CABINET 10 th FEBRUARY 2006 JOINT REPORT OF THE CHIEF EXECUTIVE AND ASSISTANT CHIEF EXECUTIVE (FINANCE, IT & RESOURCES)

MEDIUM TERM CAPITAL STRATEGY 2006/07 to 2008/09

1. PURPOSE

1.1 This paper • sets out the draft Council’s capital strategy for the next three years • updates the latest projections for 2005/06 • sets out the commitments into 2006/7 and 2007/08 • identifies the effect of funding capital expenditure on the revenue budget • updates the prudential indicators for 2005/06.

2. Background

2.1 It is essential that we are able to evidence a budget process that links revenue and capital. With the advent of changes to the revenue support regime and an increasing internal demand for “prudential borrowing” the process for planning and delivering the revenue and capital budgets needs to be improved. This paper sets out an approach for 2006/07 and beyond.

2.2 In February 2005 a report (EDRS 05020006) was taken to Cabinet detailing the 2005/06 capital programme and suggested new starts. This showed committed expenditure in 2005/06 of £37,928,000 with resources of £46,677,000 leaving £8,749,000 available for new starts. The HRA expenditure and resources stood at £33,853,000.

2.3 Proposals in this report were scrutinised by the Finance and Resources Overview and Scrutiny Commission on the 26 th January 2006 (EDRS 6010087). No recommendations were made by the Commission to Cabinet.

3. Executive Summary/Recommendations

3.1 The main items to note from this report are:

• The new draft capital strategy setting out the Councils strategy for planning future capital spend in particular the new policy led scoring mechanism requiring the need for a business case for each scheme which includes taking account of the impact on revenue. • The current projected capital spend is £5.7m above resources in 2005/06 and £1.6m above resources in 2007/08 due to capital receipts of £8.5m being set aside to repay debt in 2004/05. As a result of this and the development of a

C:\mgPageScraper\\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc Capital Strategy it is proposed that there will be no new capital schemes started in 2006/07 funded from Council resources. • The total capital spend in 2006/07 is estimated at £116m, the detail of schemes is set out at Appendix 3. • As the capital strategy is embedded and future decisions around Council funded capital schemes is policy led there may be new starts occurring in 2006/07 and beyond but all will be based on a business case appraisal and updated to Members via the budget monitoring process. • The effect on the revenue budget of the proposed level of unsupported and prudential borrowing as well as those schemes which have been given a direct revenue contribution have been included in the revenue budget.

4. Capital Strategy

4.1 The Capital Strategy attached at Appendix 1 sets out the overarching framework against which the future capital plans of the Council should be drawn. It puts this strategy into the context of the Golden Thread and Oldham Business Planning Process.

The main theme of the strategy is that all expenditure decisions should be assessed against their ability to deliver the Council’s Vision, Themes, and Priorities as set out in Departmental and Service Improvement Plans. This must also take account of the revenue implications of both financing the capital scheme and any additional revenue funding required or savings once the scheme is completed.

This will take the onus away from project managers finding funding for schemes until the schemes have been approved as a strategic fit or as having beneficial revenue consequences. Only at this stage does funding for a scheme need to be found unless Members decide they wish to bear the revenue consequences of the scheme.

5. Capital Programme 2005/06

5.1 The budget setting report in February 2005 showed a projected spend in 2005/06 of £78.4 million including HRA This was supported by resources of £80.6 million, due to additional work to meet the 2010 Decent Homes Standard funded from additional government funding for FCHO. The current projection shows spend of £106.4 million supported by resources of £100.6 million. A difference to be funded from a loan of £5.7 million. A comparison of the figures reported in February and current projections can be seen in Appendix B

5.2 For 2005/06 the total forecast spend was £78.4m against available resources of £73.4m. the gap of £5m arises as we took the opportunity to repay debt in year from capital receipts set aside.

5.3 The increase in this additional loan required is largely due to capital receipts being projected at £521,000 lower than originally estimated

5.4 The detailed analysis of the £116m therefore proposed is set out in Appendix 3.

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6. 2006/07 and 2007/08 Capital Programme

6.1 The 2006/07 and 2007/08 current commitments on the capital programme are shown in Appendix 2. The bottom line figures show that before any new starts are considered we already need to utilise a loan of £1.6 million. This leaves no Council funds available for new starts in 2006/07.

6.2 In light of the limited resources available for 2006/07 bids for schemes/funding from departments will be presented to the Capital Strategy Group to be evaluated in light of the new capital strategy. Any bids that have a good strategic fit or beneficial revenue consequences will be asked to draw up a full business case. These schemes will then be reassessed and if successful built into the capital programme in future years. This means that for 2006/07 there will be no new starts at this stage

7. Revenue Implications

7.1 Clearly most schemes will incur revenue costs for the duration of their life. For example, a new build will need to account for utility bills, rates and ongoing repairs. In most cases where a scheme replaces a building these costs will be an adjustment of previous costs. This would hopefully be a saving, for example, reduced energy costs due to better insulations.

7.2 For 2006/07 the capital programme at Appendix 3 includes several schemes that involve a revenue contribution and a depreciation charge for new and existing buildings. For example, Medlock Valley and Blackshaw Lane revenue costs have been included in the Education services and schools base budgets for 2006/07. A review by Central Finance has also confirmed that the Asset Management Revenue Account (AMRA) budget held centrally equals the depreciation charge included in Departmental base budgets.

8. Prudential Indicators

8.1 The Prudential Borrowing powers (which came into effect in April 2005) provide councils with welcome freedom with which to tackle funding issues.

8.2 Authorities must however ensure that they have in place robust procedures which ensure that any proposals is justified by a business case.

8.3 Guidelines for departments are included in the Capital Strategy at Appendix 1. These specify approval thresholds. It is proposed that these will allow:-

• Chief Officers delegated powers to approve proposals costing less than £50k • Schemes between £50k and £100k to be approved by the Assistant Chief Executive (Finance, IT & Resources)/Head of Finance • Larger schemes to be subject to Cabinet approval.

8.4 There is a requirement that in order to assess the ability to borrow the Council assesses its prudential indicators. The key indicators are set out at Appendix 4 for scrutiny.

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc 9 Community Cohesion Comments

9.1 The impact of existing programme starts rolled forward from 2005/06 included in 2006/07 were assessed against all of the Council’s corporate priorities, including community cohesion, as part of last year’s scoring system.

10. Legal Comments Not applicable.

11. IT Implication

11.1 There is limited provision for ICT schemes and the key going forward under the Capital Strategy will be to fund such schemes from prudential borrowing.

12 Property Implication

12.1 As set out in the programme at Appendix 3.

13. Recommendations

13.1 The Cabinet is recommended to :

a) Agree the Capital Strategy as a process against which future capital programmes should be set.

b) Note the current budget projections, and the impact on the revenue account.

c) Note the future years capital programme and assess the initial process by which assessment of bids is to be carried out by the Capital Strategy Group.

The following is a list of the background papers on which this report is based in accordance with the requirements of Section 100D(1) of the Local Government Act 1972. It does not include documents which would disclose exempt or confidential information, as defined by that Act.

Various files held by Assistant Chief Executive (Finance IT and Resources), Room 442, Civic Centre (Tel: 0161 911 4900).

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc APPENDIX 1

CAPITAL STRATEGY 2006-09

1.0 BACKGROUND

1.1 Capital investment shapes the future. This strategy is therefore a key element of Oldham MBC’s medium term planning process, drawn together with the contribution of all Directorates and agreed by the Senior Management Team, Capital Strategy Group and Cabinet. The document sets the strategic direction for the Council’s capital programmes and its approach to managing its £772m asset portfolio. It also provides the background against which OMBC will pursue funding opportunities in order to optimise capital investment for Oldham’s needs.

1.2 A full picture of Oldham, its people and communities, economy, transport, housing market and physical environment, can be obtained from the visionary document Oldham Beyond. Oldham Local Strategic Partnership and the Northwest Development Agency jointly commissioned this in 2004, with the objective of setting out a route for renaissance for the town.

1.3 In 2001, Oldham had a population of 217,300 making it one of the most populous boroughs in . Whilst the overall figure compares favourably to other Manchester areas it masks an internal demographic migration to the more affluent part of the borough. The capital strategy will have to support the need to attract people into the less affluent parts, which are amongst the most deprived in England. At the same time the town is striving to address perceived racial tensions. This affects, and is affected by; the fact that Oldham has been cited as one of the most racially segregated towns in the UK [Oldham Independent Review].

1.4 Oldham has traditionally been a low wage low skill economy. Initiatives are needed to diversify the boroughs economy from historically high manufacturing levels, inherited from the days of textiles. The borough can claim qualified success in doing this though its economy is still vulnerable The economic challenge is to use a mixture of inward investment opportunities and indigenous growth to create a modern sustainable economy, which we are attempting to do by, for example, the creation of the sixth form college, promotion of University Oldham and regeneration initiatives referred to below.

1.5 Though Oldham lies to the outskirts of the North West, it is at the hart of the Trans- Pennine area that encompasses , Merseyside and Yorkshire. Transport in Oldham is therefore potentially a key driver for the prosperity of the borough, and infrastructure investment could be a key element of the renaissance.

1.6 OMBC’s Strategy is based on the overarching principle that the Council’s capital investment should be deployed where it can make the greatest impact in improving peoples’ lives by helping to provide quality services and regenerate the Borough.

This will be policy led and recovery against the Council and the Local Partnership’s strategic aims will be one of the key assessment criteria for new projects.

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc 1.7 The Capital Strategy is set within the overall context of OMBC’s strategic plans, described in the Oldham Business Planning Process , the Corporate Plan, Oldham Beyond, and the Community Strategy. (Fig1.1)

1.8 The six core themes expressed in the Corporate Plan and its proposed action plans, are translated into specific targets in the Departmental Plans, which the strategy has drawn upon to help provide some specific focus for the strategy.

Fig 1.1 Where the capital strategy fits The capital strategy lies at the heart of the strategy framework, which schematically appears thus:

COMMUNITY STRATEGY 2005-2020

CORPORATE PLAN 2005-2008 VISION, THEMES AND PRIORITIES

FACILITATIN G STRATEGIES

Medium Human Info. & Asset Treasury Procurement

Term Resources Comms. CAPITAL Management Strategy Strategy

Financial Strategy Technology STRATEGY Plan Strategy Strateg y

SERVICE S TRATEGIES

Social Services Involvement Strategy School Organisation Plan Homeless Strategy

Youth Services Strategic Plan

Carbon Management Strategy

Service Improvement Partnering Agreements Plans

The Oldham community Strategy Document – Updated 2005

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2.0 STRATEGIC FRAMEWORK

2.1 Community Strategy

2.1.1 Local Area Agreements (LAA’s) are the mechanism by which Central Government is seeking to address the disjointed way in which Government funding is delivered. The disconnection was identified in the Audit Commission report “People, Prosperity, Places”. The LAA seeks to channel funding and therefore decision making at a local level through a single co-ordinating body. In Oldham’s case the body will be the Local Strategic Partnership The Oldham Partnership.

2.1.2 The Local Area Agreement for the Oldham Partnership has the strap line of “Increasing life opportunities for all” and has a number of broad aims. 1. Addressing inequalities. 2. Implementing the Community Strategy and Oldham Beyond. 3. Addressing housing needs as a strategic priority. 4. Incorporating crosscutting priorities. 5. Pre-emptive and preventative solutions 6. Drive to reduce bureaucracy and increase efficiency.

2.1.3 The aim is for the Oldham Partnership Executive to operate more akin to a Local Public Service Board, with the Partnership Steering Group having a policy making and Scrutiny role.

2.1.4 Central to all of is be the introduction of a Strategic Commissioning Framework. Utilising the framework will enable the partnership to commission the most appropriate body to deliver a programme to aid the achievement of the aims set out in the LAA.

2.1.5 The current time line is that agreement will be reached locally between the Partnership and Government Office North-West some time in February. This will then get Ministerial sign off in March ready for implementation from the beginning of April.

2.2 Oldham Beyond

2.2.1 The Oldham Beyond document was produced in conjunction with URBED. Oldham Beyond vision gives the Borough and our regional partners an ambitious, yet achievable image of how we want to develop by 2020. The “Northern Way” emphasises the potential that can be unlocked in the North to benefit the whole of the UK economy. The Borough’s position on the M62/M60 corridor means that we can spread our ambition beyond the Borough boundaries to the rest of the UK, Europe and other international markets. The building of Metrolink and the development of Hollinwood will reinforce our position as a key gateway to Greater Manchester and the rest of the world, via Manchester Airport and the ports of Liverpool and Hull.

2.3 Corporate Plan, Departmental Plans and Service Improvement Plans

2.3.1 In order to decide which of the infinite capital demands should be met from the limited resources there are a number of key strategies and policies within the Oldham Business Planning Process that should drive decision making and put capital planning in the performance framework.

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2.3.2 The Corporate Plan sets out the Councils Vision, Themes and Priorities . It identifies six main themes 1. Community Cohesion 2. A Prosperous Borough 3. Realising the Potential of Children, Young People and Families 4. An Improved Environment 5. Healthy and Well Cared for People 6. An Improving Council Striving for Excellence Future capital planning must be intrinsically linked to these themes.

2.3.3 The Corporate Plan then goes on to detail the priorities of achievement behind these themes in the short term. Some of these priorities, detailed below, have a potential impact on capital planning and may need significant sums of capital expenditure.

Corporate Theme Priority for Achievement Community Cohesion Development of an inclusive and cohesive community. Roll out neighbourhood solutions to reduce crime, anti social behaviour, vandalism, fly tipping, and littering. A Prosperous Borough Implementation and development of the Housing Market Renewal Fund. Grant of between £40m and £70m to transform neighbourhoods Well Educated and Highly Skilled People Continue to develop the University Centre Oldham. Develop Children’s Services/Centres An Improved Environment Improve local environmental quality, through improved cleanliness Healthy and Well cared for People Deliver against the Social Services Performance Improvement Plan. Develop a vision for Adult Social Care A Well Managed Council Provide more efficient, high quality services. Improving the customer experience including establishing a contact centre

2.3.4 Departmental Plans feed from and to the Corporate Plan and identify how at a strategic level departments are to achieve the Councils corporate aims therefore all capital expenditure at a departmental level should be readily identifiable with objectives set out in these plans

2.3.5 The Departmental Plans feed to and from individual Service Improvement Plans, which set out how the Departmental and in turn Corporate aims are to be achieved at a more operational level. All capital expenditure that a service requires to meet its improvements should be detailed in these plans, which should form the basis for future capital planning. This will ensure a “joined up” approach to decision making .

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2.4 The Corporate Asset Management Plan

2.4.1 The Corporate Asset Management Plan 2005 is a key document in capital planning as it provides a basis for the Council to plan for future property needs. The aim of the plan is to address property management practice throughout the council resulting in the unlocking of the full potential of property.

2.4.2 The Corporate Asset management Plan identifies seven top priority proposals, all which need addressing in the short term and should provide focus for capital planning. These are: • Review of OMBC public access/customer facing and office accommodation • Review opportunities for new partnerships packages for Housing, Leisure, Schools and possible others • Introduce efficiency targets for OMBC assets • Establish a corporate asset management framework including a Corporate Landlord function • Review of Social Services accommodation strategy and incorporate into corporate asset management delivery • Strategic review and action plans for Regeneration assets • Upgrade property management information

2.4.3 In the short term the most important of these proposals is to establish a corporate landlord function. Once this is established it will act as a focus and facilitator for other capital priorities.

2.5 Medium Term Financial Strategy

2.5.1 The Medium Term Financial Strategy clearly states that a comprehensive medium term and long term capital programme should be an integral part of our financial planning. It lays out five guiding principles of • Open, • Anticipatory, • Intelligent, • Coherent and • Action orientated planning, which should be a key part of any financial strategy.

2.6 Unitary Development Plan

2.6.1 The Unitary Development Plan will influence capital planning as it sets a framework for the development of land in the Oldham area for the next ten years.

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc 3.0 CHALLENGES

3.1 Availability of Funding

3.1.1 Needless to say, the Council has potentially infinite demands for capital funds but only finite resource. Fig 3.1 shows the full range of resources used to finance the 2004/2005 capital programme.

3.1.2 The Council has access to capital grants and to funds that subsidise repayment of borrowing (“supported borrowing”). These are mainly fixed by Central Government.

3.1.3 Central Government funds are often “ringfenced” to particular areas (for example highways allocations can only be spent on highways works) and the strategy must accommodate such restrictions. Moreover, Central Government funding is usually only allocated on an annual or bi-annual basis. This leads to uncertainty in service departments when addressing the medium term and requires a flexible approach to capital strategy.

Fig 3.1 Sources of Capital Funding 2004-05

Capital Receipts £5.9m Other £0.2m Other Capital Grants £2.2m

Government Grants £18.9m

Supported Borrow ing £39.8m Housing Major Repairs Reserve Prudential Borrow ing £12m £0.4m

3.2 Ability to Borrow

3.2.1 The Council is now allowed to borrow in excess of supported borrowing for capital purposes. This is under a regulatory regime called Prudential Borrowing, supported by the Local Government Act 2003, which requires the Authority to: • establish borrowing limits and key borrowing indicators over a rolling three year period, • assess individual borrowing decisions against those limits, and their impact on the local taxpayer and • support borrowing decisions through a Business Case.

The principles and practices of Prudential Borrowing are fully reflected in the Oldham Business Planning Process, referred to in 2.3, and the Capital Strategy must accommodate this process.

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3.3 Revenue Implications

3.3.1 Since the relaxation of borrowing controls, local authorities are focussed entirely, from a finance point of view, on the implications of their actions on the Revenue Account. Capital decisions affect revenue in two ways:

1. The operational revenue consequences of making the decision (e.g. staff costs) and, 2 The cost of financing borrowing (interest plus debt repayment)

The challenge is to maximise capital outcomes whilst minimising adverse revenue impact.

3.4 Regulations

3.4.1 CIPFAs’ Statement of Recommended Practice (SoRP) on local authority accounting has very real implications for capital planning as it determines what type of expenditure may be treated as capital.

3.4.2 The Council is conscious that its reporting and monitoring procedures will need to accommodate Whole of Government Accounting. This is to aid UK Government in its aim to consolidate and reconcile the activities of all public bodies. In relation to capital this means a particular aim to support, with audited evidence, the Golden Thread of Government Policy, that borrowing is only undertaken for investment purposes.

3.4.3 The legislative framework which includes the Local Government Act 2003, further restricts the capital planning process by determining the income which can be classified as a capital receipt, imposing a minimum level of revenue monies which has to be set aside for debt repayment from the General Fund and the amount of capital receipts which are available to use after pooling arrangements.

3.4.4 The Housing Act 1989 has further legislative requirements that are specific to Housing Revenue Account. This means when planning capital expenditure greater attention needs to be paid to HRA expenditure to ensure it meets these requirements.

3.4.5 Sitting beneath this legislation is the Local Governments Capital Financing and Accounting Regulations, which interprets these Acts and makes amendments to the Acts on an ongoing basis.

3.4.6 Local Authorities have certain legal obligations they have to fulfil which result in capital expenditure on an ongoing basis for e.g. Disability Discrimination Act, Water Quality and Asbestos Management. These items need to be taken into consideration first when planning capital programmes.

3.5 The Green Paper – Meeting the Challenge of Our Changing Environment

3.5.1 The Green Paper Meeting the Challenge of our Changing Environment will be a key influence on any future capital planning. It challenges why the council is holding assets as it moves to a more commissioning approach.

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3.6 Partnerships

3.6.1 With the forthcoming SSDP, central government actively encouraging closer links between local authorities and health authorities, PFIs becoming increasingly more common as a method of replacing assets, and Local Area Agreements the councils partners will play a key roles with future capital planning.

3.6.2 A quarter of our capital programme, Public Sector Housing, is currently delivered through an Arms Length Management Organisation (FCHO). The current contract for this delivery is due to expire in 2007, the Councils future plans for delivering this service will have a major impact on capital planning.

3.7 Housing Market Renewal Fund

3.7.1 Oldham & Rochdale MBC joined forces to create Oldham/Rochdale Partners in Action Pathfinder, this partnership attracted £53.5m in funding to implement plans for the renewal of the housing market in both boroughs for 2004-2006. The fifteen year Housing Market Renewal Programme that began in 2004 is a once-in- a-lifetime opportunity to remodel our neighbourhoods and provide homes for the 21st and 22nd centuries.

3.7.2 The strategy of the Pathfinder is to provide high quality, new mixed use neighbourhoods adjacent to the town centres of both towns and transform the image and conditions of both boroughs, requiring substantial new build and demolition.

3.7.3 HMRF currently accounts for approximately 20% of OMBC’s capital programme, and any future funding and strategies will have a major impact on OMBC’s housing strategy to delivering private sector housing and the decent homes standard in the borough

4.0 THE STAKEHOLDERS

4.1 The people who live and work in and around Oldham are clearly the ultimate target for the Councils’ capital strategy and the primary stakeholder. There are a number of bodies that play a key role in influencing the capital strategy. These are detailed in the table below.

Stakeholder Function Stake in Capital Strategy Local Partnership Partnership of service delivery Set local strategy and hence bodies, funding panels & strategic capital needs across beneficiary bodies formed to set services. Identify cross service local agenda capital delivery opportunities Full Council, Full Elected Council Members forming Set individual service capital Cabinet, Cabinet governance and scrutiny hierarchy strategy. Approve overall Council Members, and of the Council. Capital budget. Scrutinise Overview and Scrutiny individual capital decisions. Commission Approve Prudential borrowing schemes over 500k

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Strategic Management Most senior strategic body of Review & advise cabinet on Team Council officers. Led by head of capital strategy document and paid service and formed from other principal capital proposals individual service directors, to intended for approval by Full advise Council and cabinet in Council and Cabinet. formulating policy. Capital Strategy Group Permanent committee of Council Coordinates Council capital Officers & 2 Cabinet members, strategy. Addresses cross cutting who’s chair reports to the Strategic capital issues. Formulates draft Management Team. capital strategy for approval by Council. Assesses departmental asset management plans Asset Management Committee of Council officers Advise Capital Strategy Group of Group formed to co-ordinate the necessary actions on Council acquisition, use, disposal and properties. Devise Asset refurbishment of Council property. Management Plan. Departments & Budget Senior managers producing Service plans will result in holders departmental plans, heads of service Departmental Asset Management managers producing service Plans and prudential borrowing improvement plans, Schools Forum, proposals. These will feed and school governors. through to the Corporate Asset Management Plan and Capital Strategy Funding Panels Separate decision making bodies Fund some local authority capital that approve grant funding both to programmes at 100% and some the Council and to other external that require match funding. organisations e.g. Housing Market Renewal, New Deal for Communities Central Government Provide majority of funding for Dominant influence over the Departments Local Government. Set high level broad allocation of majority of agendas that drive much of local capital funding. Also nationally government activity. driving consultation and partnering agenda through initiatives such as HMRF and PFI funding

5.0 DEPARTMENTS

5.1 Regeneration Dept

5.1.1 The work of the Regeneration Department contributes to all six corporate themes, but has a lead role in the achievement of a prosperous borough, as it does in the delivery of Oldham Beyond.

5.1.2 The Regeneration Department underpins the Town’s vision of flourishing neighbourhoods by generating and sustaining vibrant and inclusive economies. Our overall aim is to close the gaps between the most deprived communities in the town and the town, regional and national averages. Working to ensure that everyone benefits from the economic prosperity of the town.

5.1.3 Together with an increased focus on improving our District Centres, the development of new Local Improvement Finance Trust (LIFT) Health Centres and Children Centres and the redevelopment of Oldham Town Centre, we are making our Borough a much more

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The Department is split into three divisions with specific areas of focus: -

5.1.4 Area Regeneration Division The Division is responsible for co-ordinating Boroughwide regeneration and delivering a broad range of physical regeneration projects, which support the integrated economic, social and environmental regeneration of the Borough. This includes developing and implementing Masterplans for specific areas of the Borough i.e. Hollinwood Motorway Junction, Mumps Business Area.

The physical improvement work across the Borough is managed or undertaken by staff within the division and much of this is done either jointly with or directed by the Council’s partners but following a shared vision detailed in ‘Oldham Beyond’.

The Division is also undertaking the delivery of physical improvement projects in specific areas of the borough funded by SRB6, NDC, HMRF and evironmental programmes. Our role is to ensure that activities successfully support and compliment the range of regeneration action that is within the Oldham Beyond vision, such as the transformation of Hollinwood and the Oldham Town Centre.

The Division works closely with partners, providing advice and support, including a number of private sector developers and investors, as well as our public sector partners e.g. Oldham Primary Care Trust, Higher Education etc. A key element of the Division’s approach to partnership involves close working with the Area Committees and Area Committee Managers. Working together will maximise the impact of improvements throughout the borough and ensure achievement of mutual goals, particularly in relation to work around ‘common ground’ and ‘public realm’.

5.1.5 Property Development and Investment Division The Division provides specialist advice and expertise in identifying and facilitating property development opportunities aimed at increasing inward investment and encouraging economic activity. The Division works closely with the Area Regeneration Division in supporting those regeneration activities, which involve property development. The Division is heavily involved in major development initiatives at Hollinwood Junction, Oldham Town Centre as well as the District Centres.

They are also responsible for providing an ongoing Business Advice and Relocation Service to both existing and prospective businesses and input into the promotional marketing of the Borough, working closely with MIDAS and North West Development Agency.

5.1.6 Strategy Division Responsible for the co-ordination of the work of the Department across the borough as a whole to ensure consistency with the Oldham Beyond vision, working closely with and supporting the Area Teams. The team is also the main point of contact with the Chief Executives Department, supporting implementation of Boroughwide policy initiatives and bids for additional resources. The Division liaises with other Council Departments and other public bodies to support the implementation of corporate documents such as

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc the Local Development Framework and the Local Transport Plan and to help them with their own land and property requirements. Specialist advice is provided on issues such as Housing or Environmental Improvement, ensuring consistent standards of delivery are met by improvement schemes and the Private Sector Housing Service across the whole borough. The team also has responsibility for the Housing Market Renewal process within Oldham and Private Sector Housing.

5.2 Social Services

5.2.1 The Social Services department is fundamental in achieving the Councils theme of Healthy and Well cared for people. Its main aim is working with both other council departments and external bodies to fulfil the potential of all the people of Oldham through promoting independence and protecting the vulnerable.

5.2.2 With the need to establish a Children’s Services department which will incorporate the Children’s Services division of Social Services the department has taken this opportunity to review its current portfolio of assets with the ain of reducing the number of assets it owns and channelling any receipts from these assets into improving those it decides to retain. This should result in improved service delivery especially with the Adults and Older Peoples Services enabling people to stay and live independently in their own homes.

5.2.3 Within Children’s Services the department is looking for partners to provide two Children’s Homes enabling a further reduction in holdings.

5.3 Education

Central to the work of the Council’s Education and Cultural services Department are Social Inclusion and Raising Standards, the major focus of the Education Department Plan (EDP). Moreover, the Departments Business Plan’s Mission Statement is:

To provide, promote and develop high quality inclusive education and cultural opportunities, which meet the needs of all those who live, work and are educated in or visit the Borough of Oldham.

This underpins all our work across the whole Education field especially in our work with schools.

Oldham is currently the 46 th most deprived authority nationally, with many local people lacking the skills required by today’s employers, despite step changes in educational attainment. An emphasis on increasing skill levels and raising educational attainment is required if Oldham Council is to achieve its goal of a higher wage economy and a more prosperous Borough. The population of Oldham is going through significant changes in ethnic composition and age structure. These changes will present both challenges and opportunities to the Council. Oldham faces a cycle of deprivation, which will only be broken through a serious commitment to education and training.

The approach to Asset Management Planning priorities and the capital programme will play a major part in tackling these acute socio-economic challenges. Oldham LEA has clear policies, strategies and priorities, with the raising of educational achievement and

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc inclusion central to them. Better school buildings and youth facilities will enhance educational attainment and promote community cohesion.

Current Major Programme

The LEA: • Has successfully bid for £58 million of PFI credits, which is being used as the first step towards transforming the Borough’s secondary school provision. This allocation will rebuild 2 of the 3 Community Split Site Schools;

• Has successfully bid to the Targeted Capital Fund for the replacement of Lyndhurst Primary School and Springbrook Special School for children with emotional and/or behavioural difficulties on the Lyndhurst School site, which will open in September 2007;

• Is currently building a 105 place extension for Burnley Brow Primary School. Due to open end June 2006.

• Is building 5 childrens centres on school sites in the most deprived areas of Oldham. Schools in Phase 1 are Richmond, Propps Hall, Littlemoor, Beever and Stanley Road.

• Has successfully bid to the Targeted Capital Fund for an innovative bid for the creation of a Sports Performance Theatre at College for Technology and Sport.

Future Major Programme

The LEA is currently carrying out capital works funded from The Big Lottery Fund at;

• The Hathershaw College of Technology and Sport (refurbishment of gym, café, dance studio and IT facility);

• The Radclyffe Community Secondary School, (design and build an indoor sprint track);

• There is also planned provision of children’s centres in the most deprived areas of Oldham by 2010.

Building Schools for the Future

The authority has been notified that it is in wave 4 of the Building Schools for the Future programme and will receive an allocation between 2009/2011. This is a major opportunity to regenerate the Borough and rationalise secondary education provision throughout the authority. Extensive consultation has commenced and will continue in order that the Authority’s proposal can be drawn together.

Departmental Property Strategy

The Department is embarking on a Departmental Property Strategy that will inform the allocation of resources and future capital bids for its premises other than schools and it is hoped that significant funding can be identified for future developments in this area.

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc Supporting Schools The LEA will continue to support schools and encourage partnership funding of Capital Schemes in order to improve the condition and suitability of schools and will continue to promote the partnerships in place with the Roman Catholic and Church of England dioceses to improve the aided sector property portfolio.

Children’s Services Department

Whilst the above programmes refer specifically to the Education & Cultural Services Department there is a need to look to the future and to the implementation of Capital Programmes to support the requirements of the new department. In light of this, the current approach to Asset Management planning will need to be reviewed in order to deliver outcomes arising from the implementation of the Children’s and Young peoples Plan which is currently in draft form and out for consultation.

5.4 Environmental Services

The strategy for the department is somewhat blurred by the various changes happening within the directorate including the absorption of the area committee into the department, the imminent partnership agreements with a parking provider and a white collar partner. These will all have an impact on the capital requirements going forward.

• Transport & Infrastructure - the investment strategy is to secure significant improvements to transport and communications, particularly to the road networks in line with the objectives of the Local Transport Plan (LTP). The LTP highlights the need for development of integrated public transport networks across the area as well as promoting the transfer of freight from road to rail wherever possible. This would help ease the pressure on the road infrastructure. However, a recent assessment of the condition of the roads has identified an immediate need to invest £60M to bring the standard up to BVPI upper quartile. The current provision is woefully inadequate to maintain the extensive network. This situation is exacerbated by the damage to the network caused by the prevalent weather conditions, particularly frost. The network and street lighting provision are increasing year on year win line with completion of new housing estates. Costs for tradesmen, contractors, materials and disposal of spoil are all increasing are a rate far above inflation reducing the meterage of the annual planned infrastructure renewal.

• Street lighting replacement requires a further £28m, while rural/urban transport packages, safety schemes and minor works require ongoing investment. Regional priorities emphasise releasing development potential through improvement of strategic transport links . Where possible, external funding is used to augment to meagre capital and revenue budgets. PFI and prudential borrowing options are being explored, but both involve exchanging existing budgets to repay the new arrangements. It is unlikely that adopting these options will merely postpone the problems to future years rather than provide the required additional funding. • Property - Property ownership is actively being review and a process is in place to reduce the amount of office accommodation used by the council itself, to identify and dispose of excess “greenspace” and other surplus assets to reduce the call on buildings maintenance budgets.

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc • Parks and Greenspace - The policy of soft landscaping areas is being reviewed to reduce the ongoing call on the grounds maintenance budgets. New schemes will focus on minimising labour intensive soft landscaping schemes and focus on hard landscaping schemes whilst maintaining the aesthetics of the environment. The number of parks will be rationalised. However, the remaining parks will be enhanced to improve security for the users and provide upgraded or additional facilities for the core users. • Fleet – the procurement exercise for the new fleet has recently been completed. And therefore, there should be no need to review the fleet in the foreseeable future. • Waste Disposal - investment in the Council’s Civic Amenity (CA) sites to improve effectiveness, accessibility and growing demand – CA site tonnage is increasing but recycling targets are still well below LA averages. A business plan is currently being implemented that identified capital and revenue costs and new income streams. This plan, if successful, will support the Council’s waste recycling and PSA targets.

6.0 Procurement

6.1 Given the scale of the capital works undertaken each year by the Council, it is important that an efficient, effective and economic approach to procurement of the capital works is in place. Consequently, the Council has adopted a procurement policy that sets out its commitment to:

• Set rigorous quality standards • The retention of a robust procurement and monitoring procedure to ensure the ongoing delivery of Best Value • The development of schemes that take better account of sustainability issues and the need to minimise lifetime revenue costs

The Council continues to explore procurement opportunities in accordance with these principles with recent examples including:

Newbridge Secondary School PFI Library, Lifelong Learning Centre, Schools and Housing New primary schools builds Retaining walls contract

7.0 Capital Expenditure Strategy

7.1 Drawing on all the above challenges and influences it emerges that the Council requires an overarching capital strategy that co-ordinates the efforts of all departments and stakeholders and focuses around their future capital needs. It is vital that the Capital strategy is co-ordinated at a borough wide and Corporate level. All capital expenditure will be evaluated within the strategic framework with a focus on the Councils Vision, Themes and Priorities.

7.2 There is a need for the Council to reduce its asset portfolio and make more efficient use of the assets it holds, for e.g. through shared accommodation and fit for purpose. The Asset Management Plan quite rightly proposes a need for a Corporate Landlord to ensure decisions taken on our asset portfolio are the best for the Council and the people

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc of Oldham as a whole. This may in some instances not be the most beneficial for individual departments in the short term.

8.0 Disposal Strategy

8.1 Currently when surplus assets are identified the department responsible for the asset informs the Property Services section and this asset is then offered to departments who if interested take over the asset rental and maintenance cost of the asset. In future the department that wishes to take over the asset will need to pay the market value for this asset. This should ensure that no asset is retained once it has been identified as surplus, without a full Business Case justification.

9.0 Reporting and Monitoring

9.1 Currently the departments make bids to the centre for capital resources which are then evaluated by a scoring mechanism. This scoring mechanism has been updated to take account of the new focus on revenue implications and a stronger emphasis on the Corporate Plan, Departmental Plans and Service Improvement Plans. (See Appendix B)

9.2 Due to the scarcity of both capital and revenue resources (excluding those items that we have a legislative requirement to fulfil) future capital bids need to be supported a Business Case (see Appendix A). This case should justify the need for capital expenditure, examine the options available and identify the full revenue consequences and whole of life costing of the project. The business case should clearly show a link to the areas Service Improvement Plan, Departmental Plan and Corporate Theme.

9.3 These business cases will then be assessed by the Corporate Capital Strategy Group, which in turn will advise Members. It will be the decision of Members as to what schemes will progress.

9.4 Monitoring of the capital programme will continue to be carried out centrally in the Chief Executives department. The common aspects of many capital projects makes best use of the centralised expertise and the close links with central treasury managements. Centralising capital budgets also aids comparison of differing schemes seeking resource.

9.5 Progress against approved schemes will be reported to Cabinet on a quarterly basis and the individual departments Departmental Management Team on a monthly basis.

9.6 An annual post completion report will also be produced detailing schemes of significant value that have completed in the previous year, identifying key learning points and successful solutions used.

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc Appendix A

Business Case

All bids must be submitted using the following business case:

A. INFORMATION • Project Title • Project Sponsors B. BUSINESS CASE • Description of the project - What is the purpose / objective of investment? • Description of how the project supports the Authority’s Corporate Plan • Description of how the project supports the Departmental Plan • Description of how the project supports your areas Service Improvement Plan • Identification of innovation (if applicable) • Consultation – internal - external • Current Performance • Current capital costing information / comparative data • Target performance after investment - What will be the outcome? • Where an asset is to be disposed of state exit strategy including any barriers to disposal which need to be overcome C. OPTIONS APPRAISAL • Options identified, discarded and evaluated. (Include comment on financing options. This should include consideration of opportunities to claim grants, and evaluation of leasing as well as prudential borrowing) C. REVENUE IMPLICATIONS • Identify the repayment period of the investment. This can be cash or non- cashable savings. • Identification of savings to be retained in the department. • Identification of any additional revenue resources

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc D. FUNDING REQUIREMENTS • Identify and analyse what level of investment is needed? Note include implementation costs such as any training. • Identify any match funding, e.g. external grants / partners. E. TIMESCALES / MONITORING • Set out the timescales for implementation • Note project management arrangements • A description of how savings achievement and performance improvement will be monitored. F. RISK ASSEMENT • Identify barriers to achievement and suggested ways to overcome – note any cost implications and include in costing section. G CONFIRMATION YOU HAVE SOUGHT COMMENTS / ADVICE AS APPROPRIATE FROM: • Treasurers • Legal • Property • HR

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc Appendix B

ASSESSMENT CRITERIA

Each project will be assessed based on an open and transparent scoring system and based the Councils new ability to borrow within the constraints detailed above will have a lower emphasis on capital funding.

The new criteria will be based on a filter system detailed below and only when a scheme has scored sufficiently highly on the first two section will scoring on the second section commence. This will enable a quick comparative view of Revenue Consequences v Strategic fit to highlight schemes which stand out at either end of the scale (see appendix C)

Section Criteria Scoring Maximum 1 Strategic Fit – Supports Corporate Plan, 7 Departmental Plan and Service Improvement Plan 2 Revenue Implications – provides continuous 7 cashable savings, 3 Ability to deliver continuous improvement 7 4 Likelihood of success/Risk 7 5 Funding Available 7 TOTAL 35

It is intended that whilst project managers should look for methods of funding a vast amount of time is not spent prior to approval doing this.

Members should, when approving schemes, decide whether they wish to fund a scheme by revenue growth to cover the cost of borrowing or if they wish a scheme to be financed by other methods. If the second is the case the project manager together with the Capital Accounting Team should set about securing funding.

Even if members decide to finance a scheme from revenue growth an effort should still be made to still secure funding from other sources.

Illustrative examples of how schemes evaluation criteria might be applied are included in Appendix C below.

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc Appendix C

Guidance The First two sections will be considered concurrently at outline stage. These are • Strategic fit and • Revenue implications.

This will allow cross comparison on these two criteria and focus further analysis on schemes considered worth pursuing. The following graph illustrates how leaders (scheme A below) and losers (Scheme F below) can be easily identified and “marginal” schemes subjected to finer analysis.

Figure 1: Example of graph used to compare Revenue Impact to Political support

Stage 1 Analysis

8 Sch. A 6 Sch. B

7] 4 Sch. C 2 Sch. D 0 Sch. E Political [0- Support 0 2 4 6 8 Sch. F Revenue impact [0-7] Sch. G

The Outline Business Case of schemes passing on the first two criteria will then be evaluated on all five criteria, which are the two above plus:

• Ability to deliver continuous improvement • Likelihood of success – Inherent risk • Available funding

The objective is to make the comparisons, of what will be very different schemes, as methodical as possible in the manner described in the Medium Term financial Plan. The decisions should be Open, Intelligent and Coherent. The decision at each stage may be to:

Reject the scheme, Require an improved Outline Business Case, Move to a Full Business Case or Implement the scheme

What follows is an illustration of the criteria that could be applied for each element of the assessment. It is envisaged that scoring will be as flexible as possible for example could be in fractions and could be negative. The key is that they are applied in a logical and consistent manner.

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc Strategic Fit The project should address one or more of the six broad aims of the Oldham Partnership , the six Themes of the Corporate Plan or the Priorities for Achievement within the Corporate Plan. The Business Plan should demonstrate links to these, and to the Service Improvement Plans of the section. Using these as you bullet headings, describe the ways in which your plan links in. Examples of key issues: The project makes a major contribution to one or more key aims/themes The project contributes across a broad range of themes The project is integral to other approved projects The project clearly links to the stated aims of the service improvement plan The project makes good contribution to partnering agenda The Policy ties are unclear but the projects has clear potential policy benefits The project aims have strong Member support The project has already obtained SMT support Overall Score Strategy

Revenue Implications Examples of Key issues: Business Plan shows, in cash flow form, the annual revenue implications for each year and for the whole of the schemes life. The revenue costs of capital are fully disclosed The risks inherent within estimates have been stated Revenue costs are only reduced for secured funding The project makes a positive contribution to revenue The project is entirely self financing The project requires third party funding, already secured The project requires third party funding and finance identified There is a revenue cost to the Authority - addressed in Funding Section Net present value of cash flows Payback period Overall Score Revenue Implications

STAGE 1 SCORE

Ability to Deliver Continuous Improvement Examples of key issues: Non financial resources / expertise have been identified in the Business Plan Those resources are available within Council Those resources are readily available in the marketplace / community Project timelines and milestones have been provided in the Business Plan SMART targets have been established to measure the effect of the project Actual instances of achieved outcomes in other bodies have been provided Independent evaluation of the target outcomes have been provided Where there are a number of possible outcomes, these have been evaluated Dependant factors have been highlighted and risk evaluated Recommendations for scoping the project have been made Recommendation for future developments beyond the project life have been made

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc Overall Score Delivery

Risk Assessment - Likelihood of Success Examples of key issues: A draft risk register and action points is included in the Business Plan A schedule of likely outcomes has been compiled indicating probability of desired outcomes, with financial evaluation where appropriate The quantified risk score is low The quantified risk is moderate but payback is commensurately high Examples of successful similar schemes exist within the Council Examples of successful similar schemes exist within other Councils Empirical evidence has been produced to demonstrate likely success The majority (>80%) of risk will be transferred to a third party Some risk (%?) will be transferred to a third party NPV of Council funds at risk are £k

Overall Score - Risk

Funding Key issues An annualised schedule of capital and revenue funding requirements has been provided External funding is required and has been secured External funding is available and has been applied for External funding is available External funding will not require Council match funding Match funding is required and has been specifically identified. Match funding is required and a likely source identified. There is a call on Council resources which has been quantified The NPV of revenue implications of the funding is £k

Overall Score Funding

OVERALL SCHEME SCORE

Example of Low, High and Medium scoring Schemes

Example Scheme 1

A speculative purchase of land, which has become available in the city centre, £1,000,000

The land occupies a key site in the area and could be used in a number of ways to link to either Commercial (Spindles) or Education (College). Due to the uncertainty of use revenue statements have not been prepared, though the holding cost is known up to the point of development.

It is generally accepted that the price is reasonable from a commercial standpoint and a range of future sale values have been estimated all indicating a positive payback in 5+ years’ time if the asset were to be sold. A car park developer is also known to be strongly interested in the land

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An outline business case has been prepared though many elements of this could not be completed. It has been requested that prudential borrowing be undertaken to secure the land for a quick purchase at the offered price.

Score and Comment Few projects that are submitted are without merit and clearly there are good reasons why the authority would like to purchase the land. Unfortunately the uncertainties surrounding the project would be likely to lead to a low score, 1 or 2, in the first round and the scheme would lose out by comparison to others. The scheme is unlikely to score more than a couple of points on strategic fit as its future contribution to strategy is uncertain. It would probably score highest under the P re-emptive Solutions bullet of the Local Partnership and could score under Improved Environment or Well Educated and Highly Skilled heads in the Corporate Plan or Prosperous Borough.

Of more concern are the uncertainties surrounding finance. As future use is uncertain it is impossible to project the revenue costs and income from the project and the resultant impact on Council finances. What is known is that there will be an annual “holding cost” for the land of around £100k per annum (interest and Minimum Revenue Provision) which would have to be met from budget savings or from Council Tax until the scheme cashed in, which in itself is uncertain and could, in a worst case, actually be a further capital loss, restricting future investments.

The example illustrates the problem experienced by Regeneration department in obtaining quick decisions on land opportunities. It also explains the use of partners in such speculative developments, where the risk and costs are borne in the development vehicle. Options are being considered for a separate mechanism to evaluate such opportunities.

Example Scheme 2 The IT ledger systems of the Council are need of replacement. They are over five years old and the maintenance costs are escalating. The licence holder has indicated that all support will be withdrawn at the end of the current licence period, three years. The age of the system leads to excessive manual operations and hence a slower and more costly bureaucracy.

The cost of replacement of the core systems is estimated at £1,500,000 though there is considerable scope for movement either way. Other Councils have successfully replaced their systems and achieved savings of around 15% in staffing costs. These arise from a mix of direct job redundancy and efficiency savings across the authority. A business case has been prepared indicating that the payback period will be two to three years providing all savings are cashable, though no details of how this will be achieved have yet been provided.

Score and Comment The project would be likely to score in the mid range on the first stage, a four or five. The project scores in the Well Managed Council and Pre-emptive Solutions categories and underpins many of the service delivery policies and is also clearly linked to service improvement plans.

Financially, the project is capable of quantifying its costs and paybacks with a reasonable degree of certainty though there are issues still to be ironed out as the business plan is developed. The plan does indicate, though, a call on Council resources in the first couple of

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc years until the scheme pays back. The finance team and managers would have to resolve this issue in the Funding analysis for the scheme to proceed.

The assessment of the scheme on Ability to Deliver and Risk Assessment will require more information than provided above and would be addressed in the Business Case. This type of project is very mainstream and there is no reason why the scheme should not score reasonably in the second round provided thorough work is carried out in the Business Case. The first draft of the case, for comparison to other schemes, will present the data in outline only (hence the name “outline business case”) and further work will be needed to firm up on finances, facts and statistics before the scheme is implemented. Much of the financial risk would revolve around cashing in savings and the case should deal with this matter in detail

On funding it is important to note that thought the scheme makes a positive contribution over its life, there will be an initial funding gap which may cause it to suffer by comparison to other schemes and hence only score a 4-5 overall.

Example Scheme 3

The Council is undertaking the refurbishment of five care homes. This is partially from funding specifically provided for the purpose under a welfare capital grant but the opportunity is being taken to undertake refurbishment not included within the supported element. The main unsupported element is boiler replacement costing £1,500,000.

A full business plan has been presented showing that not only will the replacement boilers reduce costs but they will also help the Council in its Carbon Management Programme. In two out of five instances it will prove possible to link the new boilers to adjacent Primary care Trust buildings and the PCT will contribute toward the revenue cost out of their budget.

It is estimated that the scheme will pay back all costs by the end of the second year. The contractor has agreed in principle to withhold invoicing of boiler refurbishment until the second year.

Score and Comments The outline details of the scheme rank high in initial Policy and Revenue scoring. It scores on a number of themes and also has a cross cutting and partnering aspect. From financial point of view (assuming a thorough Business Case) the scheme is self financing in aggregate and year on year. The management have solved the early revenue cost of capital problem by partnering with the contractor. This would be a 6 or 7.

The second stage review should reveal how realistic the scheme is. Whilst the project has some innovative aspects, most aspects of it will be within Council experience and a strong management team should be able to resolve the risks and uncertainties inherent to the project. There also should be a body of evidence as to the amount and certainty of payback. A well presented Business Case should obtain a 6 or 7, though the complexities may require a Full Business Case before the scheme was given the go ahead.

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc Capital Expenditure and Resources 2005/06 APPENDIX 2

Expenditure Revised Current 2006/07 2007/08 Budget Estimate £’000 £’000 £’000 £’000 Regeneration Economic Development 5,200 5,845 9,864 1260 Regeneration Town Centre Developments 1 ,452 1,003 3,324 0 Regeneration Environmental Works 666 3,716 663 3 Housing Private Sector 3,846 20,529 25,091 0 Chief Executives Department 2,035 2,939 3,087 0 Education & Culture 18,824 17,116 23,848 10,022 Transport 10,729 12,443 13,894 5,459 Environmental Services 1378 2,705 1,674 0 Social Services 400 3,368 127 0 Housing Public Sector 33,853 36,688 34,753 8,033 Total 78,383 106,352 116,325 24,777

Resources

Revenue 267 1,952 101 0 Prudential Borrowing 0 3,290 6,000 0 Unsupported Borrowing (LPSA) 934 934 0 0 Supported Borrowing Allocations 13,056 12,733 12,035 10,199 Grants & Contributions 19,603 39,945 * 46,509 4,914 HRA Supported Borrowing 26,222 27,700 * 25,200 0 Major Repairs Allowance 7,631 5,825 * 8,253 7,033 HRA Grants & Contributions 0 537 * 1,300 1,000 HRA Prudential Borrowing 0 837 0 0 HRA Revenue 0 1790 0 0 Modesole Airport Dividend 611 624 30 0 Capital Receipts after Set aside 4,993 4,472 15,557 3,500 Total 73,317 100,638 114,681 26,646

Total Additional Loan Needed/(Surplus 5,066 5,714 1,644 (1,869) Resources)

* We are awaiting final confirmation of the figures from central government any charges will be reported to Cabinet on 10 th February and/or Council on 22 nd February.

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APPENDIX 3

CAPITAL PROGRAMME 2006/07 BY SCHEME

Education and Culture

Scheme Exp in Exp in Exp in 2005/06 2006/07 2007/08 £’000 £’000 £’000 Richmond Childrens Centre 684.5 1150.7 0 Stanley Rd Childrens Centre 136.4 856.4 0 Beever Childrens Centre 130.1 866.9 0 Propps Hall Childrens Centre 181.1 1078.8 0 Littlemoor Childrens Centre 182.3 1292.9 0 Childrens Centres Indicative Allocation 0 2170.0 0 Phase 2 Blackshaw Lane New School 2273.4 0 0 Burnley Brow Extension to 2FE 957.2 34.8 0 New Medlock Valley School 2441.0 0 0 Lyndhurst & Springbrook Replacement 386.7 4428.7 1531.8 Schools Hathershaw College Sports Centre 277.5 740.0 0 Refurbishment Radclyffe College Indoor Athletics Track 474.8 1320.0 0 Hathershaw School Specialist Netball 303.1 0 0 Development New Bridge Secondary Special School 1171.5 0 0 Park Dean Extension & Remodelling 343.2 0 0 Provision for new Schemes funded by 0 2357.0 4383.3 NDS Modernisation Provision for schemes funded by Schools 0 516.6 372.0 Access Initiative Provision for schemes funded by 0 4385.2 3691.5 Devolved Capital Other Minor Education & Culture 7173.7 2650.0 43.2 Schemes

Total Education & Culture 17116.5 23848.0 10021.8

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc Regeneration

Scheme Exp in 2005/06 Exp in 2006/07 Exp in 2007/08 £’000 £’000 £’000 Private Sector Renewal 898.2 0 0 inc Safe as Houses & Home Repair Assistance Private Sector Renewal 1260.7 270.3 0 Westwood & Coldhurst Private Sector Renewal 1771.1 607.0 0 Glodwick Disabled Facilities Grant 696.0 Trf to Soc Serv 0 HMRF – Werneth 6940.0 347.9 0 HMRF – Derker 8243.0 2627.8 0 HMRF – 2 nd Wave 720.0 200.0 0 Provision for additional 0 18000.0 0 HMRF monies Provision for Housing 0 3038.0 0 Grant Total Housing Private 20,529.0 25091.0 0 Sector Oldham Town Centre 201.7 1175.1 0 Failsworth District Centre 615.5 1599.3 0 Various Other minor 185.8 549.6 0 Schemes Total Town Centre 1003.0 3324.0 0 Contour Environmental 1000.0 0 0 Improvements Hollins & Avenues Estate Ashton Rd 451.8 0 0 Environmental Improvements Other Minor Schemes 2264.2 663.0 0 Total Environment 3716.0 663.0 0

Land at Albert St 646.2 0 0 Roxy Cinema Acquisition 560.3 282.7 0 Repayment of Derelict 617.3 0 0 Land Grant Improvements to 346.3 278.7 0 Business Premises Grants Grant Assistance not -736.0 736.0 0 required by developer Opportune land 0 1200.0 1150.0 acquisition Hathershaw Community 533.2 2831.3 108 Centre HMRF 1245.9 1143.1 0

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Other Economic 2631.8 3392.2 2 Development Schemes Total Economic 5845.0 9864.0 1260 Development Total Regeneration 31093.0 38942.0 1260

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc Environmental Services & Transport

Scheme Exp in Exp in Exp in 2005/06 2006/07 2007/08 £’000 £’000 £’000 Legionella 95.6 200.0 0 Asbestos Removal 192.8 200.0 0 Rear Passages Improvements 400.0 0 0 Alex Park 414.1 0 0 Energy Conservation 20.0 90.0 0 DDA 71.9 309.4 0 Other Environmental Services Schemes 1510.6 874.6 0 Total Environmental Services 2705.0 1674 0

Hobson St Car Park 0 1347.6 0 Integrated Minor Works 632.5 349.0 501 A62 Huddersfield Rd QBC 1124.2 0 0 A62/Broadway QBC 486.3 250.0 0 Lees Rd Salem QBC 20.0 150.0 750 Local Safety Schemes 1058.7 1119.0 1119 Neighbourhood Road Safety Initiative 223.5 283.0 0 Delph Bridge 47.0 298.8 0 Yates St Bridge 0 260.0 0 Oldham Way Ph 3 467.7 90.7 0 Platting Rd Retaining Wall 600.0 0 0 A670 Standedge Rd Retaining Wall 400.0 0 0 Royton & Shaw Road Maintenance 674.4 0 0 Chadderton Road Maintenance 279.9 0 0 Saddleworth & Lees Road Maintenance 716.5 0 0 Failsworth & Hollinwood Raod 404.7 0 0 Maintenance Road Maintenance General Provision 366.0 1874.0 1700 Hathershaw & Fitton Hill Street 453.5 106.0 0 Lighting Transport (subject to business case) 0 6000.0 0 General Provisions & Various small 4488.1 1765.9 1389 schemes Total Transport 12443.0 13,894.0 5459

Total Environmental Services 15148.0 14,568.0 5459

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc Social Services

Scheme Exp in Exp in Exp in 2005/06 2006/07 2007/08 £’000 £’000 £’000 Willow House Replacement 490.5 0 0 Moreton St Flats 524.0 0 0 Highbarn Refurbishment 380.0 0 0 Electronic Social Care System 954.8 118 0 Other Social Services Schemes 1019.1 9 0

Total Social Services 3368.4 127 0

Chief Executives

Scheme Exp in Exp in Exp in 2005/06 2006/07 2007/08 £’000 £’000 £’000 HR & Payroll System 0 800 0 Corporate Contact Centre 653.6 0 0 Replacement Council Tax & Benefits 502.4 0 0 System IT capital Programme 590.0 0 0 Provision for Claims/Overspends etc 400.0 1000 0 M60 Motorway Noise Nuisance 0 340 0 Invest To Save 0 500 0 Other Chief Executives Schemes 792.5 447 0 Total Chief Executives 2938.5 3087 0

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc Housing Public Sector

Scheme Exp in Exp in Exp in 2005/06 2006/07 2007/08 £’000 £’000 £’000 Cowhill 690.0 0.0 0.0 Washbrook 1,500.0 0.0 0.0 Arden St 1,541.5 0.0 0.0 Dairyside 0.0 540.0 0.0 Canal St 0.0 630.0 0.0 Acquireds- Chadderton 0.0 810.0 0.0 Richmond Mill 0.0 830.0 0.0 Chadderton West Ph1 0.0 934.0 0.0 Taylor Street 0.0 1,520.0 0.0 Henley Street 313 0.0 0.0 560.0 Higher House Close 0.0 0.0 810.0 Shield Street/Villiers Drive 699.7 0.0 0.0 Welfold and Norbury 761.5 0.0 0.0 Bardsley Estate 865.5 292.0 0.0 Burnley St Phase 2 1,078.7 0.0 0.0 Eldon St Heating 1,253.0 0.0 0.0 Barker Street 2,183.0 0.0 0.0 Crete Street 0.0 569.4 0.0 West Street Estate 0.0 600.0 1,361.0 Environmental Improvements Programme 0.0 798.0 0.0 Provision-West West Oldham Heating Obsolescence 0.0 868.0 0.0 Acquireds-West 0.0 1,027.4 0.0 Electrical Improvements-West 0.0 1,208.4 664.6 Coldhurst Reroof 0.0 1,500.0 0.0 Werneth & Freehold 0.0 1,655.0 0.0 Busk Estate 0.0 0.0 506.7 Jenny Street and Margaret Street 603.3 0.0 0.0 Hollinwood Estate Refurbishments 655.8 0.0 0.0 Day Drive 782.4 0.0 0.0 Brierley Avenue 836.8 0.0 0.0 Ashton Road East 1-3 1,005.4 0.0 0.0 Hollinwood Estates 0.0 750.0 0.0 Clough Road 0.0 2,316.0 0.0 Lymditch 0.0 0.0 615.0 Marlborough Dr 0.0 0.0 750.0 Egerton Street 598.8 0.0 0.0 Glodwick Phase 2 & Gordon Ave 631.3 0.0 0.0 Environmental Improvements Phase 3-St Marys 800.0 122.9 0.0 Sholver 9 1,370.7 0.0 0.0 Sholver Flats 1,870.0 0.0 0.0 Sholver 7&8 2,258.4 0.0 0.0 Dunkerley Street 0.0 587.7 0.0

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc Environmental Improvements Programme 0.0 750.0 0.0 Provision-East Acquireds-East 0.0 960.0 0.0 Stoneleigh 2 0.0 1,288.3 0.0 Stoneleigh 1 0.0 1,362.1 0.0 Wallshaw Street 1 0.0 0.0 700.0 Derker 0.0 0.0 1,679.2 Lees & Wrigley Square 918.3 0.0 0.0 Springhead 0.0 808.0 0.0 Milton Street 570.0 0.0 0.0 Queen St/Sumner St 693.7 0.0 0.0 Oak St/Beal Lane 1,000.0 0.0 0.0 Mill St/Holly/Flake Lane 1,466.3 0.0 0.0 Birchenlee 0.0 1,550.0 0.0 2005/06 Programme-Boroughwide 522.1 0.0 0.0 Group Heating 1,110.0 120.0 386.5 SX3 Implementation of new computer system 1,582.2 0.0 0.0 Future Programmes 0.0 600.0 0.0 Schemes below £500,000 6839.6 9,755.8 0.0

Total Housing Public Sector 36,688 34,753.0 8,033.00

C:\mgPageScraper\Oldham\Intranet\CABINET\20060210\Minutes\$m2nvamqo.doc APPENDIX 4

PRUDENTIAL INDICATORS

1. The Local Government Act 2003 section 3(1) requires the Council to determine and keep under review how much money it can afford to borrow. In meeting this duty the Council must have regard to the Prudential Code published by CIPFA (LA capital Finance Regulations 2003 - reg (2)). The Prudential Code requires the Council to determine the indicators listed below and to monitor against them during the year.

Indicators 2. The Council is required to note the estimated ratio of financing costs to the net revenue stream for both HRA and non HRA services

Code Prudential Indicator 2005/06 2006/07 2007/08 2008/09 35 Estimated ratio of financing 6.82% 6.75% 6.51% 6.17% costs to the net revenue stream (non HRA) 36 Estimated ratio of financing 26.06% 28.15% 29.44% 28.43% costs to the net revenue stream (HRA)

3. The following indicators show the impact on council tax and rents of the capital programmes proposed for the next three years

39 Estimated impact of capital - £1.20 £9.36 £10.95 investment decisions on the Council Tax (band D) 40 Estimated impact of capital 0 0 0 0 investment decisions on housing rents

4. The above figures are based on the assumptions in the Capital Programme report (ie that unsupported borrowing on new starts in 2005/06 will cost £6.651m, and £Nil in 2006/07. For 2007/08 it has been assumed that unsupported borrowing will be covered by capital receipts in the year. Moreover it is implicit throughout that prudential borrowing will only be undertaken where a business case shows that this is matched by increased revenue or reduced costs, and thus nil effect. Total new starts will of course be greater, but because the additional spend will be subsidised it should have no effect on Council Tax levels. The HRA impact is shown as nil because all HRA spend is fully subsidised. 5. Borrowing should only used for capital purposes The following indicator ensures this by comparing net borrowing to “the capital financing requirement” (CFR). The CFR is a measure, extracted from the Balance Sheet, of the need to borrow for capital purposes.

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Code Prudential Indicator 2005/06 2006/07 2007/08 2008/09 45 Net Borrowing should not exceed the Capital Financing Requirement two years hence: • Net Borrowing £333.8m £380.0m £391.2m £395.6m • Relevant Capital Financing £401.1m £429.1m £457.1m £485.1m Requirement

6. In the above table the CFR shown is that two years hence (i.e. the indicator allows for borrowing in anticipation of future capital spend). The CFRs for each of the following three years is as follows

31/03/06 31/03/07 31/03/08 31/03/09 53 Estimated Capital £189.694 £201.661m £203.328m £226.800m Financing Requirement at year end (non HRA) 53 Estimated Capital £178.623m £203.822m £202.822m £202.322m Financing Requirement at year end (HRA)

7. The estimated total capital expenditure (on committed and new schemes) over the next three years is as follows

Code Prudential Indicator 2005/06 2006/07 2007/08 2008/09 48 Estimated non HRA £69.666m £81.572m £16.744m £5.586m capital expenditure in year 49 Estimated HRA capital £36.689m £34.753m £8.033m £7.511m expenditure in year TOTAL £105.355m £116.325m £24.777m £13.097m

HMRF expenditure has been included in these figures.

8. There are other prudential indicators in respect of borrowing. These will be reported in the Treasury Management Strategy Statement which will be submitted to Cabinet in March.

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