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Agenda Item No. 5

 

The Vale of Glamorgan Council

 

Scrutiny Committee (Economy and Environment): 1st  December 2015

 

Report of the Director of Environment and Housing

 

Initial Capital Programme Proposals 2016/17

 

Purpose of the Report

  1. To provide an update on the progress of the Capital Programme for 2015/16 and to submit for consultation the initial capital proposals for 2016/17.

Recommendations

It is recommended:-

  1. Committee note the changes to the 2015/16 Capital Programme.
  2. Scrutiny Committee consider the 2016/17 initial capital budget proposals and forward its recommendations to Scrutiny Committee (Corporate Resources) as the lead Scrutiny Committee.

Reasons for the Recommendations

  1. To ensure that Members are aware of the position with regards the 2015/16 Capital Programme, relevant to this Scrutiny Committee.
  2. In order that Cabinet be informed of the comments of Scrutiny Committees before making a final proposal on the 2016/17 Capital Programme.

Relevant Issues and Options

2015/16 Capital Programme

  1. Appendix A details financial progress on the Capital Programme as at 30th September 2015.
  2. Weycock Cross to Barry Comprehensive Road Resurfacing - The road between Weycock Cross and Barry Comprehensive School requires resurfacing and it has been requested that the 2015/16 Capital Programme is increased by £40k, to be funded from the Visible Services reserve.
  3. Wick to Ewenny Highway Improvements - Highway Improvement works are required between Wick and Ewenny and it has been requested that the 2015/16 Capital Programme is increased by £40k, to be funded from the Visible Services Reserve.
  4. Coast Protection and Land Drainage General - £50k has been allocated within this budget for works which are part of the Causeway Improvement Scheme. In order to enable a more co-ordinated approach to the scheme, it has been requested that £50k is vired to the Causeway Improvement Scheme. The budget for this scheme will total £950k.
  5. Jenner Park and Colcot Pitches - A grant of £100k has been awarded to the Council from The Sports Council for Wales. The £853k budget for this scheme is currently fully funded from the Jenner Park reserve. It has been requested that the contribution from the reserve is reduced and the scheme will now be funded by £753k from the reserve and £100k from The Sports Council for Wales grant.
  6. Coldbrook Flood Risk Management - Emergency Powers, have been used for the inclusion of £2,959k for the construction phase and £257k for the design and development phase into the Capital Programme in order to complete the flood risk management works. This scheme will be funded as detailed below: -

Construction Phase

£'000

Design and Development Phase

£'000

WG Grant

2,151

WG Grant

218

ERDF Grant

114

Council Match Funding

39

Natural Resources Wales Grant

302

   

Council Match Funding

392

   

Total

2,959

Total

257

       

 

  1. Barry Regeneration Partnership Scheme - At Cabinet on the 13th July 2015, £600k was added to the Capital programme for the Barry Regeneration Partnership Scheme. £361k of this sum has been allocated using Delegated Authority as set out below: -
  • Barry Island: Western Shelter Lighting £50k
  • Barry Island Interpretation, Tourist Information Centre and WIFI £50k
  • Victoria Gardens: area improvements (phase 3) £60k
  • George Street Play Area: resurface pedestrian links £41k
  • Cowbridge Street/Bridge Street Play Area: refurbishment £50k
  • Eastern Approach (Cardiff Road): gateway improvements £100k
  • Business Service Centre Improvements £10k

The £600k was allocated over financial years 2015/16 and 2016/17 and it has been requested that the schemes set out in the table below are reprofiled as follows: -

 

Scheme

2015/16

£'000

2016/17

£'000

Barry Island: Western Shelter Lighting

8

42

Barry Island Interpretation, Tourist Information Centre and WIFI

35

15

Victoria Gardens: area improvements (phase 3)

0

60

George Street Play Area: resurface pedestrian links

41

0

Cowbridge Street/Bridge Street Play Area: refurbishment

50

0

Eastern Approach (Cardiff Road): gateway improvements

0

100

Business Service Centre Improvements

10

0

     

 

Further assessment is being undertaken to allocate the remaining balance of £239k to priority schemes.

  1. Barry Regeneration Partnership Scheme - It has been approved by delegated authority that £107k of the unallocated original budget in 2015/16 and £34k of the unallocated budget in 2016/17 for this scheme be allocated as follows:-
  • Project Management Unit £60k for 2015/16
  • Landscape Design Service £25k for 2015/16
  • Urban Regeneration Service £4k for 2015/16 and £28k for 2016/17
  • High Street (Springboard) £6k for 2015/16 and £6k for 2016/17
  • Gladstone Gardens £2k for 2015/16
  • Main Street Area Improvements £4k for 2015/16
  • Eastern Approach £6k for 2015/16
  1. Pedestrian Crossing across Ffordd Y Millenium and Improved Bus Access - Further studies have identified that this scheme is not attainable within the budget available, therefore, alternative schemes have been identified through active travel route assessments. It has been requested that this budget is increased by £52k to be funded from s106 monies and that the scheme is renamed 'Pedestrian/Cycle improvements at Ffordd Y Millenium'. The total budget for this scheme will be £69k. Member consultation has been undertaken under the s106 protocol and the contribution needs to be spent by January 2016.

2016/17 to 2020/21 Capital Programme

  1. The Council's Capital budget is determined largely by the General Capital Funding Settlement (GCF). In previous years, the provisional GCF settlement was received from Welsh Government (WG) during October, with the final settlement being received during December. This year, however, the initial budget proposals have not yet been received.
  2. A statement on the timing of the Welsh Government's Budget for 2016/17 was released by the Minister for Finance and Government Business on 6th October 2015. It stated that the late timing of the UK Government's Spending Review presented WG with significant challenges for the preparation and publication of the Draft Budget 2016/17. WG will not know their Budget for 2016/17 until 25th November 2015. WG is facing unprecedented levels of uncertainty and consequently will not publish the Draft Budget for 2016/17 until 8th December 2015 and the Final Budget on 1st March 2016.
  3. A joint letter dated 26th October 2015 has been received from the Minister for Public Services and the Leader of the Welsh Local Government Association, outlining the outcome of their joint discussions regarding the timing of the release of the settlement. They provide a timetable which shows that local authorities will be advised of the Provisional Settlement on 9th December 2015 and of the Final Settlement on 2nd March 2016, however, the Final Budget will be debated by WG on 9th March 2016. They consider that the proposed timetable does not result in any legal or financial impediment to the budget process, however, they acknowledge that the timetable does present challenges.
  4. Even with a lack of clarity on the funding position for 2016/17 and these unprecedented circumstances, in order to be in a position to meet the statutory deadlines and the requirements for consultation set out in the Council's Constitution, much of the work on quantifying the resource requirements for the Capital programme will still need to be carried out before the initial and final GCF settlement is notified to the Council. Therefore, in line with the approach adopted in the current Medium Term Financial Plan, the proposals assume a reduction of 10% for each year of the programme for 2016/17 and onwards. This has been reflected in the proposed Capital Programme 2016/17 to 2020/21, which for this Committee is shown in Appendix B.
  5. 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.
  6. In addition to external funding, the Council will finance part of the Capital Programme from its own resources, e.g. capital receipts and reserves.
  7. 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 2016/17 Capital Programme

GENERAL FUND                                                                                                £'000                 £'000

Welsh Government Resources               

Supported Borrowing                                                                                          3,058

General Capital Grant                                                                                         1,861

                                                                                                                                                    4,919

Council Resources

Capital Receipts                                                                                                  7,199

Reserves/Leasing                                                                                                9,135

Unsupported Borrowing                                                                                         528

                                                                                                                                                   16,862               

Net Capital Resources                                                                                                              21,781           

 

 

Capital Bids 2016/17 to 2020/21

  1. New capital bids were invited for return by 30th September 2015 and the number of bids received was low (3 from Learning and Skills, 12 from Social Services, 11 from Environment and Housing and 2 from Managing Director and Resources). 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.
  2. The CAMG used the criteria set out in the Budget Strategy so 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

           

 

  1. 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

   

 

  1. 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.
  2. As part of the Transport review the use of vehicles by the Authority has been extensively reviewed, which has meant that the purchase of new vehicles under the scheme has been delayed. In addition, an amendment to the level of expenditure in the Capital Programme is required, to reflect the continuing need to replace vehicles across the Council. The proposed revised expenditure is set out in the table below;
 

2015/16

2016/17

2017/18

2018/19

2019/20

2020/21

 

£000's

£000's

£000's

£000's

£000's

£000's

Original Expenditure

2,375

1,596

694

1,818

962

0

Revised Expenditure

2,121

1,453

616

1,338

800

800

             

 

  1. Vehicles can be funded from the Vehicle Renewals Fund or can be leased. 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 2016.

Next Steps

  1. The next stage is for the estimates to be submitted to Scrutiny Committees for consultation. Corporate Resources Scrutiny Committee is the lead Scrutiny Committee and is asked to consider both the Initial Budget Proposals and any recommendations that other Scrutiny Committees have made. The responses of Scrutiny Committee must be made no later than the 15th December 2015.
  2. Each Scrutiny Committee will be asked to first consider the Initial Capital Programme proposals as shown in Appendix B and to make any 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.
  3. 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.
  4. Currently the approved timetable requires Cabinet to approve the final budget proposals by no later than the 22nd February 2016 and that Cabinet's final budget proposals will be considered by Council at a meeting to be held on 2nd March 2016.
  5. As the Final Settlement will not be received from WG until 2nd March 2016, this timetable is now under review and will have to be revised.

Resource Implications (Financial and Employment)

  1. The total net capital expenditure of the proposed programme for the Council as a whole over the 5 years, is approximately £104.525m.
  2. If all proposed schemes for the Council as a whole 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 2016

8,122

1,348

1,065

       

Anticipated Requirements - 2016/17

-5,515

0

-1,684

Anticipated Receipts - 2016/17

0

0

7,500

Balance as at 31st March 2017

2,607

1,348

6,881

       

Anticipated Requirements - 2017/18

0

-1,348

0

Anticipated Receipts - 2017/18

0

0

2,800

Balance as at 31st March 2018

2,607

0

9,681

       

Anticipated Requirements - 2018/19

0

0

                    0

Anticipated Receipts - 2018/19

0

0

0

Balance as at 31st March 2019

2,607

0

9,681

       

Anticipated Requirements - 2019/20

-4

0

-1,404

Anticipated Receipts - 2019/20

0

0

0

Balance as at 31st March 2020

2,603

0

8,277

       

Anticipated Requirements - 2020/21

        -223

0

-7,686

Anticipated Receipts - 2020/21

0

0

0

Balance as at 31st March 2021

2,380

0

591

       

Anticipated Requirements between 2021/22 and 2026/27

0

0

-5,250

Anticipated Receipts between 2021/22 and 2026/27

0

0

4,750

Balance as at 31st March 2027

2,380

0

91

       

 

  1. 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 2016/17 to 2020/21.
  2. 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 Head of Finance. 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 2016

2,918

   

Anticipated Requirements - 2016/17

-858

Anticipated Receipts - 2016/17

                      50

Balance as at 31st March 2017

2,110

   

Anticipated Requirements - 2017/18

                   -100

Anticipated Receipts - 2017/18

                      50

Balance as at 31st March 2018

2,060

   

Anticipated Requirements - 2018/19

0

Anticipated Receipts - 2018/19

50

Balance as at 31st March 2019

2,110

   

Anticipated Requirements - 2019/20

0

Anticipated Receipts - 2019/20

50

Balance as at 31st March 2020

2,160

   

Anticipated Requirements - 2020/21

0

Anticipated Receipts - 2020/21

50

Balance as at 31st March 2021

2,210

   

 

  1. 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

  1. 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
  1. 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 2016.

Legal Implications (to Include Human Rights Implications)

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

Crime and Disorder Implications

  1. 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)

  1. Additional finance improves the Council's opportunities for assisting disadvantaged members of society.

Corporate/Service Objectives

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

Policy Framework and Budget

  1. This report follows the procedure laid down in the constitution for the making of the budget. The 2016/17 budget proposals will require the approval of Council. Some of the proposals for amendments to the 2015/16 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)

  1. All Scrutiny Committees will be consulted on the proposals.

Relevant Scrutiny Committee

  1. The lead Scrutiny Committee is Corporate Resources.

Background Papers

Bids received from departments

Correspondence received from the Welsh Government

Contact Officer

Victoria Lloyd, Capital Accountant

Officers Consulted

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

Corporate Management Team

Responsible Officer:

Miles Punter

Director of Environment and Housing

 

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