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Agenda Item No 7

The Vale of Glamorgan Council

 

Learning and Culture Scrutiny Committee: 12th December 2016

 

Report of the Interim Director of Learning and Skills

 

Initial Capital Programme Proposals 2017/18

 

Purpose of the Report

  1. To provide an update on the progress of the Capital Programme for 2016/17 and to submit for consultation the initial capital proposals for 2017/18.

Recommendations

It is recommended that :-

  1. Committee note the progress relating to the 2016/17 Capital Programme.
  2. Scrutiny Committee consider the 2017/18 initial capital budget proposals and forward its recommendations to Scrutiny Committee (Corporate Performance and Resources) as the lead Scrutiny Committee.

Reasons for the Recommendations

  1. To ensure that Members are aware of the position with regards the 2016/17 Capital Programme, relevant to this Scrutiny Committee.
  2. In order that Cabinet be informed of the comments of Scrutiny Committees before making a final proposal on the 2017/18 Capital Programme.

Relevant Issues and Options

2016/17 Capital Programme

  1. Appendix 1 details financial progress on the Capital Programme as at 30th September 2016.
  2. The changes detailed below have been reflected in Appendix 2.
  3. St Brides Expansion - An emergency power was approved on 17th October 2016 to increase the budget to £510k in order for the scheme to proceed. This is funded from s106, and includes £10k brought forward from 2017/18.
  4. Victorian Schools - External consultants are being appointed to project manage this scheme with the aim of appointing contractors in March 2017 for works to start during Easter 2017. The project will be split between a number of contractors to ensure that the high priority repairs are completed as early as possible and all works are completed by March 2018. It has therefore been requested that £1.2m is slipped from 2016/17 to 2017/18.

2017/18 to 2021/22 Capital Programme

  1. The Welsh Government (WG) announced the provisional 2017/18 General Capital Funding, on 19th October 2016. The 2017/18 Capital Settlement is a flatlined capital settlement which for the Vale of Glamorgan Council equates to General Capital Funding of £5.405m which is made up of £2.045m General Capital Grant and £3.360m Supported Borrowing.
  2. There is no indication of the level of funding likely beyond 2017/18 and therefore in line with the approach adopted in the Medium Term Financial Plan the proposals assume a reduction of 10% for each year of the programme from 2018/19.
  3. Appendix 2 sets out the Initial Proposals for the Capital Programme between 2017/18 and 2021/22 for schemes relating to this Committee.
  4. The Council will seek to mitigate the projected deteriorating funding situation by looking to progress only those schemes which are deemed to be a key Corporate Priority and make a clear impact to the Wellbeing and Future Generation priorities. The Council will seek assurances that schemes included in the capital programme can be delivered on time and within budget.
  5. In addition to external funding, the Council will finance part of the Capital Programme from its own resources, e.g. capital receipts and reserves.
  6. The table below details the General Capital Funding and internal resources required to fund the proposed schemes for the Council as a whole.

Analysis of Net Funding Required for the Indicative 2017/18 Capital Programme

GENERAL FUND

£'000

£'000

Welsh Government Resources

   

Supported Borrowing

3,360

 

General Capital Grant

2,045

 

Total Welsh Government Resources

 

5,405

Council Resources

   

General Capital Receipts

1,006

 

Reserves/Leasing

7,142

 

Total Council Resources

 

8,148

Net Capital Resources

 

13,553

HOUSING REVENUE ACCOUNT

   

Housing Reserves

3,631

 

Housing Unsupported Borrowing

12,473

 

Net Capital Resources

 

16,104

Total Net Capital Resources

 

29,657

     

 

Capital Bids 2017/18 to 2021/22

  1. New capital bids were invited for return by 30th September 2016 and the number of bids received was in line with previous years since the 5 year capital programme was introduced (2 from Learning and Skills, 11 from Environment and Housing and 3 from Managing Director and Resources) in addition a joint bid was submitted from Housing and Planning. Departments were requested to rank their own bids in order of importance before submission and bids from each Department were forwarded to the Insight Group for evaluation.
  2. The Insight Group used a number of criteria to assess the Capital Bids. The first criteria used was to classify the nature of the bids, the criteria used is set out below;

Priority Level

Criteria

A

Health and Safety legislation

B

Other Legislation/Statutory Requirement

Ci

Economic Sense/Invest to Save

Cii

Corporate Plan

Ciii

Sufficiency

D

Condition/Suitability

E

Welsh Government Requirements

F

Low Priority

   
  1. Where bids are rated an A or B on the above criteria there would clearly be a legal obligation to ensure that works are progressed in a timely manner within the confines of the funding available. Schemes that represent an invest to save opportunity or support the achievement of corporate priorities should also be prioritised.
  2.   In addition, in accordance with the criteria set out in the Budget Strategy, the bids were prioritised in terms of their corporate priority and the risk they pose to the Council if they are not pursued. The risk assessment element was undertaken in line with the Council's Corporate Risk Management Strategy as follows;

Possible Impact or Magnitude of Risk

Catastrophic

MEDIUM

MEDIUM/HIGH

HIGH

VERY HIGH

High

MEDIUM/LOW

MEDIUM

MEDIUM/HIGH

HIGH

Medium

 LOW

MEDIUM

MEDIUM

MEDIUM/HIGH

Low

VERY LOW

 LOW

MEDIUM/LOW

MEDIUM

Risk Matrix

Very Unlikely

Possible

Probable

Almost Certain

Likelihood/Probability of Risk Occurring

           
  1. Taking into account the nature of capital schemes, the following criteria were applied to assess corporate priority:

Corporate Priority

Score

Commitments and areas where the Council has no control over the expenditure, e.g. contractual and legal commitments, absolute minimum statutory service, taxes, etc.

3

Very high priority (publicly announced commitment e.g. items included in the Community Strategy, Corporate Plan etc.)

2

"Invest to Save" and preventative expenditure

2

Statutory expenditure above the absolute minimum and other priorities

1

Low Priority

0

   
  1. The bids were also reviewed for the contribution that they made to the Wellbeing and Future Generations criteria as set out below;

         - Long Term

         - Integration

         - Collaboration

         - Prevention

         - Involvement

  1. Each scheme was awarded one point for every one of the outcomes that it met to a maximum of 5.
  2. Only those schemes assessed as corporate priority 1 or higher and medium risk or higher are included in these proposals. In addition the schemes put forward should contribute to at least three Wellbeing and Future Generations outcomes and should have a scheme priority factor of either A/B/Ci/Cii/Ciii. The bids that did not meet these criteria were excluded from consideration as there was insufficient funding available and these bids are detailed in Appendix 3 with a reason for their exclusion.
  3. Details of the Learning and Skills proposed capital programme is shown in Appendix 2.

School Investment Programme

  1. The 21st Century Schools Programme is the Welsh Government's funding initiative for investment in schools. The first tranche of schemes under Band A of the funding were submitted prior to November 2011. Band A schemes run between 2013/14 and 2018/19. Band B schemes are expected to commence in 2019/20.
  2. The schemes included under the Band A submission for construction between 2013/14 and 2018/19 are; Ysgol Nant Talwg, Ysgol Dewi Sant, Ysgol Gwaun Y Nant and Oakfield , Colcot and Llantwit Learning Community. The Ysgol Nant Talwg, Ysgol Dewi Sant, Ysgol Gwaun Y Nant and Oakfield schemes are now complete and Llantwit Learning Community is on track to complete in September 2018.
  3. In October 2016 the Vale of Glamorgan Council received notification from WG that the funding envelope for 21st Century Schools would in principle be increased from £30.848m to £32.048m pending the receipt of a satisfactory business case. This includes funding for a new Band A scheme Romilly Primary permanent structure a scheme which is expected to cost £1.2m, funded by £600k WG Grant and £600k contribution from the School Investment Strategy Reserve.
  4. Band B Schemes are expected to commence in 2019/20 and in December 2014 the Council submitted proposals for a number of schemes to Welsh Government. Based on latest indications, it has been assumed that 50% funding will be available from Welsh Government to fund these schemes. However, there is no guarantee that this funding will be available from Welsh Government or what form it will take.
  5. During 2016/17 reports were taken to Cabinet regarding two key schemes to be progressed under Band B
  • Proposal to establish new Mixed Sex Secondary Schools in Barry - estimated cost £44m.
  • Proposal to Increase Welsh Medium Secondary School Places - estimated cost £19.3m
  1. Given the extremely high level of Council funding committed to these schemes any other proposals progressed as part of Band B would need to be fully funded by Capital Receipts, S106 and WG funding. If WG funding is not available at 50%, the scale of these schemes will need to be reviewed by the Council.
  2. It is proposed that the Band B schemes are funded as follows;

Band B Scheme

WG Grant

S106

GCF

Capital Receipts

Cont. from Reserves

Unsupp Borrowing

Total

 

   £'000

   £'000

£'000

     £'000

       £'000

     £'000

     £'000

Welsh Medium Secondary

   9,650

   1,037

2,598

      514

       3,501

     2,000

   19,300

Mixed Sex Secondary School

22,000

      986

1,036

  11,685

       8,293

               -

    44,000

               
  1. The level of funding committed to Band B from 2019/20 has necessitated a reduction in Education Asset Renewal to £600k from 2019/20 to provide funding for the Band B schemes.
  2. In 2016/17 a sum of £1.2m was set aside towards medium schemes for schools. £600k of this sum has been allocated to the Romilly scheme referred to in paragraph 23 of this report, the balance of this funding is unallocated and a further report will be brought to Cabinet detailing the proposals for this sum.
  3. The following table shows the planned spend on the Education capital programme from 2017/18 to 2021/22 incorporating expenditure under Band A and Band B schemes funded under 21st Century Schools Programme. Gross Expenditure totals £75.772m.

By Scheme

17/18

18/19

19/20

20/21

21/22

Total

 

£000's

£000's

£000's

£000's

£000's

£000's

Band A Llantwit Major Learning Community

1,240

29

0

0

0

1,269

Band A Colcot Primary

125

0

0

0

0

125

Band A Romilly Primary

1,200

0

0

0

0

1,200

Medium Schools Projects to be allocated

600

0

0

0

0

600

Eagleswell Marketing & Disposal

5

0

0

0

0

5

Schools Asset Renewal/Other

600

600

600

600

600

3,000

Additional Schools Asset Renewal

400

400

0

0

0

800

Education Asset Renewal - contingency

50

50

0

0

0

100

Rhoose Primary New School

1,500

1,762

0

0

0

3,262

Victorian Schools

2,000

0

0

0

0

2,000

Gwenfo Primary Expansion

11

0

0

0

0

11

Band B Welsh Medium

0

250

5,650

10,500

2,600

19,000

Band B Co Ed

0

500

12,900

24,000

6,000

43,400

Schools IT Loans

200

200

200

200

200

1,000

Total

7,931

3,791

19,350

35,300

9,400

75,772

             
  1. The total cost for Band B schemes is projected to be £63.3m (£31.650m WG Funding), however of this total £62.4m relates to costs up to and including 2021/22 which is the period covered by this report and is therefore included in Appendix 2.
  2. The Education capital programme is funded as follows;

 

17/18

18/19

19/20

20/21

21/22

Total

 

£000's

£000's

£000's

£000's

£000's

£000's

General Capital Funding/General Capital Receipts

3,605

1,785

2,354

2,200

1,147

11,091

Education Capital Receipts

0

0

3,764

7,824

0

11,588

Other Reserves and Revenue Contribution

0

0

2,428

1,543

0

3,971

School Investment Reserve

1,390

444

954

2,260

3,753

8,801

IT Fund

200

200

200

200

200

1,000

Prudential Borrowing

0

0

0

2,000

0

2,000

Total Internal Funding

5,195

2,429

9,700

16,027

5,100

38,451

S106 Agreements

1,011

1,362

0

2,023

  0

4,396

Welsh Government Grant

1,725

0

9,650

17,250

4,300

32,925

Total Funding

7,931

3,791

19,350

35,300

9,400

75,772

             

 

Next Steps

  1. The next stage is for the estimates to be submitted to Scrutiny Committees for consultation. Each Scrutiny Committee will be asked to first consider the Initial Capital Programme proposals as shown in Appendix 2 and to make any recommendations for changes. If they wish to make a change, the reason for this needs to be recorded in order to assist the Cabinet and the Budget Working Group (BWG) in drawing up the final proposals. Corporate Performance and Resources Scrutiny Committee is the lead Scrutiny Committee and will consider both the Initial Capital Budget Proposals and any recommendations that other Scrutiny Committees have made. The responses of Scrutiny Committee must be made no later than the 13th December 2016.
  2. Managers will be asked to revisit the schemes included in Appendix 2 and to confirm final costs and spend profile prior to the final proposals being presented to Cabinet.
  3. Currently, the approved timetable requires Cabinet to approve the final budget proposals by no later than the 20th February 2017 and that Cabinet's final Capital Programme proposals will be considered by Council at a meeting to be held on 1st March 2017 to enable the Council Tax to be set by 11th March 2017.

Resource Implications (Financial and Employment)

  1. The total net capital expenditure of the proposed programme in Appendix 2, over the 5 years, is approximately £98.628m.
  2. If the schemes shown in Appendix 2 are approved, the effect on General Fund useable capital receipts will be as shown in the following table.

Capital Receipts

General

Ringfenced Social Services

Ringfenced Education

 

£000's

£000's

£000's

Anticipated Balance as at 1st April 2017

2,343

1,327

1,299

       

Anticipated Requirements - 2017/18

(1,006)

0

0

Anticipated Receipts - 2017/18

0

0

0

Balance as at 31st March 2018

1,337

1,327

1,299

Anticipated Requirements - 2018/19

0

(1,327)

0

Anticipated Receipts - 2018/19

0

0

8,414

Balance as at 31st March 2019

1,337

0

9,713

Anticipated Requirements - 2019/20

(405)

0

(3,764)

Anticipated Receipts - 2019/20

0

0

1,875

Balance as at 31st March 2020

932

0

7,824

Anticipated Requirements - 2020/21

(659)

0

(7,824)

Anticipated Receipts - 2020/21

0

0

0

Balance as at 31st March 2021

273

0

0

Anticipated Requirements - 2021/22

0

0

0

Anticipated Receipts - 2021/22

0

0

0

Balance as at 31st March 2022

273

0

0

Anticipated Requirements - 2022/23

0

0

0

Anticipated Receipts - 2022/23

0

0

0

Balance as at 31st March 2023

273

0

0

       
  1. The Education Capital Programme utilises general capital receipts in addition to capital receipts ringfenced for Education.
  2. In line with the overall strategy and specific suggestions proposed by the BWG, in order to resource the Capital Programme, reserves will be utilised over the period of the Capital Programme 2017/18 to 2021/22.
  3. The Project Fund will be used to fund schemes assessed on an invest to save basis, and in certain circumstances business critical schemes may also be funded from this reserve with the prior approval of the Head of Finance. The projected usage of this reserve over the period of the Capital Programme is shown below;

Project Fund

             £'000

Anticipated Balance as at 1st April 2017

2,749

Anticipated Requirements - 2017/18

(530)

Anticipated Receipts - 2017/18

       0

Balance as at 31st March 2018

2,219

Anticipated Requirements - 2018/19

       0

Anticipated Receipts - 2018/19

       0

Balance as at 31st March 2019

2,219

Anticipated Requirements - 2019/20

      0

Anticipated Receipts - 2019/20

      0

Balance as at 31st March 2020

2,219

Anticipated Requirements - 2020/21

(212)

Anticipated Receipts - 2020/21

      0

Balance as at 31st March 2021

2,007

Anticipated Requirements - 2021/22

      0

Anticipated Receipts - 2021/22

      0

Balance as at 31st March 2022

2,007

   
  1. The above forecast balances need to be seen in the context of significant pressures for spending which are not yet included in the Capital Programme. These include the backlog of school, highways and buildings improvements.

Sustainability and Climate Change Implications

  1. The bids have also been evaluated for Sustainable Development. The four areas of Sustainable Development to be considered are:
  • Living within environmental limits
  • Ensuring a strong, healthy and just society
  • Achieving a sustainable economy
  • Promoting good governance
  1. Sustainability checklists were submitted by Project Managers for each of the proposed bids included in Appendix 2. These were reviewed by the Insight group, with a view to ensuring that wherever possible the four sustainable targets are addressed.

Legal Implications (to Include Human Rights Implications)

  1. The Council is required to show that capital expenditure is covered by identified resources.

Crime and Disorder Implications

  1. The obligations of the Council with regard to Section 17 need to be fully considered in the budget decision making process.

Equal Opportunities Implications (to include Welsh Language issues)

  1. Additional finance improves the Council's opportunities for assisting disadvantaged members of society.

Corporate/Service Objectives

  1. Funds allocated contribute to the wide range of corporate service objectives as set out in the Corporate Plan.

Policy Framework and Budget

  1. This report follows the procedure laid down in the constitution for the making of the budget. The 2017/18 budget proposals will require the approval of Council. The proposals for amendments to the 2016/17 Capital Programme are the responsibility of Cabinet.

Consultation (including Ward Member Consultation)

  1. All Scrutiny Committees will be consulted on the proposals.

Relevant Scrutiny Committee

  1. The lead Scrutiny Committee is Corporate Performance and Resources.

Background Papers

Bids received from departments

Correspondence received from the Welsh Government

Contact Officer

Capital Accountant,

Resources

Officers Consulted

The following Officers have been consulted on the contents of this report:-

Corporate Management Team

Budget Working Group

Responsible Officer:

Paula Ham

Interim Director of Learning and Skills

 

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