposed capital programme. This decision was taken because the mechanism within the revenue grant system which previously provided funding for the marginal cost of additional supported borrowing has not been restored by the Government for 2007/08. Cabinet set the following provisional limits for the use of supported borrowing for Policy and Resources.

Schemes funded by capital grants from the Government may be added to the above limits. The anticipated capital grants for each of the four years of the programme are summarised below.

4.2 The amount in 2007/08 is higher than the later years reflecting the Government's offer of additional capital grant under the New Deals for Schools modernisation programme in 2007/08, which is deducted from the allocations for the following three years to 2010/11. Hampshire's total advance is £11.8m for works to address condition and suitability issues. Of this, £6.4m is included in the Policy and Resources capital programme for condition works, with the balance in the programme for Childrens' Services for suitability works.

4.3 Though there is a risk in taking up this offer, as the programme levels from which the deductions will be made in 2008/09 to 2010/11 will not be known until after Spending Review 2007, there are two advantages in taking up this offer - firstly it will more than compensate for the reduction of £6.7m proposed in schools programmes in 2007/08 as a result of the decision made in July not to take-up supported borrowing in full in 2007/08. Secondly, as repayment is on a £ for £ basis, a higher value of extra work is likely to be obtained in 2007/08 than will be foregone in the following three years. On this basis the Director of Children's Services has indicated to the Department for Education and Skills (DfES) that the County Council would wish to take up this offer.

4.4 Total Cash Limit for schemes supported by Government allocations

5 Capital programme summary

5.1 On the basis of the position outlined above, the total value of the capital programmes submitted for consideration for the four years to 2010/11 are:

6 Revenue Implications

6.1 The revenue implications of the proposed capital programme are as follows:

6.2 The total revenue implications for the four years of the starts programme, including capital charges, represent a real term increase of 14.5% over the 2006/07 original budget of this service.

7 Impact assessment

7.1 The proposals in this report are derived from the departmental service plans and are in accordance with the budget strategy and the County Council's financial management policy. An impact assessment of the financial management policy has been carried out and the proposals in this report are not considered to be discriminatory.

Recommendations

1 The recommendations are contained in the summary decision sheet.

Section 100 D - Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have 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.

Financial Management Policy - Appendix 1 Budget Book