Agenda Item No.
THE VALE OF GLAMORGAN COUNCIL
CABINET: 25TH FEBRUARY, 2013
REFERENCE FROM SCRUTINY COMMITTEE (CORPORATE RESOURCES): 8TH FEBRUARY, 2013
"829 UPDATE ON THE BUDGET REVIEW – CAPITAL PROGRAMME 2013/14 – 2017/18 (MD) –
Members were updated on the progress of the Budget Review of the Capital Programme for the years 2013/14 to 2017/18 by the Managing Director. The results of the Budget Review would inform the final Capital Programme proposals 2013/14 which would be considered by Cabinet on 25th February 2013 and Council on 6th March 2013.
The Managing Director explained that one of the main tenants of the Budget Review was to put in place a financial strategy for the Council to 2017 (and not for the first year only and indicative thereafter as previously). In doing so, assumptions had necessarily been as to the level of General Capital funding (GCF) that would be received in future years from the Welsh Government (WG). This Capital Programme was predicated consequently on a 10% cut in GCF year-on-year from 2015/16. As part of the Budget Review a major consideration was how the Council could look to:
· mitigate the deteriorating situation insofar as it was able by reappraising all schemes and looking to progress only those which were deemed to be key corporate priorities whilst also seeking to gain assurance that such schemes were delivered on time and within budget
· develop a strategy to maximise the availability of resources to address those priorities.
As regards the prioritisation of schemes, details were contained within paragraphs 7 to 12 of the report, in essence the bids had been initially prioritised by the Corporate Asset Management Group of officers in the normal manner and consequently further reviewed by the Budget Working Group (BWG) in terms of their corporate priority and the risk they posed to the Council if they were not pursued. Regard had also been given to the priorities as set out in the Draft Corporate Plan 2013/17 as well as the results of the consultation process undertaken on the Draft Plan and Council’s Initial Budget proposals. Details pertaining to the resources available were contained within paragraphs 13 to 21 of the report. The WG had announced the final 2013/14 GCF settlement in December 2011 which had shown a 10.7% reduction in funding from 2012/13. As indicated above, further cuts of 10% in 2015/16 and each year thereafter had been assumed. Members noted that another means of financing capital expenditure was through capital receipts resulting from the sale of assets. As at 31st March 2013 the forecast balance of useable General Fund capital receipts was £1.101m. with a further £1056m. estimated to be generated between 2013/14 and 2017/18. Capital expenditure could also be funded by revenue contributions or the utilisation of existing resources. Other means of generating income to fund capital projects was through money forthcoming under Section 106 planning obligations and the new Community Infrastructure Levy. Outside of the above, the Council was heavily dependent upon specific grant funding to supplement its own resources if certain capital schemes were to be progressed. When considering options for capital financing, the ability of the Council to finance the repayment of any loans raised for the funding of capital schemes must be considered. In that respect, local authorities were required to have regard to the Prudential Code and, in setting the Capital Programme, the Council was required to ensure that the key objectives of the Prudential Code were complied with, namely that its capital investment plans were affordable, that all external borrowing and other long term liabilities are within a prudent and sustainable level and that a consequent treasury management decision for Prudential Borrowing were taken with good professional practice. Members noted that total Prudential Borrowing over the next five years was estimated at £40.98m. of which £31.1m. related to the Housing Improvement Programme.
As regarding matching priorities with resources, full details were contained within paragraphs 22 to 39 of the report. Funding was available to meet those schemes assessed as either corporate priority 1 or above or medium risk or higher. Details of those schemes were shown at Appendix A to the report. Those schemes which were of a lower corporate priority and lower than medium in terms of risk were shown at Appendix B. Members’ attention was drawn to the fact that, given the restricted resources available for capital schemes, funding was available only for those schemes assessed as either Corporate Priority 1 or above or medium risk or higher. Details of those schemes were appended to the report. The schemes in that appendix included a significant number of projects listed as:
· School Investment Programme
· Housing Improvement Programme and
· Other Schemes.
The Managing Director stressed that it was of fundamental importance that the best use was made of the Council’s resources in order to meet its aspirations and priorities for the Capital Programme and mitigate the risks associated with it. She drew attention to the fact that there still remained a number of issues, both burgeoning and extant, to which further consideration must be given that could affect the life of the next Capital Programme and or beyond. Those issues included:
· the increase in risk proposed by schemes which had currently been assessed medium low but were likely to increase in future years if not addressed
· the appearance of new high priority schemes not anticipated when drawing up the Capital Programme
· the possibility of increased demands upon flooding, coastal protection and the environment generally
· the general shortfall of funding available to address the Council’s asset renewal requirements both in respect of public buildings and highways
· the Council’s ambitions for regeneration and how they can be realised
· the continued expansion over time of the School Investment Programme
· funding of renewal areas
· the need to increase capital receipts (particularly those associated with the School Investment Programme)
· the establishment of collaborative partnerships associated with other public bodies and the independent / third sector as potential levers / sources of funding.
Whilst Members applauded the changes to the way schemes had been prioritised, the Managing Director agreed to look into utilising a more sophisticated method of prioritisation in future years. The matter of the priority 2 afforded to “invest to save” was also raised, given the condition of, for example, so many of the Council’s buildings. The Managing Director clarified the position by stating that “invest to save” had been used where there was either grant available or where there would be payback. She also confirmed that there was a rolling programme of surveys in relation to the Council’s assets.
The inclusion of the ashpath footpath improvements scheme in Appendix A was welcomed by a local Member who expressed disappointed that the scheme relating to the Cross Common Road bridge was contained within Appendix B. The local Member indicated that the route was well used, accommodated a regular bus service and that local residents felt there was a flooding problem in the area. He asked that the scheme be reprioritised. At this juncture, the Head of Development Services was invited to comment. He stated that funding was difficult to come by and that Sewta funding was generally allocated to bids for highway improvements rather a scheme of this nature; he went on to say, however, that there was a possibility that, with the Community Infrastructure Levy, the scheme could be picked up in the Infrastructure Plan in the future.
In response to a question as to when report would be made to this Committee in relation to the Vehicle Replacement Programme (contained within Appendix A of the report), the Chairman confirmed that would be submitted to the next meeting.
RECOMMENDED – T H A T the position be noted.
Reason for recommendation
To have regard to the information submitted and to inform Cabinet."
Attached as Appendix - Report to Scrutiny Committee (Corporate Resources): 8th February, 2013