Hampshire County Council

Buildings Land and Procurement Panel Item

14 July 2008

Strategy for the Built Estate - Managing the Backlog of Repairs and Maintenance

Report by the Acting Director of Property, Business and Regulatory Services

1.0

Introductory Summary

1.1

Managing the backlog of repairs and maintenance is one of the Audit Commission's key lines of enquiry when assessing the County Council's performance in relation to managing the County Council's asset base. More specifically the Audit Commission look for evidence that Members are advised of both the level of backlog and have approved a plan to address the backlog of repairs and maintenance.

1.2

The purpose of this report is to refresh thinking on how the backlog of repairs and maintenance is being addressed and in particular to:

· Reaffirm the position concerning the backlog of repairs and maintenance.

· Restate the key plans and strategies for managing the property asset base and in particular the backlog of repairs and maintenance.

The Panel last received a major strategy report concerning the backlog of repairs and maintenance in June 2006. The following is the link to that report /decisions/decisions-docs/060606-blcpnl-R0530162034.

1.3

The proposals contained in this report contribute to each of the Corporate priorities by providing well maintained buildings for the benefit of Hampshire's communities, preserving the County Council's building assets for future generations to enjoy and by providing well maintained buildings that enhance our quality of place.

2.0

Recommendations

That the Buildings, Land and Procurement Panel:

a) Notes that the level of backlog of repairs and maintenance for the built estate is estimated to be £448 million over the next 5 years.

b) Endorses the overarching strategies in place to manage the backlog of repairs and maintenance anticipated within the County Council's property portfolio, summarised in Appendix 5 of this report.

c) Acknowledges that future landlord's repairs and maintenance programme should, where appropriate, be targeted to reduce primary energy consumption and CO₂ emissions.

3.0

Background

3.1

The County Council is one of a number of public authorities involved in large public building programmes during the 1960s and 1970s. These building programmes resulted from post war increases in population, the raising of the school leaving age from fifteen to sixteen and, in Hampshire's case, the expansion of Basingstoke and Andover as a result of the London overspill.

3.2

3.3

The 2006 report to the Panel drew attention to the concept of the "Maintenance Time Bomb". This is a term that was used by the Audit Commission to describe the maintenance liability that would flow from the vast public building programmes of the 1960's and 1970's, (Appendix 1), when life expired building and engineering components would need to be replaced at a point in the future. Public authorities are now in a period where the maintenance time bomb is at a peak. This will help to explain why the County Council's backlog of repairs and maintenance is at a high point with investment struggling to keep pace with the liabilities identified in the Asset Management Plan (AMP).

What is particularly unique about Hampshire is that during the 1960s and 1970s the County Council took part in the Second Consortium of Local Authorities (SCOLA) schools building programme. These buildings are of system construction which give rise today to high repair costs and, due to their light weight (thin wall) construction, have issues around heat loss in the winter and solar gain in the summer. In the context of the climate change agenda this presents some significant challenges in respect of both mitigation and adaptation strategies which will add further pressures to the repairs and maintenance programmes.

4.0

Profile of the Built Estate

4.1

The profile of the Built Estate remains very much the same today as when reported in 2006 in terms of overall size and number of properties. The pie chart in Appendix 2 illustrates the profile of the estate between services. Schools continue to dominate the property portfolio, making up nearly 75% of all buildings. Around 90% of schools were constructed post 1945 with the majority being constructed in the 1960s and 1970s. These very much fall within the Audit Commission's definition of buildings that will now be operating with many components that are time expired.

5.0

The Latest Backlog Position

5.1

Information about the backlog of repairs and maintenance (condition) of the County Council's built estate is held in the AMP which has three elements:

1. Condition - Repairs and maintenance

2. Suitability - Adequacy (fit) of accommodation to deliver service needs

3. Sufficiency - Amount, and size of the accommodation to deliver service needs

5.2

This report is primarily focused on the condition element of the AMP as suitability and sufficiency issues are generally service department led. These later two elements are particularly well developed for schools due to requirements of the Department for Children, Schools and Families (DCSF) and are being developed with other service departments as part of the Strategic Property Review.

5.3

The AMP is a dynamic tool, the content of which is frequently changing to reflect the implementation of work programmes, new survey work, changes in the estate and inflationary pressures. Annual inflation accounts for much of the increase in liabilities.

5.4

The AMP information for schools and the corporate estate is illustrated in Appendices 4 and 5 respectively. Both appendices show the annualised trend in AMP condition liability and the year on year capital expenditure used to address the liability. The available revenue expenditure is used to manage the gap between capital expenditure and liability.

5.5

The Schools AMP shows a five year condition liability of £324 million. Although the AMP condition information for the corporate estate is less well developed, the total 5 year liability is estimated to be around £124 million. This gives rise to a total five year condition liability for the whole estate of £448 million. Expressed another way, the condition backlog is equivalent to an annualised liability of approximately £90 million.

5.6

This year, due to the work to Ashburton Court, the total annual repairs and maintenance expenditure represents approximately 60% of the total annualised liability. Historically the percentage of funding to liability has been around 45% to 50%.

6.0

Plan for Managing the Backlog of Repairs and Maintenance Liability

6.1

The Panel has agreed an overarching set of strategies to manage the backlog position as summarised in Appendix 5. Some of the main strategies are considered below in more detail.

6.2

Annual Programmes of Investment

6.3

This is one of the main elements of the Panel's strategy to address the backlog of repairs and maintenance. These programmes consist of both revenue and capital investment.

6.4

The annual NDS condition programme has generated £120 million of investment to tackle the backlog of repairs and maintenance at schools over the last eight years. This programme has had a major positive impact on the backlog position and has enabled planned programmes of work in preference to patch and mend strategies. A good example of this is the SCOLA school recladding/window replacement programme which is now saving around £1 million a year on the traditional recurring maintenance programme for external redecoration and associated repairs. The Dedicated Schools Grant has meant that more traditional capital repairs funding has been channelled into the schools estate. The extensive devolved capital funding to schools is also helping to tackle AMP priorities at schools. Not withstanding these significant investment programmes, the annual gap between investment and available capital funding for the schools estate remains at about £30 million. The Policy and Resources revenue funding is being used to manage the gap between AMP liability and available capital expenditure for both the schools and corporate estate. Appendix 6 shows the ratio between capital and revenue spend which is well within the accepted range of 70/30 respectively.

6.5

Future Capital Investment Strategies

6.6

The major opportunities for addressing the outstanding backlog of repairs and maintenance (plus sustainability and sufficiency) aspects of the AMP will come from the primary schools capital investment strategy and Building, Schools for the Future (BSF). Both strategies offer the potential for year on year multi million pound investment over the course of the next five to ten years. These programmes offer the greatest potential to address not only the maintenance backlog but suitability and sufficiency issues. In addition joining up schools devolved capital funding with capital investment strategies is key to obtaining best value from single contracts and supporting schools with investment advice.

7.0

Strategic Property Review (Hampshire Workstyle)

7.1

Included elsewhere on this agenda is a report that describes the proposed rationalisation of the County Council's office estate, together with the implementation of a wider change management programme.

7.2

This major strategic approach to the asset management of our corporate office portfolio will lead to the creation of a consolidated office estate, more efficient use of space, and a range of other operational efficiencies. It will also reduce the current level of backlog maintenance through the disposal of a number of our older office buildings, many of which carry a significant quantum of maintenance liability in the medium term.

7.3

The benefits to the County Council of the proposed approach to office accommodation include opportunities to:

· promote and implement a new flexible working culture leading to more efficient use of space, better working practices, and improved use of the technology now available

· divest itself of costly leasehold space, inefficient office buildings, and those with major liabilities; and

· ensure that its office stock is fully and effectively utilised

8.0

Capital Receipts Strategy

8.1

A history of reinvestment projects has supported opportunities to enhance the efficiency and use of the County Council's property assets and this has been particularly successful in delivering new or significantly improved facilities fit for modern day use.

8.2

By seeking planning approvals for its disposal sites in advance of their disposal the County Council has been able to consistently achieve strong land values whilst shaping the quality of the resulting development. With the "slowing down" in the housing market it may be necessary to review the detailed application of these policies to assist with the completion of sales on programme whilst still seeking to influence design quality

9.0

Conclusions

9.1

The AMP for the built estate shows a total backlog of repairs and maintenance over the next five years of just under £450 million. The Panel has a range of well developed strategies to manage the backlog position and continues to make progress.

9.2

Annual programmes of capital investment are targeted at major planned replacements of building and engineering elements as opposed to a reactive patch and mend strategy thus the ratio between capital and revenue expenditure is broadly in balance with what would be expected from managing a large estate.

9.3

Capital investment does however fall short of meeting the annualised AMP liability. The opportunity to improve on the position will come from future primary schools capital investment by the DCSF. Building Schools for the Future investment will have a major positive impact on targeting the backlog position at secondary schools over the next five to ten years.

9.4

The level of investment into the Ashburton Court Headquarters Offices has over the last two years helped to narrow the gap between the annualised AMP backlog trend and capital repairs expenditure.

9.5

Overall, the County Council must keep a focus on the identified investment strategies for managing the backlog position and at least maintain present levels of expenditure and investment, or where possible increase such expenditure.

9.6

Targeting repairs and maintenance funding in a way that helps the climate change agenda will be key in the future as well as help to keep rising energy consumption and CO₂ emissions in check.

LINK(S) TO CORPORATE STRATEGY

Yes

No

Hampshire safer and more secure for all

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Maximising well-being

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Enhancing our quality of place

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