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Agenda Item No

 

The Vale of Glamorgan Council

 

Scrutiny Committee (Housing and Public Protection) 6th December 2012

 

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

 

Initial Capital Programme Proposals 2013/14

 

Purpose of the Report

1.             To provide an update on the progress of the Capital Programme for 2012/13 and to submit for consultation the initial capital proposals for 2013/14.

Recommendations

It is recommended that:

 

1.             The position with regard to the 2012/13 Capital Programme be noted.

2.             Scrutiny Committee consider the initial budget proposals and forward its comments to Corporate Resources Scrutiny Committee and Cabinet.

Reasons for the Recommendations

1.             That Members are aware of the position with regards the 2012/13 Capital Programme, relevant to this Scrutiny Committee.

2.             To allow full consultation on the future Capital Programmes.

Relevant Issues and Options

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

2012/13 Capital Programme

3.             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.

4.             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.

2013/14 Capital Programme

5.             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.

6.             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.

7.             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.

8.             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.  An assumption has been made in Appendix B that the grant will continue at the current allocation of £2.8 million in 2013/14.

9.             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.  

10.        Appendix B outlines the proposed 2013/14 Capital Programme for services under this Committee's remit. 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 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

 

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

Capital Bids 2013/14

12.        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.

13.        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

 

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

15.        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. 

16.        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.  

17.        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

18.        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 20th December 2012. It is also proposed to consult with the public, LSB, business sector and town and community councils.

19.        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.

20.        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.

21.        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 28th February 2013.

22.        Cabinet’s final Capital Programme proposals will be considered by Council no later than 11th March 2013.

Resource Implications (Financial and Employment)

23.        The total net capital expenditure for the proposed programme for the whole of the Council, over the 5 years, is over £105M.

24.        If the schemes proposed for the whole of the Council 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

 

25.        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

 

26.        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

27.        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.

28.        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)

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

Crime and Disorder Implications

30.        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)

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

Corporate/Service Objectives

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

Policy Framework and Budget

33.        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)

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

Relevant Scrutiny Committee

35.        Corporate Resources.

Background Papers

Bids received from departments

Correspondence received from the Welsh Government

Contact Officer

Carolyn Michael, Senior Group Accountant

Officers Consulted

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

Management Team

Responsible Officer:

Miles Punter, Director of Visible Services and Housing

Rob Thomas, Director of Development Services

 

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