1 THE ISSUE

1.1 This report informs the Council Executive of the final out turn position of the 2002/2003 Capital Programme and available resources.

1.2 This report also informs the Council Executive of the current position of the 2003/2004 Capital Programme and available resources.

2 RECOMMENDATION

2.1 That the Executive:

a) notes the 2002/2003 capital out turn;

b) approves the incorporation of late additional funding to the 2002/2003 programme as detailed in paragraph 4.1;

c) notes the financing of the 2002/03 capital programme;

d) notes the current position of the 2003/2004 capital programme;

e) approves the incorporation of additional funding to the 2003/2004 programme as detailed in paragraph 5.1;

f) approves the carry forward of resources to 2003/2004;

g) approves the Director of Housing & Social Services request to write off the net overspend of £60,000 as detailed in paragraph 4.5.

h) notes the current position of available resources.

3 FINANCIAL IMPLICATIONS

3.1 Included in the report.

4 2002/2003 CAPITAL PROGRAMME

4.1 At the 5^th March meeting a revised capital programme of £32.4 million was approved. The following revisions have now been incorporated into the programme giving a final revised total of £32.8 million:

· Transportation, Access & Waste Management - additional grant funding of £381k was awarded for recycling schemes.

· An SCA of £23,000 was allocated for Air Quality Monitoring.

4.2 £355,000 was spent by Property Services on development costs for various sites including Southgate, Bath Post Office, Shires Yard and Culvers Road, Keynsham. These costs will be carried forward to be offset from the anticipated sale proceeds. £193,000 was also spent on the refurbishment of Plymouth House, which together with previous years expenditure of £364,000, will be carried forward to be offset from the sale proceeds of North Parade Buildings.

4.3 The total expenditure for 2002/03 totalled £29.03 million. This included grant funded expenditure of £2.8m on the Stone Mines project and £952,000 on Norton Radstock SRB. £2.3m was also spent on the Spa scheme in excess of the budget (please see the note at the bottom of Appendix 1) and £548,000 referred to in paragraph 4.2. Excluding these items, expenditure was £22.4 million compared to a profiled spend of £24.6 million or 91% of the planned spend.

4.4 Details of the 2002/2003 capital out turn and comparison to the profiled spend are given in Appendix 1.

4.5 Disabled Facilities Grant overspend - the standard procedure is to carry forward an over spend to the following year thus reducing the budget accordingly. In 2002/03 the Disabled Facilities Grant budget was overspent by £112,000. At the same time there was an under spend in Discretionary Grants of £52,000, leaving a net overspend of £60,000. The Director of Housing & Social Services has requested that the net overspend in 2002/03 is written off rather than carried forward to reduce the available budget in 2003/04. The reason being that requests for these grants have increased by 50% over the last two years and the Council has a statutory duty to provide grant aid to disabled people. Reducing the budget in 2003/04, would therefore increase the waiting list. Also a request is being made to the government office for additional grant funding which if approved would offset the net overspend.

4.6 The 2002/03 capital programme was financed as shown:

5 2003/2004 CAPITAL PROGRAMME

5.1 At the February meeting of Council, a capital programme of £30.789 million was approved. Further additions, detailed below, plus carry forwards from 2002/03, have now been incorporated giving a revised programme of £39.9 million.

· Education - Additional government grant of £371k has been allocated for Seed Challenge/Nursery Places and a Supplementary Credit Approval of £65k for additional Basic Need requirements. The Supplementary Credit approval for Targeted Capital for Radstock Schools has been re-phased giving a reduction of £924k in 2003/04 but additional approval in 2004/05. The DFEE has also approved Targeted Capital for Bath Special Schools. The project totalling £4.9 million is to be phased over three years, with grant funding of £665,000 in 2003/04. Future years will be in the form of Supplementary Credit Approval.

· Social Services - A report was approved by Executive Members in May, to allocate the funds from the sale of three Social Services properties (two of which have already been sold) to refurbishment works at Springfield House and the replacement of Carrswood Day Centre. £532k has therefore been added to the capital programme for Social Services. Government grant of £115k has been allocated for Information Management and IT for Looked After Children and a Supplementary Credit Approval of £85k has been given for Mental Health IT.

· Transportation, Access & Waste Management - A Supplementary Credit Approval of £42k has been given for Air Quality Monitoring.

5.2 Spend to the 30^th June totalled £4.3million (£3.2million net of grant funded Stone Mines expenditure).

5.3 Details of the current programme and carry forward items are given in Appendix 2.

5.4 Spa Scheme - review of the impact of the continuing delays on construction has identified the potential for significant additional costs. It will therefore be necessary to recommend the draw-down of further significant contingency from the Risk Management Funding Reserve. This is in addition to the £1m recommended in December 2002.

The December 2002 project resource plan anticipated a February 2003 completion, the contractor is now advising completion by the end of July 2003. Consequently, additional funding is required to cover the costs of the Project Team (including consultants) over the 5.5 months period. Whilst the financial resources required are currently being assessed, the assessment of maximum risk indicates the potential for significant additional costs.

Further information will be given in the next report and the full financial impact will be taken into account in the new Financial Plan.

6 RESOURCES

6.1 Details of revised resources are as follows:

6.2 The table shows surplus resources of £843k after allowing for the recovery of the Spa scheme over spend and the offset of £548,000 development costs. This gives a total of £2.1million additional resources to figures previously reported. The surplus resources will be taken into account in preparing the new Financial Plan for 2003/04-2006/07. As the development costs are dependant on future sales, surplus resources may change, should these sales fail to materialise.

6.3 The table below shows a breakdown of the additional £2.1million resources:

6.4 The financing of the capital programme is being managed to retain our debt-free status for as long as possible. However this is not anticipated to last beyond this financial year. The impact of losing our debt-free status will need to be taken into account in the Financial Plan.

APPENDIX 1 2002/2003 CAPITAL OUT TURN

In addition to the above programmed spend, the following expenditure was made:

* Spa Scheme - actual expenditure for the year totalled £3.5m net of grant income, giving a deficit of £2.3 million. However this will be reversed in 2003/04 by the Operator's lease premium which is being held in a secure joint account and will be released on Practical Completion. The Millenium Commission also retain a proportion of the total grant payable until practical completion occurs.

Economic Development - £952,000 has been spent on Norton Radstock SRB, which is grant funded.

Stone Mines - In addition to the above Council funded budget, £2.8million has been spent which is grant funded. The over spend in the Council funded budget will be carried forward and offset against the 2003/04 budget.

£193,000 was spent on refurbishment of Plymouth House. This will be funded from the proceeds of the sale of North Parade Buildings.

Costs of £355,000 were incurred on various development sites, which should be recouped when the sites are sold.

Transportation, Access & Waste Management - the overspend was in part due to the late addition of DEFRA grant funding referred to in paragraph 4.1, and part to overprogramming which will be adjusted in the 2003/04 programme.

Housing General Fund - the overspend was due to the high demand for Disabled Facilities Grants referred to in paragraph 4.5, and also a change in legislation concerning the funding of Social Housing Grant. Previously authorities have been reimbursed by the Housing Corporation for Social Housing Grant expenditure. However this has now ceased and expenditure is no longer `cash backed'. It was anticipated that this change would take effect from April 2004 but was unexpectedly introduced from April 2003. In order to take advantage of the cash backed receipts, as much expenditure as possible, given the short notice, was brought forward into 2002/03.

APPENDIX 2 CAPITAL PROGRAMME 2003/2004

In addition to the above expenditure £1.1million has been spent on the Stone Mines which will be grant funded.