Agenda Item No

 

The Vale of Glamorgan Council

Scrutiny Committee (Lifelong Learning) Meeting: 1st December 2008

Report of the Director of Finance, ICT and Property

Initial Capital Programme Proposals 2009/10

 

Purpose of the Report

1.             To advise Scrutiny Committee of the progress on the 2008/09 Capital Programme for the period ended 31st October 2008 and to submit for consultation the initial capital proposals for 2009/10.

Recommendation

1.             That Scrutiny Committee considers the initial budget proposals and comments are to be forwarded to Corporate Resources Scrutiny Committee and Cabinet.

Reason for the Recommendation

1.             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 31st October 2008.  

Amendments to the 2008/09 Capital Programme

3.             It is requested that Cabinet approve the following changes to the capital programme, and where indicated, refer to Council for approval.

Director of Education

4.             Rhoose Primary Accommodation - final estimates for this scheme have been received and are below budget. Works are anticipated to complete in April 2009. It has been proposed that the anticipated underspend of £110,000 be vired to the School Investment Strategy budget. This proposal requires Council approval.

2009/10 Capital Programme

5.             On 15th October 2008 the Welsh Assembly Government announced the provisional 2009/10 General Capital Funding. The provisional allocation is unchanged from the current year at £8,198,000. The final settlement is expected to be announced by January 2009.

6.             The Major Repairs Allowance (MRA), which is the grant that provides capital funding to the Housing Revenue Account (HRA), for 2009/10 has not yet been announced by the Welsh Assembly Government.  Cabinet will be advised as soon as the announcement is made. An assumption has been made in Appendix B that the grant will continue at the current allocation of £2.7 million.

7.             In addition to funding from the Welsh Assembly Government, 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 2009/10 Capital Programme. The table below details the General Capital Funding and internal resources required to fund the proposed schemes.

Analysis of Net Funding Required for the Indicative 2009/10 Capital Programme	£'000	£'000
General Fund Resources from Welsh Assembly Government
Supported Borrowing	5,701
General Capital Grant	2,047
		7,748
Council Resources
Capital Receipts	1,583
Reserves/Leasing	2,785
		4,368
Net Capital Resources		12,116

 

9.             The table below details the Housing Capital Funding and internal resources required to fund the proposed schemes.

Analysis of Net Funding Required for the Indicative 2009/10 Housing Capital Programme	£'000	£'000
General Fund Resources from Welsh Assembly Government
Supported Borrowing	450
		450
Council Resources
Housing Capital Receipts	3,219
Housing Reserves	3,958
		7,177
Net Capital Resources		7,627

 

10.        The indicative 2009/10 Capital Programme shown in Appendix B includes allocations already approved by Council and the slippage requests mentioned earlier in this report.

11.        Indicative asset renewal budgets have been included in Appendix B as follows:

Education                                       £800,000

Social Services                                 £150,000

Visible Services                                £800,000

Leisure Services                               £150,000

Miscellaneous Buildings                      £150,000

 

These constitute an un-earmarked general provision.  In addition, Directors have made specific bids, which have been classed as asset renewal by the Corporate Asset Management Group.  Due to the inclusion of the indicative asset renewal budgets, these specific bids have been shown as a separate heading in Appendix C, which lists the unsuccessful bids.  Specific asset renewal schemes will be reported to a future Cabinet for approval and the bids included in Appendix C will be considered at that time.

Capital Bids 2009/10

12.        In addition to the capital bids shown in Appendix B, Appendix C lists capital bids received that were unsuccessful and have not been put forward for inclusion in the 2009/10 programme.  The Corporate Asset Management Group has prioritised schemes that fall within their remit.  The method of prioritisation used is detailed in the Authority’s Capital Investment Strategy and is shown in the following table.

 

Priority Level	Criteria
1	Health and Safety Legislation
2	Other Legislation / Statutory requirement
3	Sufficiency; Corporate Plan; Economic Sense
4	Condition; Suitability
5	Welsh Assembly Government objectives
6	Low Priority

 

13.        The Project Fund was initially set up to finance capital and revenue projects to initially finance a project with repayment of such advances (including interest) being credited back to the fund.  It is proposed that this Project Fund be used to provide matchfunding for a grant towards the setting up of a Carbon Management Fund, a ring-fenced, sustainable fund to finance energy efficiency and renewable energy projects within the Council, in line with the Council’s Carbon Management Programme.  The fund would be credited with finance from Salix grant and the Council’s match funding.  A minimum of 75% of investments financed by the fund will be repaid back into the fund over an agreed period in order to finance further energy saving projects. The balance can be retained by service accounts as revenue savings.  Investment projects would be subject to evaluation.  Projects must deliver CO2 and revenue benefits and must offer long term CO2 savings.  Projects will be prioritised on capital cost per tonne of CO2 saved on a lifetime basis.

Next Steps

14.        The bids are now presented 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 23rd December 2008.

15.        Scrutiny Committees are requested to first consider the indicative capital proposals and the priority given to new bids in the light of the limited resources that are available.  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.        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.

17.        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 25th February 2009.

18.        Cabinet’s final capital programme proposals will be considered at a special meeting of Council to be held by the 4th March 2009.

Resource Implications (Financial and Employment)

19.        New bids to the value of £4.97 million have been submitted.

20.        If the schemes shown in Appendix B are approved, the effect on useable capital receipts will be as shown in the following table.

 

Capital Receipts	£'000
Balance as at 1st April 2008 (excludes £1.4m for Schools Investment Strategy)	10,712
Anticipated Requirements – 2008/09	(7,292)
Anticipated Receipts – 2008/09	305
Balance as at 31st March 2009	3,725
Anticipated Requirements – 2009/10	(1,583)
Anticipated Receipts – 2009/10	0
Balance as at 31st March 2010	2,142
Anticipated Requirements – 2010/11	(2,106)
Anticipated Receipts – 2010/11	0
Balance as at 31st March 2011	36
Anticipated Requirements – 2011/12	(29)
Anticipated Receipts – 2011/12	0
Balance as at 31st March 2012	7

 

 

21.        The receipts figure shown in the table has been reduced by the £1.4 million which has been ringfenced for the School Investment Strategy.

22.        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.  There are no commitments against the fund from 1st April 2009 onwards.

           

Project Fund Balance
	£'000
Balance as at 1st April 2008	3,364
Anticipated Requirements – 2008/09	(727)
Anticipated Receipts – 2008/09	299
Balance as at 31st March 2009	2,936
Anticipated Requirements – 2009/10	(300)
Anticipated Receipts – 2009/10	211
Balance as at 31st March 2010	2,847
Anticipated Requirements – 2010/11	(600)
Anticipated Receipts – 2010/11	108
Balance as at 31st March 2011	2,355
Anticipated Requirements – 2011/12	0
Anticipated Receipts – 2011/12	104
Balance as at 31st March 2012	2,459

 

Legal Implications (to Include Human Rights Implications)

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

Crime and Disorder Implications

24.        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)

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

Corporate/Service Objectives

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

Policy Framework and Budget

27.        This report follows the procedure laid down in the constitution for the making of the budget.  The 2009/10 budget proposals will require the approval of Council. 

Consultation (including Ward Member Consultation)

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

Relevant Scrutiny Committee

29.        Corporate Resources.

Background Papers

Bids received from departments

Correspondence received from the Welsh Assembly Government

 

Contact Officer  Laura Davis  Tel. No. 01446 709249

Officers Consulted

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

Management Team

Responsible Officer:

Sian Davies

Director of Finance, ICT and Property