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Agenda Item No. 6

 

The Vale of Glamorgan Council

 

Scrutiny Committee (Social Care and Health): 30th November 2015

 

Report of the Director of Social Services

 

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 that :-

  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. Cartref Porthceri Lift Replacement - There is currently a £70k budget allocated for this scheme within the 2015/16 Capital Programme. A survey has confirmed that the lift needs to be refurbished and not replaced. It has therefore been requested that this scheme is renamed 'Social Services Lift Refurbishments' and works will be extended to include refurbishment works to lifts in Cartref Porthceri, Southway and Ty Dyfan.
  3. Southway Lift Replacement - There is currently a £70k budget allocated for this scheme within the 2015/16 Capital Programme. This lift is now being refurbished as stated above. The call and assistance systems within the four residential homes are in need of replacement and it has therefore been requested that the name of this scheme is changed to 'Residential Homes Call and Assistance Systems' for these works to be carried out from this allocation.

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. The condition of Social Services buildings is deteriorating. To enable the maintenance of these properties, it has been proposed that £100k is vired each year from 2016/17 to 2020/21 from the All Services Asset Renewal budget to create a Social Services Asset Renewal budget. Social Services will be able to allocate the funding within year to priority works that are required. This change has been reflected in Appendix B.

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. The capital receipt balance for Social Services has been ringfenced for Social Services capital expenditure. Options are being explored by the Council however, it is expected that the full capital receipt of £1.348m could be utilised for older persons' accommodation in 2017/18.
  2. 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.
  3. 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:

Phil Evans, Director of Social Services