The report presents capital expenditure bids and capital resources for the 2002/03 financial year. The Executive is requested to consider such and determine its capital programme for the year.

1 That the Education Annual Capital Guideline (ACG) be as agreed in accordance with the programme recommended by the Select Committee.

2 That Officers proceed with a Housing Investment Programme consistent with the Housing Annual Capital Guideline and the recommendations of the Select Committee, and that further investment in housing be considered in due course having regard to available resources.

3 That the Annual Capital Guideline of £123,000 relating to Social Services be used in accordance with a programme to be determined by the Strategic Director for Social Services and Housing.

4 That the bids contained at Appendix D be approved, in accordance with the recommendations of the Director’s Group.

5. That the sum of £50,000 earned in respect of Capital Strategy and Asset Management Plans be reinvested in systems for the future progression of such matters, and be delegated to Director’s Board for implementation and subject to normal IT procurement procedure.

6 That the acquisition of plant and equipment by operating lease be considered where it is cost effective to do so and where sufficient revenue resources exist to fund the leasing premiums and any other associated costs.

1 Government capital allocations (and associated borrowing approvals) for the year are detailed at Appendix A, and the corresponding figures for the current year are included for comparison purposes.

The Receipts Taken Into Account (RTIA) reduction in credit approvals to give our Basic Credit Approval (borrowing power) has risen by approximately £500,000 from the current year and cannot now be covered by the Environment (previously Other Services) Allocation, as has been the case in previous years. The RTIA can in broad terms however be covered by the combined total of Environment and Performance Related allocations, and this approach is recommended. The increase in RTIA is specific to 2002/03 and is related to the large receipt from the Coppins Bridge site now feeding into the Governments calculations.

2 The 2002/03 financial year sees the implementation of the Governments Single Capital Pot proposals for the capital programme. Government Office for the South East have advised that the above allocations now constitute the Single Capital Pot (SCP), that they are not ring fenced, and that the Council has the discretion to use as it chooses. However service plans as submitted to individual Government Departments such as Education, Housing and Transport mean that the Council is inhibited in the use of this discretion if it is to maintain current levels of Annual Capital Guidelines.

3 The Performance Related figure is new for 2002/03 and is funded by national ‘top slicing’ of other allocations, with distribution to individual authorities based on an assessment of their capital investment plans. The £433,000 total allocation includes £50,000 for the production of a satisfactory Capital Strategy and Asset Management Plan. This combined draft document was presented to the Resources Select Committee in January 2001, and the final version was submitted to Government Office in July 2001. It is recommended that the £50,000 reward for Capital Strategy and Asset Management Plans be invested in systems to further progress these items for the subsequent long term benefits to capital allocations.

4. In previous years the Highways allocation has been funded by two year Supplementary Credit Approval (SCA), a ring-fenced resource which could be spent over two years. The inclusion of Highways into the Single Capital Pot for 2002/03 means that it is no longer ring-fenced but that the allocation must be used in 2002/03 if it is not to be lost. As at the 31^st March 2001 there was £3.8 million slippage in the Highways capital programme (£1.8 million of which relates to the Military Road), of which £1.6 million is covered by SCA carried forward from the 2000/01 two year allocation and £2.2 million from other carried forward resources and capital receipts. The current two year SCA of £5.9 million is likely to include substantial slippage and the 2002/03 ACG must be used in that year if it is not to be lost. If the 2002/03 Highway ACG is allocated to Highways schemes, in order to complete their total expenditure programme an estimated spend of around £13.0 million would be required in that year. Having regard to this level of potential slippage a sum of £600,000 of revenue resources set aside for capital has been earmarked in support of the revenue budget. A report on the Highways Capital Programme is contained later on this Agenda.

5 Capital bids for 2002/03 are detailed at Appendix B. These bids have been presented to and considered by respective Select Committees and their minutes and priorities are set out at Appendix C.

6 The proposals of the Officer Capital Strategy Group have been considered by the Director’s Group, and their recommendations for capital releases are contained at Appendix D. The extent of their recommendations are based on the assumption that a total of £1,600,000 of new capital receipts will be available to supplement Government capital allocations. A brief rationale for the recommended bids is also contained within Appendix D. Past years capital programmes have been set on estimated capital receipts of £900,000, the current assumption for 2002/03 of £1.6 million is dependent upon satisfactory approval and conclusion of individual sales.

7 The Education Select Committee has endorsed the bids as contained in Appendix B, which includes for the Education schools programme being met from Basic Credit Approval (BCA) in respect of Education. Capital expenditure bids relating to Community Development projects have been included in the deliberations of the Director’s Group having regard to corporate priorities and the likely level of anticipated capital receipts.

8 The Social Services and Housing Select Committee having considered the resources available through the Housing Investment Programme and recommend the following allocation of resources:-

9 Coast Protection schemes are approved on an individual basis by the Department for Environment, Food and Rural Areas (DEFRA). These schemes bring with them capital funding resources in the form of Supplementary Credit Approval (SCA) and Government Grant. The 2002/03 financial year programme will include a major scheme at Castlehaven at a cost of £4 million. This scheme has the approval of DEFRA. A further scheme at Seaview Duver is currently being prepared for presentation to DEFRA at an estimated cost of £3 million.

10 Having regard to the additional capital investment in Housing over the past two financial years, it is also recommended that further housing investment is considered later in the year when the likely level of capital receipts is reviewed. The appropriation of property from the Housing Revenue Account (HRA) should generate additional useable capital resources from the disposal of both temporary accommodation units and shared ownership dwellings.

11 In recommending the above bids the Group also had regard to the proposed Ventnor Harbour project, which also requires additional funding to that which is already in place.

Additional resources for Ventnor Harbour would not be required until 2003/04, but a commitment to the scheme has already been made. The Coastal Manager is to continue to seek funding to reduce the financial input from Council capital resources. A sum of £250,000 had already been approved and a further bid for capital receipts of £175,000 has now been requested for 2003/4, and this is recommended by the Director’s Group

The total estimated cost of this project is £2.4 million and the anticipated funding package as previously reported to Members was as follows:

The proposed funding from the private sector and lottery cannot be guaranteed at this stage of the project. A more detailed report on the current position is contained later on this Agenda.

12 The continued use of operating leases for the acquisition of plant and equipment is recommended where it is economically viable and that there is sufficient cover in the revenue budget to finance the ongoing lease premiums and running costs.

J PULSFORD

Strategic Director

Finance and Information and County Treasurer

R R BARRY

Portfolio Holder for Resources

61 The above resources are all allocated through the Single Capital Pot and are not ring-fenced to individual services.

12 The Highways capital allocation for 2001/02 was in the form of SCA, it has now been aggregated into ACG and BCA totals for presentational purposes.

13 The Performance related total relates to Government’s overall assessment of our capital investment plans including a £50,000 reward relating to our Capital Strategy and Asset Management Plan submission.

14 RTIA is the amount of ACG that the Government assumes will be met from our capital receipts. It is calculated by reference to capital receipts in the past financial year(s).

6 The introduction of the Single Capital Pot (SCP) means that Disabled Facilities Grant (DFG) will in future be allocated separately from ACG. An allocation of £360,000 has been received and this will need £240,000 of matching capital resources if the programme and grant are to be maximised.

7 The Council has received average or satisfactory performance in the assessment of its capital plans, with the exception of Social Services which received an above average rating. The overall increase in year on year borrowing approval is just £245,000 once the Highways’ increase is excluded. The Highways increase relates principally to work at Niton Undercliff.

With regard to the Capital Programme for 2002/03 it was reported that the Directors Group were to consider and prioritise the bids submitted. Historically priority had been given to those which related to Health and Safety issues, were statutory/mandatory, or maintained income streams. The Strategic Director undertook to write to Members regarding the recommendations of the Directors Board for the Capital Programme.

ii) THAT the Strategic Director of Finance and Information and County Treasurer write to members of the Select Committee regarding the recommendations of the Directors Board for the Capital Programme.

The Select Committee considered the draft education capital programme for 2002/03. This contained projects recommended by the Schools Asset Management Plan Steering Committee.

The level of capital allocation released by the DfES was noted. In addition to this further monies had been made available through successful bids under other programmes and initiatives.

i) THAT the Education Schools Capital Programme for 2002/03 be agreed and the Executive be requested that the appropriate funding be made available.

ii) THAT the applications made to the DfES under other programmes and initiatives for capital works be noted.

The Strategic Director explained the prioritisation of the capital bids. It was noted that only £31,000 had been allocated in 2001/02 in respect of essential works at the Botanic Gardens. The need to identify the provision of a new County Record Office was becoming more urgent as the Council had only been issued a temporary licence by the National Record Office for the storage of certain documents.

ii) THAT the priorities identified by the Strategic Director for capital schemes be agreed.

iii) THAT in future years more details be supplied on revenue pressure areas and the background to capital bids at an earlier date.

b) THAT officers prioritise the schemes to be included within the capital programme but the Executive be informed that the Ventnor Harbour project should be a first priority in the 2003/04 programme.

c) THAT in future years the capital programme contain a commentary on the works proposed, revenue implications and a priority ranking.

ii) THAT the Executive be informed that Firefighting Personal Protective Equipment, Fire House Refurbishment, Replacement Radio Scheme and the Modernisation of Cowes Fire Station be first priorities in the 2003/04 capital programme.

iii) THAT the Select Committee would like to see more detail in the budget papers in particular they should include capital charges and central service costs.

The Select Committee received the Capital Bids for 2002/03. Members considered the bids and highlighted three as priority.

ii) THAT the Executive be recommended that in relation to Capital Bids for 2002/03 the following only be approved, as set out in Appendix 6 of the report.

In discussing the Capital Programme members were advised of the revised figure of £1,781K for the Housing Investment Programme.

b) that with regard to the Capital Bids for 2002/03, subject to Care Standards Act 2000 – Alterations being placed at the head of those listed under Other Services and 5 Digital Cameras being placed at the foot, the schemes outlined be considered as the Priority order for bids in the Capital Programme.

1. The Disabled Facilities Grant total of £240,000 represents this Council’s contribution to a total programme of £600,000, to maximise a Government Grant allocation of £360,000.

2. The Respite Care Home allocation is the second stage of a two year programme, previously agreed by the Executive.

3. Disabled Facilities Act and Care Standards Act items are in order for the Council to progress with statutory requirements.

4. The proposed Tone Zone at Westridge has a total cost of £250,000 and has received matching contributions from both Single Regeneration budgets and the Sports Lottery.

5. All other recommended bids have either Health & Safety and Revenue Income protection aspects to the proposed works.