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Agenda Item No. 5

 

The Vale of Glamorgan Council

 

Scrutiny Committee (Economy and Environment): 2nd December 2014

 

Joint Report of the Director of Development Services and the Director of Visible Services and Housing

 

Initial Capital Programme Proposals 2015/16

 

Purpose of the Report

1.         To provide an update on the progress of the Capital Programme for 2014/15 and to submit for consultation the initial capital proposals for 2015/16.

Recommendations

It is recommended:-

1.         Scrutiny Committee consider the 2015/16 initial capital budget proposals and forward its recommendations to Scrutiny Committee (Corporate Resources) as the lead Scrutiny Committee.

2.         That any recommendations of Scrutiny Committees are passed to Corporate Resources Scrutiny Committee as the lead Scrutiny Committee in order for their views to be forwarded to Cabinet.

3.         That Committee note the following changes to the 2014/15 Capital Programme:

  • Rural Integrated Transport Initiative - Increase the 2014/15 Capital Programme by £100K for the WG Pilot Transport Project Rural Integrated Transport Initiative.

4.         That Committee note the inclusion of the following capital scheme in the 2014/15 Capital Programme, to be funded from an increased revenue contribution:

  • Public Conveniences Refurbishment - £100k

5.         That Committee note the use of article 13.09 of the Council's Constitution (urgent decision procedure) to increase the 2014/15 Capital Programme for the following capital schemes to be funded from an increased revenue contribution in 2014/15 and therefore, enable officers to carry out the works within the current financial year:

  • Penarth Esplanade/Cliff Road Improvements - £450k
  • Highways Improvements - £250k
  • Parks Refurbishment - £200k
  • Barry Island Enhancements Phase 2 - £300k

6.         That Committee note the following changes to the 2014/15 and 2015/16 Capital Programmes that require Council approval:

  • Vehicle Replacement Programme - Carry forward £952k to 2015/16 and £738k to 2016/17, reducing the budget in the 2014/15 programme to £1.082m.
  • Penarth Esplanade Feasibility - Carry forward funding for Penarth Esplanade scheme to 2015/16 £50k and £50k to 2016/17.
  • Ashpath Footpath Improvements - Carry forward funding £72k to the 2015/16 Capital Programme.
  • S106 Funded Schemes - Increase the Capital Programme for 2014/15 by £346k and £350k in 2015/16 for the following schemes to be funded by S106 contributions;

- Cogan Hall Farm - Dinas Powys to Cosmeston Cycleway Link £150k in total, with £15k in 2014/15 and £135k in 2015/16.

- Plassey Street/Glebe Street Zebra Crossing £30k in 2014/15.

- Plassey Street/High Street Zebra Crossing £20k in 2014/15.

- Windsor Road/Plassey Street Roundabout Junction Enhancements £100k in 2014/15.

- Windsor Street/Pill Street Dedicated Right Hand Turn £110k in 2014/15.

- Lighting Scheme for Zig Zag Path £100k in total, with £25k in 2014/15 and £75k in 2015/16.

- Pedestrian Crossing across Ffordd Y Millennium and Improved Bus Access £69k in total, with £17k in 2014/15 and £52k in 2015/16.

- Pedestrian Crossing across Thompson Street/Holton Road £24k in total, with £6k in 2014/15 and £18k in 2015/16.

- Pedestrian Access Buttrills Road/Holton Road £93k in total, with £23k in 2014/15 and £70k in 2015/16.

Reasons for the Recommendations

1.         To allow full consultation on the future Capital Programme.

2.         In order that Cabinet be informed of the comments of Scrutiny Committees before making a final proposal on the 2015/16 Capital Programme.

3.         To ensure that Members are aware of the position with regards the 2014/15 Capital Programme, relevant to this Scrutiny Committee.

4.         To ensure that Members are aware of the position with regards the 2014/15 Capital Programme, relevant to this Scrutiny Committee.

5.         To ensure that Members are aware of the position with regards the 2014/15 Capital Programme, relevant to this Scrutiny Committee and the use of article 13.09 of the Council's Constitution (urgent decision procedure).

6.         To ensure that Members are aware of the position with regards the 2014/15 and 2015/16 Capital Programme, relevant to this Scrutiny Committee.

Relevant Issues and Options

2014/15 Capital Programme

2.         Appendix A details financial progress on the Capital Programme as at 30th September 2014.  

Director of Visible Services and Housing

3.         Vehicle Replacement Programme - It has been requested to carry forward £952k to 2015/16 and £738k to 2016/17, reducing the total budget in the 2014/15 programme to £1.082m. The Vehicle Replacement programme will be reviewed as a result of the outcome of the Transport Review prior to the Final Budget Proposals being submitted in February 2015.

4.         It has been requested that the following schemes totalling £1m are included in the 2014/15 Capital Programme to be funded from an additional revenue contribution

  • Public Conveniences Refurbishment - £100k
  • Penarth Esplanade/Cliff Road Improvements £450k
  • Highways Improvements £250k
  • Parks Refurbishment £200k.

Director of Development Services

5.         Penarth Esplanade Feasibility - It has been requested that there is a carry forward of budget for the Penarth Esplanade Feasibility scheme of £50k to 2015/16 and £50k to 2016/17. Progress on this scheme has not been feasible in 2014/15 due to other priorities and commitments.

6.         Ashpath Footpath Improvements - It has been requested to carry forward funding of £72k to the 2015/16 Capital Programme as the implementation of the full programme has been delayed due to land issues. The remaining £28k is retained in 2014/15 to enable a scheme to resolve the flooding issue to be implemented. A bid for improvements to the footpath has been resubmitted as part of the Initial Capital Programme proposals to request that £100k for the footpath widening, for improved security and to improve the cycle path is available in 2015/16.

7.         Rural Integrated Transport Initiative - Cabinet on 12th May 2014 (Minute C2330), agreed to accept £100k of grant funding for a WG Pilot Transport Project for Rural Integrated Transport. It has been requested to increase the 2014/15 Capital Programme by £100k.

8.         S106 Funded Schemes -  An increase of £346k in 2014/15 and £350k in 2015/16 has been requested to be funded by S106 contributions as outlined below;

  • Cogan Hall Farm - Dinas Powys to Cosmeston Cycleway Link £150K in total, with £15k in 2014/15 and £135k in 2015/16.
  • Plassey Street/Glebe Street Zebra Crossing £30k in 2014/15.
  • Plassey Street/High Street Zebra Crossing £20k in 2014/15.
  • Windsor Road/Plassey Street Roundabout Junction Enhancements £100k in 2014/15.
  • Windsor Street/Pill Street Dedicated Right Hand Turn £110k in 2014/15
  • Lighting Scheme for Zig Zag Path £100k in total, £25k in 2014/15 and £75k in 2015/16.
  • Pedestrian Crossing across Ffordd Y Millennium and Improved Bus Access £69k in total, with £17k in 2014/15 and £52k in 2015/16.
  • Pedestrian Crossing across Thompson Street/Holton Road £24k in total, with £6k in 2014/15 and £18k in 2015/16.
  • Pedestrian Access Buttrills Road/Holton Road £93k in total, with £23k in 2014/15 and £70k in 2015/16.

9.         It has been requested that a scheme for Barry Island Enhancements Phase 2 Works totalling £300k is included in the 2014/15 Capital Programme to be funded from an additional revenue contribution.

Variance between Actual Spend to date and Profiled Spend

10.      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:-

  • Local Road Network Improvements - As noted in the previous monitoring this scheme has been subject to delay this financial year however a further £791k has been spent in October 2014 which will bring expenditure in line with budget profile.

2015/16 to 2019/20 Capital Programme

11.      The Welsh Government (WG) announced the provisional 2015/16 General Capital Funding, on 8th October 2014. The 2015/16 capital settlement represents a £62k decrease on the 2014/15 Final Settlement which equates to a 1% cut. There is no indication of the level of funding likely beyond 2015/16 therefore in line with the approach adopted in the Medium Term Financial Plan the proposals assume a reduction of 10% for each year of the programme from 2016/17. This has been reflected in the proposed Capital Programme 2015/16 to 2019/20. Proposed schemes for this Committee are outlined in Appendix B.

12.      In line with the financial strategy, the Council will mitigate the deteriorating situation by looking to progress only those schemes 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.

13.      In addition to external funding, the Council will finance part of the Capital Programme from its own resources, e.g. capital receipts and reserves.  

14.      The table below details the General Capital Funding and internal resources required to fund the proposed schemes for the Council as a whole. 

Analysis of Net Funding Required for the Indicative 2015/16 Capital Programme

GENERAL FUND                                                          £’000                    £’000

Welsh Government Resources 

Supported Borrowing                                                  3,398

General Capital Grant                                                  2,068

                                                                                                                5,466

Council Resources

Capital Receipts                                                           2,260

Reserves/Leasing                                                        9,920

Unsupported Borrowing                                               2,074

                                                                                                               14,254           

Net Capital Resources                                                                           19,720                       

HOUSING REVENUE ACCOUNT                                £’000                    £’000

Housing Reserves                                                      4,141

Housing Capital Receipts                                                  0

Housing Unsupported Borrowing                             11,292

Net Capital Resources                                                                           15,433

 

15.      The indicative 2015/16 Capital Programme shown in Appendix B includes allocations already approved by Council and the amendments requested within this report.

Capital Bids 2015/16 to 2019/20

16.      New capital bids were invited for return by 30th September 2014 and the number of bids received were low (1 from Social Services, 11 from Visible Services and 6 from Development). 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.

17.      The CAMG used the criteria set out by the Budget Strategy; the bids were prioritised in terms of their corporate priority and the risk they pose to the Council if they are not pursued. Following this the prioritisation of bids was reviewed by the Budget Working Group. The risk assessment element was undertaken in line with the Council's Corporate Risk Management Strategy as follows;

Possible Impact or Magnitude of Risk

 

Catastrophic

 

MEDIUM

 

MEDIUM/HIGH

 

HIGH

 

VERY HIGH

 

High

 

MEDIUM/LOW

 

MEDIUM

 

MEDIUM/HIGH

 

HIGH

 

Medium

 

 LOW

 

MEDIUM

 

MEDIUM

 

MEDIUM/HIGH

 

Low

 

VERY LOW

 

 LOW

 

MEDIUM/LOW

 

MEDIUM

Risk Matrix

Very Unlikely

Possible

Probable

Almost Certain

Likelihood/Probability of Risk Occurring

 

18.      Taking into account the nature of capital schemes, the following criteria were applied to assess corporate priority:

Corporate Priority

Score

Commitments and areas where the Council has no control over the expenditure, e.g. contractual and legal commitments, absolute minimum statutory service, taxes, etc.

3

Very high priority (publicly announced commitment e.g. items included in the Community Strategy, Corporate Plan etc.)

2

“Invest to Save†and preventative expenditure

2

Statutory expenditure above the absolute minimum and other priorities

1

Low Priority

0

 

 

 

 

 

 

 

 

 

 

 

 

19.      Only those schemes assessed as corporate priority 1 or higher and medium risk or higher are included in these proposals. The bids that did not meet these criteria or were excluded from consideration because funding has already been allocated as part of the current Capital Programme are set out in Appendix C with a reason for their exclusion.

20.      Submitted as part of the capital bids were the following two bids. The bids were resubmitted to request that funding be made available in future years because the existing budget will not be contractually committed at the end of 2014/15;

  • Ashpath Footpath Improvements - There have been delays on implementation of the full scheme due to land issues. In 2014/15, it is proposed that a scheme intended to resolve the flooding issues that will cost £28k is implemented. The bid for improvement to the footpath has been resubmitted as part of the Initial Capital Programme for 2015/16 and in addition to the £72k carried forward it is requested that an additional £28k is made available for footpath widening, improved security and improvements to the cycle path. This increased cost will be funded by an additional contribution from Capital Receipts.
  • Penarth Esplanade Feasibility - The purpose of this scheme is to consider options for physical improvements to the Esplanade, given the progress made to date on key developments such as Penarth Pavillion, Beachcliff and the Town Plan. Due to other priorities and commitments progress on the scheme has not been feasible in 2014/15. It is requested that £50k funding is carried forward from 2014/15 to 2015/16 and a further £50k is carried forward from 2015/16 to 2016/17.

21.      As part of the Transport review the use of vehicles by the Authority has been extensively reviewed, this has meant that the purchase of new vehicles under the scheme has been delayed. In addition the level of expenditure for the scheme has been amended in the Capital Programme to reflect the continuing need to replace vehicles across the Council, the proposed revised expenditure is set out in the table below;  

 

2014/15

2015/16

2016/17

2017/18

2018/19

2019/20

 

£000's

£000's

£000's

£000's

£000's

£000's

Original Expenditure

2,772

1,189

509

128

0

0

Revised Expenditure

1,082

2,141

1,596

694

1,818

962

 

22.      The level of and financing of this expenditure will be reviewed as a result of the outcome of the Transport review and the amended proposals will be brought as part of the Final Budget Proposals in February 2015.

23.      Cabinet on 28th July 2014 (Minute C2419) agreed the inclusion of £418k in 2015/16 and £249k in 2016/17 for the Tackling Poverty Grant. It has also been approved that in 2015/16 £116k and 2016/17.  £40k of Barry Regeneration Project Development Fund would be utilised as match funding for the Grant. In addition s106 contributions of £60k in 2015/16 and £86k in 2016/17 will also be utilised for the project. These contributions are reflected in Appendix B.

24.      In addition to bids meeting the criteria for inclusion in the Capital Programme, there have been a number of changes approved by Cabinet since the final budget proposals 2014/15 to 2018/19 in February 2014 that have an impact on the Capital Programme.

Next Steps

25.      The next stage is for the estimates to be submitted to Scrutiny Committees for consultation.  Scrutiny Committee (Corporate Resources) 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 16th December 2014.

26.      Scrutiny Committee is asked to first consider the initial Capital Programme 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 Budget Working Group (BWG) draw up the final proposals.

27.      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 23rd February 2015. 

28.      Cabinet’s Final Capital Programme proposals will be considered by Council on 4th March 2015.

Resource Implications (Financial and Employment)

29.      The total net capital expenditure of the proposed programme for the Council as a whole, over the 5 years, is approximately £96.144m.

30.      If all proposed schemes for the Council as a whole shown are approved, the effect on General Fund useable capital receipts will 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 1st April 2015

8,233

1,225

0

 

 

 

 

Anticipated Requirements – 2015/16

(1,660)

0

(600)

Anticipated Receipts – 2015/16

0

0

1,285

Balance as at 31st March 2016

 6,573

1,225

685

 

 

 

 

Anticipated Requirements – 2016/17

(5,525)

0

(1,684)

Anticipated Receipts – 2016/17

0

0

2,500

Balance as at 31st March 2017

1,048

1,225

1,501

 

 

 

 

Anticipated Requirements – 2017/18

0

(1,225)

(800)

Anticipated Receipts – 2017/18

0

0

2,500

Balance as at 31st March 2018

1,048

0

3,201

 

 

 

 

Anticipated Requirements – 2018/19

0

0

0

Anticipated Receipts – 2018/19

0

0

0

Balance as at 31st March 2019

1,048

0

3,201

 

 

 

 

Anticipated Requirements – 2019/20

0

0

0

Anticipated Receipts – 2019/20

0

0

2,800

Balance as at 31st March 2020

1,048

0

6,001

 

 

 

 

Anticipated Requirements between 2020/21 and 2025/26

0

0

(6,001)

Anticipated Receipts between 2020/21 and 2025/26

0

0

0

Balance as at 31st March 2026

1,048

0

0

 

31.      In line with the overall strategy and specific suggestions proposed by the BWG, in order to resource the Capital Programme, reserves will be utilised over the period of the Capital Programme 2015/16 to 2019/20.

32.      The Project Fund will 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 will be retained as a balance on this fund.  The projected usage of this reserve over the period of the Capital Programme is shown below:

 

Project Fund

             £'000

Anticipated Balance as at 1st April 2015

4,244

 

 

Anticipated Requirements – 2015/16

(1,684)

Anticipated Receipts – 2015/16

100

Balance as at 31st March 2016

2,660

 

 

Anticipated Requirements – 2016/17

(400)

Anticipated Receipts – 2016/17

60

Balance as at 31st March 2017

2,320

 

 

Anticipated Requirements – 2017/18

(100)

Anticipated Receipts – 2017/18

60

Balance as at 31st March 2018

2,280

 

 

Anticipated Requirements – 2018/19

0

Anticipated Receipts – 2018/19

0

Balance as at 31st March 2019

2,280

 

 

Anticipated Requirements – 2019/20

0

Anticipated Receipts – 2019/20

0

Balance as at 31st March 2020

2,280

 

33.      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

34.      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.

35.      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 incorporated into the Final Capital Programme Proposals report in February 2015. 

Legal Implications (to Include Human Rights Implications)

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

Crime and Disorder Implications

37.      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)

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

Corporate/Service Objectives

39.      Contributes to the corporate priority of Community Leadership by the provision of sound financial management. 

Policy Framework and Budget

40.      This report follows the procedure laid down in the constitution for the making of the budget.  The 2015/16 budget proposals will require the approval of Council.  Some of the proposals for amendments to the 2014/15 Capital Programme are the responsibility of Cabinet and others are for Council.  These are identified in the recommendations to this report.

Consultation (including Ward Member Consultation)

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

Relevant Scrutiny Committee

42.      Corporate Resources

Background Papers

Bids received from departments

Correspondence received from the Welsh Government

 

Contact Officer

Gemma Jones, Principal Accountant

 

Officers Consulted

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

Corporate Management Team

 

Responsible Officer:

Rob Thomas, Director of Development Services

Miles Punter, Director of Visible Services

 

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