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Agenda Item No. 5

 

 

THE VALE OF GLAMORGAN COUNCIL

 

SCRUTINY COMMITTEE (CORPORATE RESOURCES): 10TH DECEMBER, 2013

 

REFERENCE FROM SCRUTINY COMMITTEE (SOCIAL CARE AND HEALTH): 2ND DECEMBER, 2013

 

 

"           INITIAL CAPITAL PROGRAMME PROPOSALS 2014/15 (DDS AND DVSH) -

 

Set out at Appendix A to the report were full details of the progress on the Capital Programme as at 30th September 2013.

 

The Welsh Government (WG) had announced the provisional 2014/15 General Capital Funding on 16th October 2013.  The 2014/15 capital settlement represented a £246,000 (4.7%) increase in funding over the previous year’s allocation; however because this amount included the reinstatement of £280,000 transferred to supported borrowing for the Housing Revenue Account in 2013/14, the actual position for the Council was a reduction of £34,000 which represents a 0.61% cut.  The indicative amount provided by WG suggested that capital funding will be maintained at this level for 2015/16.  This has been reflected in the proposed Capital Programme 2014/15 to 2018/19.

 

Whilst the indicative amounts have been utilised in 2014/15 and 2015/16, for the purposes of this programme, the assumption of a 10% cut each year had been assumed in 2016/17, 2017/18 and 2018/19.  In line with the financial strategy, the Council would mitigate the deteriorating situation by looking to progress only those schemes which were deemed to be a key corporate priority, whilst also seeking to gain assurance that such schemes were delivered on time and within budget.

 

In addition to funding from the WG, the Council would finance part of the Capital Programme from its own resources, e.g. Capital Receipts and Reserves.  Set out in Appendix B was the proposed 2014/15 to 2018/19 Capital Programme for services under the Committee’s remit. 

 

Analysis of Net Funding Required for the Indicative 2014/15 Capital Programme

 

GENERAL FUND

£’000     

£’000

Welsh Government Resources

 

 

Supported Borrowing

3,438

 

General Capital Grant

2,092

 

 

 

  5,530

Council Resources

 

 

Capital Receipts

2,509

 

Reserves/Leasing

6,095

 

Unsupported Borrowing

5,600

 

 

 

14,204

Net Capital Resources

 

19,734

 

HOUSING REVENUE ACCOUNT

£’000       

£’000       

Housing Reserves                                                       

7,387

 

Housing Capital Receipts                                                 

1,525

 

Housing Unsupported Borrowing                   

6,034

 

 

 

 

Net Capital Resources

 

  14,946

 

Capital bids were invited for return by 30th September 2013 and the number of bids received were reduced from the high volume in the previous year. This reduction reflects that the Capital Programme had been set to 2017/18 following the budget review that took place as part of the 2013/14 budget process.  Departments were requested to rank their own bids in order of importance before submission, and bids from each Department were forwarded to the Corporate Asset Management Group (CAMG) for evaluation.

 

The Budget Working Group had prioritised bids based upon the recommendations of the CAMG and were shown in Appendix B.  The method of prioritisation used in the Council’s Capital Investment Strategy was set out in the report for information.  Only those schemes assessed as corporate priority 1 or medium risk and above were included. 

 

In addition to bids meeting the criteria for inclusion in the Capital Programme, there had been a number of changes approved by Cabinet since the final budget proposals in February 2013 that impacted on the Capital Programme, such as, amendments to the budgets carried forward and these changes were included. 

 

As in the case of the consideration of the Initial Revenue Budget Proposals, similar arrangements were in place for the Scrutiny Committees to pass their recommendations to the Scrutiny Committee (Corporate Resources) who would, on behalf of all the Council’s Scrutiny Committees, formally respond to Cabinet by no later than 13th December 2013.  However, Scrutiny Committees were being asked to first consider the indicative Capital Proposals as set out in Appendix B.  If a change to the initial proposals was desired, the Scrutiny Committee was required to provide a reason for this need in order to assist the Cabinet and the CBWG in their deliberation when drawing up the final proposals.  The total net capital expenditure of the proposed programme for the whole of the Council over the five years was over £102m.  

 

Managers would be asked to revisit the schemes listed in Appendix B and to confirm final cost and spend profiles prior to the final proposals being considered by Cabinet by no later than 24th February, 2014.  Cabinet’s final Capital Programme proposals would be considered by Council no later than 5th March, 2013.

 

If the schemes proposed for the whole of the Council were approved, the effects on General Fund useable capital receipts were as follows:

 

General Fund Capital Receipts

          £'000

Anticipated Balance as at 1st April 2014

7,940

 

 

Anticipated Requirements – 2014/15

(2,656)

Anticipated Receipts – 2014/15

885

Balance as at 31st March 2015

6,169

 

 

Anticipated Requirements – 2015/16

0

Anticipated Receipts – 2015/16

0

Balance as at 31st March 2016

6,169

 

 

Anticipated Requirements – 2016/17

(2,237)

Anticipated Receipts – 2016/17

0

Balance as at 31st March 2017

3,932

 

 

Anticipated Requirements – 2017/18

(0)

Anticipated Receipts – 2017/18

0

Balance as at 31st March 2018

3,932

 

 

Anticipated Requirements – 2018/19

(0)

Anticipated Receipts – 2018/19

0

Balance as at 31st March 2019

3,932

 

In line with the overall strategy and specific suggestions proposed by the Budget Working Group (BWG), in order to resource the Capital Programme, reserves will be utilised over the period of the Capital Programme 2014/15 to 2018/19.

 

The Project Fund would 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 Director of Resources.  A balance of £2m would be retained as a balance on this fund.  The projected usage of this reserve, for the whole of the Council, over the period of the Capital Programme was shown below:

 

Project Fund

             £'000

Anticipated Balance as at 1st April 2014

4,217

 

 

Anticipated Requirements – 2014/15

(1,754)

Anticipated Receipts – 2014/15

402

Balance as at 31st March 2015

2,865

 

 

Anticipated Requirements – 2015/16

(450)

Anticipated Receipts – 2015/16

100

Balance as at 31st March 2016

2,515

 

 

Anticipated Requirements – 2016/17

(400)

Anticipated Receipts – 2016/17

60

Balance as at 31st March 2017

2,175

 

 

Anticipated Requirements – 2017/18

(100)

Anticipated Receipts – 2017/18

60

Balance as at 31st March 2018

2,135

 

 

Anticipated Requirements – 2018/19

(0)

Anticipated Receipts – 2018/19

0

Balance as at 31st March 2019

2,135

 

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

 

Members noted the reduced size of the proposed Capital Programme and enquired if this was as a result of choice or necessity.  In response, Members were advised that the bids were based on pragmatism.

 

In response to a question, Members were informed that the Welsh Government had agreed a further Capital injection towards Flying Start, and the Directorate had bid for £250,000 for 2014/15.

 

RECOMMENDED -

 

(1)       T H A T the position with regard to the 2013/14 Capital Programme be noted.

 

(2)       T H A T the proposed Capital Programme for 2014/15 as detailed in Appendix B to the report be noted.

 

Reason for recommendations

 

(1&2)  In acknowledgement of the budget proposals and to allow the matter to be further considered." 

 

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