Archived decisions
Appendix 1
Hampshire County Council
Capital Strategy 2009
1 Introduction
1.1 This Capital Strategy has been approved by the County Council and the Corporate Management Team. It brings together the Council's key policies for managing all its capital assets, including land, buildings and roads, by:
· focusing attention on the most effective and efficient use of the Council's capital assets
· linking directly to the Council's Corporate Strategy and Corporate Improvement Plan, to the Hampshire Sustainable Community Strategy and the priorities in the Hampshire Local Area Agreement
· improving the management, utilisation and efficiency of the use of capital assets alongside the Council's policy and service objectives
· providing the strategy for the preparation of the capital programme and the Strategy for the Built Estate
· improving the procurement strategy and creating long-term collaborative relationships with the public and private sector to ensure value for money and continuous improvement.
1.2 As well as linking policies on asset management, the Capital Strategy is one of the key statements that underpins the Council's Medium Term Financial Strategy. The Medium Term Financial Strategy requires that the Capital Strategy is reviewed annually.
1.3 Core data on the background to the County Council's Capital Strategy are attached as Annex 1.
2 Corporate policy and strategy
2.1 The Capital Strategy has been prepared within the:
· Corporate Strategy
· Corporate Improvement Plan
· Corporate Management Plan (especially resources following priorities and value for money)
· Medium Term Financial Strategy
· Sustainable Community Strategies developed at both county and district level
· priorities identified in the Hampshire Local Area Agreement.
2.2 The County Council is a full partner in the eleven district level Local Strategic Partnerships (LSPs), which have published community strategies for each district area. The county-level Hampshire Strategic Partnership has developed a Sustainable Community Strategy for Hampshire, which is complementary to the district strategies. The priorities identified at the county level, along with those from the district LSPs, are reflected in the Capital Strategy.
2.3 The County Council and its partners signed a revised Local Area Agreement in 2008 with the Government identifying eight key priorities for the area. The County Council also has a second round Local Public Service Agreement which concluded at the end of March 2009.
2.4 The key themes identified in the Hampshire Local Area Agreement for the period from 2008 to 2011 are:
· children and young people
· employment skills and business support
· accessibility and transport
· housing and accommodation
· safer communities
· health and well-being
· environment
· strong communities.
2.5 The current Corporate Strategy represents the direction for the County Council up until the elections in June 2009 and is a response to these priorities and a way of ensuring service transformation. There is one over-arching and two supporting priorities for the County Council which provide the focus for all the Council's activities:
· Hampshire safer and more secure for all
· maximising well-being
· enhancing our quality of place.
2.6 These priorities will be reviewed following the 2009 elections.
2.7 Schemes are not included in the capital programme unless they contribute to meeting one or more of the priorities. In this way, the priorities have implications for the Council's capital assets. For example, during 2009/10, the Council will:
· continue work with partners to develop projects which will increase the supply of high quality extra-care housing throughout the County through a combination of remodelling existing sheltered housing schemes and new-build developments
· fund the construction of a purpose-built day centre in a new-build extra-care housing development in Basingstoke
· further develop plans to bring together services and partner agencies within shared accommodation
· complete the occupation of the refurbished Ashburton Court offices (now renamed Elizabeth II Court North, West and East) and maximise the efficient use of the asset to deliver the outcomes of space and energy efficiency
· start the first phase of the Hampshire Workstyle project in the north east of the County, beginning in Basingstoke
· continue the significant capital repair programme in schools with local and New Deal for Schools capital funding
· complete the design and implementation of a range of major capital projects at schools including the completion of the Andover Primary Capital Pathfinder (PCP) projects and Forest Park School in Totton, a new £11 million special needs school due to open in September 2011, for primary age children with complex learning difficulties
· complete work on the refurbished primary school in Lovedean near Waterlooville, a new primary school at Abbots Ann, Andover, one of the PCP projects, and complete a major extension to an existing primary school in Elvetham Heath to cater for population growth
· implement phase three of the children's centres programme, investing £9 million in new facilities. This will now be linked with the initiative to facilitate remodelled and extended facilities for early years and childcare in the Private, Voluntary and Independent sectors. Total investment will be around £15 million including £7 million for significant building projects.
· undertake major condition repairs at over 100 service units ranging from resurfacing playgrounds to major structural repairs of timber-framed buildings
· complete feasibility design work on Discovery Centre projects in Basingstoke, Aldershot and Andover, to follow on from the successful opening of Winchester Discovery Centre in the Autumn of 2007
· complete the delivery of a £29.6 million programme of highway maintenance, including major maintenance of the A326 and Winchester High Street
· undertake major transport improvement schemes, such as the Gosport Bus Rapid Transit scheme (£20 million) and Winchester Park and Ride (£7 million)
· start delivery of a £20 million programme of transport improvements to address accessibility, safety and traffic management issues across the highway network
· maximise the receipt and use of external funding, particularly for highway improvements relating to development
· implement around £11 million of work to improve safety and use of Council assets.
2.8 The County Council has approved a major project called Hampshire Workstyle to introduce more efficient and flexible working and bring down travel costs and times. Related to the refurbishment of Ashburton Court, this project will modernise the way all staff work in offices by introducing flexible working. It will significantly reduce the number and floor area of offices required to deliver the same services. The project will lead to closer integration of departments, positive use of technology and shared central services for the management of facilities.
2.9 As part of the Workstyle programme, the County is engaging actively with a number of district councils, with a view to sharing assets (principally offices for staff). Through flexible working and reinvestment in improving facilities this will produce revenue savings for all the organisations involved. Currently, three authorities are actively involved - Rushmoor Borough Council, Havant Borough Council and New Forest District Council. It is anticipated that, as this programme is rolled out, similar benefits will result in other areas.
3 Framework for managing assets and the capital programme
3.1 At member level, the County Council approves the Capital Strategy and the capital programme following consideration by the Cabinet. These documents are subject to scrutiny by the Council's Select committees. Responsibility for asset management within the Cabinet is allocated to the Executive Member for Policy and Resources. The Buildings, Land and Procurement Panel advises the Executive Member on buildings, land and contracts issues.
3.2 At officer level, senior representatives of service departments, as well as the officers responsible for preparing the Council's Community Strategy, make sure that all the strategies are fully integrated in the preparation of the Capital Strategy.
3.3 The Director of Property, Business and Regulatory Services (PBRS) manages and monitors the implementation of the capital programme for building works, together with service chief officers, in line with the Council's financial regulations and procedures, standing orders on contracts and the conditions agreed by the Council when the capital programme is approved. Project appraisals are prepared for major schemes at feasibility and design stages, before contracts are let.
3.4 Regular reports monitoring the capital programme are considered by the Executive Member for each service. The overall progress on implementing the programme, including the resources to finance it, is reported to the Corporate Management Team and the Executive Member for Policy and Resources. Regular updates on major high value or key projects are routinely reported to the Buildings, Land and Procurement Panel and Executive Member Policy and Resources.
3.5 Chief officers responsible for individual capital schemes work with colleagues from other services and disciplines to maximise the benefit for all services from capital investment. The involvement of other departments is a key part of the project appraisal process for capital schemes. This makes sure that solutions that cut across the boundaries between services are identified at an early stage. Regular strategic meetings are held between Property Services and service departments at chief or senior officer level to ensure assets are best managed and projects are prioritised and co-ordinated across the Council. This is particularly relevant to Children's Services, Adult Services and Culture, Communities and Rural Affairs.
3.6 Significant developments have taken place over recent years to establish integrated working teams through new procurement arrangements and creating long-term partnerships with consultants and contractors, which continue to be monitored against formal Key Performance Indicators. 2008/09 saw the renewal of a range of Consultant Frameworks for Property Services. These were tendered through the Official Journal of the European Union (OJEU) compliant processes to ensure best value in relation to ability and price, where external supplementary resources are required to deliver the capital and revenue maintenance programmes. This year will see these refreshed Frameworks managed and monitored to make sure performance is maximised.
3.7 A new Framework for Civil Engineering Professional Services will be tendered in 2009/10. This is a strategic framework being promoted jointly by both Property Services and the Engineering Consultancy in the Environment Department which will be accessible to a number of local authorities in the South East region. The County Council continues to take a regional lead through IESE (Improvement and Efficiency South East), joining up procurement and implementation across many authorities to deliver economies of scale and substantial capital revenue savings. For example, a combined outcome of £7 million of efficiency savings were made across the participating authorities in the major construction framework.
3.8 Action has also been taken to improve the Council's rating against the measures for asset management in the Audit Commission's Use of Resources assessment. By achieving `four stars' in this assessment of the County Council's Use of Resources last year, asset management made a significant contribution to the Council's overall rating of `four stars, improving strongly' (the highest score possible). Progress has been made on improving the reconciliation of the Council's asset register and a new `Palms' property database is now live.
3.9 Work is ongoing to develop asset management plan (AMP) information regarding the condition of the County Council's property portfolio. The AMP for the schools estate is 100% complete and it is planned that information will be completed for the remainder of the Corporate Estate during 2009. A new project has been started to benchmark property asset performance through the Institute of Public Finance and the National Property Performance Management Initiative. A Strategic Property asset review is taking place that looks at integrating asset management with service planning and more efficient use of resources. Hampshire Workstyle is one of the major outputs of this review which is pioneering new ways of working and greater use of office accommodation.
3.10 The implementation of the first phase of a county-wide integrated Facilities Management Service was started on 1 June 2009. This brings together into one central team the resources and skills to provide an integrated service for three of the biggest offices in the Winchester portfolio (Ashburton Court, Elizabeth II Court and Capital House) accommodating over 2,000 staff. Future phases are now being planned for the remaining offices in Winchester and then on a regional basis within the county, in parallel with the implementation of Hampshire Workstyle.
4 Other linked strategies on capital matters
4.1 The County Council's approach to managing its assets and planning the capital programme recognises the corporate and integrated nature of asset management, with a framework based on a `corporate landlord'. The Executive Member for Policy and Resources is responsible as landlord for the Council's land and buildings. Users and occupants similarly have responsibilities as `tenants'. The Capital Strategy builds on this existing platform to provide high quality and effective assets, in support of the delivery of services, that are safe and fully accessible for all users and the public.
4.2 The Council considers that maintaining its existing assets is very important. Under its Strategy for the Built Estate, the Council identifies properties for which there is a long-term need and then invests in their maintenance to make sure they are maintained to appropriate standards. Planned programmes are then carried out to maintain their condition and deal with outstanding maintenance liabilities. Budgets for all the Council's repairs and maintenance of buildings, both capital and revenue, are controlled centrally as part of the Strategy. All community schools and an increasing number of foundation and Diocesan schools buy back a comprehensive revenue property management service through a service level agreement (covering 97% of all public sector schools in Hampshire). A particular issue at present is the repair and refurbishment of system-built buildings which are nearing the end of their life.
4.3 In June 2006, the Buildings, Land and Procurement Panel undertook a detailed review of the Council's management of the backlog of repairs and maintenance in the built estate. With the liability over the next five years estimated to be £449 million, as set out in Annex 1, the Executive Member for Policy and Resources has agreed the Panel's recommendations that approval should be given to:
· the existing strategies for repair and maintenance of buildings, summarised in this Capital Strategy
· continuing the current levels of funding for repairs and maintenance for school buildings at least until the Government's Building Schools for the Future programme for secondary schools starts for Hampshire in 2011 and the outcome of the Government's initiatives for Primary Capital Programmes
· identifying future levels of funding for capital repairs for the non-education sector to alleviate the repair and maintenance pressures.
4.4 A planned approach is also adopted for the structural maintenance of highways assets within the context of the Council's local transport plan as set out in paragraph 5.7.
4.5 The Council has clear objectives for holding land and property and these provide the context for a rolling programme of property reviews. This systematic review started in the mid 1990s and the current evolution of this process is the Strategic Property Review launched in 2006. At the centre of the review is the need to achieve significant efficiencies in the operating costs of the Council in relation to its office accommodation and to identify land and buildings that can be promoted for disposal and development after 2009. The Council has had to take a pro-active position in response to the significant economic downturn and the major slow-down in capital receipts over the last year. This is not expected to pick up in the near future and so a different approach has been approved by the Council that:
· re-profiles capital expenditure to smooth available financial resources over a longer period as income streams reduce
· tests and reviews all disposal projects on the basis of minimising exposure to short-term borrowing
· tracks the market by means of regular market testing
· maximises opportunities for securing sales with potential purchasers with sound financial backing or public sector funding streams.
4.6 The Strategic Property Review involves a series of reviews to consider the core attributes of the estate, linked to current and future usage and alongside new models of delivery. In addition, a range of thematic reviews of particular uses (for example, office accommodation) is now underway, together with a range of area-based reviews. As always, opportunities for the re-use or disposal of surplus properties, rationalisations and issues regarding the suitability of premises for future service delivery are priorities, taking account of fitness for purpose and maximising efficiency. Where disposals are possible, sale proceeds are reinvested in the core building stock or other corporate priorities. The Council continues to give incentives to services to encourage them to recycle assets by allowing them to retain part of the proceeds for reinvestment, normally 25% but up to 100% for in/out schemes. This makes sure that assets are suitable for their purpose, meet corporate and service objectives and are used efficiently and effectively.
4.7 From 2007/08, the County Council has adopted a revised approach to using borrowing allocations from the Government following changes to the way that the Government calculates its revenue grant support. Previously Government borrowing allocations had been used in full by the Council on the understanding that the Government would provide revenue grant support to meet the annual loan charges. From 2006/07, there is now no marginal benefit in terms of revenue grant from additional borrowing allocations for local authorities such as the County Council that are subject to the Government's floor mechanism for distributing its revenue grant. As representations to the Government to reverse this change were unsuccessful, the Council has restricted its use of Government borrowing allocations from 2007/08 onwards to a level that will limit the growth in annual loan charges to an affordable level. As a result, £33 million of the Government's borrowing allocations for 2007/08 and 2008/09 have not been used, and it is planned that £24 million of the Government's allocations of £131 million for 2009/10 to 2011/12 will not be taken up.
5 Service plans
5.1 The strategic approaches adopted within each of the County Council's service areas for capital investment and asset management are derived from the Council's Corporate Strategy and this Capital Strategy. The level of investment planned over the next three years for the main service areas is summarised in Annex 1.
Children's services
5.2 Working closely with schools and governing bodies under the Council's Management Partnership arrangements, an asset management strategy has been developed, which is delivered through the capital programme. The key aims are to:
· contribute to meeting the aims of the Children Act, raising educational standards, including new provision for early years education with private and voluntary sector partners
· optimise the use of capital and other financial resources
· reflect the current and anticipated future needs of the curriculum
· underpin the County Council's strategy for the maintenance, repair and improvement of school buildings
· address the capital funding implications of falling school rolls and localised increases in population in areas of new housing development.
5.3 The children's services capital programme also includes provision for capital schemes at children's homes and early years facilities including children's centres.
5.4 The County Council was a pilot authority for the Government's Primary Capital Programme, including a refurbished primary school in Lovedean and a major special school project in Totton, New Forest to which Primary Capital Programme funding is contributing.
5.5 The County Council is a pilot authority in the Department for Children, Schools and Families' national co-location capital initiative, intended to review opportunities to secure better integration of the use of capital at local level. Capital allocations totalling £12.4 million have recently been made to the County Council towards the cost of four co-location projects.
5.6 The Government has confirmed the County Council's inclusion in the Building Schools for the Future (BSF) programme to rebuild, refurbish and remodel secondary schools. The programme could see all the County's 71 secondary schools and special schools for secondary-aged pupils transformed over the next ten years. The County Council's first phase of works under the BSF programme will benefit the Havant area.
Transport
5.7 Investment in Hampshire's transport systems and network underpins the economic growth agendas for the Council.
5.8 In the light of the current economic situation the Council is addressing the likely reduction in capital investment over the medium term. Maintaining the existing transport systems and network will remain a priority during this period, as will the development of major transport infrastructure schemes, with bids being made for support from national and regional funding streams. The Council was successful in bidding for Community Infrastructure Funding (CIF) which will enable delivery of the first phase of the Fareham to Gosport Bus Rapid Transit.
5.9 Capital investment in transport projects is also funded through developer contributions. A three-year programme of improvements is being prepared to spend £30 million by 2011/12.
5.10 Just over 84% of the Government's support for local transport projects is in the form of borrowing allocations. As a result, the programme has been affected by the County Council's decision to reduce the take-up of Government borrowing allocations, referred to in paragraph 4.7. However, it has been possible to offset some of this reduction by the use of other funding.
Adult services
5.11 The priorities for the Council's adult services assets are:
· ensuring that they positively support the personalisation of care services in line with the Government's transformation agenda `Putting People First'
· the development of high quality extra-care housing throughout the County
· modernising services for people with learning disabilities in line with the objectives of the White Paper `Valuing People' and its subsequent updates
· meeting the requirements of health and safety, disability discrimination, equality and other legislation
· refurbishing existing older persons homes to improve provision for residents suffering from dementia
· replacing poor quality residential provision which cannot be brought up to standard cost effectively with a range of alternative options including extra-care housing.
Information Technology
5.12 Investment in information technology systems underpins the delivery of services. The Council's financial and business systems have been replaced in recent years using SAP technology in a major capital investment known as the Enterprise Project.
5.13 SWIFT, the core social care system used by Adult and Children's Services will continue to be improved by upgrading to a new platform and improving `usability'. It provides the platform for implementation of the Electronic Social Care Record (ESCR) as required by the Department of Health and the Integrated Children's system (ICS) which is a Department for Children, Schools and Families requirement. Both of these systems will be implemented this year. SWIFT is also being further developed to support improvements to business processes and enable integration with the corporate contact centre Hantsdirect.
5.14 The internet facilities for the public in Hantsweb for Adult Services will continue to be developed to support independence and choice. These facilities will not only provide information that enables people to make informed choices but also will provide another way of requesting services from the Council that will reduce processing costs and response times. A key development will be a website for people who arrange their own support, in line with the overall move towards personalisation of social care.
5.15 In Property Services, a project is underway to create an integrated Project Information Portal. This will bring together a number of technology based databases and the time and resource management systems into one facility. The benefits will include significant improvements in the ability to manage the business activities and reductions in cost and the time taken to track, monitor and manage project data.
6 Cross service plans
6.1 Equally important are county-wide strategies including:
· the final South East Plan was published in May 2009 and provides the Regional Spatial Strategy for South East England. The Plan identifies the level of housing and employment growth that the districts of Hampshire will have to deliver up to 2026. This requires a total of 133,200 dwelling are to be delivered over the plan period. As part of the housing allocations, Hampshire will have three Strategic Development Areas (one at North East Hedge End, one at North Fareham and another at Whitehill / Bordon), requiring significant levels of new facilities. Schools, transport and community facilities will be required and included in future capital programmes and bids to help deliver the planned growth. Substantial levels of additional resources will be required
· the Aalborg Commitments, which promote actions to achieve sustainable development and underpin the Council's actions and services, including capital investment
· the Corporate Equalities Strategy, including access to services and facilities
· the Council's `Transforming Through Technology' strategy, a corporate business strategy for the exploitation of information technology for service improvement and efficiency.
7 Links to performance reviews and efficiency statements
7.1 The County Council's Corporate Review Programme for 2009/10 includes implementation of the continued review of corporate and central services focusing on achieving budget efficiencies whilst improving or maintaining service performance. This builds on the Council's ever increasing emphasis on providing value for money. The County Council applies the principles of Best Value covered by the four Cs of Challenge, Consult, Compare and Compete. Relevant outcomes from the review programme will be fed back to the Capital Strategy and the capital programme, along with recommendations from audit and other independent inspections.
7.2 In meeting its efficiency targets, the Council has reviewed its capital plans in identifying the potential for efficiencies. The scope for ongoing efficiencies in procurement of capital schemes is covered below in section 12.
8 Working with partners
8.1 The County Council works closely with all partner organisations on service matters that affect capital issues. These include district councils, neighbouring local authorities, the police and fire authorities, school governing bodies, the diocese, community and voluntary bodies, the health service including the local Primary Care and NHS Foundation Trusts, the lottery boards, national organisations such as Sport England, as well as the business sector including developers.
8.2 The joint working with district councils and others to develop and implement the Sustainable Community Strategy and to move towards delivery of the Local Area Agreement reinforces the wide range of existing partnership arrangements concerning capital schemes. The Council's close links with district councils and the neighbouring unitary authorities in Portsmouth and Southampton include the provision of community and leisure facilities in schools, Transport for South Hampshire, local area transport strategies, Town Access Plans, a joint office strategy, the regeneration of older urban areas, integrated waste management facilities, coast protection, museums, and extra-care housing. All involve capital investment or the use of assets.
8.3 As an example of community planning in practice, the first phase of Building Schools for the Future (BSF) in Havant is being planned in close co-operation with Havant Borough Council. In particular, the opportunity is being taken to integrate BSF planning with reviews of the Borough Council's strategic leisure, sporting and cultural strategies. In addition, the concept of Discovery Centres has been developed with partners and is now being implemented to provide library services, adult learning and community use in one building, leading to wider service use of existing assets for longer hours.
8.4 The partnership between the Council's Adult Services and the health service over the use of assets is long established. Current examples include:
· the joint initiative completed in 2007 to provide 500 new nursing care beds
· development of information systems to support partnership working with the Hampshire Primary Care Trust and joint mental health and learning disabilities services across Hampshire
· provision of an enhanced integrated community equipment service
· the establishment of joint mental health and learning disability team bases
· co-locating and integrating Adult Services and Primary Care Trust staff serving the borough of Fareham.
8.5 The voluntary and community sector continues to play a key role in many of the Council's capital projects. The 'One Compact for Hampshire', developed with voluntary and community bodies, sets a protocol for joint working and includes other statutory bodies such as the Primary Care Trust and district councils. Examples of the voluntary sector's involvement include community and leisure facilities, village halls, local transport and running adult services day care facilities.
8.6 The Council is also working with voluntary and private sector partners in respect of Early Years and Childcare Capital Grant to support the improvement of the learning environment in Private, Voluntary and Independent early years settings whilst supporting the delivery of the Early Years Foundation Stage. Work also continues with the development of phase three of the national children's centres programme.
8.7 The Council also plays a leading role in the Hampshire Economic Partnership, which brings together local government, central government and training organisations to promote key economic development.
8.8 Another important partnership is with central Government itself, and many of the Council's capital schemes result from close working with Whitehall departments and the Government Office for the South East (GOSE), as well as the European Union.
9 Consultation with the public and partners
9.1 The County Council consults widely with the public, its partner organisations, the business community, the voluntary sector and the Council's staff as part of the process of developing the Sustainable Community Strategy, Corporate Strategy and Local Area Agreement. This includes focus groups, opinion surveys, a Citizens' Panel and engagement through the Council's magazine for the public, `Hampshire Now'. The Council also consults residents' groups, trade unions and the business sector about the budget, including the capital programme. Following discussions with representatives of the business community in July 2005, it was agreed that the key objectives in the business plans of the Chambers of Commerce should be matched with the Council's Corporate Strategy. The priorities for business are skills, employment, transport, infrastructure, housing and the constraints of planning on enterprise.
9.2 An important part of the Council's consultation processes are the extensive and innovative discussions held at the planning and feasibility stage of each capital proposal with all partners and stakeholders. From these detailed, ground-level consultations, and from those on service plans, vital and practical information is drawn together to build up the Capital Strategy, supplementing the more broadly-based `top-down' consultations.
9.3 All these consultation processes are ongoing. The Council will continue to analyse the results and they will influence the content of future strategies.
10.1 The County Council prepares and publishes a rolling three-year capital programme within limits set by Government support and the Council's assessment of available local resources and the revenue implications of the proposed programme. The Council uses the later years of the programme to plan and prepare schemes. This includes work on design, land acquisition, and obtaining planning approvals and Government support.
10.2 The Council has refined its techniques for assessing priorities between schemes, evaluating options for capital investment that make the best use of its assets in terms of the benefits for services and financial returns. All schemes are developed to meet needs identified in the Capital Strategy, and must contribute to meeting the Council's key priorities as set out in the Corporate Strategy. If necessary, the Council top-slices resources to protect essential parts of the capital programme. Final judgement on political priorities, in the light of public consultation, are made by the County Council. This process has been applied to all schemes in the current programme as well as those currently being considered for inclusion.
10.3 Linked to the three-year capital programme, the Council has incorporated the key financial elements of the Capital Strategy in its Financial Management Policy. It has also revised its financial control procedures, including project appraisals and progress monitoring. This makes sure that the need for each major capital scheme and its links to the Corporate Strategy and value for money strategy are fully considered by members of the Council before approval is given.
10.4 The Council has also adopted best practice advice in the development of its investment appraisal of capital schemes to make sure that whole life costing is used where appropriate. This brings together best value appraisal techniques before the contract is let and best practice procurement arrangements post-contract.
10.5 The Council's existing capital assets are reviewed through the Strategic Property Review process to see if they are still appropriate and give value for money, taking account of the investment necessary to maintain those assets.
11 Resources for capital
11.1 The Council will maximise the use of capital resources from other bodies, provided that the proposed schemes are compatible with the Capital Strategy and the Council's Medium Term Financial Strategy. This will include submitting bids to central Government, the European Union, health authorities and the national lottery. The Council will encourage partner organisations to reflect their involvement in capital schemes by contributing to the costs, where appropriate.
11.2 The Council will continue to make full use of its own resources to finance the capital programme. This includes using capital receipts from the disposal of assets and revenue finance primarily for capital repairs and structural highway maintenance. The rolling programme of land reviews will continue to identify land and buildings no longer required which can be sold to provide resources for reinvestment. The global economic crisis has had a significant impact on the sale of surplus land (in particular for new housing development). The action being taken to adapt to this major loss of income is described in paragraph 4.5. It is expected to continue into 2009/10 and beyond.
11.3 Where appropriate, the Council will undertake invest-to-save projects, especially in new IT technology. Following the Government's reforms of its capital control system in 2004 to allow additional borrowing within prudential limits, the Council has used such loans for suitable invest-to-save and in/out projects, subject to appropriate business cases and revenue costs being contained within cash limits. A detailed strategy for the use of `prudential' borrowing was agreed by Cabinet in November 2003 and updated in February 2006.
11.4 The County Council's decision not to use in full Government borrowing allocations has been described in paragraph 4.7. Changes in the calculation of revenue grant in 2006/07 mean that the Government no longer provides full revenue grant towards the repayment and interest borrowing costs. Over the three years from 2009/10 to 2011/12, just under 18.5% of the expected Government borrowing allocations of £131 million will not be taken up.
11.5 As part of its culture of partnership, the Council works closely with other organisations to maximise benefits from their capital investment. This includes joint transport investment by the Highways Agency, bus companies and Network Rail. For example, the Council has improved the infrastructure for the A3 road, in conjunction with Portsmouth City Council and a bus company has provided new buses and services for the route. The joint schemes listed in paragraph 8.4 reflect the close working of health authorities and Adult Services.
11.6 The County Council will be looking for substantial additional resources from the Government over the next ten years to help provide the facilities required for the significant growth proposed in the South East Plan.
11.7 As outlined in paragraph 4.3, the Council has recently undertaken a significant review of its management of backlog repairs and maintenance in the built estate. The liability over the next five years is estimated to stand at £449 million. In order to reduce the backlog liability at schools, it is essential that the Council continues to receive Government grant funding under the New Deals for Schools modernisation programme.
11.8 The Government announced in July 2009 that the County Council will receive about £80 million of support in the first phase of funding under the Building Schools for the Future (BSF) programme. This will finance rebuilding, refurbishment and remodelling work for secondary schools in the Havant area. It is the first phase of funding for Hampshire under the BSF programme which could see all the County's 71 secondary schools and special schools for secondary-aged pupils transformed over the next ten years. It is essential that the Government provides the necessary funding under further phases of the BSF programme.
12 Procurement
12.1 The Council will consider all methods of procuring and financing its capital programme. It will adopt a public-private partnership (PPP) approach, including the private finance initiative (PFI), if this can be shown to be the best value for money and consistent with the Capital Strategy. This could include larger schemes that generate an income stream.
12.2 The South Coast Street Lighting PFI is a major project being run by a partnership of Hampshire, West Sussex and Southampton City Council. This 25 year contract will be awarded in Autumn 2009. The total joint scheme capital investment will be £225 million in cash terms (£114 million in Hampshire).
12.3 The Council has continued to develop its procurement strategy in line with the Government's policy set out in the National Procurement Strategy for Local Government and is the construction lead for the Improvement and Efficiency South East (IESE) formerly the South East Centre of Excellence (SECE).
12.4 The key elements of the current procurement strategies are:
· collaborative working arrangements with contractors leading to earlier identification of all project risks and enabling more effective management and predictable outcomes. Partnership working also removes the adversarial approach by giving the team common objectives which, in turn, reduces or eliminates claims and disputes
· greater involvement of the supply chain in the design process to allow identification of best value solutions and longer term relationships with supply chains, allowing them to deliver more predictable products with associated quality and value gains. This also preserves learning and potentially opens up further opportunities
· combining individual projects into programmes of work reducing the number of bespoke components, reducing design times and providing opportunities to generate volume discounts from the supply chain.
12.5 As the lead on the construction workstream for the IESE, the Council has established a major framework for IESE which replaces the framework for major schemes established in 2003. The IESE framework will be in place until after 2012 and has the potential to create significant efficiency savings. These arrangements can be accessed by any of the seven county, twelve unitary and fifty-five district councils in the South East region as well as any local public service provider. The arrangements are also open to London Boroughs, fire and police authorities and further education colleges. The Council is leading the development of these arrangements with over £1 billion of construction projects already being progressed through the framework. The IESE Major Framework is a national demonstration project of a scale not previously attempted. The arrangements are now being replicated by South West Regional Improvement and Efficiency Partnership (RIEP) through Devon County Council. The South West framework will be operational from autumn 2009.
12.6 The Hampshire Procurement Model has been further developed to allow broader collaboration through:
· second tier frameworks for projects up to £2.5 million
· third tier frameworks for projects up to £0.5 million
· integration of engineering maintenance and building maintenance into a single maintenance contract for the Castle Complex buildings
· collaborative arrangements for planned and reactive building work
· specialist framework for landscaping works
· long term consultancy partnerships in all disciplines.
12.7 The second and third tier frameworks have been developed through IESE and are available to other local authorities and the fire and police services in Hampshire and neighbouring unitary authorities.
12.8 Evidence of greater efficiency in construction procurement is demonstrated through a range of performance indicators which capture data on the underlying trends. The results for projects completed during 2008/09 reflect the benefits that best value procurement routes continue to provide over traditional competitive tendering.
12.9 With the introduction of the second and third tier frameworks and specialist arrangements, collaborative forms of procurement now account for a significant proportion of overall activity. Greater efficiency will be generated through the increased early contractor involvement linked to a process of continuous improvement across all services.
12.10 Long-term efficiencies should also accrue through the Council's work in leading the construction workstream for IESE:
· collaborative frameworks across councils
· establishing and sharing good practice across councils
· alignment of supplier capacity with long-term regional and sub-regional demand
· common processes and procedures to minimize progressive costs and maximise the benefits of greater standardisation
· the provision of strategic and high level design and operational advice.
12.11 Major supply chains are vital to the success of capital projects, as most of the physical work on site is undertaken by them. On many Hampshire schemes such as the children's centres programme and new primary schools, as well as involving framework contractors with design development work, key supply chains have been appointed early in the design process. Integrated teams are then formed who deliver:
· better design co-ordination - fewer changes during construction (improved cost predictability)
· more effective programming and planning (time saved)
· added value (improved product)
· simplified processes (time saved)
· improved management through better understanding (more effective risk management).
12.12 In addition, a new Highways Professional Framework for Local Transport Plan Delivery will be procured in 2009/10. The contract will run for four years from January 2010. Several stakeholder authorities have been working with the County to develop this innovative and wide-reaching framework, including West Sussex, East Sussex, Isle of Wight, Bracknell Forest, Royal Borough of Windsor, Maidenhead and Kent.
12.13 In 2006 the Council established a baseline score for the Aalborg Commitments of 2.02 overall. For each theme, key areas were prioritised for improvement and target scores were set for 2008/09, 2009/10 through to 2015/16. Evaluation of the 2008/09 performance against the overall target indicates that the Council has progressed on the majority of the priority areas and the overall target score of 2.1 will be exceeded.
12.14 In 2008 the Cabinet approved a strategy and policy report in connection with Government proposals to introduce a Carbon Reduction Commitment (CRC - carbon trading scheme), in respect of buildings and street lighting. In so doing the Cabinet agreed to the development of three corporate work streams (Changing the Culture, Medium Scale Capital Investment, Strategic Capital Investment) aimed at reducing primary energy consumption and CO2 emissions. Work on the CRC is underway and the Council is currently in the process of preparing to roll out smart meter installation across the largest carbon emission sites in its estate to take advantage of the early action metric in the CRC. Workstream 1 is progressing on a number of fronts including the establishment of Energy Champions throughout the Council and a pilot study with the Carbon Trust on a number of schools to identify key factors in their energy management. Workstreams two and three are being developed, particularly for the BSF programme as well as the use of alternative technologies and fuels for other parts of the Council's estate.
13 Performance measurement
13.1 The County Council has continued to publish the results for its own local property performance indicators (PIs), which include user satisfaction, contractor performance, energy and water use, asset performance and, as described in section 12, procurement. These local PIs are used in conjunction with the national PIs for benchmarking with other providers including those existing relating to construction and procurement. PI information continues to be shared with SECAMP, the South East County Asset Management Plan network, enabling comparisons to be made with other county councils in the South East.
13.2 The results for all property PIs are reported regularly to members, service managers and partners as appropriate. Once completed and in operation, capital schemes are evaluated with users and lessons fed back to the preparation of future schemes.
13.3 A further investment is planned in 2009/10 using funds from various departments to establish an integrated Asset Management System. A Geographic Information System interface will be used to log and update live data about buildings, including the Government's criteria of condition, suitability and sufficiency. Efficiencies will be realised in data storage and handling across a common platform. It will facilitate better asset usage and future disposals of under utilised or redundant accommodation. This is very much in line with the emerging national emphasis on improved asset management together with centralised facilities management.
Annex 1
Capital Strategy - Core Data
1 Hampshire - profile
1.1 Hampshire is a large county of 367,900 hectares (excluding Portsmouth and Southampton) with a mixture of significant urban and extensive rural areas. Although less than 15% of the county is classified as urban, 77% of the population lives in urban areas.
1.2 The population of Hampshire in 2008 was 1,290,000, and is forecast to increase by 2.9% by 2015 assuming rates of development consistent with the proposals in the South East Plan.
1.3 Older age groups are increasing, while the working age group falls. Consequently the total dependency ratio is expected to increase as a result of the ageing population.
1.4 Further details of Hampshire can be found in the following reports published by the County Council - "A Profile of Hampshire" published in February 2009, "The Demographic Future of Hampshire" published in July 2007 and "Quality of Life" report published in November 2007.
2 Revenue budget 2009/10
£m | |
Gross revenue expenditure |
1,754 |
Net expenditure after income, specific and area grants |
681 |
Budget requirement |
657 |
£/band D | |
Council tax - band D dwelling |
£1,018.17 |
Further information on the County Council's revenue budget is available in the Budget Book 2009/10 or online at:
http://www3.hants.gov.uk/finance/budget/
3 Assets
Number |
Gross Floor |
Value 31 Mar | |
Area (GIA) |
2009 | ||
sq m |
£m | ||
Operational assets |
|||
Children's services |
|||
Schools |
465 |
1,060,000 |
2,378 |
Residential homes and day centres |
51 |
25,900 |
36 |
Adult services |
|||
Residential homes and day centres |
76 |
80,500 |
160 |
Offices and administrative buildings |
79 |
78,200 |
81 |
Libraries |
55 |
35,300 |
68 |
Museums and art galleries |
27 |
32,800 |
37 |
Other land and buildings |
40 |
57,500 |
62 |
------------- |
------------- |
-------- | |
Land and buildings |
793 |
1,370,200 |
2,822 |
Vehicles, plants and equipment |
- |
- |
57 |
Infrastructure - roads and bridges |
- |
- |
446 |
Community assets - parks etc |
27 |
28,900 |
12 |
------------- |
------------- |
-------- | |
820 |
1,399,100 |
3,337 | |
Non-operational assets |
130 |
115,000 |
65 |
Work in progress |
- |
- |
42 |
------------- |
------------- |
-------- | |
Totals |
950 |
1,514,100 |
3,444 |
------------- |
------------- |
-------- |
4 Maintenance liabilities - land and buildings
Total |
Priority levels | |||||
Cost |
1 |
2 |
3 | |||
Urgent |
Essential |
Desirable | ||||
to prevent |
within |
in | ||||
closure |
2 years |
3-5 years | ||||
£m |
£m |
£m |
£m | |||
Children's services |
327.8 |
0.2 |
181.2 |
146.4 | ||
Libraries |
6.1 |
0.1 |
3.7 |
2.3 | ||
Adult services |
16.0 |
0.1 |
8.0 |
7.9 | ||
Offices |
35.1 |
0.1 |
18.6 |
16.4 | ||
Other services |
63.6 |
0.1 |
38.4 |
25.1 | ||
---------- |
---------- |
---------- |
---------- | |||
Total |
448.6 |
0.6 |
249.9 |
198.1 | ||
---------- |
---------- |
---------- |
---------- | |||
Maintenance liabilities - roads and bridges
£m |
|||
Roads |
169 |
see note below | |
Footways |
25 |
||
Highway drainage |
67 |
||
Street lighting column replacement |
50 |
||
Bridges |
7 |
||
Road signs and markings |
3 |
||
-------- |
|||
Total |
321 |
||
-------- |
|||
This is an assessment of the amount that would need to be spent to eliminate the backlog of maintenance work that has reached critical `intervention' level of deterioration, ie, where failure to carry out maintenance works will result in disproportionate increases in future maintenance costs. Note Nationally maintenance backlog is no longer recognised as a measure of maintenance liability and therefore these calculations have not been updated for a number of years. New methods for estimating the value of the assets (Gross Replacement Cost) and depreciation (Depreciated Replacement Cost) are being progressed in a national project. This project may specify the need for a `dry run' in 2010/11 and will aim to refine the process in subsequent years. The annual maintenance liability will not be updated until the new process is defined. | |||
5 Capital programme
5.1 The County Council's three-year capital programme for 2009/10 to 2011/12 is summarised below. Full details of the programme are published in the Council's Budget Book for 2009/10. The estimated capital payments on the programme and on schemes already in progress are also shown together with details of how the Council expects to finance them.
Capital programme - value of schemes in 2009/10 to 2011/12 | |||
2009/10 |
2010/11 |
2011/12 | |
£m |
£m |
£m | |
Children's services |
87.4 |
100.8 |
58.3 |
Local transport improvements, maintenance and major infrastructure projects |
69.7 |
37.7 |
35.8 |
Libraries, museums, arts, countryside, sport etc |
2.3 |
0.9 |
0.5 |
Adult services |
2.9 |
1.1 |
0.6 |
Capital repairs of buildings funded from the |
6.4 |
4.1 |
4.1 |
County Council's own resources |
|||
Household waste recycling centres, environmental improvements and other schemes |
8.8 |
3.0 |
2.9 |
---------- |
---------- |
---------- | |
Total programme |
177.5 |
147.6 |
102.2 |
---------- |
---------- |
---------- | |
2009/10 |
2010/11 |
2011/12 | |
£m |
£m |
£m | |
Payments on the programmes for 2009/10 |
|||
to 2011/12 and works in progress |
159.1 |
162.7 |
151.0 |
---------- |
---------- |
---------- | |
Financed by: |
|||
Loans |
65.2 |
33.1 |
-1.8 |
Capital receipts |
4.7 |
13.2 |
37.9 |
Grants and contributions |
49.7 |
92.3 |
85.7 |
Contributions from revenue and reserves |
39.5 |
24.1 |
29.2 |
---------- |
---------- |
---------- | |
Total financing |
159.1 |
162.7 |
151.0 |
---------- |
---------- |
---------- | |
6 Prudential borrowing
6.1 The Government introduced a new prudential capital control system from April 2004 that allows local authorities to raise additional loans for capital purposes, unsupported by Government grant. The County Council has agreed that prudential borrowing may be used to finance invest-to-save projects that generate ongoing savings to cover the additional costs of borrowing and reinvestment or in/out projects for which the replacement asset is required in advance of the capital receipt.
6.2 Major schemes using prudential borrowing approved so far include:
· the amalgamation of two pairs of infant and junior schools in the Waterside area to form two primary schools
· the amalgamation of Burnham Copse Infant and Junior schools in Tadley to create a new primary school
· a number of schemes at primary schools in the Hedge End, Romsey, Basingstoke, Winchester and Andover areas in advance of capital receipts and developers' contributions
· an improvement project at the Swanwick Lodge secure unit in Fareham, to be repaid from the sale of part of the site
· the refurbishment of Winchester library to create a new Discovery Centre, to be repaid from the sale of a site elsewhere in Winchester
· the refurbishment of Ashburton Court, Winchester, to be funded from savings as a result of vacating leased offices, capital receipts from Merton Rise and the disposal after the refurbishment scheme of vacant properties in Winchester, and a reduction in future capital repairs
· the funding of schemes which would otherwise be financed from local resources in order to release revenue funding for the set-up costs of the County Council's contact centre, Hantsdirect
· investment in IT infrastructure, to be repaid from charges to IT Services' users.
6.3 Unsupported borrowing of £20 million was also used as part of the overall funding arrangements associated with the Enhance scheme to provide additional nursing care beds.