Agenda Item No

 

The Vale of Glamorgan Council

Scrutiny Committee (Lifelong Learning): 30th November 2009

Report of the Director of Finance, ICT and Property

Initial Capital Programme Proposals 2010/11

Purpose of the Report

1.             To advise Scrutiny of the progress on the Capital Programme for 2009/10 for the period to 30th September 2009 and to submit for consultation the initial capital proposals for 2010/2011.

Recommendation

1.             That Scrutiny Committee considers the initial budget proposals and comments are 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 30th September 2009.  

2010/11 Capital Programme

3.             On 13th October 2009 the Welsh Assembly Government announced the provisional 2010/11 General Capital Funding. An anticipated fall in the level of capital funding did not materialise (though there is no guarantee that future years will not be reduced). In fact the provisional allocation has increased marginally (by £7,000) to £8,209,000. The final settlement is expected to be announced by January 2010 but is not expected to vary much from this figure. 

4.             Cabinet, on 13th February 2008,  approved that the Director of 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'. As in 2009/10, WAG have been requested to transfer the sum of £280,000 supported borrowing from General Fund to the Housing Revenue Account in 2010/11 in order to fund the level of council property Disabled Facility Grants.

5.             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.  

6.             Appendix B outlines the proposed 2010/11 Capital Programme for the Directorate. The table below details the General Capital Funding and internal resources required to fund these proposed schemes together with other Directorates' schemes totalling £16,603m (net).

Analysis of Net Funding Required for the Indicative 2010/11 Capital Programme	£'000	£'000
General Fund Resources from Welsh Assembly Government
Supported Borrowing	5,889
General Capital Grant	2,040
		7,929
Council Resources
Capital Receipts	2,616
Reserves/Leasing	5,728
		8,344
Net Capital Resources		16,273

 

7.             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 2010/11 Housing Capital Programme	£'000	£'000
General Fund Resources from Welsh Assembly Government
Supported Borrowing	280
		280
Council Resources
Housing Capital Receipts	0
Housing Reserves	50
		50
Net Capital Resources		330

 

8.             The indicative 2010/11 Capital Programme shown in Appendix B includes allocations already approved by Council.

9.             An indicative Education asset renewal budget of £800,000 has been included in Appendix B. This constitutes an un-earmarked general provision. Some of the specific schemes in the unsuccessful bids listed in Appendix C could be funded from the asset renewal provision.  Specific asset renewal schemes will be reported to Cabinet before April 2010 for approval and the bids included in Appendix C will be considered at that time.

Capital Bids 2010/11

10.        Due to the anticipated reduction in future capital funding for 2010/11 onwards, and to review historic priorities, it was decided that all those budgets previously included in the indicative future Capital Programme should be withdrawn, other than those schemes which are contractually committed by the end of March 2010. Officers were asked to re-bid for those sums that they still regarded a high priority as part of the 2010/11 bidding round. As a result of this exercise there have been a very high number of bids received this year.

11.        The Sustainable Development Working Group was consulted on the capital bids submitted by Services and their comments were subsequently considered by the Capital Asset Management Group when prioritising the schemes. The four areas of Sustainable Development considered were:

·     Living within environmental limits

·     Ensuring a strong, healthy and just society

·     Achieving a sustainable economy

·     Promoting good governance.

 

12.        The Sustainable Development (SD) Group identified schemes for which there was particular support, or concern. They also highlighted schemes which, if approved, they would like to consider in more detail following completion of a SD checklist. Their comments are summarised below.

Scheme	Comment
Asset Renewal Programme (All Services)	Implementation important. (Checklist required)

 

13.        The Budget Working Group has prioritised bids based upon the recommendations of the Corporate Asset Management Group (CAMG). 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

 

14.        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 2010/11 programme. 

15.        There are certain schemes for which funding has been reserved but not included in the capital programme as yet. They are shown on appendix B as reserved schemes at a nil budget at this stage. Some of these schemes include matchfunding for grant bids that have not yet been approved. Should the grants be approved then the scheme would be included in the capital programme, together with the reserved Council funding.

Next Steps

16.        The next stage is for the estimates to be considered by Scrutiny Committee and comments passed to Corporate Resources Scrutiny Committee. 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 15th December 2009.

17.         Scrutiny Committee is requested 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.

18.        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.

19.        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 2010.

20.        Cabinet’s final Capital Programme proposals will be considered by Council no later than 3rd March 2010.

Resource Implications (Financial and Employment)

21.        The total net capital expenditure of the proposed programme for the whole Authority together with reserved schemes, over the 5 years is £90m.

22.        If all the schemes are approved, the effect on General Fund useable capital receipts will be as shown in the following table.  The projections assume no decrease in general capital funding from WAG and £4.5m Capital funding is transferred from General fund to the HRA as set out in the HRA business plan.

 

General Fund Capital Receipts	£'000
Balance as at 1st April 2010	10,009
Anticipated Requirements – 2010/11	(2,616)
Reserved schemes	(2,891)
Anticipated Receipts – 2010/11	0
Balance as at 31st March 2011	4,502
Anticipated Requirements – 2011/12	(995)
Reserved schemes	(650)
Anticipated Receipts – 2011/12	0
Balance as at 31st March 2012	2,857
Anticipated Requirements – 2012/13	(1,838)
Anticipated Receipts – 2012/13	0
Balance as at 31st March 2013	1,019
Anticipated Requirements – 2013/14	0
Anticipated Receipts – 2013/14	0
Balance as at 31st March 2014	1,019

 

23.        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
Balance as at 1st April 2009	3,289
Anticipated Requirements – 2009/10	(345)
Anticipated Receipts – 2009/10	161
Balance as at 31st March 2010	3,105
Anticipated Requirements – 2010/11	0
Anticipated Receipts – 2010/11	58
Balance as at 31st March 2011	3,163
Anticipated Requirements – 2011/12	0
Anticipated Receipts – 2011/12	54
Balance as at 31st March 2012	3,217
Anticipated Requirements – 2012/13	0
Anticipated Receipts – 2012/13	54
Balance as at 31st March 2013	3,271

 

24.        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 repairs as well as leisure centre refurbishment and remodelling.

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 Corporate Resources 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 2010/11 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 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