1

Summary

1.1

This report updates Members on the current financial position for revenue and capital repairs and also

· Updates Members on the revenue budget position for 2007/08 and seeks approval to the allocation of the budget for 2008/09.

· Details the level of commitment against the 2007/08 allocations

· Seeks approval for carrying forward resources relating to specific areas of work that have been unavoidably delayed

· Outlines the budget provision for 2008/09 and seeks approval to the proposed allocations

Recommendations

(a)

(b)

(c)

(d)

That the Buildings, Land and Procurement Panel advise the Executive Member for Policy and Resources that approval be given to:

The projected outturn against the 2007/08 budget including the proposal to carry forward any unspent balance on the winter maintenance contingency in full.

The proposed allocation of the 2008/09 revenue budget.

The proposal to carry forward into 2008/09 £1.938m relating to

specific commitments that have been unavoidably delayed.

The proposed allocation of the 2008/09 capital repairs budgets.

2

Revenue budget 2007/08

2.1

The level of commitment against the 2007/08 budget at 8 February 2008 is shown at Appendix 1. It is expected that the budget of £15.302m will be fully spent by the end of the financial year with the exception of the winter maintenance contingency.

2.2

Appendix 1 shows the total level of commitment as 84.4% which is broadly in line with expectations for this stage in the year although at a lower level than this time in 2006/07. Two elements of the budget delegated to schools are not within the control of the Panel and relate to minor repairs arranged directly by schools and budgets delegated to Foundation Schools that have not entered into buy back arrangements with Property Services. These two items are shown as fully committed throughout the year. The Engineering Term Maintenance contract accounts for 43% of the revenue budget and in previous years has been shown as fully committed throughout the year however with the change to the new contract in August 2007 part way through the year this practice has been changed - this is the main reason why the commitments to date this year are showing at a lower level than at the equivalent period in 2006/07.

2.3

The winter maintenance contingency in 2007/08 remains largely intact following a relatively mild winter and if this position remains to the end of the year the Panel is requested to support a recommendation to the Executive Member for Policy and Resources to carry forward the unspent balance in full in line with previous practice. The unspent balance at 8 February is £384,000.

3

Revenue budget 2008/09

3.1

The 2008/09 revenue budget provision for non-school buildings includes an above average inflation increase of 3.5% and totals £4.390m. School budget shares are expected to increase by 2.5% and this would result in a schools budget provision of £11.334m taking the total repairs and maintenance revenue resources available to £15.724m. Appendix 2 shows the proposed allocations for 2008/09.

3.2

The current engineering term maintenance contract for the Winchester headquarters complex will be re-let from October 2008. The packaging of this work is being considered as part of a wider review of facilities management (FM). The review of FM has the twin objectives of delivering efficiency gains and service improvements and is the subject of a separate report to this meeting.

4

2007/08 Capital Repairs

4.1

The available resources in 2007/08 are shown in the table below. The figures include amounts carried forward from 2005/06 of £2.122m for Policy and Resources and £1.629m for Dedicated Schools Grant (DSG) capital repairs and allow for the re-profiling of resources reported to the March and October 2007 meetings of this Panel.

Capital Repairs

£m

Policy and Resources

6.802

Dedicated Schools Grant (DSG)

12.537

Total resources

19,339

4.2

The majority of this funding, £13.591m, has been allocated to support Corporate Risk Assessment priorities with the balance allocated to support other schemes and landlord strategic requirements. The level of commitments against these allocations to 8 February 2008 is shown at Appendix 3.

4.3

A major programme of structural work in schools has been delayed and is not now expected to start until 2008/09 and approval is sought to carry forward £1.68m to meet this commitment in the new financial year subject to agreement of the Schools Forum. In addition to this, a programme of testing and inspection has been delayed following issues with the contractor which will result in commitments of £258,000 being carried forward into 2008/09. Again, approval to carry this funding forward is sought.

5

2008/09 and future allocations

5.1

Available resources

The Dedicated Schools Grant allocation for 2008/09 has been confirmed at £11.181m including a 2.5% uplift for inflation. The Policy and Resources capital repairs budget at £8.946 also includes the standard 2.5% uplift and the re-profiling previously agreed. Allocations for 2009/10 and 2010/11 are shown without further increase for inflation.

5.2

The three year allocations for the New Deal for Schools (NDS) programme announced as part of the recent Comprehensive Spending Review brought a marked reduction in the overall level of resource allocated to Hampshire County Council. This is likely to be the impact of a new formula allocation basis introduced by the Government to determine the allocations from 2008/09. In addition to this two other factors have combined to reduce the available funding over the next three years. Firstly the repayment of the advance allocation of £6.392m taken up in 2007/08 must be repaid in equal instalments over the next three years. Secondly the approvals for 2008/09 and 2009/10 are in the form of 100% borrowing approvals and, as in 2007/08, this means the County Council will not be in a position to afford to take up these borrowing approvals in full. In 2008/09 the percentage of the total borrowing approval that will be affordable is 61% and in 2009/10 65%. The position from 2010/11 reverts largely to grant again. This position is summarised in Table 1 below.

Table 1: Original NDS Funding

2007/08

2008/09

2009/10

2010/11

£m

£m

£m

£m

Overall NDS allocation

23.674

21.307

17.755

16.034

Advance allocation

11.837

-3.946

-3.946

-3.946

Net allocation

35.511

17.361

13.809

12.088

PBR share (54%)

19.175

9.375

7.457

6.528

Less affordability reduction

-2.557

-3.692

-2.645

-0.117

Available funding

16.618

5.683

4.812

6.411

5.3

During the budget process the County Council agreed to re-profile £5m of the funding from 2007/08 equally into 2008/09 and 2009/10 to smooth the transition to the lower funding level. This is only possible where the funding support is in the form of borrowing approval: grant funding must still be fully utilised by the end of the following August. The County Council was also able to agree some additional borrowing to support this and other capital programmes affected by the affordability reduction. For NDS Condition this amounted to an additional £1.4m split equally between 2008/09 and 2009/10. The impact of these two changes is shown in Table 2 below.

Table 2: Impact of Budget Decisions on NDS

2007/08

2008/09

2009/10

2010/11

£m

£m

£m

£m

Available funding

16.618

5.683

4.812

6.411

Impact of re-profiling

-5.000

2.500

2.500

0

Increased affordability

0

0.700

0.700

0

Revised totals

11.618

8.883

8.012

6.411

5.4

Based on above the total capital resources available in the four year period from 2007/08 are shown in Table 3 below. It is worth noting that the overall reduction in resources between the current year and 2010/11 is 24% and the reduction between 2008/09 and 2010/11 is 18.8%.

Table 3: Total Capital Repairs Resources 2007/08 to 2010/11.

2007/08

2008/09

2009/10

2010/11

£'m

£m

£'m

£'m

Capital repairs

6.802

8.946

5.988

5.960

DSG

12.537

11.181

11.181

11.181

NDS

11.618

8.883

8.012

6.411

Total

30.957

29.010

25.181

23.552

5.5

The proposed allocation of the capital repairs and DSG budgets in 2008/09 using the above figures are shown at Appendix 4. In line with previous practice the majority of capital repairs funding will be used to address the priorities from the Corporate Risk Assessment.

6

Conclusions

6.1

The revenue outturn position for 2007/08 is expected to be at cash limit with the exception of the winter maintenance contingency which has not so far been required.

6.2

The total revenue budget available for 2008/09 is £15.724m.

6.3

Two programmes of 2007/08 capital repairs work totalling £1.938m have been unavoidably delayed and approval is sought to carry these items forward.

6.4

Total capital resources for the next three years are at a significantly lower level due to the reduction in New Deal for Schools funding. The total value of capital resources available in 2008/09 is £29.01m (2007/08 £30.957m) falling to £23.552m in 2010/11.