Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report

Decision Maker		Buildings, Land and Procurement Panel
Date of Decision		31 March 2009
Decision Title		Strategy for the Built Estate
Decision Reference		577
Report From:		Acting Director of Property, Business and Regulatory Services
Contact name			Mike Fitch
Tel	01962 847846				[email protected]

EXECUTIVE SUMMARY

1) Summary of Decision Area

1.1 This report sets out the annual strategic plan for the built estate, together with a series of actions relating to the development of the plan throughout the year.

2) Issues Covered in Report

· Objectives against a framework for the Strategy for the Built Estate

· Proposals for the revenue maintenance, capital repairs, innovation and future development relating to the Built Estate and other corporate initiatives.

· Areas of work in an annual plan for 2009/10 and beyond and a series of actions.

3) Recommendations

3.1. That the Panel advises the Executive Member for Policy and Resources to adopt the Annual Strategic Plan for 2009/10 as set out in section 2.

MAIN REPORT

1) Strategy for the Built Estate

1.1 It is customary for the Panel to review and confirm the County Council's Strategy for the Built Estate at the start of each financial year. This establishes a framework that is used to guide available investment in areas of both regular activities and innovations for the future.

In summary, the key objectives of the Strategy are to:

· Direct resources to the highest and most significant liabilities for core properties within the built estate

· Continue to develop long-term strategies to address the backlog of repairs and maintenance liabilities

· Maximise the opportunities for planned maintenance regimes as opposed to reactive patch and mend

· Ensure investment opportunities are linked to effective procurement practices that offer best value

· Ensure buildings are accessible and remain open for business

· Establish a robust `Health and Safety Corporate Risk Assessment' that helps to ensure that buildings remain safe to occupy

· Maintain strong links with schools through the SLA and to ensure that schools have access to corporate property advice

· Next steps for Hampshire Workstyle

· Develop proposals in relation to Building Schools for the Future (BSF)

· Developing the agenda in respect of climate change and for achieving a carbon reduction commitment from the built estate.

2) Annual Strategy Plan 2009/10

2.1 The purpose of the annual strategy plan is to set out the main workstreams relating to the built estate over the next twelve months:

1.	Confirming a financial framework with the Panel for the next twelve months.
2.	Managing the backlog of repairs and maintenance through the Revenue, New Deal for Schools (NDS) and Capital Repairs programmes.
3.	Continue managing health and safety through the Corporate Risk Assessment.
4.	Capital Receipts Strategy
5.	Prepare for major investment in Hampshire schools through the Government's Building Schools for the Future programme
6.	Hampshire Workstyle initiative - beyond Ashburton Court
7.	Maintaining strong links with Hampshire schools through the Service Level Agreement (SLA). Preparing for the next SLA in 2012
8.	Procurement Initiatives
9.	Climate Change

3) Financial Framework

3.1. The Revenue and Capital Repairs report found elsewhere on this agenda sets out the proposed budget allocation and distribution of revenue resources for 2009/10 and capital resources for 2009/10 and 2010/11.

3.2. It is worth noting that there is an exceptional level of complexity that has been building over the last few years in respect of managing the NDS element of the capital repairs budget. The latest adjustment to the NDS funding is in respect of accelerated funding, to bring forward NDS spending from 2010/11 to 2009/10 and this will be factored into the strategic plan. In order to meet the Government's request for accelerated NDS spending this financial year (2009/10) it is proposed to smooth out the pressure this will create on staff resources by undertaking less survey/inspection activities in 2009/10 and to make up for this position in 2010/11.

4) Managing the Backlog of Repairs and Maintenance through the Revenue and Capital Repairs Investment Programmes

4.1. The Revenue Maintenance Budget is used to service the Built Estate on a day-to-day basis and deal with breakdowns and the Capital Repairs budget is used to replace worn out/obsolete building and engineering components. This is against a backlog of major capital repairs and maintenance of approximately £445 million across the estate over the next five years.

4.2. The repairs and maintenance budgets as they stand are insufficient to service the backlog liability and therefore a Strategic Risk Assessment is used to review property risks annually which in turn is used to determine the priority areas for investment.

Action:

A detailed report on the backlog of repairs and maintenance be submitted to the Panel in June.

5) Strategic Risk Assessment for the Built Estate

5.1. The Strategic Risk Assessment for the built estate has been in operation for over a decade and is used to assess risk each year against 20 key areas relating to Property. The output from this risk assessment process is used to inform priorities for investment in the built estate.

5.2. Good progress has been achieved through focused management action and capital investment according to the rank order and published improvement agenda. Enhanced capital investment, beyond the current allocation, is required to eliminate or significantly reduce risk and associated liabilities, including the chance of criminal prosecution. The annual risk review provides clear evidence that risk management is being effective in all areas and leading to positive and sustained improvement in risk handling. However, it is recognised that the County Council retains significant risks and liabilities associated with the Built Estate, owing to its diverse use, age profile and condition of the buildings and the engineering services.

5.3. Fire precautions continue to be an area of high risk and Members will note from the NDS and Landlord's capital repairs programme report the significant investment taking place in this area.

5.4. One new emerging priority concerns electrical capacity for various sites and establishments. As the infrastructure at sites becomes developed with new extensions, IT and other electrical equipment, this places increased loading on the mains electrical supply. As a result a number of electrical supplies are at, or near capacity and will start to restrict any further site development.

5.5. A new risk heading covering climate change has been added to the strategic risk register this year.

Action:

i) A detailed progress report against the Corporate Risk Assessment headings be submitted to the Panel in June.

ii) A further detailed report specifically outlining the risks associated with the mains electrical infrastructure for the built estate be presented to a future meeting of the Panel.

6) Capital Receipts Strategy

6.1. The impact of the economic downturn on the programmed capital receipts for 2008/09 and 2009/10 is significant. Virtually all of the planned sales to approved preferred purchasers that made up the programme of disposals for the current financial year have now fallen through and many of the under-bidders have also withdrawn their bids. At present it is expected that receipts could be as low as £3m at the end of 2008/09 with a forecast of between £3.0m to £5.00m for 2009/10. Key issues to be addressed include:

· A decline in potential purchasers.

· A move towards lower and restructured offers over a period of years.

· Whether offers are so low as to raise the question of whether it is prudent to sell in the current market

The impact on disposals is being considered and managed on a case by case basis and is being led by a core group of experienced officers involved in disposals, with the following responses already being taken forward:

· Regular capital receipt update reports and liaison with the County Treasurer and service departments regarding the impact on capital programmes.

· Supporting and further exploration of current offers and bids

· Ongoing test and re-marketing of select key disposals

· Parallel disposal project reappraisals to explore alternatives

· Targeting disposals of select properties to specialist potential purchasers

· Reappraisal of the three year Capital Receipt Programme and its development into a more flexible strategy with options for disposal cases and priorities

· Planning and preparing for the eventual upturn in the market

· Identifying opportunities for advantageous land acquisitions

Action:

The development of a more flexible Capital Receipts Strategy be presented to the Panel later this year.

7) Building Schools for the Future (BSF)

7.1 Further information is set out in the Major Projects Update report found elsewhere on this agenda. In Hampshire, there are 71 secondary schools, 17 special schools with secondary age pupils and 8 Pupil Referral Units (PRUs) that will form the County Council's BSF programme. It is anticipated that the funding available for the programme will be approximately £1.1bn, over ten tranches of work, subject to future central government spending decisions.

7.2 An initial assessment of the likely scope of works at each school site has been carried out. More detailed analysis had been undertaken on the first two priority areas in Havant and Gosport where the anticipated aggregated value of the construction work is approximately £200m.

8) Hampshire Workstyle Initiative

8.1 Further information is set out in the Major Projects Update report found elsewhere on this agenda. The Ashburton Court redevelopment project is now coming to a close and has demonstrated the more efficient use of space and the introduction of flexible working. The Hampshire Workstyle programme will improve the way the County Council works and will be a platform for change in the use of buildings, and will generate ongoing efficiencies and opportunities for shared services.

9) Services to Schools

9.1. Schools account for about 75% of the County Council's property portfolio. The repairs and maintenance SLA offers a full range of support services including design and project management. The SLA provides a gateway for schools to access professional property services and in turn for the County Council to help influence individual schools with property investment decisions using the Fair Funding scheme of delegation for recurring maintenance and devolved capital finance. This has been a core element of the Strategy for the Built Estate over a number of years.

9.2. The advent of BSF programmes of work will challenge the current style of SLA for schools and this needs to be factored into the department's thinking for renewing the SLA in 2012, particularly in relation to the development of hard and potentially soft Facilities Management solutions.

Action:

That a report concerning services provided under the existing SLA and the likely shape of a new service level agreement with schools be submitted to the Panel in October 2009.

10) Procurement Initiatives

10.1 Achieving efficiencies through procurement remains as important as ever, particularly given the projected downturn in capital receipts.

10.2 The market is currently showing a fall in tender price indices which generally points to more competitive industry pricing. Striking the right balance between traditional competitive tendering and procurement through frameworks will be key to achieving efficiencies throughout the year ahead. Packaging small works through the Tier 3 and new Reactive Maintenance frameworks will provide an opportunity for greater efficiency for small works, particularly in the are of professional services. Some individual schemes may benefit from traditional competitive tendering.

11) Climate Change

11.1 Appendix 1 provides an overview of New Climate Change Legislation that will impact on the County Council. The major impact will come from the introduction of carbon trading and a further report on this topic will be shared with the Panel once the final regulations have been published.

11.2 New regulations were introduced last year for Energy Performance Certificates (EPCs) and Display Energy Certificates (DECs) to be applied to public buildings. EPCs are required for the purchase, sale or rent of a building or when a new building is constructed. A DEC is required if a building is a public building over 1,000m² frequently used by members of the public.

11.3 As set out in the table below, 355 buildings required a DEC to be issued last year. The Government is considering the possibility of reducing the 1,000m² threshold to 250m². If this happens then around 3,000 of the County Council's buildings would become eligible under any new Regulations.

The table below charts the outputs of DECs in respect of the County Council's buildings.

Table: Energy Performance Ratings of Buildings Requiring a DEC.

Rating	No. properties	% properties reviewed
A (most efficient)	0	0
B	13	4
C	64	18
D	110	31
E	105	29
F	36	10
G(least inefficient)	27	8
TOTAL	355	100

11.4 The energy performance of the County Council's public buildings reflects the diverse properties and use. The majority of buildings (over 80%) were constructed prior to thermal performance standards becoming part of Building Regulations. The cost of providing DECs last year amounted to approximately £200,000. This cost will rise considerably if the Government reduces the 1,000m² floor area threshold to 250m².

Carbon Trading:

11.5 2009/10, will be the final preparation year before the new carbon trading regulations come into force. Carbon trading will place a premium on having accurate and timely energy/CO₂ emissions data on which to measure performance. The two early action metrics below will help the County Council's position in the proposed CRC performance league table. The main activities that need to be progressed in preparation for carbon trading include:

· Registration in connection with the new carbon trading regulations

· Early Action Metric for Smart Metering. Schools have already agreed to use £1 million of surplus funding to support the installation of Smart meters.

· Early Action Metric for meeting the Carbon Trust Standard. Meeting this standard will involve providing a demonstration of how the County Council is managing energy and CO₂ emissions

· Raising awareness amongst local managers.

· Establishing a costed carbon management (CO₂ emissions reduction) plan.

National Indicators:

11.6 Complying with the requirements of National Indicator 185 and 194 requires significant staff resource to complete data returns to Defra in respect of the County Council's carbon dioxide emissions data from buildings, street lighting, transportation and outsourced services. The County Council is responsible for submitting the data to Defra by July of each year. It is also responsible for collating the NI information from all District Councils in Hampshire and submitting their information to Defra alongside the County Council's own data.

Action:

That the position on DEC's and carbon trading and National Indicator 185 be reported to the Panel in June.

12) Outline of Options:

12.1 The annual strategy plan for 2009/10 is based on meeting new legislation, particularly around climate change, AMP intelligence gathering and market conditions and will establish a framework against which further reports will be presented to the Panel. Opportunity will be taken in these further reports to outline options relating to the various workstreams proposed by the strategy report.

13) Option Analysis / Comparison:

13.1 Please refer to section 12 above.

14) Conclusions

14.1 The annual plan represents a significant programme of work for the year ahead and is ambitious in terms of innovation and meeting corporate initiatives.

14.2 Accelerated NDS funding will place pressures on the existing staff resource base which will be managed by reprofiling a range of survey and inspection work into future years.

14.3 It is expected that BSF will develop into a major workstream. The opportunities to modernise and transfer secondary school buildings will have a major impact on education facilities as well as help to address the backlog of repairs and maintenance.

14.4 Workstyle is a major opportunity to rationalise the County Council's office accommodation and, building on the success of Ashburton Court, change ways of working, generate on going efficiencies and opportunities for shared services.

14.5 New Climate Change legislation is starting to have an impact on the way energy is used and reported for buildings. Carbon trading will commence in 2009/10 with the need to collect and record base energy/CO₂ emissions data.

CORPORATE OR LEGAL INFORMATION:

LINKS TO THE CORPORATE STRATEGY
			Yes	No
Hampshire safer and more secure for all			x
Corporate Business plan link no (if appropriate)
Maximising well-being			x
Corporate Business plan link no (if appropriate)
Enhancing our quality of place			x
Corporate Business plan link no (if appropriate)
OR
This proposal does not link to the Corporate Strategy but, nevertheless, requires a decision because:

OTHER SIGNIFICANT LINKS:
Links to Previous member decisions:
	Ref	Date
	Item 7	2 April 2008
Strategy for the Built Estate - BLAPP Report
Direct Links to Specific Legislation or Government Directives
Climate Change Act 2008 European Energy Performance of Buildings Directive		Date

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 published works and any documents which disclose exempt or confidential information as defined in the Act.)
Document	Location

IMPACT ASSESSMENTS:

Race and Equality Impact assessment

Race and equality impact assessment has been considered in the development of this report and no adverse impact has been identified.

Crime prevention issues

The County Council has a legal obligation under Section 17 of the Crime and Disorder Act 1998 to consider the impact of all the decisions it makes on the prevention of crime. This strategy for the built estate will, establish revenue and capital investment programmes that positively support managing and reducing crime and disorder in the community. The principal mechanisms for achieving this is  through the County Council's vandalism/ arson reduction work as well as capital investment for improved fire precautions - upgrading existing buildings and fire detection systems. 

Climate Change

How does what is being proposed impact on our carbon footprint/energy consumption?

The annual strategic plan has within it a major development area to support the reduction of the County Council's carbon foot print through compliance with new legislation for Display Energy Certificates, Carbon Reduction Commitment (CRC) regulations and work to meet new National Indicators 185 and 194.

How does what is being proposed consider the need to adapt to Climate Change and be resilient to its large term impacts?

Landlord' programmes and particularly the development of Building Schools for the Future (BSF) programmes seek to adapt buildings to meet the longer term impacts from climate change.