Hampshire County Council

Buildings Land and Procurement Panel Item 9

2 April 2008

1. New Deal for Schools (NDS) Modernisation (Condition) Programmes and Funding for 2007/08 and 2008/09

2. Landlord's Capital Repairs Programme 2008/09

Report by the Acting Director of Property, Business and Regulatory

Services

1.0

Summary

1.1

This report outlines the available NDS condition funding in connection with major programmes of repairs and maintenance at Hampshire Schools over the next three years (2008/09 to 2010/11). An NDS capital repairs programme for 2008/09 is also presented in this report.

1.2

Further programmes of work will be presented to the Panel in respect of future years NDS condition allocations based on the schools' Asset Management Plan (AMP) priorities.

1.3

This report also outlines the available Landlord's capital funding and a capital repairs programme for 2008/09 based on the Corporate Risk Assessment priorities for the built estate.

2.0

Recommendations

2.1

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

1. The allocation of NDS and Landlord's Capital Repairs Funding for Buildings and Engineering Services.

2. The programmes of NDS and Landlord's capital repairs for 2008/09 as set out in Appendices 4 and 5.

3.0.

Allocation and Split of NDS Modernisation (Condition and Suitability) Funding 2008/09

3.1

Members will know from the NDS Condition report that was presented to the Panel in January 2007, that the Department for Children, Schools and families (DCSF) issued an additional advanced allocation of NDS funding in 2007/08 but warned that future allocations of funding for the period 2008/09 to 2010/11 will be reduced accordingly. The DSCF have now started to claw back last years additional allocation of NDS funding and the impact of this is shown in table 1 below. It can also be seen from table 1 that the overall allocation of NDS funding for 2010/11 is now some 32% lower than for 2007/08.

3.2

It is also worth noting the DCSF has now changed the method of allocating NDS Modernisation funding this year. In the past, allocations of NDS funding were based on the DCSF's assessment of relative need among authorities, following detailed submissions through the Asset Management Plan (AMP) of the range of work needed to bring school buildings up to the standard to teach the modern curriculum. It appears the DCSF are now suggesting a change to the allocation methodology to one based on the proportion of each authority's schools which it considers to be modernised, defined as 80% or more of the floor area improved to modern standards. Final guidance on this new methodology is awaited from the DCSF. The new methodology tends not to favour the County Council who have helped to improve school buildings from its own funding streams (largely resources from capital receipts) which in part now looks like having a negative effect on future years NDS allocations.

3.3

It is customary to split the allocation of available NDS Modernisation funding between Policy and Resources (condition) and Children's Services (suitability) in the ratio of 54% and 46% respectively. Table 1 has also been designed to show the agreed split in the available NDS Modernisation allocations.

Table 1 : New Three Year Allocation (2008/09 to 2010/11) of NDS Modernisation Funding from The DCSF Compared To The 2007/08 Allocation And Split Between Children's Services and policy and Resources.

2007/08

2008/09

2009/10

2010/11

£m

£m

£m

£m

Overall NDS allocation

23.674

21.307

17.755

16.034

Advance of NDS funding

11.837

-3.946

-3.946

-3.946

Net NDS allocation

35.511

17.361

13.809

12.088

Policy and Resources 54%

19.176

9.375

7.457

6.528

For information only:
Children's Services 46%

16.335

7.986

6.352

5.560

3.4

Due to the County Council's position as a `floor' authority, the Governments' decision to allocate the NDS funding in the form of borrowing approvals in 2008/09 to 20010/11 brings no additional resources in the revenue grant settlement to the County Council. In light of this position, a decision was taken at Cabinet in December 2007 to continue the restrictions on the use of Government supported borrowing allocations. A similar position prevailed last year in respect of the 2007/08 NDS allocations. Table 2 below, therefore, sets out the affordable `take up' of NDS Condition funding for 2007/08 and 2008/09 to 2010/11.

3.5

Given the increasing delegation of devolved capital funding to schools and the large number of school projects this will generate, it is proposed to reprofile £5 million of NDS funding from 2007/08 into the next two financial years. By spreading the Landlord's NDS programme for 2007/08 across into two future financial years, more professional time can be spent on the delivery of schools' devolved funded capital work. The reprofiled NDS funding is also illustrated in table 2 below:

Table 2 : Reprofiled Landlord's NDS Condition Allocation 2007/08 and 2008/09 to2010/11

Year

Original Allocation

Take up agreed by Cabinet

Revised allocations

Target Spend Date

£m

%

£m

2007/08

Original allocation

12.873

80

10.226

Advance allocation

6.392

100

6.393

Reprofiling

-5.000

Total 2007/08

19.175

11.619

Aug 08

2008/09

Original allocation

9.375

61

5.683

Increased affordability

0.700

0.700

Reprofiling

2.500

Total 2008/09

10.075

8.883

Aug 09

2009/10

Original allocation

7.457

65

4.812

Increased affordability

0.700

0.700

Re-profiling

2.500

Total 2009/10

8.157

8.012

Aug 10

2010/11

Original allocation

6.528

98

6.411

Aug 11

Total 2010/11

6.411

Aug 11

4.0

Landlord's Traditional Capital Repairs Funding 2007/08 to 2010/11

4.1

The Landlord's traditional capital repairs funding is described in a more detailed report elsewhere on the agenda. The overall available Landlord's capital repairs resources is shown in table 3 below. However, this report is focused on the element of Landlord's capital repairs funding that is used to address identified health and safety priorities connected with the Corporate Risk Assessment (CRA) for the built estate. For 2008/09 the proposed CRA expenditure amounts to nearly £13.6 million. A breakdown of this element of capital repairs expenditure across the various CRA headings is shown in Appendix 1.

Table 3 : Landlord's Traditional Capital Repairs Resource 2007/08 to 2010/11

2007/08
£m

2008/09
£m

2009/10
£m

2010/11
£m

Capital Repairs

6.802

8.946

5.988

5.960

DSG

12.537

11.181

11.181

11.181

Total

19.339

20.127

17.169

17.141

Note: The DSG (Dedicated Schools Grant)element of the Landlord's capital funding must be entirely spent on schools.

5.0

Consideration Of Landlords and Capital Repairs NDS Condition Programme Priorities for 2008/09 And Project Selection.

5.1

The Landlord's capital repairs expenditure is used to support a move away from patch and mend repairs towards a more planned approach for capital investment in the built estate. The key objectives of this approach include:

· Tackling the backlog of building and engineering repairs and maintenance;

· Reducing risks and improving the health and safety performance of buildings;

· Modernising buildings and making them fit for purpose;

· Improving efficiency and reducing recurring/running costs;

· Improving the quality of the built environment for communities and generations to come;

· Helping to reduce the impact of greenhouse gas emissions in the environment and supporting the Government's climate change agenda by creating opportunities for reduced end energy use.

5.2

The Landlords' NDS and traditional capital repairs programmes are both directed at managing the backlog of repairs and maintenance liabilities identified in the AMPs for schools and the corporate estate. The 5 year AMP liabilities are indicated in Appendix 2 and 3 respectively. Both these appendices show a gap between the affordable resources and overall liability. This position is a reflection of the size and age profile of the County Council's built estate and an illustration of what the Audit Commission referred to as the "Maintenance Time Bomb", resulting from major building programmes of the 1960s and 1970s.

5.3

NDS Programme: Over the last eight years the Panel has approved the use of the NDS condition resources against a set of AMP priorities outlined below:

1. External walls and windows;

2. Mechanical services:

3. Roofs;

4. Electrical services;

5. External decorations.

These priorities are discussed with headteachers at regular "Headteachers'/PBRS Standing Committee" meetings, so there is general understanding and agreement amongst schools that these priorities should remain the principal areas for investment.

5.4

Significant progress has been made at improving the schools estate since the inception of the NDS funding in 2000. However despite having invested nearly £120 million of NDS condition funding over the last seven to eight years, a lot of work remains outstanding if the backlog of repairs and maintenance in the school's sector is to be fully addressed. The next major opportunity beyond the NDS programmes should be the DCSF's Building Schools for the Future (BSF) investment strategy which aims to renew/modernise every secondary school in the country. Hampshire is due to receive its first wave of BSF funding in 2011.

5.5

In the meantime Appendix 4 shows the proposed programme of NDS condition projects for approval in 2008/09. This proposed programme is broadly in proportion to the main areas of building and engineering liability for the schools estate and supports a move away from patch and mend strategies.

5.6

Landlord's Traditional Capital Repairs Programme: Although the Landlord's capital repairs programme is directed at the backlog of repairs and maintenance, the primary driver for this element of expenditure is aimed at addressing health and safety risks relating to the built estate. Assessment of the various risks is made each year through the County Council's Corporate Risk Assessment process. This process is audited annually and provides a robust mechanism for making investment decisions each year. It is worth noting that the first CRA report for the built estate was presented to the Panel ten years ago and since that time an estimated £100 million pounds of investment has been made through this mechanism.

5.7

A Landlord's CRA programme of capital repairs investment for 2008/09 is presented for approval in Appendix 5.

6.0

Opportunity for Improved Energy Performance of Buildings and Reduced Carbon Dioxide Emissions

6.1

Around 80% of the County Council's built estate was constructed before thermal performance standards became part of the Building Regulations. Appendix 6 helps to illustrate this position. Although the main drivers for investing the Landlord's capital repairs programme in the built estate has to be to address the backlog of repairs and maintenance and corporate risk assessments, it is also important that, where possible, the investment of capital repairs resources is used to help improve the thermal performance of the building stock. Table 4 below provides an indication of the potential opportunity for energy savings and reduced carbon dioxide emissions from the Landlord's NDS and capital repairs programmes for 2008/09. The indicative energy and carbon dioxide emissions savings are highly dependant on the patterns of use for buildings and control by local managers. This has to be seen against a national trend of rising energy consumption.

Table 4 : Distribution of NDS Programme For 2008/09 Showing Opportunity For Energy And Carbon Dioxide Emission Reductions.

Landlord's
NDS & Capital Expenditure 2008/09 Schools

Landlord's

Capital Expenditure 2008/09

Corporate Estate

Priority
Category of Work

£'000

Indicative Energy Saving MWh

Indicative

CO2

Reduction
Tonnes

£'000

Indicative Energy Saving MWh

Indicative

CO2

External Walls and Windows
(SCOLA re-cladding and window replacements)

2,560

600

115

565

Mechanical Services
(Boiler systems, heating and systems and underground mains)

1,345

Roofs

2,370

Electrical Services (Light, power, fire alarms and mains distribution)

550

Redecorations

2,143

Other Internal and External Elements

1,195

TOTAL

10,163

*

Energy figures rounded

7.0

Conclusions

7.1

The allocation of NDS Condition Funding for the next three years brings the total allocation of NDS Condition Funding to nearly £120 million since 2000. This level of funding has supported a significant move away from a patch and mend approach to building and engineering repairs and maintenance at schools, which is now helping to reduce recurring maintenance costs.

7.2

The level of NDS modernisation funding is starting to fall away and the funding allocation for 2010/11 is some 32% lower than for 2007/08, but still allows a continuation of the strategic investment programme in schools. One of the next major opportunities for further major investment in secondary schools will come from the DCSF's `Building Schools for the Future' programme. In Hampshire's case the first case of BSF funding is expected in 2011.

7.3

The available capital funding falls short of the overall condition liability and backlog of repairs and maintenance, which means that risks associated with the building stock cannot be eliminated. Hence the importance of the Corporate Risk Assessment mechanism for making investment decisions in the built estate. The affordable funding levels have, however, allowed significant capital investment through the Corporate Risk Assessment process and over the last ten years around £100million has been invested against key health and safety headings.

LINK(S) TO CORPORATE STRATEGY

Yes

No

Hampshire safer and more secure for all

_

Maximising well-being

_

Enhancing our quality of place

_