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Agenda Item No

 

The Vale of Glamorgan Council

 

Cabinet Meeting 16th November 2011

 

Report of the Leader

 

Initial Capital Programme Proposals 2012/13

 

Purpose of the Report

1.             To gain approval for the revised capital programme for 2011/12 and the initial capital proposals for 2012/13 so that they may be submitted to Scrutiny Committee for consultation.

2.             To advise Cabinet of the progress on the 2011/12 Capital Programme for the period 1st April 2011 to 30th September 2011 and, where necessary, to request changes to the programme.

Recommendations

1.             That the initial budget proposals for the 2012/13 and future Capital Programme be approved for consultation with Scrutiny Committees.

2.             That Cabinet (and Council, where indicated) approves the following changes to the 2011/12 Capital Programme:

·               Barry Waterfront Park & Ride - increase the budget by £46,000 (funded from the South East Wales Transport Alliance - SEWTA - grant)

·               Regional Capital Access Fund - include the sum of £105,000 in the Capital Programme (funded partly from Welsh Government (WG) grant and partly from revenue budgets). This will require Council approval.

Reasons for the Recommendations

1.             To allow full consultation on the future capital programmes.

2.             To amend the 2011/12 capital programme.

Relevant Issues and Options

3.             Appendix A details financial progress on the Capital Programme as at 30th September 2011.  

2011/12 Capital Programme

Director of Environmental and Economic Regeneration

3.             Barry Waterfront Park and Ride Additional Design - SEWTA have agreed an additional grant sum of £46,000 for this scheme, to cover additional costs on the main contract sum, design and management fees due to additional works required on drainage and re-design following Planning procedure, as well as ecology related fees. This would increase the current budget to £606,000. Works are proceeding well and a full spend for the year is anticipated.

4.             Regional Capital Access Fund - the Authority has received grant funding of £74,792 to provide support for capital initiatives to achieve increased waste prevention and improve recycling initiatives. It is intended that this capital funding be used for a new recycling vehicle and the procurement process is being progressed by the Council's Fleet Management Section. Though tenders have not yet been received, it is anticipated that the vehicle will cost slightly more than the available grant and as such, a contribution from revenue budgets of up to £30,000 will be needed. It is requested that the full cost of the vehicle purchase be included in the 2011/12 Capital Programme.

Variance between Actual Spend to date and Profiled Spend

4.             Cabinet have previously agreed that further information would be provided where schemes have a value of over £500,000 and show a variance of 20% or more between actual spend and the profile. The following schemes meet this criteria:-

5.             Llanmaes Flood Risk Management - despite having received funding for our Coldbrook Catchment flood management scheme, I am now being advised that it is extremely unlikely that grant funding for the Llanmaes scheme will be forthcoming this year. Notwithstanding this, this Authority will still be making an application for funding to the Welsh Government to progress the scheme to the detailed design stage. Even in the event of an unexpected late grant offer being received, there is now insufficient time to achieve the full budget spend. The Director of Environmental and Economic Regeneration will be taking a separate Cabinet report on both the Coldbrook and Llanmaes flooding schemes shortly. 

6.             Vehicle Renewal Programme - expenditure on this budget is well behind profile. I have been advised that the original ‘All Wales Public Sector Framework Agreement for the Acquisition of Commercial Vehicles' has been replaced by the Yorkshire Purchasing Organisation (Pro 5 Framework). However, this arrangement has not been formally accepted by the All Wales Fleet & Transports Managers Group & Welsh Purchasing Consortium, which has caused a delay in the purchasing of vehicles in financial year 2011/12. To expedite matters, Authorities in Wales are currently making their own arrangement to purchase vehicles in 2011/12 whilst planning to introduce a Vehicle Purchasing Framework in the future. Whilst every effort is being made to maximise expenditure on this budget, the Fleet Manager advises that there could potentially be some underspend at year-end. This will be quantified later in the financial year.

7.             Barry Waterfront Park and Ride Additional Design - this WG grant funded scheme for works around the Barry Dock train station and Dock Office car park has encountered delays due to drainage problems. This has put the scheme 4 weeks behind profile but additional funding has successfully been bid from WG and completion is still expected well before the end of the financial year. The budget will be re-profiled in next month's report to reflect the current situation.

 

2012/13 Capital Programme

8.             The Welsh Government announced the provisional 2012/13 General Capital Funding, on 18th November 2011. The 2012/13 capital settlement represents a 6.8% cut in funding over last year's allocation. This has been reflected in the table on Appendix B. In addition, the forecast cut for 2013/14 is a further 11.5%. This figure has also been used in Appendix B, year on year to 2016/17.

9.             Cabinet, on 13th February 2008,  approved that the Director of Finance, ICT and Property, in consultation with the Cabinet Member responsible for Finance, be given delegated authority to transfer supported borrowing between General Fund and the Housing Capital budgets as appropriate. The Authority has requested a transfer of £560,000 for 2012/13.  A transfer of £280,000 each year has been assumed in Appendix B for each subsequent year, to 2016/17.

10.        The Major Repairs Allowance (MRA), which is the grant that provides capital funding to the Housing Revenue Account (HRA), for 2012/13 has not yet been announced by the Welsh Government.  Cabinet will be advised once the announcement is made. An assumption has been made in Appendix B that the grant will continue at the current allocation of £2.7 million in 2012/13.

11.        In addition to funding from the Welsh Government, the Council will finance part of the capital programme from its own resources, e.g. capital receipts and reserves.  

12.        Appendix B outlines the proposed 2012/13 Capital Programme. The table below details the General Capital Funding and internal resources required to fund the proposed schemes.

Analysis of Net Funding Required for the Indicative 2012/13 Capital Programme

GENERAL FUND                                                                £’000      £’000

Welsh Assembly Government Resources     

Supported Borrowing                                                           3,589

General Capital Grant                                                          2,090

            5,679

Council Resources

Capital Receipts       1,021

Reserves/Leasing                                                                 3,842

            4,863           

Net Capital Resources                                                                              10,542                       

 

HOUSING REVENUE ACCOUNT           £’000   £’000

Housing Reserves                                                         5,425

Housing Capital Receipts                                                 378

Supported Borrowing                    560

            6,363

Net Capital Resources        6,363

 

13.        The indicative 2012/13 Capital Programme shown in Appendix B includes allocations already approved by Council.

 

Capital Bids 2012/13

14.        As with last year, due to additional anticipated reductions in future capital funding, and in order to review historic priorities, all those budgets previously included in the indicative future capital programme have been withdrawn, other than those schemes which will be committed by the end of March 2012. Officers were asked to re-bid for those sums that they still regarded a high priority as part of the 2012/13 bidding round. As a consequence of this, it was noted that the number of bids submitted was far below previous years.

15.        The bids must also be 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

16.        Sustainability checklists will be requested from Project Managers for each of the proposed bids  on Appendix B. These will be reviewed by members of the Sustainable Development Working Group, with a view to ensuring that wherever possible the four sustainable targets are addressed. The results will be included in the Final Capital Proposals report in February 2012. 

17.        The Budget Working Group has prioritised bids based upon the recommendations of the Corporate Asset Management Group (CAMG). The method of prioritisation used is shown below.

A

 

Health and Safety Legislation

B

 

Other Legislation / Statutory requirement

Ci

 

Economic Sense

Cii

 

Corporate Plan

Ciii

 

Sufficiency

D

 

Condition / Suitability

E

 

Welsh Government objectives

F

 

Low Priority

           

18.        Included in Appendix B is the sum of £2.402M for the second phase of the Barry Welsh Medium Schools accommodation at Ysgol Nant Talwg. Phase 2 Llantwit Major Welsh Medium proposals are currently being reviewed and are not included in Appendix B in this report.

19.        In addition to the capital bids included in Appendix B, Appendix C lists capital bids received that were unsuccessful and have not been put forward for inclusion in the 2012/13 programme. 

 

Next Steps

20.        The next stage is for the estimates to be submitted to Scrutiny Committee for consultation.  Corporate Resources Scrutiny Committee is the lead Scrutiny Committee and will consider both the Initial Budget Proposals and the comments that other Scrutiny Committees have made.  The responses of Scrutiny Committee must be made no later than the 20th December 2011. It is also proposed to consult with the LSB.

21.        Each Scrutiny Committee will be asked to first consider the indicative capital proposals as shown in Appendix B.  They then may make 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 Cabinet Budget Working Group draw up the final proposals.

22.        As well as considering the priority awarded to capital bids within its own services, the Corporate Resources Scrutiny Committee will be asked to look at the priority for bids across the whole range of Council services.

23.        Managers will be asked to revisit the schemes included in Appendix B and to confirm final costs and spend profile prior to the final proposals being presented to Cabinet, which will be no later than 17th February 2012.

24.        Cabinet’s final capital programme proposals will be considered by Council no later than 29th February 2012.

 

 

Resource Implications (Financial and Employment)

25.        The total net capital expenditure of the proposed programme in Appendix B, over the 5 years, is £105 million.

26.        If the schemes shown in Appendix B are approved, the effect on General Fund useable capital receipts will be as shown in the following table.

General Fund Capital Receipts

             £'000

Anticipated Balance as at 1st April 2012

9,638

 

Anticipated Requirements – 2012/13

(1,021)

Anticipated Receipts – 2012/13

439

Balance as at 31st March 2013

9,056

 

Anticipated Requirements – 2013/14

(4,506)

Anticipated Receipts – 2013/14

170

Balance as at 31st March 2014

4,720

 

Anticipated Requirements – 2014/15

(597)

Anticipated Receipts – 2014/15

0

Balance as at 31st March 2015

4,123

 

Anticipated Requirements – 2015/16

(1,074)

Anticipated Receipts – 2015/16

448

Balance as at 31st March 2016

3,497

 

Anticipated Requirements – 2016/17

(52)

Anticipated Receipts – 2016/17

438

Balance as at 31st March 2017

3,883

 

 

 

27.        A Project Fund exists to finance capital and revenue projects.  The aim of the Fund is to initially finance a project with repayment of such advances (including interest) being credited back to the Fund.  The following table shows the projected position of the fund. 

 

Project Fund Balance

             £'000

Anticipated Balance as at 1st April 2012

4,299

 

Anticipated Requirements – 2012/13

       (450)

Anticipated Receipts – 2012/13

     124

 

Balance as at 31st March 2013

 3,973

 

Anticipated Requirements – 2013/14

  0

Anticipated Receipts – 2013/14

      70

 

Balance as at 31st March 2014

 4,043

 

Anticipated Requirements – 2014/15

        (1,200)

Anticipated Receipts – 2014/15

      70

 

Balance as at 31st March 2015

2,913

 

Anticipated Requirements – 2015/16

0

Anticipated Receipts – 2015/16

70

 

Balance as at 31st March 2016

2,983

Anticipated Requirements – 2016/17

0

Anticipated Receipts – 2016/17

30

 

Balance as at 31st March 2017

 3,013

 

28.        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.

 

Legal Implications (to Include Human Rights Implications)

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

Crime and Disorder Implications

30.        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)

31.        Additional finance improves the Council’s opportunities for assisting disadvantaged members of society.

Corporate/Service Objectives

32.        Contributes to the corporate priority of Corporate Resources by the provision of sound financial management. 

Policy Framework and Budget

33.        This report follows the procedure laid down in the constitution for the making of the budget.  The 2012/13 budget proposals will require the approval of Council. 

Consultation (including Ward Member Consultation)

34.        The Management Team and all Scrutiny Committees have been consulted on the proposals.

Relevant Scrutiny Committee

35.        Corporate Resources

Background Papers

Bids received from departments

Correspondence received from the Welsh Government

 

Contact Officer

Laura Davis Tel. No. 01446 709249

Officers Consulted

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

Management Team

 

Responsible Officer:

Sian Davies

Director of Finance, ICT and Property

 

 

 

 

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