Agenda item

(1)       The report presented the Highways maintenance budget for 2008/09 (Revenue and Capital) following approval of budgets by Cabinet on 6February 2008 [and ratification at the County Council meeting on 19 February 2008]. Table 1 of the report showed how the Highway Maintenance Budget had been derived taking the total Revenue and Capital budgets for Kent Highway Services as the starting point. It showed overall that the maintenance works budget had increased by approximately £2m compared with 2007/08.

(2)       The main changes from 2007/08 were as follows:- Revenue: +£4m for freedom pass, +£5m for highways maintenance injection, -£1.5m targeted highways works. Capital: +£4m IT schemes [net of Ringway fixed charge share], -£1.6m for phase1 of LED conversion, -£3m capital maintenance supported by Prudential borrowing. There had also been a significant change in the accounting mechanism for the grants for rural buses and safety cameras, the effect of which was to increase the overall budget but remove income previously credited to KHS.

(3)       The “Highway Maintenance Budget Model” report to the Board on 10 January 2006 described how the budget model had been developed for distributing the available funds. The report recommended that:-

·                    Allocations for highway assets were based on a relative assessment of their degree of depreciation, and

·                    Allocations to the areas were based upon an assessment of the size and condition of their networks.

The Cabinet Member for Environment, Highways and Waste subsequently approved the recommendations. The budget model had been updated with the most recent condition and network data and had been used to develop the maintenance budget for 2008/09.

(4)       The Budget Model followed a process that:-

·                    Set out the revenue and capital budgets available for highway maintenance,

·                    Separated out the budget necessary for Operational maintenance (works that included safety repairs by NOMU gangs and routine maintenance such as gully emptying)

·                    Determined the remaining budget available for Repairs (works that maintained the structural integrity of the network)

·                    Allocated the Repairs budget between the various highway assets; and

·                    Finally allocated Operations and Repairs budgets to the new Services.

The model also provided a geographical distribution of the available funds by district for each asset group based on quantity and condition of the attributes.

            (5)       The gross highway revenue and capital budgets were set out in table 2 of the report.  The next stage in the budget process was to determine and separate out the Community Operations and Technical Services Operational maintenance budgets from the remainder of the budget available for highway maintenance. In calculating the budgets, an allowance for contract inflation had been included to maintain the current minimum level of Operational maintenance. Separating out the budgets for Operational maintenance from the overall maintenance budget determined the balance available for Repairs. This was summarised in table 3 of the report.

(6)       Table 3 of the report showed that, compared with 2007/08, the budget for Operations had risen by £3,416k owing to an increase for contract inflation but also an effort to align the budgets to the agreed standards in the Kent Highway Asset Maintenance Plan [Jan 2004]. The Repairs budget had decreased by £1,452k compared with 2007/08. The Operations budget of £12,000k for Technical Services & Community Operations was distributed between the work activities as shown in table 4 of the report.

(7)       The £24,445k Repairs budget consisted of £4,767k of Revenue and £18,928k of Capital funding. As mentioned previously, the HAB report of 10 January 2006 recommended that the Repairs budget be allocated to the various asset groups depending on the relative need of those assets. The relative need had been determined by evaluating the degree of depreciation of each of the assets and calculating the annual budgets necessary to address that depreciation. The budget model allocated the Repairs budget depending on those relative annual needs. The resultant distribution of the remaining Repairs budget across asset groups, after deducting £750k for the second phase of LED traffic signal conversion and signal refurbishments, was shown in table 5 of the report.

(8)       The next step was to allocate money to the new Community Operations and Technical Services teams and areas. The Budget model did this by assessing relative need within each district taking a range of factors into account that represented the size and condition of their highway infrastructure. In previous years a table showed the distribution to the Divisions but as these were now being phased out, although the district boundaries were still used as building blocks in the model, the funds for each asset group were no longer sub-divided in this way.  A summary of the financial allocation for maintenance was provided in table 6 of the report.

(9)       The other top-sliced costs for Operations included £400 for temporary traffic management on high speed roads, £500 for inventory data capture, £4,545k of Ringway fixed charges – of which £2,275k would be funded from capital; £800k of this capital expenditure would be recharged to IT schemes. The grand totals for 2008/09 were £25,921k for Operations [51%] and £24,445k for Repairs [49%].  Compared to the current year’s base budgets [£22,504 Operations & £25,897 Repairs], there would be an extra £3.4m for Operations but £1.4m less would be available for Repairs. The grand total for revenue funded maintenance of £28.4m in 2008/09 compared to £23.6m in 2007/08, representing an overall increase of £4.8m.

(10)     The Budget Model would continue to be developed both as a result of improved asset management practice and through monitoring the actual expenditure during the year in response to the actual demands on the highway asset.

(11)     The Board supported the proposal for recommendation to the Cabinet Member for Environment, Highways and Waste that the Highway Maintenance budget for 2008/09 be approved as set out in the report.