Corporate Property Asset Management Plan
CABINET
8 JULY 2003
CORPORATE CAPITAL INVESTMENT STRATEGY/PROPERTY ASSET MANAGEMENT PLAN
PART OF PUBLISHED FORWARD PLAN – YESSTATUS – CABINET POLICY
1.0 / PURPOSE AND POLICY CONTEXT
1.1 / The purpose of this report is to provide the Cabinet with the opportunity to consider, review and agree the documentation forming part of this year’s submission to the Office of the Deputy Prime Minister (ODPM), via Government Office South West (GOSW) in respect of Corporate Capital Investment Strategy and Property Asset Management Plan (AMP).
2.0 /
DECISION REQUIRED
2.1 / That Members note the performance details in respect of last year’s submission.2.2 / That Members consider and confirm the Context document and supporting information relating to the Corporate Capital Investment Strategy and Property AMP, (attached as Appendices 1 and 3), for submission to the Office of the Deputy Prime Minister (ODPM), via Government Office South West by 31 July 2003.
3.0 /
BACKGROUND
3.1 / In 1998, the Government issued a White Paper entitled, “Modern Local Government – In Touch with the People” in which it promised a new cross-service allocation for the bulk of central government capital support to local authorities, through what it termed ‘a single capital pot’.3.2 / The Government’s stated purpose and objectives for the single capital pot is to promote and reward strategic planning and good performance that strikes a balance between local decision making and the need to meet national priorities. Government guidance further envisaged that the single capital pot should deliver improved outcomes and better services through:
· Better planning, by giving greater predictability in funding levels and allowing more flexibility;
· More autonomy and accountability, and greater responsibility for local authorities in making spending decisions;
· Better corporate, and strategic working, and more effective tackling of cross-cutting issues; and
· Better use and management of its assets.
3.3 / Advice from the ODPM indicates that for 2002/03 the amount distributed through the single capital pot represented half of the funds that could potentially have been directed through this mechanism. This was increased to 60% for last year’s (2003/04) allocations and we are now advised that the Government has committed to increasing the proportion to two-thirds by the end of the current review period, (2004/05). It has also indicated that there will be no ring fencing of funds for those authorities assessed as excellent under the comprehensive performance assessment, (other than for funding pass-ported directly through to schools).
3.4 / For this Council, the first allocations made under this system were announced in December 2001, for the financial year 2002/2003. The Council received £75,000 Basic Credit Approval (BCA) following the assessment of our Capital Investment Strategy as being “good” and the Corporate Property Asset Management Plan as being “satisfactory”. The subsequent 2002 submissions were both assessed as being ‘good’ and the council consequentially received a £100,000 BCA.
3.5 / In the past the Government has required the submission of three documents:
(i) A context document, (containing core data);
(ii) A capital investment strategy; and
(iii) A corporate property asset management plan.
However, in line with a broader initiative to ease the plan burden on local authorities, the Government has decided to relax the requirement to submit all but the context document and core data for those authorities whose submissions were assessed as ‘good’.
3.6 / The information contained in the old context sheet includes some basis statistical information including key data on asset numbers, value and condition and a general overview of the Council’s District. Additionally, the Government has requested that local authorities continue to provide returns on property performance indicators, (PPI’s). All of this data will be used to inform and support decisions about local authority investment needs and priorities in future spending reviews.
3.7 / The Government has also indicated that authorities will need to continue to produce capital investment strategies and asset management plans for their own purposes, in particular as:
· a means of consulting and informing stakeholders; and
· a robust and effective management tool.
They also believe that once the proposed prudential system of capital finance is introduced, the strategy and plan will become an essential part of the annual budget setting process.
3.8 / Recent guidance from the Government also suggests that they will continue to work with local government in encouraging and supporting further development of asset management planning and have stated that effective use of assets should be taken into account in relevant best value reviews and will also continue to form part of the assessment process in government inspections as well as in the comprehensive performance assessment.
4.0 / Considerations
4.1 / Context documentation
4.2 / Attached as Appendix 1 is a copy of the Context Document revised to incorporate the latest information and democratic structure of the Council and is presented for Member consideration, for submission to GOSW as required by 31st July 2003. Whilst last year’s (July 2002) submission is included as Appendix 2 for comparison purposes, the alterations made simply reflect the changes in political administration and the consequential amendments to the democratic process introduced to date.
4.3 / The only other amendment made is the inclusion of the consolidated balance sheet, which is an additional item of information requested this year.
4.4 /
2003 Core data information
4.5 / Appendix 3 to this report sets out the Property Performance Indicator (Ppi) data, (core data), that is required, in accordance with ODPM’s single capital pot guidance for 2003, to form part of the submission to GOSW by 31st July 2003. To assist Members comparison of the information, explanations and definitions have been provided along with last year’s information being placed alongside this year’s data.4.6 / In relation to Ppi1 there has been a general reduction in the condition of the Council’s property assets and a consequential increase in higher priority maintenance backlog. On a positive note, the costs associated with priority 1 work have reduced by a small amount. However, in all other priority levels there have been increases in the maintenance backlog and consequently the costs necessary to fund the work.
4.7 / Property Performance indicators Ppi3 and Ppi5 have been the subject of a change in the Office of the Deputy Prime Minister (ODPM) definitions. It is not therefore appropriate to make comparisons this year. Similarly, no year on year comparisons are provided for Ppi2, as this indicator is intended to compare the rental income generated by an asset over a ten year period against its capital value. The objective of this indicator is focused on illustrating the financial advantages or disadvantages of holding or disposing of assets within the Council’s portfolio.
4.8 / Property Performance Indicator 4 is a series of indicators that enable comparisons to be made of the efficient use of Councils assets. As such the indicators consider:
· Repair and maintenance costs per square metre (based on the gross internal floor area);
· Energy costs, (gas, electricity, oil and/or solid fuel) per square metre (based on the gross internal floor area);
· Water costs per square metre (based on gross internal floor area); and
· CO2 emissions in tonnes of carbon dioxide per square metre.
Alan Muzzall
Head of Building Consultancy Services
Telephone 01202 633212
Joe Logan
Head of Housing Management Services
Telephone 01202 633424
The Capital Investment Strategy 2002/2003
Government White Paper - ‘Modern Local Government - In Touch with the People’
Government White Paper - ‘Strong Local Leadership - Quality Public Services’
DTLR - ‘Single Capital Pot Guidance 2002 - Part 1’
DTLR - ‘Single Capital Pot Guidance 2002 - Part 2’
BOROUGH OF POOLE
CONTEXT DOCUMENT
FOR THE
CAPITAL INVESTMENT STRATEGY & ASSET MANAGEMENT PLANS
Submission to Department of Transport Local Government and the Regions
1.0 CONTEXT1.1 The Borough
The Borough of Poole is a compact area of about twenty five square miles, which encompasses some of the most beautiful coastland in the south of England. Poole Harbour is the largest natural harbour in Europe so it is of significant ecological, recreational and commercial importance. It is also said to be one of the UK's busiest ports. The local economy is based on services, manufacturing and tourism. Unemployment levels are low, standing at 1.1 percent in September 2001, however this masks a low wage economy and pockets of deprivation in parts of the area, as well as a growing divide between rich and poor.
The Borough is one of the fastest growing in England, with a population of one hundred and thirty eight thousand three hundred and ninety (138,390) which is predicted to rise to one hundred and forty five thousand four hundred and fifty (145,610) by 2011. There is a higher than average proportion of those above retirement age. Generally, the population is affluent, partly as a result of recent steep rises in the price of houses and land locally, however, this masks a low wage economy.
Over the last thirty years Poole has grown so rapidly that many of its resources are now stretched. New housing development so far has been integrated into the town and commands high prices. Across the area there is a significant shortage of social housing, which provides only eleven percent of the housing stock. Also green belt restrictions are very tight despite strong pressure for further development.
1.2 The Council
In 1997 Poole was granted unitary status, breaking away alongside Bournemouth from Dorset County. Since then the Council has risen to the challenge of achieving a step change in the way it does business and uses the opportunities provided by the Government's agenda positively and innovatively. Government targets have been met and the Council's approach has been encouraged through a range of positive inspections by the Social Services Inspectorate (SSI), the District Auditor, the Best Value Inspectorate, also of its schools by OFSTED and more globally from an Improvement and Development Agency, (IDeA) peer group and the Comprehensive Performance Assessment. Locally, the Council has obtained peer recognition from its partners in the public and private sectors.
The Council employs five thousand four hundred, (5,440) people and is the largest employer within the borough. Services are delivered through 23 service units, all of whom have achieved Investors in People (IiP) recognition, each of which being directly managed by a Service Unit Head (SUH). The six Policy Directors (PD's) do not carry operational responsibilities but co-ordinate clusters of services, (e.g. education, social services and housing functions are divided into a number of discrete service units which are managed across directors' portfolios).
The Council has an annual net expenditure budget of £126.2 million. Within this, service budgets are delegated to SUH's.
The Council aims to deliver through a "corporate governance" approach, and has developed its own political structure, which involves a Cabinet, five Overview Groups, three Scrutiny Committees, five Area Committees and a Standards Committee.
Taken overall, the Council’s Capital Assets are valued at over £440 Million. This includes approximately 4,800 council houses, 1,100 hectares of open space, 495 kilometres of highways, 588 operational and 128 non operational property establishments and land parcels including schools, libraries, offices, social services establishments and transport depots.
The Council has recently had a change of its political administration and is therefore, currently re-evaluating its capital strategy. It has however, identified a minimum annual average need for capital funding of £11.125 million from a combination of government allocation and local finance. Its low debt position and extent of revenue financing will enable the Council to take up borrowing in accordance with the prudential framework, (when introduced) in order to deliver its current Capital Investment Strategy objectives, the extent of which is being addressed in the development of the medium term plan and anticipates that the level of disposals required are as follows:
2003/2004 Target / 2004/2005 Target / 2005/2006 Target£2,500,000 / £500,000 (estimated) / £500,000 (estimated)
CONSOLIDATED BALANCE SHEET
As at / As at
31 March / Notes / 31 March
2001 / 2002
£000's / £000's / £000's
FIXED ASSETS
Operational Assets
178,945 / - Council Dwellings / 1 / 191,151
172,023 / - Other Land & Buildings / 1 / 181,731
304 / - Vehicles, Plant & Equipment / 1 / 248
3,937 / - Community Assets / 1 / 3,978
49,611 / - Infrastructure Assets / 1 / 52,601
Non-Operational Assets
35,341 / - Investment Properties / 1 / 34,395
440,161 / 464,104
555 / Deferred Charges / 6 / 870
1,501 / Long Term Debtors / 7 / 1,147
442,217 / TOTAL LONG TERM ASSETS / 466,121
CURRENT ASSETS
311 / - Stocks and Work-in-Progress / 384
14,378 / - Debtors / 8 / 13,852
9,000 / - Investments / 9 / 9,000
1,870 / - Cash and Bank / 2,363
25,559 / 25,599
CURRENT LIABILITIES
(17,460) / - Creditors / 10 / (18,998)
0 / - Borrowing repayable within 12 months / (3,970)
(22,968)
450,316 / TOTAL ASSETS LESS CURRENT LIABILITIES / 468,752
(986) / Deferred Capital Receipts / 11 / (912)
(1,769) / Provisions / 14 / (1,032)
447,561 / TOTAL ASSETS LESS LIABILITIES / 466,808
FINANCED BY:
Capital Reserves
(327,824) / Fixed Asset Restatement Reserve / (343,014)
(89,337) / Capital Financing Reserve / (92,791)
(7,325) / Government Grants - deferred account / 12 / (10,382)
0 / Usable Capital Receipts / 15 / 0
Earmarked Reserves
- Major Repairs Reserve (HRA) / (1,176)
(9,664) / - Capital Fund / (8,117)
(296) / - Capital Fund (schools) / (348)
(547) / -Capital Replacement Reserve / (483)
(434,993) / (456,311)
Revenue Reserves
General Fund
(2,599) / - General/Un-earmarked / (2,213)
(1,537) / - Cost Centre Balances / (980)
(4,130) / - Schools Balances / (4,734)
(128) / - Schools Insurance reserve / (150)
(1,163) / - Invest to Save / (464)
(892) / - Insurance Fund Reserve / (292)
(370) / - 'e' government / (312)
(120) / - Local Plan / (200)
(62) / Collection Fund (see page 24) / (27)
(1,567) / Housing Revenue Account / (1,125)
(12,568) / (10,497)
(447,561) / TOTAL EQUITY / (466,808)
R L JACKSON CPFA
Head of Financial Services
1