Archived decisions
Hampshire County Council
21 February 2007 Item 8
Revenue Budget and Precept 2007/08 and Medium-Term Financial Plan 2008/09 - 2009/10 (Part A)
Capital Programme 2007/08 - 2010/11 (Part B)
Report of 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 2007/0 and the Capital Programme 2007/08-2010/11.
A. REVENUE BUDGET AND PRECEPT 2007/08 AND MEDIUM-TERM FINANCIAL PLAN 2008/09
1. Summary
1.1 The Leader and Cabinet recommends a council tax increase of 4.9% (£45 for Band D) and a proposed budget of £598.2m. Although the budget has increased from the budget guidelines (£592.7m) reported to the Cabinet on 18 December 2006, a 4.9% tax rise can still be sustained due to a (one-off) higher surplus on collection funds of £2.7m (which increases the income from council tax) and a (continuing) increase of £2.3m in precept income from more tax base Band D equivalent dwellings and £0.5m from an anticipated continuing surplus on the collection fund.
1.2 This level of council tax and the budget have been proposed following full consultation with key stakeholders, the outcome of which indicated that further reductions in services, beyond those already identified, in order to achieve a lower council tax, would not be supported. Furthermore, the level has been achieved despite only a 2.7% (£3.2m) increase in Government formula grant for 2007/08, the total amount of grant allocation being £122.7m. In announcing the final settlement the Local Government Minister said that:
"new multi-year settlements provide local authorities with a stable and predictable funding base"
However, the increase is below inflation (December retail price inflation was 4.4% and consumer price inflation for all services of 3.8%) and does not adequately take into account demographic pressures, especially on adult social care (rapidly increasing numbers of older people and adults with disabilities requiring care) and waste management (mainly increased costs of meeting landfill directives). Because the Government has ignored these extra costs in their formula grant allocation, they all fall on the council tax. Disappointingly, this low level of increase remains unchanged despite strong representations by the County Council to which no answer on any of the specific points raised was received. Coupled with the potential grant loss of £38m over the next three-year funding period, the County Council continues to face severe pressures.
1.3 The Local Government Minister has also made it clear that, as in previous years the Government would be prepared to use capping powers to protect against excessive budget increases. The proposed budget therefore avoids the risk of capping as well as delivering substantial budgeted cash savings and redeployments of £21.4m, including efficiency savings of £15.3m.
1.4 The tight grant position for services contrasts starkly with the 5.8% (£39.4m) increase for Dedicated Schools Grant (DSG) (minimum per pupil increase of 5%) and other schools grants in 2007/08. The increase is inclusive of a further £8.1m for personalised learning at key stage 3, for primary schools and for practical learning for 14 to 16 year olds. The total Dedicated Schools Grant is £644.9m and with other schools grant, the result is a total schools budget of £721m.
2. Budget Guidelines
2.1 Executive Members have put forward service budgets in accordance with an
agreed budget strategy.
3. Service budgets, growth proposals and savings
3.1 Following a review of Executive Members' specific proposals, the Cabinet proposes total planned expenditure of £1,318.904m as summarised below:
2007/08 budget requirement |
£'000 | |
Service budgets: |
|
1,318,904 |
Other budgets: Revenue contributions to capital Contingency Contribution to earmarked reserves |
|
-720,681 ________ |
2007/08 budget requirement: |
598,223 |
3.2 Increases in service budgets are detailed in the table below with the largest increase (in percentage terms) being the waste management contract. In order to reflect the County Council's commitment to maximising wellbeing, priority has also being given to adult services with a total increase of £11.4m (5.8%). The overall position is summarised below:
Total cash increase in service guidelines |
County Council |
Specific Grant |
Total |
|||
£m |
% |
£m |
% |
£m |
% | |
Adult Services |
11.4 |
5.8 |
0.3 |
0.6 |
11.7 |
4.6 |
Children's Services Schools Local Education Social Care |
0.0 0.9 2.9 |
0.0 1.5 4.9 |
39.4 1.8 0.7 |
5.8 40.5 8.5 |
39.4 2.7 3.6 |
5.8 4.1 5.4 |
Waste Contract |
3.0 |
6.9 |
-0.3 |
- |
2.7 |
6.3 |
All other services |
2.9 |
2.0 |
0.3 |
17.9 |
3.2 |
2.2 |
21.1 |
4.2 |
42.2 |
5.6 |
63.3 |
5.0 |
3.3 Total growth proposals for services of £25.7m have been identified, offset in part by growth above the base budget of £7.4m for adult and children's services. The required savings within the guidelines are £3.1m therefore a total of £21.4m of savings and redeployments have been identified to meet both the required savings target and the additional growth above the cash limit thus complying with the budget guidelines. The overall position is summarised
below:
Spending pressures and savings 2007/08
Pressures |
Less Growth |
Savings Required |
Net Redeployment | |
£m |
£m |
£m |
£m | |
Adult Services |
19.9 |
-6.2 |
0.7 |
14.4* |
Children's Services |
2.8 |
-1.2 |
1.0 |
2.6 |
Environment |
1.1 |
0.5 |
1.6 | |
Policy & Resources |
1.0 |
0.6 |
1.6 | |
Recreation & Heritage |
0.9 |
0.3 |
1.2 | |
Total |
25.7 |
-7.4 |
3.1 |
21.4 |
* (includes £9.3m for second year of recovery plan)
3.4 A key component of the Audit Commission's Corporate Assessment is the close linking of budgets with performance management. Accordingly proposals for additional spending should indicate measurable improvements in performance anticipated and an implementation plan for any significant savings. Therefore, Executive Members will review their plans and monitor achievement against them throughout 2007/08 for all the proposed growth and redeployment proposals detailed above, especially to monitor performance against specific savings targets.
3.5 The County Council is required to demonstrate a minimum 2.5% efficiency improvement in 2007/08 for the Annual Efficiency Statement (AES), of which 1.25% must be cashable. Not all of the total cash redeployments in the budget are eligible as cashable efficiency savings. However, there are other efficiency improvements which are not included in the budget which can be counted in the AES, such as increments on pay scales which are not budgeted for but offset by managing vacancy levels. Therefore the overall amount of efficiency improvements identified is £19.9m, of which £12.5m counts towards the AES. £15.3m of the overall amount is included in the budget.
4. Additional Resources
4.1 There are several changes to the provisional budget since guidelines were set. These are made up of one-off and continuing changes as follows:
_ One-off changes due to an unusually high increase in the council tax collection fund surplus (£2.7m), one year further funding of the Local Authority Business Growth Incentive Scheme (LABGI) (£1m) and a schools budget overspend of £0.3m in 2006/07 that will be recovered from DSG in 2007/08. A total of £4m will be added to balances in 2007/08.
_ Continuing changes due to a £2.3m increase in the tax base, £0.5m in the council tax collection fund surplus and a number of other base budget variations of approximately £0.3m. The continuing extra income will be used to meet higher interest costs and additional unsupported borrowing costs of £0.7m from the 2006/07 capital programme, provide £0.8m towards resources for the Hampshire Action Teams to meet local priorities, and to make a budgeted contribution of £0.7m to a new invest to save reserve to provide better value for money in the delivery of adult and children's services in 2008/09. The net effect of these continuing changes is to add about £1m to balances.
5. Risk Management
5.1 The main areas of risk identified are:
· equal pay claims arising from job evaluation in 2007/08
· the impact of the Comprehensive Spending Review 2007 (CSR07) covering
the two year period from 2008/09 onwards
· further formula grant loss of up to £38m from 2008/09, if floor grant is
removed in part or in whole
· any further changes to council tax, revaluation, or in the Council's balance
of funding between grant and council tax, as a result of the delayed
implementation of any changes arising from the Lyons Inquiry over the
CSR07 period
· achievement of cash savings, particularly on Adult Services
· risks from the budget assumptions, especially on inflation and the
achievement of capital receipts
· inherent volatility from demand led budgets in Adult and Children's
Services.
To expand on some of the risks highlighted above:
In respect of job evaluation, the estimated full year cost remains around £10m. £7.5m of that continuing cost will be met from the budgeted contribution that was initially made to the grant equalisation reserve and then switched into the job evaluation transitional reserve for 2006/07. The remaining £2.5m will be met by a benefits realisation as a result of reducing workforce numbers or by increasing productivity the outcome of which means no additional cost to the council tax payer. The job evaluation reserve stood at £10m as of 31 March 2006 and will increase to £17.5m by 31 March 2007, which will be needed for the costs of the evaluation team, other implementation costs and any claims that become payable together with legal costs. The provision in the reserve is not an acceptance or assessment of liability. There is a strong risk that the liability might exceed the provision made and should this be the case, the Government has confirmed that it will set aside normal accounting requirements so that the liability need not be acknowledged for council tax setting purposes until the expenditure is incurred. Thus, costs can be spread over a longer period of time as they are paid out to allow cash flow to be managed.
In respect of CSR07, the settlement is expected to realise only a 1.9% increase in all public spending, with a potential 3% cash savings from the baseline. If the trend to give higher priority to schools, health and the police continues there is a real risk that there will be very little grant increase left nationally for other public services - maybe as little as 1%. The medium-term plan assumes formula grant continues at its existing cash value (i.e no increase), but potentially that grant could reduce in cash terms, which would mean a negative floor grant increase. Therefore, this needs to be taken into account as a potential loss of £38m for the County Council (31% of the total grant support received for 2007/08). Because of this uncertainty, it is proposed that the grant equalisation reserve remains intact during 2007/08 at £25m subject to the results of CSR07. Subsequent to firmer costing of the liability from equal pay claims, the reserve could be wound down over the CSR07 period to avoid the cliff edge of grant loss of £38m, guard against sudden cuts if the financial forecast worsens, provide flexibility if lower council tax rises are enforced or required, and provide for further pressures on adult and children's services for 2008/09 when recovery plans, modernisation and restructuring have been completed.
5.2 A detailed risk assessment indicates potential risks of around £29m in 2007/08, not all of which will occur at the same time. Nonetheless, it would be prudent to set aside approximately 50% of these potential risks having particular regard to pay and price inflation (2.25% and 2.5% respectively), slippage on the planned savings of £21.4m and of capital receipts in excess of £60m, and volatility in demand led budgets.
6 Earmarked Reserves
6.1 Earmarked reserves at 31 March 2008 are estimated at £56.7m excluding the schools reserve of £32.6m. The other principal reserves are the grant equalisation/CSR07 reserve (£26.1m) and the job evaluation transitional costs reserve (£17m). Overall there is a reduction in earmarked reserves despite the substantive and increased risks compared with a year ago in respect of job evaluation/equal pay claims, the anticipated grant loss, and the likely tighter capping and efficiency target regimes with CSR07.
7. Balances
7.1 Projected balances are estimated at £9.4m at 31 March 2007 taking account of an addition of £2.4m for 2006/07, which includes the reimbursement of some of the costs for the abandoned South Hampshire Rapid Transit project. Projected balances are estimated at £14.4m at 31 March 2008, which takes account of one-off additions in 2007/08 of £4m and the budgeted contributions of £1m. Although a balance of £14.4m is significantly higher than the minimum level of balances normally used by the County Council, it is necessary to guard against the risks identified in paragraph 5.2 above, with the longer term objective of reducing the level back to £7.5m when the projected risks identified from inflation and slippage in savings plans are reduced. This level of balances will also be sufficiently robust for the County Treasurer's assurance required by Section 25 of the Local Government Act 2003 (see section 9 below).
8. 2008/09 to 2009/10 medium-term financial plan
8.1 There is flexibility built into the medium-term financial plan with unallocated amounts of £4.6m in 2008/09 and £5.2m in 2009/10 which may be required for demand led services such as adult and children's services. These contingencies will be needed to cover service pressures and priorities, any reinstatement of supported borrowing, higher inflation or interest rates, lower grant increase, reduction in council tax capping limit below 5%, higher unsupported borrowing from slippage in capital receipts and higher balances to cover these and other risks.
9 Section 25 report, Local Government Act 2003
9.1 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. 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 factors detailed above in paragraphs 5-7 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 levels of reserves.
10. Treasury Management and Annual Investment Strategies for 2007/08
10.1 As interest rates generally are expected to be relatively stable over the period to
March 2008, 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 also be considered in order to generate short-term savings in interest costs. Guideline targets of up to £16m and £9m are proposed for 2007/08 to 2009/10 for long term fixed rate borrowing and lender's option/borrower's options loans respectively, which can be exceeded if the circumstances are appropriate, particularly in view of the projected peak in the capital financing requirement at 31 March 2009. Furthermore, on condition that the draft Local Authorities (Capital Finance and Accounting) (England) Regulations 2007 are implemented, it is proposed that the County Treasurer be given authority to repay Public Works Loan Board loans held at high coupon rates prematurely, replace with longer term loans at lower rates, and amortise over the outstanding periods of those replacement loans. The Cabinet also recommends approval of the Annual Investment Strategy attached to this report as Appendix 2.
11. Prudential Indicators
11.1 The prudential code ensures that capital programmes are affordable in revenue terms; that external borrowing and other long-term liabilities are within prudent and sustainable levels, and that treasury management decisions are taken in line with professional good practice. The Cabinet recommends approval of the summary of prudential indicators attached to this report as Appendix 3.
12. Conclusion
12.1 The County Council continues to face severe difficulties, especially in regard to demographic pressures, the lack of adequate funding by the Government for Adult Services, pressures within Children's Services, the uncertainty of CSR07, and the potential loss of formula grant of £38m. The proposals set out above present a robust response to these difficulties and uncertainties. Despite the lack of response to date in regard to the representations made by the County Council in respect of the low level of formula grant, the Cabinet remains determined to continue to lobby the Government to secure a fair deal for the people of Hampshire.
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 2007/08 (Appendix 1)
b) That the revenue budget for 2007/08 (as set out in the attached draft budget book circulated separately) and the medium-term financial plan be approved
c) That the total budget requirement for the general expenses of the County Council for the year beginning 1 April 2007 be £598,223,000
d) That the County Council's band D average council tax for the year beginning 1 April 2007 be £955.62
e) That the County Council's council tax for the year beginning 1 April 2007 for properties in each tax band be:
£ | |
Band A |
637.08 |
Band B |
743.26 |
Band C |
849.44 |
Band D |
955.62 |
Band E |
1167.98 |
Band F |
1380.34 |
Band G |
1592.70 |
Band H |
1911.24 |
f) That precepts be issued totalling £471,356,287.22 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 tax base of each billing authority's area as determined by them and as set out below:
Basingstoke and Deane Borough Council |
61,049.70 |
East Hampshire District Council |
47,044.89 |
Eastleigh Borough Council |
43,012.29 |
Fareham Borough Council |
42,043.00 |
Gosport Borough Council |
26,948.20 |
Hart District Council |
36,953.10 |
Havant Borough Council |
42,468.00 |
New Forest District Council |
71,687.40 |
Rushmoor Borough Council |
30,359.64 |
Test Valley Borough Council |
45,019.00 |
Winchester City Council |
46,661.35 |
g) That the Annual Investment Strategy (Appendix 2) be approved
h) That the Prudential Indicators (Appendix 3) be approved
B. CAPITAL PROGRAMME 2007/08 - 2010/11
1. The Cabinet has considered proposals put forward by Executive Members for the four years 2007/08 to 2010/11. 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 sourced capital programme for the four-year period within the guidelines of the current programme, adjusted for inflation;
- prepare a programme of schemes supported by Government grants and scheme or programme specific supported borrowing allocations for 2007/08 and those expected to be supported in 2008/09, 2009/10 and 2010/11, subject to limits restricting the take-up of Government supported borrowing allocations; and
- consider the use of unsupported borrowing in accordance with the County Council's policy on prudential borrowing.
2. The total value of the four-year programme is (round figures) £515m. The main elements are £406m for schemes supported by Government approvals, £104m for the four-year locally resourced programmes and £5m for land acquisition.
3. Capital expenditure will exceed resources by £4.864m at the end of 2006/07 therefore it is proposed that this shortfall be met by way of temporary borrowing. It is anticipated that this amount, together with £1.861m of temporary borrowing to cover a similar shortfall in 2005/06, will be repaid in 2007/08 if the forecast level of capital receipts is obtained. Further temporary borrowing of £8.825m in 2008/09 and £1.469m in 2009/10 will be required. It is forecast that this borrowing will be repaid in 2010/11 and 2011/12, which represents an improved funding position from that reported in February 2006. It will not be necessary to reduce or delay the proposed capital programmes for the four-year period specified. However, the repayment plan is reliant on capital receipts being obtained at the level currently forecast, including in excess of £60m in 2007/08. In order to achieve the forecasts, specific disposals have been identified and additional invest-to-save funding of £310,000 per annum for a two-year period has been included in the Property Services budget in recognition of the substantial disposal programme. Furthermore, the Director of Property, Business and Regulatory Services will require some flexibility in deploying resources and consultants to ensure the capital receipts target is achieved and a report will be submitted to Cabinet in due course. In addition, the Executive Members for Children's Services and Recreation and Heritage are proposing further unsupported borrowing for the four-year period of up to £26.5m. Payments and resources will continue to be monitored closely in 2007/08 with regular progress reports to the Leader and Cabinet. Executive Members will also review progress with their capital programmes at regular intervals.
4. The proposed level of unsupported borrowing detailed is manageable and is compliant with the Prudential Code for Capital Finance in Local Authorities. The majority of unsupported borrowing is in the form of bridging loans in advance of capital receipts or developers' contributions, all of which will be repaid in full by 2012/13. Since the beginning of the 2006/07 financial year, it has been necessary for services to meet the annual cost of interest and principal repayment of bridging loans from their revenue budgets or existing capital programmes or by setting aside part of their shares of other capital receipts. The effect of this has been 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.
5. In respect of Government supported borrowing, guidelines have been confirmed which limits the take up over the four-year period of the capital programme. This follows the Government's decision not to provide full revenue grant support towards the loans raised by the County council on the basis of the so-called `supported' borrowing allocations. Ahead of the Government announcing the results of its Comprehensive Spending Review, the Cabinet will continue to lobby the Government to recognise the cost of new supported borrowing when calculating the revenue grant floor or to provide full support by capital grants.
6. The proposed programme for Adult Services is in line with the guidelines for the locally resourced programme. For 2007/08, this includes Government supported schemes for improving information management, improving the care home environment for older people and a borrowing approval for mental health services of £0.241m [reduced from £0.336m] in line with Cabinet's decision not to take up full Government borrowing allocations.
7. The proposed four-year programme for Children's Services of £208.9m is supported mainly by the Government with capital grant and supported borrowing allocations. The programme also includes schemes totalling £19.496m which the Executive Member for Children's Services wishes to defer from the 2006/07 starts programme to 2007/08, together with matching funding (includes four schemes for which the use of unsupported borrowing was approved by the Cabinet in February 2006).
7.1 Other key points for Children's Services:
New Deal for Schools (NDS) : allocations have been divided between modernisation works (Children's Services capital programme) and condition works (Policy and Resources capital programme) on the basis of a 46% : 54% split as previously agreed. Further grant funding of £11.837m has been made available by the Government as an advance equivalent to 50% of the County Council's indicative allocation for 2008/09, which will be recovered by deductions from allocations for the period 2008/09-2010/11. Using the ratio detailed above, £5.445m will be allocated to NDS modernisation, with £6.392m allocated to NDS condition. This additional grant more than covers the reduced take-up of supported borrowing for 2007/08 (reduction of £6,533m). It is anticipated that the Department for Educations and Skills (DfES) will seek to resolve the issue of supported borrowing from 2008/09 onwards after the Comprehensive Spending Review (CSR) announcement mid-2007 and if this is the case, a further report on the funding position will be submitted to the Cabinet.
Building Schools for the Future (BSF) : the earliest date that Hampshire secondary schools could be included in this programme is 2011. However, the County Council has been included in a national pathfinder programme for a new capital-funding stream for the improvement of primary schools and primary age special schools. A capital grant of £6.5m has been allocated in 2008/09 for major improvements to schools in the Andover area.
Capital funding for early years and childcare : a capital grant of £19.775m for the period 2006/07 to 2007/08 has been made available from the Government to support the provision of children's centres, childcare through extended schools and the expansion of childcare in areas not covered by these centres. £10.226m for 2006/07 has already been added to the capital programme with an additional allocation of £9.549m for 2007/08 being proposed. This, together with the use of other resources brings the total funding for the two-year period 2006/07 to 2007/08 to £23.795m.
Unsupported borrowing for the Children's Services capital programme : the Executive Member for Children's Services proposes further unsupported borrowing of £26.438m from 2007/08 to fund a number of schemes for which works are required in advance of receipts and developers' contributions, including school amalgamations and new school places for housing developments (£12.690m for 2007/08). This borrowing will be fully repaid by 2012/13 and is in accordance with the County Council's policy on using unsupported borrowing for `bridging loans'. Accordingly, part of the capital programme for each of the four years has been set aside to fund the annual loan charges to ensure that none of the costs will need to be met by council tax during the loan period. Excluding this further borrowing, a total of £16.6m for Children's Services schemes has been approved previously by the Cabinet to be repaid from capital receipts. A further £5.0m using the School Balances Loan Scheme has been borrowed which will be repaid from capital receipts and developers' contributions, all of which are on target to be obtained in 2006/07, 2007/08 and 2008/09.
7.2 If the proposals for unsupported borrowing for Children's Services are approved, sufficient resources will be available to fund all the schemes identified with a 2007/08 start. However, the situation in 2008/09 onwards remains difficult with considerable uncertainty until the announcement of the CSR07 in the summer. Current indications are that significant pressures on the Children's Services capital programme will continue beyond 2010/11.
8. The proposed four-year programme for Environment is £162.902m. This is made up of £1.7m carried forward from 2006/07, total local resources of £57.756m and Government support of £103.446m (after a reduction in supported borrowing of £19.603m). The programme for 2007/08 is fully funded with the reduction in take-up of Government borrowing allocations (£5.588m) mainly offset largely due to an increase of £2.6m capital grant (in recognition of a `very good' assessment by the Government for the County Council's first Local Transport Plan (LTP) Delivery Report coupled with an `excellent' rating for its second LTP), Use of developers' contributions (£1.7m), and by road safety (£1.140m) and local public service agreement reward (£0.2m) grants The programmes for 2008/09 to 2010/11 will exceed the available resources by a total of £4.444m. However, it is anticipated that additional external resources will be identified to meet this shortfall. Schemes that are totally or part-funded by developers' or other contributions have been included in the four-year programme including £11.5m in 2007/08 where security in the funding of and programme dates exists. Although there is no provision in the overall programme for new major transport schemes, such schemes as the Chickenhall Lane Link Road in Eastleigh and Access to Gosport schemes are in preparation for possible bids for Government funding in the future. £1m per annum to improve the County's household waste recycling centres has been included in the four-year programme that will be funded by Environment's share of capital receipts and by using the Waste Performance and Efficiency Grant. The £3m annual provision in recent years on a one-off basis to address concerns about the condition of footways and rural carriageways has now been consolidated in the four-year programme.
9. The Executive Member for Recreation and Heritage has proposed adding to the 2007/08 programme a scheme for urgent repair works at the Royal Victoria County Park Chapel at a cost of £150,000 by using unsupported borrowing to advance £100,000 from the capital guideline for 2010/11. The remaining £50,000 will be met by a capital receipt for that amount, which has been previously agreed can be retained by the Recreation and Heritage department. This is in effect a bridging loan therefore the loan charges will be financed by the department's revenue budget between 2007/08 and 2010/11. As £11,000 of the loan will have been repaid during those years, the capital programme for 2010/11 will be reduced by £89,000.
10. The allocation of the Policy and Resources capital programme between schemes is broadly similar to the existing programme. The maintenance of the core buildings in the County Council's estate, through the capital programme, continues to be the main corporate priority. It is proposed that an increase in the annual capital programme guideline of £0.5m for feasibility studies should be confirmed on the basis of an equivalent increase in the target for capital receipts to support the locally resourced programme. An addition to the programme for 2007/08 will be the development of workshop facilities for the Hampshire Transport Management business unit at a cost of £0.607m that will be financed from their reserves. Also included is the annual provision of £0.9m for advance and advantageous purchases of land. In respect of the refurbishment of Ashburton Court that is now underway, the Director of Property, Business and Regulatory Services and the County Treasurer will report to a future meeting of the Cabinet reviewing progress.
11. In respect of Private Finance Initiative (PFI) funding, the Department for Transport have invited the County Council to prepare an outline business case for PFI support for the replacement of street lighting columns. No other specific PFI schemes have been identified at this stage for inclusion in the four-year programme.
12. In respect of a further review of the capital programme, the Director of Property, Business and Regulatory Services proposes to report in spring 2007 on the implementation of the current programme, development of major land and capital receipts from 2010 onwards, and a range of procurement initiatives to speed up the disposal process along as well as the design and construction times associated with the programme. Other areas for review later in 2007 may include the outcome of the Government's Spending Review and whether it has changed its policy on providing grant towards loan charges arising from supported borrowing allocations, and progress on obtaining capital receipts required to fund capital expenditure in 2007/08 and to repay unsupported borrowing in 2006/07 and earlier years.
RECOMMENDATIONS
a) That the capital programme for 2007/08 be approved as set out in the draft capital programme circulated separately and 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
b) That the remainder of the capital programmes for 2008/09 to 2010/11 be approved as set out the draft capital programme circulated separately for the purpose of undertaking design work (including the preparation of feasibility and design project appraisals)
c) 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
d) That authority be given to incur expenditure on land purchases as follows:
(1) up to the sum specified in respect of sites still required for the schemes included in the capital programme for the period 2007/08 to 2010/11 provided that the relevant scheme has been the subject of a feasibility or design project appraisal approved by the relevant executive member
(2) up to the amount included in the 2007/08 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 that 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.