Agenda item

(Report by Director, Kent Highway Services)

(1)       The report presented the Highways maintenance budget for 2007/08 (Revenue and Capital) following approval of budgets by the Cabinet on 8 February 2007 and ratification at the County Council meeting on 22 February 2007. 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 that the maintenance works budget had increased by £5.154m compared with 2006/07.

(2)       The countywide programmes in Table 1 of the report included an additional sum of £1.505m for Targeted Highway Works.  This had only very recently been allocated and it had been treated as a top-slice for the purposes of the report and had not yet been distributed to the relevant maintenance or improvements budget heads pending further consideration of detailed works proposals. However it was intended to use the additional resources broadly as follows:- 

·                    £500k on a new programme to improve road signs and markings across the county

·                    £500k on additional maintenance work to street lights

·                    £300k to offset a proportion of  expected increase in tender prices for supported bus contracts

·                    £200k for structures to enable more work to be undertaken on road bridges in the county.

(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 2006/07 highways budget. The report recommended that:-

·                    Allocations for highway assets in 2006/07 were based on a relative assessment of their degree of depreciation

·                    Allocations to the Divisions in 2006/07 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 on 18 January 2006. The budget model had been updated with the most recent condition and network data and had been used to develop the maintenance budget for 2007/08.

(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 both central and divisional Operational maintenance (works that included safety repairs 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 Divisions.

(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 both the central and divisional Operational maintenance budgets from the remainder of the budget available for highway maintenance. In calculating the budgets, an 8% 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 maintenance budget determined the budget available for Repairs. The Operational maintenance budgets and remaining budget available for Repairs were summarised in Table 3 of the report.

(6)       Table 3 showed that, compared with 2006/07, the budget for Operations had risen by £4.283m owing to an increase of £2.7m for street light energy and an 8% allowance for contract inflation including maintaining the current minimum level of Operational maintenance. The Repairs budget had increased by £872k compared with 2006/07. The Divisional Operational Maintenance Budget of £10.833m was distributed between the work activities and the Divisions as shown in Table 4 of the report.

(7)       The £25.897m Repairs budget consisted of £3.445m of Revenue and £22.452m 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 £1,873 for the LED traffic signal conversion and monitoring scheme, was shown in Table 5 of the report.

(8)       The next step was to allocate money to the Divisions. The Budget model did this by assessing relative need of each Division taking a range of factors into account that represented the size  and condition of their highway infrastructure. The overall Divisional allocations were shown in Table 6 of the report.  A summary of the resulting financial allocation for maintenance was provided in Table 7 of the report.

(9)       Unlike the current year when Ringway divisional overheads had to be funded from the  works  allocations, in 2007/08 the central costs for Operations included £4.3m of Ringway fixed charges – of which £2.3m would be funded from capital. All the other Operations work was funded from Revenue and the unit rates for works items should prove significantly cheaper without this overhead element.

(10)     It could be seen that there was £23.6m funding from revenue and £24.8m from capital.  The grand totals were £22.5m for Operations [46.5%] and £25.9m for Repairs [53.5%].  Compared to the current year, there would be an extra £4.3m for Operations and £0.9m for Repairs in 2007/08.

(11)     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 as the Divisions responded to the demands on the highway asset. Contributions from the Alliance partners were sought in order to further develop the model for allocating budgets over the next ten years.

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

Following a proposal by the Chairman, Members agreed to consider Item 14 following Item 8.