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Agenda Item No. 10(f)

 

THE VALE OF GLAMORGAN COUNCIL

 

COUNCIL MEETING: 1 MARCH 2017

 

REFERENCE FROM CABINET:  20 FEBRUARY 2017

 

C3468         FINAL CAPITAL PROPOSALS 2017/18 TO 2021/22 (L) (SCRUTINY COMMITTEE – CORPORATE PERFORMANCE AND RESOURCES) -

 

Approval was sought for the Final Capital Programme Proposals for the years 2017/18 to 2021/22.

 

The Initial Capital Programme Proposals 2017/18 to 2021/22 were presented to Cabinet on 14 November, 2016 (Cabinet Minute C3363 refers). They were subsequently referred to Scrutiny Committees in December 2016.

 

In responding to the Initial Capital Programme Proposals, no specific recommendations to amend the Initial Proposals were made by Scrutiny Committees.

 

Corporate Performance and Resources Scrutiny Committee, at its meeting on 13 December, 2016 (minute no. 617 refers), recommended that the Initial Capital Budget Proposals be endorsed.

 

The minutes and recommendations of Corporate Performance and Resources Scrutiny Committee were referred to Cabinet on 9 January, 2017 (Cabinet Minute C3420 refers) and as no recommendations were made, Cabinet recommended that the contents of the report be noted and passed to the Budget Working Group for consideration in concluding the budget proposals for 2017/18.

 

On 21 December, 2016 the Welsh Government announced the final 2017/18 General Capital funding settlement. There had been a £14K (0.26%) reduction in funding from 2016/17. The Initial Capital Programme Proposals in November 2016 assumed a 10% reduction year on year. Having considered that the authority's capital funding had been flatlined for the past two financial years and reviewing the assumptions adopted by a number of other authorities across Wales, the assumed future funding had been revised to a 5% reduction year on year to 2021/22. The change to this assumption increased the funding in 2018/19 by £270K and had a knock on effect throughout the programme.

 

On that basis, a table representing the capital funding from the Welsh Government was shown below:

 

 Resources from Welsh   Government

  17/18

  18/19

  19/20

  20/21

21/22

 

  £’000

  £’000

  £’000

  ’000

  £’000

Supported Borrowing - General   Fund

  3,360

  3,192

  3,032

  2,880

  2,736

General Capital Grant

  2,045

  1,943

  1,846

  1,754

  1,666

 Total

  5,405

  5,135

  4,878

  4,634

  4,402

 

Another means of financing capital expenditure was through capital receipts resulting from the sale of assets. Receipts from the sale of Housing Revenue Account (HRA) assets could only be spent in the HRA and could not be used to finance General Fund capital schemes. As at 31 March, 2017 the forecast balance of useable capital receipts totaled £6.085M of which £1.327M was ring-fenced for Social Services and £1.299M was ring-fenced for Education. No further general capital receipts or ring-fenced Social Services capital receipts were anticipated between 2017/18 and 2021/22. A further £9.114M ring-fenced Education capital receipts for the School Investment Programme was estimated to be generated between 2017/18 and 2021/22. It should be noted, however, that projected future capital receipts were not guaranteed and failure to achieve the projected level of capital receipts could impact the affordability of the current 21st Century Schools Band B proposals.

 

HRA capital receipts arose from the sale of dwellings under the Right To Buy Act, HRA land and other HRA assets. In the case of HRA receipts, regulations set out that receipts since 1 April, 2004 could only be used to fund HRA capital expenditure or to repay HRA debt. As at 31 March, 2017 the forecast balance of useable HRA capital receipts was nil as any receipts received in a year were used to fund expenditure incurred in that same year. No further HRA receipts had been assumed.

 

If the schemes shown in Appendix 1 attached to the report were approved, the effect on General Fund useable capital receipts would 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 1   April, 2017

3,459

1,327

1,299

 

 

 

 

Anticipated Requirements –   2017/18

(2,583)

0

0

Anticipated Receipts – 2017/18

0

0

0

Balance as at 31 March, 2018

877

1,327

1,299

Anticipated Requirements –   2018/19

(100)

(1,327)

0

Anticipated Receipts – 2018/19

0

0

0

Balance as at 31 March, 2019

776

0

1,299

Anticipated Requirements –   2019/20

(127)

0

(2,617)

Anticipated Receipts – 2019/20

0

0

4,557

Balance as at 31 March, 2020

649

0

3,239

Anticipated Requirements –   2020/21

(313)

0

(7,796)

Anticipated Receipts – 2020/21

0

0

4,557

Balance as at 31 March, 2021

336

0

0

Anticipated Requirements –   2021/22

(100)

0

0

Anticipated Receipts – 2021/22

0

0

0

Balance as at 31 March, 2022

236

0

0

Anticipated Requirements –   2022/23

0

0

0

Anticipated Receipts – 2022/23

0

0

0

Balance as at 31 March, 2023

236

0

0

 

The Education Capital Programme utilised general capital receipts in addition to capital receipts ring-fenced for Education.

 

Capital expenditure could also be funded by revenue contributions or the utilisation of existing reserves. A reserve was a sum of money that had been set aside by the Council for a specific purpose, they were voluntary and could be made when the Council determined. Advances could be made from a reserve for the purchase of assets, which were then repayable over the life of the asset and the reserve was constantly replenished e.g. Vehicle Renewals Fund. Alternatively schemes could be funded from reserves with no repayment, however, once spent that source of funding was lost.

 

One such reserve was the Project Fund which existed to finance capital and revenue projects. The estimated balance of the Fund as at 31 March, 2017 was £4.293M. A balance of £2M would be retained as a balance on this fund. The following table showed the projected position of the fund over the next five years.

 

 

Project Fund

       £'000

 

Anticipated Balance as at 1   April, 2017

4,293

Anticipated Requirements –   2017/18

(2,054)

Anticipated Receipts – 2017/18

   0

Balance as at 31 March, 2018

2,239

Anticipated Requirements –   2018/19

   (22)

Anticipated Receipts – 2018/19

   0

Balance as at 31 March, 2019

2,217

Anticipated Requirements –   2019/20

   (62)

Anticipated Receipts – 2019/20

   0

Balance as at 31 March, 2020

2,155

Anticipated Requirements –   2020/21

(150)

Anticipated Receipts – 2020/21

   0

Balance as at 31 March, 2021

2,005

Anticipated Requirements –   2021/22

   0

Anticipated Receipts – 2021/22

   0

Balance as at 31 March, 2022

2,005

 

In a similar vein, the Council had an IT Fund estimated at £3.493M as at the end of 2016/17. The Council relied heavily on technology to deliver its services and the Fund allowed investment in this infrastructure and also enabled the Council to exploit opportunities to reduce the cost of services. This was in accordance with a report from the Wales Audit Office in December 2012 entitled ‘Use of Technology to Support Improvement and Efficiency in Local Government’. Best practice highlighted in the report recommended that ‘A corporate technology development fund was used to fund all developments with commitment that efficiencies replenish funds'.

 

Other means of generating income to fund capital projects was through monies forthcoming under S106 planning obligations.

 

Outside of the above, the Council was heavily dependent on specific grant funding to supplement its own resources if certain capital schemes were to be progressed. Generally, this came via Welsh Government, although contributions from other public sector organisations or associated bodies were also forthcoming. It was estimated that over the next 5 years, the level of specific grant funding for General Fund Capital Schemes was approximately £67.804M which was around £43M more than the level of General Capital Funding for the same period (£24.454M). The £67.804M grant funding was made up of £0.205 Band A 21st Century Schools grant, £31.2M Band B 21st Century Schools grant, £3.338M Flood Defence and Structures grants, £13.85M Major Repairs Allowance grant and £19.211M Five Mile Lane Improvement grant. Many of these schemes required a match funding contribution to be made by the Council to the cost of the scheme.

 

When considering options for capital financing, the ability of the Council to finance the repayment of any loans it raised for the funding of capital schemes must be considered. Part 1 of the Local Government Act 2003 required local authorities to have regard to the Prudential Code, which had been developed by CIPFA (the Chartered Institute of Public Finance and Accountancy) as a professional code of practice. In setting the capital programme, the Council had to ensure that the key objectives of the Prudential Code were complied with.

 

The Council must ensure that its capital investment plans:

  • Were affordable;
  • All external borrowing and other long term liabilities were within a prudent and sustainable level; and
  • The consequent treasury management decisions for Prudential Borrowing (also referred to as Unsupported Borrowing) were taken in accordance with good professional practice.

The Code recognised that in making capital investment decisions the Council had to have regard to option appraisal, asset management planning and strategic planning. However, given the expected severity of cuts in future revenue resources, the potential for servicing debt not funded by Welsh Government as part of General Capital Funding or already provided for (e.g. Prudential Borrowing for the Schools Investment Programme and Housing Improvement Programme) was extremely limited as this would need to be funded through the revenue budget.

 

The projected amount of prudential borrowing utilised at 31 March, 2017 was £95.053M which was made up of £6.690M for Highway Improvements under the Local Borrowing Initiative, £7.444M for 21st Century Schools Programme, £16.626M Housing Improvement Programme, £63.156M Housing Subsidy Buyout and the Local Government Borrowing Initiative for 21st Century Schools £1.137M. After allowing for repayments the balance was expected to be £90.968M at 31 March, 2017.

 

The table below set out the Council's Prudential Borrowing over the next 5 years: -

 

Prudential Borrowing

Scheme

2017/18

2018/19

2019/20

2020/21

2021/22

Total

 

£000

£000

£000

£000

£000

£000

21st Century Schools Local   Borrowing Initiative

1,500

0

0

0

0

1,500

21st Century Schools Band B

0

0

0

2,000

0

2,000

Housing Improvement Programme

13,269

5,430

4,149

639

212

23,699

Total

14,769

5,430

4,149

2,639

212

27,199

 

Total new Prudential Borrowing over the next 5 years was estimated at £27.199M of which £23.699M related to the Housing Improvement Programme.

 

Future Prudential Borrowing for School Investment Programme Band B schemes totaled £2M in 2021/22.

 

At the end of the Capital Programme period (31 March, 2022) the outstanding prudential borrowing taking into account repayments was expected to be £13.564M General Fund and £91.8M HRA.

 

Amendments to the 2016/17 Capital Programme

 

Reprofiling was required across some significant schemes in the Capital Programme as set out below;

 

Romilly Primary School - The Council received approval of the award of funding for this scheme in December and the funding for the scheme now needed to be reprofiled as follows;

 

 

2016/17

2017/18

2018/19

 

£000's

£000's

£000's

Original   Profile

0

1,200

0

Revised   Profile

40

1,124

36

 

Barry Comp Internal and External Refurbishment Works - There was a significant underspend against the original schedule of works as a result of the items being determined to be unsuitable for the school and also some of the works being delivered below the initial cost estimate. The current underspend offered the opportunity for additional works to be carried out at the school or for other priority schemes to be progressed across the wider School estate. The proposed use for this underspend would be subject to a further report.

 

Modular Building Resiting - It was requested that £82K be carried forward to 2017/18 and £1K to 2018/19. Of this £20K would be utilised as per the Cabinet report of 31 October, 2016 for adaptations at Fairfield Primary School to enable Nursery provision to be established at the school. The balance of £62K in 2017/18 and £1K in 2018/19 would be utilised to complete the resiting works.

 

St Josephs Nursery and Early Intervention Base (EIB) - The Council had secured S106 funding of £801K from local housing developments. In addition Capital Receipts of £230K would be utilised for a projected total scheme cost of £1.031M that would be used to enhance facilities at St Joseph’s RC primary school. The funding would be used to: 

  • Facilitate internal alterations to the school learning environment and thus increasing school capacity;
  • Establish a new nursery unit; and
  • Locate an Early Intervention Base (EIB) at the school

The Early Intervention Base would operate as a satellite of Ysgol Y Deri special school and therefore staff would be employed by Ysgol Y Deri who would be responsible for their management. Pupils attending the Early Intervention Base would be either on roll at Ysgol Y Deri or their home school and not St Joseph’s.

 

Vehicle Replacement Programme - Following a delay in purchasing a number of new vehicles pending the outcome of the Reshaping Services review of Visible Services, it was requested that £2.095M be carried forward to 2017/18. The Vehicle Replacement Programme had been reprofiled throughout the programme as set out in paragraph 46 to the report.

 

Coldbrook Flood Risk Management - As reported to Cabinet on 23 January, 2017 the scheme had encountered some delays and additional costs. The Cabinet report requested that the Capital Programme sum was increased to £3.801M in 2016/17 and £0.670M in 2017/18 subject to WG approval of the 85% grant funding required. Delegated Authority was also granted to increase the contract sum beyond this amount. As it was now anticipated that this Delegated Authority would be requested, it was proposed to increase the capital programme in line with the maximum contract sum as set out in the 23 January, 2017 report. The revised profile of the scheme would be £4.820M in 2016/17 and £1.412M in 2017/18. This would be funded from £5.298M WG Grant funding, £66K from capital receipts and £868K from reserves.

 

SPACE Project and Civic Office Rewire and Network Rewire Schemes - New fire barriers were required to the second and third floors above the suspended ceilings which could not be determined until the ceilings were removed. These additional works had resulted in an extension to the programme for the SPACE and network rewiring projects and the scheme budgets had been reprofiled as shown below;

 

 

2016/17

2017/18

2018/19

 

£000's

£000's

£000's

Original   Estimates

2,929

125

0

Revised   Estimates

1,400

1,600

54

 

Court Road Depot - As options for the site was still being explored it was proposed that the current sum of £300K be carried forward to 2017/18 to enable the rationalisation of Council accommodation to proceed as required.

 

Proposed Capital Programme 2017/18 to 2021/22

Following consideration of all of the above, the proposed 5-year Capital Programme 2017/18 to 2021/22 was attached at Appendix 1 to the report.

 

Since the Initial Capital Programme Proposals were prepared, a small number of amendments were received and were outlined below.

 

Several schemes had been included in Appendix 1 attached to the report which would be funded from S106 monies. These included schemes to enhance Fferm Goch Public Open space, improve sustainable transport and ongoing enhancements for the local community in respect of the Penarth Heights development. Schemes to expand Rhws Primary education, to implement Nursery and Early Intervention provision at St Josephs and the Mixed Sex and Welsh Medium Band B schemes also had significant contributions from S106 as a result of local developments in the respective areas.

 

As part of the transport review the use of vehicles by the Council had been extensively reviewed, which had meant that the purchase of new vehicles under the scheme had been delayed. In addition, an amendment to the level of expenditure in the Capital Programme was required, to reflect the continuing need to replace vehicles across the Council. The proposed revised expenditure was set out in the table below and differed from the Initial Capital Programme Proposals which were reported to Cabinet in November 2016:

 

 

2017/18

2018/19

2019/20

2020/21

2021/22

 

£000's

£000's

£000's

£000's

£000's

Original Expenditure

1,140

1,140

1,140

1,140

1,128

Revised Expenditure

3,235

1,756

1,250

901

922

 

Vehicles could be funded from the Vehicle Renewals Fund, alternatively the vehicles could be leased or borrowed for using prudential borrowing. The level of and financing of this expenditure would be reviewed during 2017/18.

 

Slippage requested through Capital Monitoring reports at Cabinet on 23 January, 2017 and 6 February, 2017 had been included in Appendix 1 attached to the report.

 

As part of the Initial Revenue Proposals report presented to Cabinet on 14 November, 2016 it was projected that the outturn for Policy for 2016/17 would be a favourable variance of £4m. Cabinet resolved "That the sum of £4 million be set aside to the General Fund and consideration be given for that allocation to be used to offset the shortfall in the revenue budget and/or used for capital schemes, the details of which will be considered by the budget working group before the final revenue proposals are presented to Cabinet and Council for approval".

 

Options for the funding had been considered by the Budget Working Group. £1M would be transferred into the Visible Services fund and used to carry out additional road and pavement resurfacing works over the next 2 years as shown in Appendix 1 attached to the report. 

 

Under the Local Development Plan, site provision must be made for Gypsy Travellers. Further work would need to be undertaken as to the final requirements and £1M would be set aside in a fund for a Gypsy/Traveller site scheme. It was also proposed that £500K was placed in the Council Building Fund to generally finance schemes included in the proposed capital programme and £500K was transferred into the Visible Services fund to be used to finance future capital expenditure.

 

Delivering Well Being

 

The Capital Programme was set having regard to the Council’s corporate priorities, which were included in the Corporate Plan through the 4 well-being outcomes which were: - 

  • An Inclusive and Safe Vale
  • An Environmentally Responsible and Prosperous Vale
  • An Aspirational and Culturally Vibrant Vale
  • An Active and Healthy Vale

These outcomes demonstrated the Council’s commitment to the Well-being of Future Generations Act which aimed to improve the social, economic, environmental and cultural well-being of Wales and ensured that the needs of the present were met without compromising the ability of future generations to meet their own need. Examples were as follows:- 

  • Continued investment in housing through the Housing Improvement Programme to achieve the Welsh Housing Quality Standard and with further expenditure planned for new build and environment and regeneration programmes;
  • Investing in the introduction of LED street lighting would bring environmental benefits;
  • Further investment in schools through the School Investment Programme with Band A substantially complete and future development under Band B anticipated to commence in 2019/20;
  • Additional funding being provided in 2018/19 and 2021/22 for Disabled Facilities grants; and
  • Investment in the Leisure Centres to encourage more use and activity.

In developing the Corporate Plan, the Council had reflected on the way it worked and had stated 5 principles it would follow. These budget proposals reflected this new approach to working. The 5 ways of working were:

 

Looking to the long term - The capital proposals were a means of planning for the future and took a strategic approach to ensure services were sustainable and that future need and demand for services was understood;

 

Taking an integrated approach - The capital proposals highlighted and encouraged ways of working with partners as it utilised funding received from various sources to deliver schemes such Welsh Government and S106 funding;

 

Involving the population in decisions – As part of the budget proposal process there had been engagement with residents, customers and partners;

 

Working in a collaborative way – The capital proposals recognised that more could be achieved and better services could be provided by collaboration and it encouraged this as a way of working in the future which included providing funding to work with local communities; and

 

Understanding the root cause of issues and preventing them – The capital budget setting process was proactive and allowed an understanding of the financial position so that issues could be tackled at the source.

 

Financial Strategy

 

In previous Capital proposals a number of pressures had been identified that would need to be subject to on-going review and management as follows;

 

Capital Budget Pressure

Mitigating Action Taken

The possibility of increased demands upon flooding, coastal protection and the environment generally (including an accelerated deterioration of the highways infrastructure).

Recurring sums had been set   aside to fund annual works for flood and coastal protection. Recurring sums had also been set aside for resurfacing. An additional sum of £1M was to be   set aside from the projected 2016/17 underspend into the Visible Services Reserve to assist with the pressures in these areas.

The general shortfall of funding available to address the Council’s asset renewal requirements.

Rationalisation of accommodation should assist with this pressure as it would minimise the number of properties with Asset Renewal requirements. In light of this pressure the asset renewal budget for schools had increased to £823K in 2017/18 and £1M in 2018/19. In the 2016/17 to 2020/21 Capital proposals a recurrent £100K for Social Services asset renewal was allocated. Any underspends against these budgets should be reported and would be ringfenced for future asset renewal requirements against the service's assets.

The Council’s ambitions for further regeneration and how they could be realised.

Regeneration was a central theme of the capital programme. The Council had committed to a recurring sum for Regeneration of £300K and had prioritised regeneration schemes as part of the 2017/18 bids.

The continued expansion over time of the Schools Investment Programme.

Band B Schemes for the School Investment Strategy had been included in the Capital Programme. Welsh Government had confirmed that Band B would commence in 2019/20. It was estimated that the cost of Band B would be in the region of £63.3M and it was assumed that the Welsh Government grant intervention rate would be 50%.

Funding of Renewal Areas to address housing, social and environmental problems in the light of reduced   grant availability.

The WG renewal area grant came to an end in March 2017. The Council had allocated in the capital programme a sum of £150K, £300K and £300K in 2017/18, 2018/19 and 2019/20 respectively to Housing Regeneration and this could be used as match funding for any potential future sources of WG funding.

 

School Investment Programme

 

The 21st Century Schools Programme was the Welsh Government's funding initiative for investment in schools. The first tranche of schemes under the Band A funding was submitted prior to November 2011. Band A schemes ran between 2013/14 and 2018/19. Band B schemes were expected to commence in 2019/20.

 

The schemes included under the Band A submission for construction, between 2013/14 and 2018/19, were Ysgol Nant Talwg, Ysgol Dewi Sant, Ysgol Gwaun Y Nant and Oakfield, Colcot, Romilly Primary and Llantwit Learning Community.

 

The Band A Programme was progressing well. Penarth Learning Community, Ysgol Nant Talwg, Ysgol Dewi Sant, Ysgol Gwaun Y Nant and Oakfield were complete and occupied. The Llantwit Learning Community scheme was substantially complete and the school was due to be occupied in February 2017. The Colcot Primary scheme was underway with further works due to take place over the Summer holidays. The Romilly Primary Scheme received approval in December 2016 and was currently in the design phase with the majority of works expected to take place in 2017/18.

 

The following table showed 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 totaled £77.379M.

 

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

Llantwit Major Learning   Community

 1,240

    29

     -   

     -   

    - 

 1,269

Colcot Primary

   375

    - 

     -   

     -   

    - 

  375

Band B Preparatory Works   Changing Rooms etc.

   250

   500

     -   

     -   

    - 

  750

Band B Schemes Welsh Medium

   150

   100

 5,650

10,500

 2,600

19,000

Band B Schemes Co Ed

   350   

   150

12,900

24,000

 6,000

43,400

Band A Romilly Primary

 1,124

    36

     -   

     -   

    - 

 1,160

Eagleswell Demolition

   100

 

 

 

 

   100

Eagleswell Marketing &   Disposal

    39

    - 

     -   

     -   

    - 

    39

St Cyres Lower School Marketing   & Disposal

    48

    - 

     -   

     -  

    - 

    48

St Josephs Nursery and EIB

 1,031

    - 

     -   

     -   

    - 

 1,031

Schools Asset Renewal/Other

   810

   601

   600

   600

  600

 3,211

Additional Schools Asset   Renewal

   223

   400

     -   

     -   

    - 

   623

Education Asset Renewal -   contingency

    50

    50

     -   

     -   

    - 

   100

Victorian Schools

 2,000

    - 

     -   

     -   

    - 

 2,000

Rhoose Primary New School

 1,500

 1,762

     -   

     -   

    - 

 3,262

Gwenfo Primary Expansion

    11

    - 

     -   

     -   

    - 

    11

Schools IT Loans

   200

   200

200

200

  200

 1,000

Total

 9,501

 3,828

19,350

35,300

 9,400

77,379

 

The total allocation for Victorian Schools in 2017/18 was £2M to support ongoing works across 21 Victorian Schools to address the existing issues with lath and plaster and masonry deterioration. These works were expected to be completed during 2017/18.

 

There was an asset renewal budget of £0.823M in 2017/18 and £1M in 2018/19. From 2019/20 the asset renewal budget had to reduce to the original £600K allocation due to increasing constraints on resources and the 21st Century Schools Band B Programme. Education in consultation with Property Services, allocated the budget in year to various schemes including rolling programmes of boiler and toilet renewal.

 

Band B Schemes were expected to commence in 2019/20 and in December 2016 the Council submitted aspirations for a number of schemes to Welsh Government in addition to the Mixed Sex Barry Secondary and Welsh Medium Barry schemes that the Council had committed to. Based on latest indications, it had been assumed that 50% funding would be available from Welsh Government to fund the schemes. However, there was no guarantee that the funding would be available from Welsh Government or what form it would take. An intervention rate in excess of 50% would increase the Council's capacity to deliver Band B schemes. The delivery of Band B schemes was contingent on the realisation of the projected level of capital receipts, the receipt of projected S106 sums and an intervention rate of at least 50%.

 

Indicative strategic projects for the Council under Band B funding would seek to address the following: 

  • Expanding primary sector capacity and addressing the condition of school buildings in various areas across the Vale; and
  • Rationalisation of school buildings currently situated on split sites.

The total cost for Mixed Sex Barry Secondary Schools and Welsh Medium Band B schemes was projected to be in the region of £63.3M and of this totalled £0.5M, £0.25M, £18.55M, £34.5M and £8.6M had been included in Appendix 1 for 2017/18, 2018/19, 2019/20, 2020/21 and 2021/22 respectively. The final £0.9M for the Band B schemes was profiled in 2022/23.

 

The Education Capital programme was anticipated to be funded as follows;

 

By Funding Source

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

 2,743

 2,055

  2,448

  2,204

 1,972

11,422

Capital Receipts

 1,643

     1

  2,644

  8,009

     0

12,297

Other Reserves and Revenue   Contribution

    64

     0

  2,166

  1,539

     0

 3,769

School Investment Reserve

 1,352

   192

  2,242

  2,075

 2,928

 8,789

IT Fund

   200

   200

    200

    200

   200

 1,000

Prudential Borrowing

 1,500

     0

      0

  2,000

     0

 3,500

Total Internal Funding

 7,502

 2,448

  9,700

 16,027

 5,100

40,777

S106 Agreements

 1,812

 1,362

      0

  2,023

     0

 5,197

Welsh Government Grant

   187

    18

  9,650

 17,250

 4,300

31,405

Total Funding

 9,501

 3,828

 19,350

 35,300

 9,400

77,379

 

Housing Improvement Programme

 

The Welsh Government required all local authorities who retained their housing stock to submit an acceptable Housing Business Plan annually that incorporated a detailed financial forecast in the form of a 30 year financial model. The Business Plan was the primary tool for a local authority’s housing landlord service and included all assets within the Council’s Housing Revenue Account (HRA).

 

It was anticipated that the draft Housing Business Plan would be reported to Cabinet during March 2017, once the latest guidance had been received from Welsh Government and the Plan would also need to be approved by Council. The Plan would form the basis of the Major Repairs Allowance (MRA) grant application, which was a pivotal financing component for the Housing Improvement Programme (to meet the Welsh Housing Quality Standard (WHQS)).

 

The MRA for 2017/18 had not yet been announced by the Welsh Government but the assumed budget in Appendix 1 attached to the report remained at £2.770M per annum as received in 2016/17.

 

The Final Capital Programme Proposals reflected the level of works required to meet and maintain WHQS. It was expected that WHQS would be attained by the end of 2017 calendar year, with on-going work required to maintain the standard based on component lifecycles. In addition, the proposed Housing Improvement Programme included new build and regeneration work between years 2017/2018 and 2021/2022.

 

The budget for the Housing Improvement Programme was shown in Appendix 1 attached to the report and the sources of funding were detailed in the table below.

 

Original Funding

2017/18 £'000's

2018/19 £'000's

2019/20 £'000's

2020/21 £'000's

2021/22 £'000's

Housing Reserves

3,532

4,192

4,451

4,844

5,412

MRA Grant

2,770

2,770

2,770

2,770

2,770

Unsupported   Borrowing

13,269

5,430

4,149

639

212

Total Budget

19,571

12,392

11,370

8,253

8,394

 

Other Schemes

 

A sum of £1.350M per annum in 2017/18 and 2018/19 and £800K in 2019/20, 2021/21 and 2021/22 was included to address high priority Visible Services assets and infrastructure improvements.

 

Flood Risk Management funding of £100K per annum was provided in addition to recurring coastal protection funding of £110K per annum. Increased matchfunding had been made available to ensure that the Coldbrook Flood Risk Management was able to be completed during 2017/18. The Llanmaes and Boverton schemes which were included in the Capital Programme would also enhance flood protection in the area. Given the complexity associated with Flood Risk Management schemes it was proposed that £150K be ringfenced in the Visible Services Reserves for potential additional match funding for these schemes.

 

A sum of £339K (including slippage from 2016/17) in 2017/18 and £300K from 2018/19-2021/22 had been allocated in relation to the Barry Regeneration Partnership. As well as being used for preparatory work (e.g. site investigations), this could also be applied as match funding to lever additional sources of grant funding. In addition to this £155K had been allocated to a regeneration scheme at Nells Point former toilet block.

 

Funding for Disabled Facilities Grants of £5.350M had been provided in total over the 5 years.

 

After presenting this item, the Leader noted the significant usage of Capital Receipts. In agreement with her colleague, the Cabinet Member for Regeneration and Education stated that she was particularly pleased to see an ambitious programme in School investment. She noted that this report alone identified over £77m of school investments across a mix of old and new developments, which were detailed in paragraph 64 of the report. The Cabinet Member further commented that cumulatively, this would mean a total investment of £150m in schools over 10 years. Additionally, the Cabinet Member for Regeneration and Education highlighted paragraph 53 of the report, which stated that “In developing the Corporate Plan, the Council has reflected on the way it works and has stated 5 principles it will follow. These budget proposals reflect this new approach to working.” and she highlighted the recent Community Mapping work that had taken place at St. Athan, Wenvoe and Rhoose as an example of the Council leading the way in working with residents to help prioritise community investment.

 

This was a matter for Executive and Council decision

 

Cabinet, having considered the report and all the issues and implications contained therein

 

RESOLVED –

 

That the following be recommended to Council:

 

(1)       T H A T the final budget proposals for the Capital Programme for the years 2017/18 to 2021/22 as set out in Appendix 1 attached to the report be approved.

 

(2)       T H A T the Managing Director and the Head of Finance, in consultation with the Cabinet Member responsible for Finance, be granted delegated authority to make additions, deletions or transfers to or from the 2017/18 to 2021/22 Housing Improvement Programme as appropriate.

 

(3)       T H A T the Managing Director and the Head of Finance, in consultation with the Cabinet Member responsible for Finance, be granted delegated authority to make additions, deletions or transfers to or from the 2017/18 to 2021/22 Asset Renewal budgets as appropriate.

 

(4)       T H A T the Managing Director and the Head of Finance, in consultation with the Cabinet Member responsible for Finance, be granted delegated authority to make additions, deletions or transfers to or from the 2017/18 Victorian Schools budget as appropriate.

 

(5)       T H A T the Managing Director and the Head of Finance, in consultation with the Cabinet Member responsible for Finance, be granted delegated authority to make additions, deletions or transfers to S106 funded schemes subject to Member consultation as required under the existing process.

 

(6)       T H A T the following changes to the 2016/17 and 2017/18 to 2021/22 Capital Programme be approved:

 

- Romilly Primary School: That the budget for this scheme be reprofiled as set out in paragraph 35 of the report.

- Modular Building Resiting: The carry forward of £20K to 2017/18 to fund Fairfield Nursery Adaptations and £62K to 2017/18 and a further £1K to 2018/19 fund the Modular Building Resiting scheme.

- St Josephs Nursery and Early Intervention Base (EIB): The capital programme in 2017/18 be increased by £1,031K for the scheme to establish Nursery Provision and to locate an Early Intervention Base at the school. The scheme would be funded from £801K Section 106 contributions and £230K capital receipts.

- Vehicle Replacement Programme: That the budget for this scheme be reprofiled as set out in paragraphs 39 and 46 of the report.

- Coldbrook Flood Risk Management: That the budget for this scheme be increased to £4.820M in 2016/17 and £1.412M in 2017/18 in line with the approved Contract sums, this would be funded from £5.298M Welsh Government Grant funding, £66K from capital receipts and £868K from reserves.

- SPACE Project and Civic Office Rewire and Network Rewire Schemes: That the budget for this scheme be reprofiled as set out in paragraph 41 of the report.

- Court Road Depot: That £300K be carried forward to 2017/18 for this scheme.

 

Reasons for decisions

 

(1)       To set and approve future capital programmes to 2021/22.

 

(2)       To enable the Housing Capital budget to be managed effectively.

 

(3)       To enable the Asset Renewal budgets to be managed effectively.

 

(4)       To enable the Victorian Schools budget to be managed effectively.

 

(5)       To enable S106 schemes to be managed effectively.

 

(6)       To amend the 2016/17 and future years Capital Programme and to seek approval from Cabinet and Council.

 

 

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