Capital Report – July 2008

  1. Introduction

The Trust’s medium term capital programme for 2008 to 2011 of £96.573mis set out in the attached table Capital 1. Earlier and later year figures areincludedfor information.

The detailed source and application for the 2008/09 capital programme are set outin tables Capital 2 and 3, respectively.

  1. Movement in 2008/09 Capital Programme from June 2008

There has been minor changes in the 2008/09 and 2009/10 capital programmes which relate to the transfer of funds from revenue for the data warehouse and the clarification of the works replacement budget for St Michael’s new water system, as reported to Finance Committee in April.

2008/09 / 2009/10
Source / Application / Source / Application
£000’s / £000’s / £000’s / £000’s
Capital Programme June 2008 / 45,687 / 45,687 / 21,881 / 21,881
IT – Data Warehouse - Funded from revenue / 250 / 250
Works replacement to St Michael’s water system / (600) / (900)
St Michael’s water system / 600 / 900
Capital Programme July 2008 / 45,937 / 45,937 / 21,881 / 21,881
  1. Position as at the 31July 2008

Source of Funds

The funding of the Trust’s capital programme is set out in Capital 2. The key area to note forJuly 2008 is that the capital expenditure of £9.323m (as detailed in Capital 3) has been funded fromtransfers from revenue of £8k, cash retained from depreciation costs included in tariff of £5.466mand cash balances of £3.849m

Foundation Trust’s can draw down PDC when it is needed to finance the capital projects to which it relates. In July the Department of Health set an interim PDC limit for the Trust of £15.698m. The interim limitenables the Trust to drawdown funds in respect of expenditure incurred on the cardiac schemethereby ensuring the Trust is not using its own cash balances to fund the scheme.

The Trust made its first PDC claim as a Foundation Trust in July. The amount claimed represents the estimated spend on the cardiac scheme to the end of July -£7.075m. The funds were received in August and therefore not reflected in the cashflow figures in agenda item 6.5.

The Department of Health will confirm the Trust’s final PDC limit by October 2008. Following this confirmation the Trust will be able to draw funds against the £6.415m brokerage amount in section F.

Application of Funds

The key highlights for July 2008, as shown in Capital 3, are as follows:

  1. Position at July 2008

The capital expenditure to 31July2008 is£9.323m; against a profiled spend of £9.135m. This represents a varianceof £0.188m. The main variances, over £75k, are:

  • Bristol Heart Institute - £202k over profiled budget

Although the expenditure to July 2008 is over the profiled budget the forecast outturn remains at £19.423m against a budget of £21.902m. The Financial Planning section will undertake a full budget review of the scheme in September 2008.

  • Dental Student Expansion – £344k under profiled budget

As reported last month the credit balance relates to income received from the University of Bristol in respect of the Higher Education Funding Council for England’s contribution to student expansion. The Director of Facilities is in liaison with the Cost Manager with regard to the final cost report. On receipt of this the credit balance on the scheme will be addressed.

  • Ultrasound modernisation - £96k over profiled budget

The capital budget excludes a contribution of £120k from a research fund which is currently being followedup by the Divisional Finance Manager for Diagnostics and Therapy. Once this funding has been confirmed the capital funding and budget will be increased.

  1. Forecast Outturn and Slippage for 2008/09

The 2008/09 outturn has been forecast as £36.555m with anticipated slippage of £9.382m (£5.895m of this relates to uncommitted funding). The forecast slippage is higher than the expected slippage by £3.487m. The main areas of slippage, over £1m, are:

  • Bristol Heart Institute - £2.659m

The construction on the scheme is due to be completed by February 2009 with the final contractor payment due in March 2009. The slippage on the scheme is mainly due to the profiled purchase of equipment which is expected to be incurred in the early part of 2009/10. The BHI is planned to open in May 2009.

  • IM&T Office Move - £1.007m

The scheme has been delayed as a result of issues arising from the contractor tender process. A contractor has now been appointed and construction started in June 2008 withan anticipated completion date in Spring 2009. The move is expected to take place during early summer 2009.

  • Air Ambulance - £1.250m

The budget-holder has undertaken a detailed review of the project and the profiled spend is expected to be £0.750m in 2008/09 and £3.250m in 2009/10. This matches the original capital allocation of £4m; £2m in both 2008/09 and 2009/10.

  • IM&T – NCRS - £2.216m

The NCRS project is currently on hold pending resolution of contract matters nationally.

  1. Process for agreeing the revised prioritised capital programme

The prioritisation of bids against the uncommitted resources, approx £5m, (Capital 3, column 6) was reviewed at the Capital Prioritisation Group on 13th August 2008.

The capital programme will be revised for August 2008 to include the following prioritised schemes:

  • Refurbishment of Bathrooms and Toilets in the Trust £1.500m over 2 years
  • Annex in Ward 26 for infection control£0.466m

Following the approval of the above prioritised schemes the capital programme will also be revised to reflect the forecast outturn position of the capital schemes in the current programme.

The balance on the uncommitted resources, £3.034m, will be allocated following a more detailed review of the submitted bids by the Trust Operational Group (TOG). The detailed review will ensure the bids are appropriately prioritised and assessed for revenue affordability. The outcome of this review will be reported to the Finance Committee in September.

  1. Recommendations

The Finance Committee is asked to ratify the movement in the capital programme, note the position to date and approve the prioritised schemes for inclusion within the 2008/09 Capital Programme.