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

1 Summary

1.1 The following decisions are sought:

1 That the capital programme for 2008/09 to 2010/11 as set out in Appendix 1 be approved for submission to the Cabinet.

2 Reasons

2.1 Cabinet has requested that executive members prepare proposals for:

· a locally-resourced capital programme for the three-year period from 2008/09 to 2010/11 within the guidelines of the current capital programme adjusted for inflation

· capital schemes supported by Government grants or supported borrowing in 2008/09 and those expected to be supported in 2009/10 and 2010/11, subject to limits restricting the take-up of Government supported borrowing allocations.

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

3 Other options considered and rejected - not applicable

4 Conflicts of interest declared by the decision maker or other executive member consulted - not applicable

5 Dispensation granted by the Standards Committee - not applicable

6 Reasons for the matter being dealt with if urgent - not applicable

Approved by: (signature) Date: (date of decision)

Councillor TK Thornber

Executive member for Policy and Resources

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

1 Summary

1.1 This report proposes the capital programme for 2008/09 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 17 December 2007 for the locally resourced programme for Policy and Resources. The guidelines have been set for a three-year programme for 2008/09 to 2010/11, instead of the four-year programme in recent years, to match the period covered by the Government's Comprehensive Spending Review and three-year revenue grant settlement.

		£000
	2008/09	12,249
	2009/10	9,307
	2010/11	9,265
	Total	30,821

2.2 The guidelines include an addition of 2.5% for inflation, in line with the non-pay inflation assumption for the revenue budget.

2.3 Executive members may vary the guidelines between years provided their total three-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 2008/09 to 2010/11 - locally resourced schemes

3.1 The programme proposed for 2008/09 to 2010/11 is based upon the allocation of resources between priorities in the current 2007/08 to 2010/11 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.

3.2 The cash limits for 2009/10 and 2010/11 have been increased by a virement from the Policy and Resources revenue budget of £30,000. This returns resources to the capital programme after a three year period of funding for The Lights theatre.

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 County Council Catering Service (HC3S) earmarked a sum of £50,000 for investment in business development with secondary schools in 2007/08. This provision has not been called upon and it is proposed to roll this forward into 2008/09. This will be funded from the business unit's reserves.

3.4 Similarly, IT Services have identified a requirement for hardware replacement and investment to facilitate the migration of the data centre to Ashburton Court, improvements to the Hantsnet infrastructure and to provide additional data storage capacity. The total provision required in 2008/09 will be £1 million. This amount will be funded by prudential borrowing, to be repaid through the IT Services trading account within five years.

3.5 The capital programme includes an annual provision (£152,000 in 2008/09) for coastal conservation, for funding schemes that will inform and deliver innovative solutions to the challenges facing the County Council's coastal landholdings and will increase understanding of the coastal environment and the factors that affect it. The programme for 2008/09 summarized in Appendix 2 gives particular priority to the development of strategies arising from the outcomes of the County Council's Climate Change Commission of Inquiry.

4 Proposed capital programme 2008/09 to 2010/11 - schemes supported by Government allocations

4.1 Cabinet agreed on 17 December 2007 to continue the restrictions on the use of Government supported borrowing allocations. 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. Cabinet set the following provisional limits for the use of supported borrowing for Policy and Resources to reflect the announcements by the Government of its allocations for 2008/09 onwards.

		New Deal for Schools Supported Borrowing
		£'000
	2008/09	5,683
	2009/10	4,812
	2010/11	499
	Total	10,994

4.2 Schemes funded by capital grants from the Government may be added to the above limits. The anticipated capital grants for each of the three years of the programme, as announced following the Comprehensive Spending Review 2007, are summarised below.

		NDS	DSG capital repairs	Sure Start capital repairs	Total capital grants
		£'000	£'000	£'000	£'000
	2008/09	0	11,181	262	11,443
	2009/10	0	11,461	453	11,914
	2010/11	5,912	11,748	477	18,137
	Total	5,912	34,390	1,192	41,494

4.3 Grant allocations under the New Deal for Schools (NDS) modernisation programme are lower than previously anticipated. This is due to a revised allocation procedure introduced by the Department for Children, Schools and Families (DCSF), based on the proportion of schools considered to be modernised as a result of capital investment over recent years, rather than demonstrated need for investment. This also includes the effect of a reduction from the repayment of a £6.4m advance taken up in 2007/08, which is to be repaid over the following three years. The NDS grant counters the reduction in NDS supported borrowing in 2010/11, with no significant effect on the cash limit.

4.4 The reduction in grant funding and not using the full supported borrowing allocation will affect the County Council's ability to fund strategic investment in projects such as SCOLA recladding, re-roofing and other major maintenance programmes. This will also affect improvement projects such as new science labs, temporary classroom replacements and new school halls. Consequently the limited resources will be allocated to the key priorities identified in the Corporate Risk Assessment.

4.5 As a result of the reduction in Government funding for NDS, it is proposed to re-profile £5m of the 2007/08 NDS supported borrowing allocation equally across 2008/09 and 2009/10, in order to smooth the transition to the lower programme levels. This would re-state the allocations for NDS as shown below, with the 2010/11 allocation unchanged at £6.411m.

		Original Cash Limit	NDS programme
		£'000	£'000
	2007/08 c/f	5,000	-
	2008/09	5,683	8,183
	2009/10	4,812	7,312
	2010/11	6,411	6,411
	Total	21,906	21,906

4.6 The Sure Start capital repairs grant is the Policy and Resources share of the allocation by DCSF to Children's Services for repairs and improvements to the quality of accommodation in early years and childcare settings.

4.7 The total Cash Limit for schemes supported by Government allocations is follows:

		Supported borrowing	Grant	Total
		£'000	£'000	£'000
	2008/09	8,183	11,443	19,626
	2009/10	7,312	11,914	19,226
	2010/11	499	18,137	18,636
	Total	15,994	41,494	57,488

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 three 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 three years of the starts programme, including capital charges, represent a real term increase of 3.2% over the 2007/08 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.

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.

Policy and Resources

Proposed Coastal Conservation Capital Programme 2008/09

Policy and Resources proposed capital programme 2008/09 - 2010/11

Details follow overleaf.