Realignment of capital allocation programme (land & buildings) 2003/04 - 2007/08

Report: 11
Date: 10 April 2003
By: Commissioner

Summary

On 13 February 2003, the Finance Committee approved a revised strategy and way forward for the capital programme (Land & Buildings). In essence the capital available is too small to fund the schemes originally envisaged and the Authority is faced with wider liabilities and obligations across the estate that need to be funded. In addition, growth pressures need to be accommodated.

The revised strategy approved a shift to ‘themed’ investment to meet policing needs and a major recast of the land and buildings 5 year capital programme is attached for approval. Pressures remain intense and utilising revenue funds to support capital investment needs offers no solution in view of the maintenance backlog and the impact of legislative requirements both on policing facilities and buildings in themselves.

Members are reminded that this land and buildings capital programme excludes the needs of the residential estate. While this programme is cast for the next five years, Property Services is charged to produce a review, including new funding sources, in the next 24 months.

A. Recommendations

That

1. the revised land and buildings capital allocation programme be approved as contained in appendices 1 and 2 which appear in the exempt section of this agenda;
2. the Director of Property Services be authorised to continue to exploit self-funding opportunities by levering off the assets in the interim (e.g. PPP and commercial property transactions);
3. the inability to fund works by the deflection of revenue funding (due to backlog maintenance and the sheer scale of need) be noted.
4. the difficulties of working within available funding envelopes be noted.
5. That the Committee notes that the recently announced proposal to move to ward based policing is not reflected in these proposals and it is assumed this will operate from the existing estate.

B. Supporting information

Introduction

1. On 13 February 2003 the Committee approved a new strategic approach to the land and buildings capital programme for the next 5 years. This acknowledged the inadequacy of capital funds available to the Authority and approved the move to a policing priority “themes” based programme while Property Services reviewed wider options to draw in new funding sources.

2. This report examines the themes costings/estimates and concludes that even with this strategic shift the land and buildings capital allocation remains insufficient to meet demand. Additional pressures have also arisen such as the need to upgrade the Serious Crime Group accommodation in South East London which requires upgrading and which affects the PFI stations.

3. The schemes and themes in the recommended programme have to reflect the statutory and contractual obligations on the Authority and achieve best value from existing contractual obligations in the estate. At the same time growth needs to be accommodated at best value.

4. Members are advised that at this stage insufficient data exists fully to cost the programme and the revised approach represents an allocation based on the best current estimates at 2003/04 prices. As construction inflation usually exceeds RPI inflation there will be continuing pressures unless capital allocations move in line with construction inflation. Other pressures such as legislative change are more difficult to predict and are not reflected in the programme.

Strategic overview of impact

5. It is proposed, that within themes of capital spend, preference /importance is given to policing priorities across the metropolis (e.g. Safer Street Boroughs, growth pressures intelligence – led demand, counter terrorism etc.).

6. Recent officer growth has been accommodated - although often at the expense of falling standards - based on policing deployment priorities. The revised programme will require additional officer deployment to take place in available accommodation.

7. The resultant inability to renew the existing estate and upgrade it to meet today’s needs increases the risk of building failure, particularly at Hendon (recruitment/growth) and in the central estate where standards will need to be reduced to accommodate staff and officers.

8. The impact of the review is positive in that themed projects are smaller in cost and enable greater flexibility over time and location. Otherwise all major renewals and rebuilds are postponed until at least 2006/07 pending the delivery of additional indirect funding (i.e. using funds other than those directly provided by the Authority). The schemes cannot be site specific at this stage.

9. The revised programme are submitted for approval in exempt Appendix 1 with supporting cross-reference to past plans in exempt Appendix 2. The attached commentary provides a guide to the appendices.

10. Members' attention is drawn to the fact that to accommodate the policing priority themes (forgetting estate fabric and space needs) within the funding envelopes has required that these be spread over 2 to 3 years which is sub-optimal and falls short of demand / expectation.

11. All OCU’s, Business Groups and BOCUs affected have been advised of this report and its impact.

12. To deliver additional indirect funding (PPP, PFI, bonds etc) will, as advised in the approved strategic review paper, not be a quick exercise. Until that review is available, which will inevitably pose affordability issues, the Committee is invited to approve the new land and buildings capital allocation programme. Detailed reports to authorise commitment will be submitted as necessary.

C. Equality and diversity implications

1. In legal compliance terms various aspects of this report indicate that the Authority may not have sufficient funds to meet its statutory obligations across the estate (Disability Discrimination Act etc). This will disadvantage certain groups and employees.

2. Otherwise no other direct impacts are anticipated.

D. Financial implications

1. The capital allocation for land and buildings is inadequate to meet the size of the estate and the demands of growth. Hence a backlog of work is being created.

2. In the meantime, the funding envelope and capital demand needs are proposed to be reconciled in the manner proposed by this report.

3.. The impact of the adoption of the Prudential Code has been anticipated in year 04/05 and has resulted in a modest planned over commitment for that year.

4. Details of new schemes will be brought forward for Members' approval in the normal way.

5. Revenue implications are not currently in the medium financial plan but are not expected to be significant and will be built into the medium term financial plan as appropriate.

E. Background papers

• Strategic Review of Capital Programme 13 February 2003 - Finance Committee

F. Contact details

Report author: Alan Croney, Director of Property Services, MPS.

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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