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Agenda Item No

 

The Vale of Glamorgan Council

 

Scrutiny Committee (Corporate Resources): 11th December 2012

 

Report of the Managing Director

 

Initial Capital Programme Proposals 2013/14

 

Purpose of the Report

1.             To advise Scrutiny Committee of the revised Capital Programme for 2012/13 and to submit for consultation the initial capital proposals for 2013/14.

Recommendations

It is recommended that:

 

1.             Scrutiny Committee considers the initial capital budget proposals for 2013/14 and comments from other Scrutiny Committees and forwards its comments to Cabinet.

2.             That the following changes to the 2012/13 Capital Programme be noted:

·         Sub-standard bridges - reduce the 2012/13 budget to nil and carry forward £250K into 2013/14 and bring £250K from the 2014/15 budget into 2013/14. This will require Council approval.

·         B4265 Toucan Crossing - include a £140K budget (funded by a £100K contribution from the Ministry of Defence and a £40K virement from the Highway Safety Schemes capital budget).

·         Traffic Calming Measures, Durell Street, Llantwit Major - include a budget of £11K (funded from a s106 contribution)

·         Pont y Werin Cycleway - increase the budget by £25K (funded from WG grant)

·         A48 Bus Stop Improvements - increase the budget by £25K (funded from WG grant)

·         Railway Walk, Penarth - include a budget of £15K (funded from WG grant)

·         Highways Making Better Use Study: Barry Docks Roundabout A4050 / A4231 - include a budget of £10,000 (funded from WG grant)

·         St Pauls Church - reduce the budget to nil and carry forward £250k into 2013/14. This will require Council approval.

·         Disabled Facility Grants - reduce the budget to £1M.

·         Coronation Street Green Space Improvements - include a budget of £31K (funded from WG grant).

Reasons for the Recommendations

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

2.             To amend the 2012/13 capital programme.

Relevant Issues and Options

2.             Appendix A details financial progress on the Capital Programme as at 30th September 2012.  

2012/13 Capital Programme

Director of Housing and Visible Services

3.             Sub-standard bridges - An allocation of £250K is included in the 2012/13 Capital Programme, along with further allocations each year thereafter, currently to 2016/17, to cover safety issues with the Authority's various sub-standard bridges. Officers have advised that there is no call on this year's allocation but that it will be needed as part of the Council's 86% contribution to Network Rail's proposed safety works to Ewenny bridge, anticipated during 2013/14, which could reach £1M. As there is only £500K in the 2013/14 budget currently, the slippage of this year's £250K into 2013/14 would bring the budget to £750K so a further £250K is required from the 2014/15 budget. It has been requested that Cabinet and Council approve the re-profiling of this budget to reflect the need for £1M for Ewenny Bridge in 2013/14.

4.             B4265 Toucan Crossing - Earlier this year, the Authority received the sum of £100,000 from the Ministry of Defence (MoD) for the construction of a new crossing over the B4265 to assist pedestrians and cyclists travelling between Boverton and West Gate, St Athan. The works were required under the terms of condition 18 of planning permission2002/01244/CROWN for the new DARA integrated maintenance facility. The works are now complete but, in addition to the funding received from the MoD, a further £40K was required to complete the works. It is proposed that this be funded from the existing allocation for Highway Safety Schemes. As such, it has been requested that Cabinet approve the inclusion of a £140K budget for the toucan crossing into the current capital programme, funded from £100K (as a result of the payment received by MoD to meet their obligations under the terms of the planning permission) and a £40K virement from the Highway Safety Schemes capital budget.

5.             An application for residential development at Andrew House, Llantwit Major was granted planning permission subject to a s106 agreement which required payment of £10,792 to improve sustainable transport facilities serving the development. It is proposed to use this contribution to establish a traffic calming scheme (speed cushions) on Durell Street to slow traffic and increase road safety for pedestrians and cyclists on a key route into the town centre. As such, it has been requested that the sum be included in the current capital programme.

Director of Development Services

6.             Pont y Werin Cycleway - WG have recently awarded an increase in their existing Regional Transport Consortia Grant allocation of £25K in order to fund the completion of the Dingle Road element of the scheme which is already receiving grant funding for 2012/13. As detailed design was completed a more accurate forecast cost was identified and WG informed. It has been requested that the existing Pont y Werin Improvement budget be increased to reflect this additional funding.

7.             A48 Bus Stop Improvements - WG have offered an additional grant of £25K to augment the current allocation of £25K on bus stop improvements along the A48 which has already been spent in full.  It has been requested that the existing budget be increased to reflect this additional funding.

8.             Railway Walk, Penarth - WG have also offered the Authority the sum of £15K pre-delivery funding to complete the detailed design stage of this cycleway scheme. It has been requested that the existing budget be increased to reflect this additional funding.

9.             Highways Making Better Use Study: Barry Docks Roundabout A4050 / A4231 - WG have offered a grant of £10K towards a study into possibilities of improving the roundabout at the junction of Port Road and the Barry Docks Link Road. Officers within our Highways Division will be preparing the study. Cabinet has been requested to include a budget of £10,000 in the current capital programme.

10.        Greenlinks Minibus - Under delegated authority, the Managing Director has approved the inclusion of a £42K budget in this year's capital programme to fund the purchase of a second minibus for the Authority's community transport initiative. The funding for the vehicle will come from an £18K South East Wales Transport Alliance (SEWTA) grant, a £16K allocation form the Authority's Local Transport Services Grant form the Welsh Government as well as a contribution from revenue budgets of £8K. This budget is included in Appendix A.

11.        St Pauls Church - Cabinet on February 29th 2012, (minute no. C1646), approved the inclusion of a £250K budget for remedial works at St Pauls Church, Penarth, in order to secure the building to allow occupation of the former St. Paul's Church in Penarth by Penarth Gymnastics Club and Penarth Boxing Club. The building had been closed since early 2011 when its condition was deemed dangerous. Since the budget approval however, it has become evident that £250K may not cover all works required to the building, increasing the budgetary requirement for the project. Funding for the works was to be taken from the s106 monies received for the Penarth Heights development. The scheme has been put on hold, pending further consultation with local residents and it is now highly unlikely that any expenditure can be achieved this year. As such, it has been requested that the £250K budget be slipped forward into 2013/14 while the situation is being reviewed.  Members will be informed of the outcome of the consultation exercise.

12.        Disabled Facility Grants - Expenditure has been behind profile all year on this grants budget. Though numbers of grants in the system have not fallen noticeably, the average cost of each grant has reduced from previous years and some high value cancellations have been received. These factors combine to reduce the anticipated final spend on grants by some £200K and, as such, it has been requested that the budget be reduced to £1M in order to reflect the maximum expenditure that can now be achieved on this budget.

13.        Coronation Street Green Space Improvements - The Authority has recently accepted funding of up to £31,400 for improvements to the open space at Coronation Street, Barry. The funding is awarded from the Welsh Government's 'Tranquil, Greener and Cleaner Places Grant' and works have to be completed and claimed in full by the end of this financial year or funding will be lost. The works will be project managed by our Landscape Section and include additional seating, repainting railings and re-surfacing paths, new tree planting and native perennial and wildflower planting as well as additional path illumination to address safety concerns and new bollards along the boundary of the upper section with Coronation Street to avoid unauthorised vehicular access.

Variance between Actual Spend to date and Profiled Spend

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

15.        Penarth Pier Pavilion - The capital budget represents the council's contribution to this Penarth Arts and Crafts (PACL) led scheme. PACL recently had to complete a further tender review to ensure their spending was within profile for their various grant funders and this meant they could not let the works contract until 21st September 2012, a full month behind profile. The budget profile will be amended to reflect this delay but at this stage a full spend is still anticipated by year-end.

16.        Barry Island Footbridge - Works are now on site on this replacement footbridge scheme and are proceeding well. There was an initial delay caused by the steel work sub-contractor but this has now been resolved and the profile will be amended to reflect this but it is anticipated that a full spend on this part-Department for Transport grant funded scheme will still be achieved well before the end of the financial year.

17.        Dyffryn Gardens Refurbishment and National Trust Contribution - Both of these budgets were originally planned as September expenditure, to coincide with the anticipated transfer to the National Trust. Delays in this process have been incurred due to finalising the transfer agreement. A full spend of both budgets is nevertheless expected as it is now planned that the transfer will take place in January 2013.

18.        Leisure Centres Refurbishment - It was originally anticipated that refurbishment works would commence during August and a profiled spend of £661K was originally anticipated by the end of September. As Members are aware, the Parkwood Partnership arrangement was not finalised until 1st August, several months behind the original profile. Though works have now commenced, the profile will be reviewed to reflect the August agreement date. At this stage a full spend is still anticipated by the end of March but Members will be informed should this no longer be possible.

2013/14 Capital Programme

19.        The Welsh Government announced the provisional 2013/14 General Capital Funding, on 16th October 2012. The 2013/14 capital settlement represents a 10% cut in funding over last year's allocation, though no further cut was indentified for 2014/15. This has been reflected in the table on Appendix B.

20.        However, should the Westminster Government commence a further Spending Review in 2014/15, it is likely that further austerity measures could be introduced between 2015/16 and 2017/18 which could bring about further cuts which are significant in nature. As such, a 10% cut each year from 2015/16 to 2017/18 has also been assumed in Appendix B. As part of a Budget Review, covering the period 2013/14 to 2017/18, the Council will have to look to mitigate the deteriorating situation in so far as it is able by reappraising all schemes and looking to progress only those which are deemed to be a key corporate priority, whilst also seeking to gain assurance that such schemes are delivered on time and within budget.

21.        Cabinet, on 13th February 2008, approved that the Director of Resources, (formerly 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 shall request a transfer of £280,000 for 2013/14 and this sum has also been assumed each year to 2017/18 in Appendix B.

22.        The Major Repairs Allowance (MRA), which is the grant that provides capital funding to the Housing Revenue Account (HRA), for 2013/14 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 £2.8 million in 2013/14.

23.        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.  

24.        Appendix B outlines the proposed 2013/14 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 2013/14 Capital Programme

GENERAL FUND                                                                £’000      £’000

Welsh Government Resources 

Supported Borrowing                                                        3,180

General Capital Grant                                                        2,106

                                                                                                                   5,286

Council Resources

Capital Receipts                                                                5,120

Reserves/Leasing                                                              3,417

                                                                                                                   8,522           

Net Capital Resources                                                                           13,823                       

HOUSING REVENUE ACCOUNT           £’000                £’000

Housing Reserves                                           13,402

Housing Capital Receipts                                                392

Supported Borrowing                                                            280

           

Net Capital Resources                                                                             14,074

 

25.        The indicative 2013/14 Capital Programme shown in Appendix B includes allocations already approved by Council.

Capital Bids 2013/14

26.        Capital bids were invited for return by 28th September and an extremely high number of bids were received. As bids are evaluated by the Corporate Asset Management Group (CAMG) it was necessary to reduce the numbers of bids actually discussed by the Group in order to allow meaningful discussion for each bid. Departments were requested to rank their own bids in order of importance before submission and a maximum of the highest 20 bids from each Department were forwarded to the CAMG for evaluation. Appendix C also lists those bids that were not evaluated by the CAMG.

27.        The method of prioritisation used by the Corporate Asset Management Group 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

 

28.        The Budget Working Group has prioritised bids based upon the recommendations of the CAMG. These are shown in Appendix B.

29.        The evaluation of the bids by the CAMG resulted in a high number of priority A and B bids. Such a high level of high priorities awarded does not assist in the allocation of the Council's scarce resources. 

30.        Consequently, bids will be further reviewed by the BWG in terms of their corporate priority and the risk they pose to the Council if they are not pursued. This methodology will follow that outlined in the Initial Revenue Budget Proposals report for the Budget Review, the risk assessment element of which will be undertaken in line with the Council's Corporate Risk Management Strategy.  

31.        Included in Appendix B is the sum of £350K for the second phase of the phase 2 expansion of Ysgol Dewi Sant, the Llantwit Major Welsh Medium School development. This is subject to a grant bid to the Welsh Government and a Business Justification Case has recently been submitted to WG to support a 50% grant bid for this £700K scheme.

32.        In addition to the capital bids included in Appendix B, Appendix C lists capital bids received that were unsuccessful, or not discussed by the CAMG, as referred to above. These have not been put forward for inclusion in the 2013/14 programme. 

33.        A request for all capital bids for future years that may not have been submitted as part of this bidding round has been requested in order to ensure that the full capital commitments of the Authority are known. Any such bids received will be evaluated by the Budget Working Group in time for the final capital programme proposals in February 2013. The BWG will also assess the likely level of future funding and the capital programme as currently drawn up.

Next Steps

34.        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 18th December 2012. It is also proposed to consult with the public, LSB, business sector and town & community councils.

35.        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.

36.        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.

37.        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 25th February 2013.

38.        Cabinet’s final capital programme proposals will be considered by Council no later than 6th March 2013.

Resource Implications (Financial and Employment)

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

40.        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 2013

7,860

 

Anticipated Requirements – 2013/14

(5,120)

Anticipated Receipts – 2013/14

170

Balance as at 31st March 2014

2,910

 

Anticipated Requirements – 2014/15

0

Anticipated Receipts – 2014/15

0

Balance as at 31st March 2015

2,910

 

Anticipated Requirements – 2015/16

(1,218)

Anticipated Receipts – 2015/16

448

Balance as at 31st March 2016

2,140

 

Anticipated Requirements – 2016/17

(928)

Anticipated Receipts – 2016/17

438

Balance as at 31st March 2017

1,650

 

Anticipated Requirements – 2017/18

(1,238)

Anticipated Receipts – 2017/18

0

Balance as at 31st March 2018

412

41.        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 2013

4,999

 

Anticipated Requirements – 2013/14

(420)

Anticipated Receipts – 2013/14

122

Balance as at 31st March 2014

4,701

 

Anticipated Requirements – 2014/15

(1,500)

Anticipated Receipts – 2014/15

70

Balance as at 31st March 2015

3,271

 

Anticipated Requirements – 2015/16

(300)

Anticipated Receipts – 2015/16

70

Balance as at 31st March 2016

3,041

 

Anticipated Requirements – 2016/17

(300)

Anticipated Receipts – 2016/17

30

Balance as at 31st March 2017

2,771

 

Anticipated Requirements – 2017/18

(300)

Anticipated Receipts – 2017/18

0

Balance as at 31st March 2018

2,471

 

 

 

42.        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

43.        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

44.        Sustainability checklists will be requested from Project Managers for each of the proposed bids included in 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 incorporated into the Final Capital Proposals report in February 2013. 

Legal Implications (to Include Human Rights Implications)

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

Crime and Disorder Implications

46.        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)

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

Corporate/Service Objectives

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

Policy Framework and Budget

49.        This report follows the procedure laid down in the constitution for the making of the budget.  The 2013/14 budget proposals will require the approval of Council. 

Consultation (including Ward Member Consultation)

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

Relevant Scrutiny Committee

51.        Corporate Resources

Background Papers

Bids received from departments

Correspondence received from the Welsh Government

Contact Officer

Laura Davis, Senior Accountant

Officers Consulted

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

Management Team

Responsible Officer:

Sian Davies

Director Resources