Archived decisions

HAMPSHIRE COUNTY COUNCIL

Report for Information

EXECUTIVE SUMMARY

1) Summary of Decision Area:

1.1. This report seeks approval for submission of the proposed capital programme for 2009/10 to 2011/12 to the Leader and Cabinet.

1.2. The report will be reviewed by the Environment and Transportation Select Committee. It will be reported to the Leader and Cabinet on 6 February 2009 to make final recommendations to County Council on 19 February 2009.

2) Issues Covered in Report:

2.1. The report considers the schemes which it is proposed to include in the capital programmes for 2009/10, 2010/11 and 2011/12.

2.2. The proposals contained in this report are derived from the departmental service plans and support the priorities in the Corporate Strategy.

3) Recommendations:

3.1. That the capital programme for 2009/10 to 2011/12, as set out in the report, be approved for submission to the Leader and Cabinet.

MAIN REPORT

1. Purpose of the Report:

1.1 This report sets out the proposed Environment capital programme for 2009/10 to 2011/12. This report will be reviewed by the Environment and Transportation Select Committee. It will be reported to the Leader and Cabinet on 6 February 2009 to make final recommendations to County Council on 19 February 2009.

2. Contextual Information:

2.1. In approving the medium term financial strategy on 27 October 2008, the Cabinet requested that Executive Members prepare proposals for:

(i) a locally-resourced capital programme for the three-year period from 2009/10 to 2011/12 within guidelines that spread the existing capital programme for 20091/0 and 2010/11 over three years. This is in recognition of the sharp decline in the expected availability of capital receipts over the next three years as a result of the condition of the housing market;

(ii) a programme of capital schemes supported by Government grants or supported borrowing in 2009/10 and 2010/11 and those expected to be supported in 2011/12, subject to limits restricting the take-up of Government supported borrowing approvals.

2.2. The medium term financial strategy is closely linked to the Corporate Strategy and the Corporate Business Plan to ensure that priorities are affordable and provide value for money and that resources follow priorities.

Key Issues

3. Overview

3.1. The Environmental capital programme is mostly funded through the Local Transport Plan (LTP) settlement in the form of supported borrowing and grants. The LTP covers integrated transport schemes (tackling safety, congestion, access and amenity problems) and structural maintenance of roads and bridges. In addition, there is substantial external funding (EF) through developers' contributions.

3.2. Due to Hampshire County Council remaining a floor authority for grant settlement purposes, LTP supported borrowing is only partially supported, and so the allocation has not been fully taken up. The reduction in supported borrowing guidelines was set by Cabinet for 2007/08 onwards but has been enhanced by prudential borrowing for highways maintenance in 2008/09 and 2009/10 funded from efficiencies arising out of the Term Highways Contract, and by a one-off resource allocation for South Winchester Park and Ride.

3.3. Most of the rest of the Environment capital programme is funded from local resources, within limits set by Cabinet. These programmes include a further allocation for highway maintenance, as well as funding for environmental improvements/urban regeneration schemes and waste management (household waste recycling centres and facilities management). In some cases there is also additional funding from external sources, such as district councils, parish councils, developers' contributions or grants from the South East England Development Agency (SEEDA) or other bodies.

3.4. Significant local resources are being carried forward from previous years for environmental improvements and household waste recycling centres, which are committed to projects which will continue to be delivered over the next two to three years. However, the recommended strategy to manage the reduced local resource guidelines by protecting highways maintenance means that there will be no new local resources allocated to the environmental improvements or waste programmes.

PART A: RESOURCES

4. Locally resourced capital programme:

4.1. The cash limit guidelines for the locally resourced capital programme for the Environment service were set by the Cabinet in October 2008. These guidelines have been subsequently amended to reflect base budget adjustments between capital and revenue, together with a further proposed transfer of £300,000 per annum to revenue to support continued funding of feasibility studies for major transport schemes , which were funded from underspends in 2008/09 (see report on the revenue budget 2009/10, 2010/11 and 2011/12 elsewhere on this agenda).

4.2. The adjusted guideline figures are as follows:

		£000
	2009/10	7,451
	2010/11	7,006
	2011/12	7,164

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

4.4. As mentioned above, the guidelines spread the existing resources for two years over three years, effectively deferring locally funded capital expenditure by some £5 million per annum for the three year capital programme period.

4.5. Some 85% of the Environment service's locally resourced capital programme relates to structural highways maintenance, so the need to spread two year's locally resources over three years will need to be carefully managed to reduce the impact on the delivery of ongoing structural maintenance works. The budget strategy seeks to protect the overall level of spending on structural maintenance, by looking for savings elsewhere, ultimately from the integrated transport programme.

5. Capital programme supported by Government allocations

5.1. As the Government has previously announced details of its support for capital schemes in 2009/10 and 2010/11, the cash limit guidelines for the programme supported by Government borrowing allocations remain unchanged. They continue to avoid taking up Government borrowing in full since this is not supported, based on the existing policy of limiting the increase in the capital financing requirement to 2.5% per annum, subject to specific decisions taken in 2008/09 to support existing borrowing.

5.2. Details of Government support for projects in 2011/12 will not be known until after the Government's Spending Review expected in 2009, but Cabinet has agreed that programmes for 2011/12 can be planned provisionally, where this is appropriate, on the basis of the best information available on potential future levels of support after taking account of the policy of limiting the increase in the capital financing requirement. On this basis, the proposed programme for 2011/12 is based on the cash limit for schemes supported by Government borrowing allocations for 2010/11.

5.3. The cash limit guidelines for the capital programme supported by Government borrowing allocations are set out in the following table. These guidelines take into account the additional prudential borrowing for highways maintenance and additional resources for the Winchester park and ride scheme, approved last year as part of the current three year capital programme.

		£000
	2009/10	27,646
	2010/11	24,501
	2011/12	24,501

5.4. These guidelines are supported by capital grants expected from the Government. These grant figures mainly comprise of the integrated transport grant element of the local transport capital settlement, but also make allowance for anticipated specific road safety capital grant and a proportion of the road safety revenue support now paid as part of the area-based grant.

		£000
	2009/10	5,632
	2010/11	5,529
	2011/12	5,536

5.5. Proposals for the new three year programmes for integrated transport and structural maintenance for the 2009/10 to 2011/12 period, set out in this report, have been prepared in accordance with the above guidelines.

5.6. The Environment Department receives contributions from developers towards the cost of highway infrastructure needs associated with the proposed developments. These are held until appropriate schemes can be developed. £6 million is planned to be spent in 2009/10 on schemes from previous starts years, the 2009/10 starts programme and the design of future schemes. It is expected that an increased level of spend will be achieved in 2010/11 and 1011/12.

PART B: PROGRAMMES

6. Highway maintenance and bridge programme 2009/10 to 20011/12

6.1. Highway maintenance is funded both from the revenue budget and capital programme. The capital programme element covers the structural maintenance of roads and bridges and is funded from both the LTP (borrowing and grant) and local resources. The level of spending on structural maintenance to maintain spending at a steady state level is £27,064,000 in 2009/10, including an allowance for inflation.

6.2. The highways maintenance capital budget has been set at £27,064,000, of which, £6,321,000 is from local resources, £3,064,000 is from previous prudential borrowing financed by efficiency savings, and £17,679,000 from within the approved borrowing guidelines. The programme covers a number of areas and the most significant, financially, are set out below with the highest spending areas first:

· Planned structural maintenance and major schemes, £10,184,000;

· Routine structural maintenance (including pot holes) £5,612,000;

· Structural bridge maintenance £4,077,000;

· Resurfacing schemes £2,861,000;

· Surface dressing £2,561,000.

6.3. Major maintenance schemes planned during the period 2009/10 - 2011/12 include Winchester High Street, A326, A3023 (Hayling Island) and A35 (Lyndhurst).

6.4. The decision of the Cabinet to spread the existing 2009/10 to 2010/11 locally resourced capital programme over three years means that in order to maintain capital spending on highways and bridge maintenance in real terms, deferrals from other programmes need to be made. It is proposed, therefore, that:

(i) the existing environmental improvements programmes for 2009/10 and 2010/11 be deferred, except for a sum carried forward from underspends in earlier years, which is required to meet existing commitments in 2009/10;

(ii) the waste management programmes for 2009/10 to 2010/11 be deferred except for the element funded from grant;

(iii) the existing planned integrated transport programmes for 2009/10 to 2010/11 funded from Government supported borrowing and grant be reduced to release resources to cover the required balance. Deferrals of schemes to reduce overall expenditure by £3,722,000 during 2009/10 and 2010/11 are required to balance the budget position.

6.5. Further information on the detailed highways and bridges maintenance programmes will be presented to the Executive Member for Environment at a subsequent decision day..

7. Integrated transport programme 2009/10 to 2011/12

LTP funded programme

7.1. The resources now available for the integrated transport programme are now insufficient to fund all of the schemes previously proposed for inclusion in 2009/10 and 2010/11, due to the need to divert resources to maintain existing levels of spend on structural highways maintenance.

7.2. The following proposals for integrated transport programme for the forward three year period therefore include the rescheduling of some schemes to 2011/12 or beyond, as well as reducing the scope of the programme, to remain within the Cabinet's capital guidelines.

7.3. Appendices 1, 2 and 3 contain the revised proposed capital programmes for 2009/10 and 2010/11 and a proposed programme for 2011/12. All the schemes have been reviewed and, where necessary, their scope adjusted to reflect factors such as:

(i) well advanced stage of scheme development;

(ii) contribution to LTP targets;

(iii) LTP spend will free up developer funding;

(iv) likelihood of scheme being completed in that year.

Developer funded programme

7.4. Schemes wholly or partly funded by developers' or other contributions are included in the programme. The 2009/10 starts programme is £4. 315 million, £5.1 million in 2010/11 and 2011/12. Schemes have only been named where there is reasonable confidence on funding security and programme dates. The exercise to accelerate the use of developers' contributions is well underway and additional schemes will be added to the starts programme as appropriate. Under the `Emerging Priorities' heading, notional sums of £2.0 million in 2009/10 and £5.0 million in 2010/11 and 2011/12 have been included in the starts programme to reflect these potential additions.

Major schemes

7.5. Work is under way into developing the evidence bases in support of potential bids for major schemes. Where these schemes occur in South Hampshire, we utilise a partnership approach through Transport for South Hampshire which also attracts additional resources.

7.6. Transport for South Hampshire receives some funding for transport infrastructure through the Partnership for Urban South Hampshire (PUSH) which in turn receives capital and revenue funding from government through `New Growth Point Funding'. These funds are allocated to specific projects by PUSH/TfSH and are paid over to lead authorities who deliver the schemes.

7.7. The A3 Bus Priority Corridor scheme, which was accepted as a major scheme by the Government on 28 October 2003, has now been completed. A bid for additional funding to cover increased costs has been submitted, the result of which is still awaited. Should the bid not be successful, schemes in the proposed programme may have to be deferred to fund the resulting deficit.

7.8. A bid has been submitted to the Community Infrastructure Fund for £20 million for phase I of South East Hampshire Bus Rapid Transit between Fareham and Gosport. The bid was approved by Cabinet in 27 October 2008. If successful the bid will allow this scheme to be added to the 2009/10 capital programme for completion in 2011.

7.9. There may also be an opportunity to introduce an improvement to M27 junction 5 at Southampton Airport. This scheme will cost £8.325 million. Whilst there may be some developer contributions, this scheme is dependent on funding being made available through PUSH. If sufficient resources are made available, it may be possible to start on site in 2009/10 without impacting on the County Council's capital budget. It is likely that the works will have to be undertaken in phases as funding permits. It would provide immediate benefits in terms of reducing congestion and allowing more control of traffic flows at the junction and improve access to the airport and its rail station but it is also seen as the first stage in providing access to the major employment area proposed in Eastleigh (Eastleigh River Side - formerly SHSEZ) along Chickenhall Lane.

8. Other locally resourced capital programmes 2009/10 to 2011/12

Environmental Improvements

8.1. As explained earlier, the proposed capital programme for environmental improvements is reduced to nil for the next two years, other than the one-off sum of £377,000 in 2009/10 carried forward from underspends in previous years as agreed earlier in 2008. There may be an opportunity to reinstate a programme in 2011/12, depending on the financial situation.

8.2. Although there will be no new starts, it may also be necessary to review continuing schemes with funding from the 2008/09 and earlier programmes.

Waste Management

8.3. This programme has historically comprised facilities management at landfill sites and improvements to household waste recycling centres. There are no new local resources for waste management during the period 2009/10 - 2011/12. However waste infrastructure grant of just over £5m over the three year period is available and has been added to the programme although there are currently no specific schemes against this.

9. Capital Programme Summary:

9.1. On the basis of the position outlined above, the total value of the capital programmes submitted for consideration for the three years to 2011/12 are:

9.2 The following table summarises the proposed 2009/10 capital programme over the main categories of expenditure:

10. Revenue implications:

10.1 The revenue implications of the proposed capital programme are as follows:

10.2 The total revenue implications for the three years of the starts programme, including capital charges, represent a real term increase of 4.7% over the 2008/09 original budget of the Environment service.

11. Conclusions:

11.1 This report complies with the Cabinet's request to prepare proposals for a three year capital programme for 2009/10 to 2011/12 in line with the guidelines for locally resources and expenditure to be supported by Government grants and borrowing approvals.

12. Recommendations:

12.1 Please see the Executive Summary for the recommendations.

1865/Rpt/491/HA

CORPORATE OR LEGAL INFORMATION:

IMPACT ASSESSMENTS:

(i) Equalities Impact Assessment

The proposals in this report are derived from the departmental service plans and LTP objectives and are in accordance with the budget strategy and the County Council's financial management policy. An impact assessment of the departmental service plans and the financial management policy has been carried out and the proposals in this report are not considered to be discriminatory.

Furthermore, all named schemes within the Integrated Transport Programme are subject to an independent peer review as part of the department's Gateway Process. This review requires evidence that customers and equalities have been considered and are being considered at all stages of the scheme's development.

(ii) Crime and Disorder Act 1998

Some of the schemes within the capital programme may contribute to a reduction in the fear of crime that may have been identified by local communities during consultation or development stages

(iii) Climate Change

The Environment Department will be developing a methodology for measuring the impact of the capital programme on our carbon footprint during 2009.