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ITEM EX7

EXECUTIVE – 18 MAY 2004

CAPITAL PROGRAMME 2004/05

Report by Head of Finance

Introduction

  1. This report sets out the revised estimated financial position on the Capital Programme for 2003/04, updates the Capital Programme for Transport and Learning & Culture in line with recommendations approved by Council in February and the addition of projects approved in January to be added to the programme in 2004/05. The Transport Capital Programme was approved by the Executive on 16 March. This is reflected in a revised capital programme booklet which is circulated with the agenda.

    (Tables - download as .xls file)

  2. An analysis of payments from the Capital Programme Booklet is shown below.

    3.  

    2003/04

    2004/05

    After 2004/005

     

    Gross Payments

    Repayment to City Schools Reserve

    Transfer to / from HOPs Reserve

    Total Payments

    Funded by:

    Credit Approval

    Grants & Contributions

    Capital Receipts

    Direct Revenue Financing

    Capital Reserve

    Total Funding

    Balance Surplus/Deficit (-)

    Cumulative Surplus/Deficit (-)

    £m

    104.9

    4.9

    1.1

    £m

    81.6

    -0.3

    £m

    24.4

    0.6

    110.9

     

    40.7

    35.2

    31.6

    1.9

    0.1

    81.3

     

    49.6

    29.7

    3.4

    1.6

    0.1

    25.0

     

    24.9

    13.6

    18.9

    0

    0

    109.5

    -1.4

    -1.4

    84.4

    3.1

    1.7

    57.4

    32.4

    34.1

  3. The programme allows for the planned repayment of £4.9m to the City Schools Reserve, which was utilised to fund the capital programme in 2002/03.

  4. In addition a further £1.1m has been set-aside in 2003/04 as being the surplus capital resources on the Homes for Older People (HOPs) Contract. This surplus currently is expected to reduce to £0.8m in 2004/05 and then increases to £1.4m in 2005/06. This position will need to be reviewed when the Executive consider the position on West Oxfordshire Homes later this year. This will allow the establishment of a reserve to offset the date at which the full costs of the HOPs contract have to be met from the revenue budget.

  5. There is a potential deficit of £1.4m in 2003/04. It is anticipated that this position can be balanced by slippage in payments on the capital programme as the capital accounts for 2003/04 are finalised.

    6. 2004/05 Position

  6. In February the Council approved a Capital Programme for 2004/05, which allocated all available capital resources and a further £0.5m on the assumption that this would be met by natural slippage on the programme. As part of the recommendations Education were to be allowed to bring forward some £7.7m of payments in 2004/05 in line with the resources available to the service.

  7. Within their own allocation Education still show available resources of £6.5m and are expecting to bring forward projects to that value to utilise those resources. However, as the programme overall is only showing a surplus of £1.7m to the end of 2004/05, there are insufficient resources available to fund the Education requirements. The main reason for the shortfall in resources relates to the slippage in capital receipts from 2004/05 to 2005/06.

  8. It is recommended that the Executive ask the Capital Programme and Asset Management Steering Group to consider ways that the shortfall in resources can be dealt with, and recommendations should be brought to the Executive in the June Financial Monitoring report, when this position can be reviewed.

    9. Future Education Programme

  9. Within the capital settlement announced in December the DfES gave an indicative capital allocation for Education in 2005/06 totalling £26.437m. As part of the planning process for the Education Capital Programme it is proposed to bring forward a three year capital programme, which makes a provisional allocation of these resources. It is recommended that this proposal is considered by the Capital Programme and Asset Management Steering Group to make appropriate recommendations to the Executive.

    10. City Schools

  10. The Council has an agreement with the DfES to repay to them 50% of any additional capital receipts obtained on certain sites. The latest estimate of this repayment is £8.1m, although the figure cannot be finalised until the last site is sold later this year. When the overall position is known officers will be talking to the DfES with a view to obtaining a relaxation of the requirement to repay the full 50% on the basis of some of the additional costs the Council had incurred since the project started.

  11. The Council has required the reorganisation project to bear the costs of the deficit balances on closing City Schools. This is costed at £0.7m. This has required the usage of £1.1m of the Council’s Annual Capital Guidelines to be allocated to the City Reorganisation to meet the full costs of the project. This largely reflects the cost of the Orchard Meadow project of £1.3m.

    12. Prudential Guidelines

  12. The Executive has agreed that projects to be funded from borrowing under Prudential Guidelines should be on an invest to save basis. Any projects will be subject to approval of a full business case by the Executive. As part of the budget approval in February provisional allocations under Prudential Guidelines were made for a Modern Work Style Project in Central Offices and Energy Conservation. To date no business case has come forward for approval.

    13. 2005/06 Funding Position

  13. The programme shows a potential surplus of £34.1m in 2005/06. Of this some £31.6m relates to Education. There are also commitments of £0.103m for Standlake Store and £0.405m for the Pegasus Theatre (with a further £0.375m in 2006/07) for the Council contribution into schemes which attract lottery funding.

    14. Conclusion

  14. There are insufficient resources in 2004/05 to fund the resources required by Education. The Executive is recommended to ask the Capital Programme and Asset Management Steering Group to consider this position and bring forward proposals as to how this position can be resolved.

    15. RECOMMENDATION

  15. The Executive is RECOMMENDED to:

          1. note the report; and

          2. ask the Capital Programme and Asset Management Steering Group:

            1. to consider the funding position on the programme for 2004/05 and bring forward to the Executive in June proposals as to how this position can be resolved;

            2. to consider and bring forward proposals for a provisional allocation of the resources which will be available to Education in a three year capital programme.

 

CHRIS GRAY
Head of Finance

Background papers:

Contact Officer: Mike Petty Tel. 01865 815622

May 2004

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