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Agenda Item No. 8

 

The Vale of Glamorgan Council

 

Scrutiny Committee (Lifelong Learning): 9th December 2013

 

Report of the Chief Learning and Skills Officer

 

Initial Capital Programme Proposals 2014/15

 

Purpose of the Report

1.             To provide an update on the progress of the Capital Programme for 2013/14 and to submit for consultation the initial capital proposals for 2014/15.

Recommendations

It is recommended that :

 

1.             The position with regard to the 2013/14 Capital Programme be noted.

2.             Scrutiny Committee consider the 2014/15 initial capital budget proposals and forward its recommendations to Scrutiny Committee (Corporate Resources) as the lead Scrutiny Committee.

Reasons for the Recommendations

1.             That Members are aware of the position with regards the 2013/14 Capital Programme, relevant to this Scrutiny Committee.

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

Relevant Issues and Options

2013/14 Capital Programme

2.             Appendix A details financial progress on the Capital Programme as at 30th September 2013.  

3.             Oakfield Primary School - The carry forward of £146,000 has been requested from the Oakfield new entrance and reception area scheme to 2014/15, when the funding will be used for pitches, external play and woodland school facilities as part of the 21st Century Schools funded proposals for Ysgol Gwaun y Nant and Oakfield Primary School.

Variance between Actual Spend to date and Profiled Spend

4.             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:-

·         Learning in Digital (Wales) Grant - A large order £470,000 was placed during September which will rectify the discrepancy between the profile and actual expenditure and ensure the grant is fully spent by the grant deadline in December 2013.

·         Ysgol Nant Talwg, Barry - The variance between actuals to date at the end of September and profiled budget is due to a delay is issuing a certificate of payment. All required information is now in place and a payment was made in October which brought the actuals to date in line with the profiled expenditure.

2014/15 to 2018/19 Capital Programme

5.             The Welsh Government (WG) announced the provisional 2014/15 General Capital Funding, on 16th October 2013. The 2014/15 capital settlement represents a £246,000 (4.7%) increase in funding over last year's allocation; however because this amount includes the reinstatement of £280,000 transferred to supported borrowing for the Housing Revenue Account in 2013/14, the actual position for the Council is a reduction of £34,000 which represents a 0.61% cut. The indicative amount provided by WG suggests 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.

6.             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 has been assumed in 2016/17, 2017/18 and 2018/19. 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.

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

8.             Appendix B outlines the proposed 2014/15 to 2018/19 Capital Programme for this Committee. The table below details the General Capital Funding and internal resources required to fund the proposed schemes for the whole of the Council.

 

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 2014/15 to 2018/19

9.             Capital bids were invited for return by 30th September 2013 and the number of bids received was 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.

10.        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;

View Risk Assessment Element here 

11.        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

 

 

 

 

 

 

 

12.        Only those schemes assessed as corporate priority 1 or medium risk and above are included in these proposals. There were no bids for this Committee that did not meet these criteria. 

13.        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 in February 2013 that impact on the Capital Programme.  These changes include amendments to the School Investment Strategy, budgets carried forward, an increase to the Schools ICT loan scheme and the new School Capital Loan scheme.

Next Steps

14.        The next stage is for the estimates to be submitted to Scrutiny Committee 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 13th December 2013.

15.        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.

16.        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 24th February 2014.  

17.        Cabinet’s final Capital Programme proposals will be considered by Council on 5th March 2014.

Resource Implications (Financial and Employment)

18.        The total net capital expenditure of the proposed programme for the whole of the Council, over the 5 years, is approximately £102m.

19.        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 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

 

 

 

20.        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.

21.        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 for the whole of the Council is 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

 

22.        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

23.        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.

24.        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 2014. 

Legal Implications (to Include Human Rights Implications)

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

Crime and Disorder Implications

26.        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)

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

Corporate/Service Objectives

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

Policy Framework and Budget

29.        This report follows the procedure laid down in the constitution for the making of the budget.  The 2014/15 budget proposals will require the approval of Council. 

Consultation (including Ward Member Consultation)

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

Relevant Scrutiny Committee

31.        Corporate Resources

Background Papers

Bids received from departments

Correspondence received from the Welsh Government

Contact Officer

Carolyn Michael (Senior Group Accountant) (01446 709778)

Officers Consulted

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

Management Team

Responsible Officer:

Jennifer Hill