Agenda Item No. 11(d)

 

THE VALE OF GLAMORGAN COUNCIL

 

COUNCIL MEETING: 28 FEBRUARY 2018

 

REFERENCE FROM CABINET:  19 FEBRUARY 2018

 

C225              Final Capital Proposals 2018/19 to 2022/23 (l) (Scrutiny Committee - Corporate Performance and Resources)

 

Approval was sought for the Final Capital Programme Proposals for the years 2018/19 to 2022/23.

 

The Initial Capital Programme Proposals 2018/19 to 2022/23 were presented to Cabinet on 20 November, 2017 (Minute C139 refers). They were subsequently referred to Scrutiny Committees in November and December 2017.

 

In responding to the Initial Capital Programme Proposals, the following recommendations in relation to the Initial Proposals were made by Scrutiny Committees. 

 

Health Living and Social Care Scrutiny Committee recommended: -

 

T H A T  the Corporate Performance and Resources Scrutiny Committee be requested to ask Cabinet to reconsider the priority bids to include the not proposed replacement playgrounds schemes and that every opportunity and option be explored in order to resource such facilities.

 

Environment and Regeneration Scrutiny Committee recommended: -

 

T H A T in noting the healthy position of the reserves, the Corporate Performance and Resources Scrutiny Committee be requested to recommend to Cabinet that the use of further reserves for resurfacing throughout the Vale of Glamorgan be considered.

 

Corporate Performance and Resources Scrutiny Committee, at its meeting on the 14th December 2017 (minute no. 559), recommended:-

 

T H A T the recommendations of the Environment and Regeneration Scrutiny Committee be noted and referred to the Cabinet for further consideration.

 

T H A T the recommendations of the Healthy Living and Social Care Scrutiny Committee be noted and referred to the Cabinet for further consideration.

 

T H A T the Cabinet be requested to re-examine the below unsuccessful schemes with a view to their inclusion in the Capital Programme for 2018/19:

 

        •  EH2 – new household waste recycling centre;

        •  EH8 – footway renewal;

        •  EH6 – replacement playgrounds.

 

T H A T the Cabinet be requested to emphasise to officers the need to complete the Vehicle Replacement Programme procurement exercise given the budgetary pressures experienced by Waste Management as set out in the Initial Revenue and Capital Proposals under consideration.

 

The minutes and recommendations of Corporate Performance and Resources Scrutiny Committee were referred to Cabinet on 22 January, 2018 (Minute C189 refers), Cabinet recommended that the contents of the report be noted and passed to the Budget Working Group for consideration in concluding the budget proposals for 2018/19.

 

On 20 December, 2017 the Welsh Government announced the final 2018/19 General Capital funding settlement. There had been a £100k (1.85%) increase in funding from 2017/18. Following consideration of the authority's capital funding for the past two financial years and reviewing the assumptions adopted by a number of other authorities across Wales, the Initial Capital Programme Proposals in November 2017 assumed a 5% reduction year on year to 2022/23. This assumption had not changed for the final proposals.

 

On this basis, a table representing the capital funding from the Welsh Government is shown below:                       

 

Another means of financing capital expenditure was through capital receipts resulting from the sale of assets. Receipts from the sale of Housing Revenue Account (HRA) assets could only be spent in the HRA and could not be used to finance General Fund capital schemes. As at 31 March, 2018 the forecast balance of useable capital receipts totalled £8.474m of which £1.339m was ring-fenced for Social Services and £1.299m was ring-fenced for Education. No further general capital receipts or ring-fenced Social Services capital receipts were anticipated between 2018/19 and 2022/23. A further receipt of £13.937m was estimated from Education assets between 2018/19 and 2023/24 and would be ring fenced for the School Investment Programme. It was noted, however, that the projected value and timing of future capital receipts was not guaranteed and failure to achieve the projected level of capital receipts to timescale could impact on the affordability of the current 21st Century Schools Band B proposals. 

 

HRA capital receipts arose from the sale of dwellings under the Right To Buy Act, HRA land and other HRA assets. In the case of HRA receipts, regulations set out that receipts since 1 April, 2004 could only be used to fund HRA capital expenditure or to repay HRA debt. As at 31 March, 2018 the forecast balance of useable HRA capital receipts was nil as any receipts received in a year were used to fund expenditure incurred in that same year. The Abolition of the Right to Buy and Associated Rights (Wales) Act 2018 gained Royal Assent on 24 January, 2018. The provisions in the Act meant abolition of the rights would come into force on 26 January, 2019 however there were some exceptions.  As a result of this change in legislation, no further HRA receipts would be assumed.

 

If the schemes shown in Appendix 1 attached to the report were approved, the effect on General Fund useable capital receipts would be as shown in the following table.

 

Final Capital Proposals

Capital Receipts

General

Ring-fenced Social Services

Ring-fenced Education

 

          £000

              £000

              £000

Anticipated Balance as at   1st April 2018

         5,836

             1,339

             1,299

 

 

 

 

Anticipated Requirements –   2018/19

       -4,387

                    0

                 -88

Anticipated Receipts – 2018/19

               0

                    0

                    0

Balance as at 31st March   2019

        1,449

             1,339

             1,211

Anticipated Requirements –   2019/20

          -438

            -1,339

            -3,326

Anticipated Receipts – 2019/20

                0

                    0

             3,250

Balance as at 31st March   2020

         1,011

                    0

             1,135

Anticipated Requirements –   2020/21

          -320

                    0

            -6,685

Anticipated Receipts – 2020/21

                0

                    0

             5,550

Balance as at 31st March   2021

            691

                    0

                    0

Anticipated Requirements –   2021/22

          -100

                    0

               -455

Anticipated Receipts – 2021/22

                0

                    0

                455

Balance as at 31st March   2022

            591

                    0

                    0

Anticipated Requirements –   2022/23

                0

                    0

                    0

Anticipated Receipts – 2022/23

                0

                    0

                    0

Balance as at 31st March   2023

            591

                    0

                    0

Anticipated Requirements –   2023/24

              -4

                    0

            -4,682

Anticipated Receipts – 2023/24

                0

                    0

             4,682

Balance as at 31st March   2024

            587

                    0

                    0

 

The Education Capital Programme utilised general capital receipts in addition to capital receipts ring-fenced for Education.

 

Capital expenditure could also be funded by revenue contributions or the utilisation of existing reserves. A reserve was a sum of money that had been set aside by the Council for a specific purpose, they were voluntary and could be made when the Council determined. Advances could be made from a reserve for the purchase of assets, which were then repayable over the life of the asset and the reserve was constantly replenished e.g. Vehicle Renewals Fund. Alternatively schemes could be funded from reserves with no repayment, however, once spent that source of funding was lost.

 

One such reserve was the Project Fund which existed to finance capital and revenue projects. The estimated balance of the Fund as at 31 March, 2018 was £3.011m. A balance of £2m would be retained as a balance on this fund.  The following table showed the projected position of the fund over the next five years.

 

Project Fund

Project Fund

                  £'000

Anticipated Balance as at   1st April 2018

 3,011

Anticipated Requirements –   2018/19

   -568

Anticipated Receipts –   2018/19

       0

Balance as at 31st March   2019

 2,443

Anticipated Requirements –   2019/20

     -62

Anticipated Receipts –   2019/20

       0

Balance as at 31st March   2020

 2,381

Anticipated Requirements –   2020/21

   -150   

Anticipated Receipts –   2020/21

       0

Balance as at 31st March   2021

 2,231

Anticipated Requirements –   2021/22

       0

Anticipated Receipts –   2021/22

       0     

Balance as at 31st March   2022

 2,231

Anticipated Requirements –   2022/23

       0    

Anticipated Receipts –   2022/23

       0

Balance as at 31st March   2023

 2,231

 

In a similar vein, the Council had an IT Fund estimated at £2.689m as at the end of 2017/18. The Council relied heavily on technology to deliver its services and the Fund allowed investment in this infrastructure and also enabled the Council to exploit opportunities to reduce the cost of services. This was in accordance with a report from the Wales Audit Office in December 2012 entitled ‘Use of Technology to Support Improvement and Efficiency in Local Government’.  Best practice highlighted in the report recommended that ‘A corporate technology development fund was used to fund all developments with commitment that efficiencies replenish funds'.

 

Other means of generating income to fund capital projects was through monies forthcoming under S106 planning obligations.

 

Outside of the above, the Council was heavily dependent on specific grant funding to supplement its own resources if certain capital schemes were to be progressed. Generally, this came via Welsh Government, although contributions from other public sector organisations or associated bodies were also forthcoming. It was estimated that over the next 5 years, the level of specific grant funding for General Fund Capital Schemes was approximately £100.508m which was around £75.6m more than the level of General Capital Funding for the same period (£24.907m).  The £100.508m grant funding was made up of £0.018m Band A 21st Century Schools grant, £68.757m Band B 21st Century Schools grant, £1.307m Flood Defence and Structures grants, £13.895m Major Repairs Allowance grant and £16.531m Five Mile Lane Improvement grant.  Many of these schemes required a match funding contribution to be made by the Council to the cost of the scheme. 

 

When considering options for capital financing, the ability of the Council to finance the repayment of any loans it raised for the funding of capital schemes must be evaluated.  Part 1 of the Local Government Act 2003 required local authorities to have regard to the Prudential Code, which had been developed by CIPFA (the Chartered Institute of Public Finance and Accountancy) as a professional code of practice. In setting the capital programme, the Council had to ensure that the key objectives of the Prudential Code were complied with. The Council had to ensure that its capital investment plans: 

  • Were affordable;
  • All external borrowing and other long term liabilities were within a prudent and sustainable level; and
  • The consequent treasury management decisions for Prudential Borrowing (also referred to as Unsupported Borrowing) were taken in accordance with good professional practice. 

The Code recognised that in making capital investment decisions the Council had to have regard to option appraisal, asset management planning and strategic planning. However, given the expected severity of cuts in future revenue resources, the potential for servicing debt not funded by Welsh Government as part of General Capital Funding or already provided for (e.g. Prudential Borrowing for the Schools Investment Programme and Housing Improvement Programme) was extremely limited as this would need to be funded through the revenue budget.

 

The projected amount of prudential borrowing utilised at 31 March, 2018 was £100.533m which was made up of £6.690m for Highway Improvements under the Local Borrowing Initiative, £7.444m for 21st Century Schools Programme, £17.354m Housing Improvement Programme, Vehicles £1.2m, City Deal £2.052, Housing Subsidy Buyout £63.156m and the Local Government Borrowing Initiative for 21st Century Schools £2.637m. After allowing for repayments the balance was expected to be £95.844m at 31 March, 2018.

 

The table below set out the anticipated Council's Prudential Borrowing over the next 5 years: -

 

Prudential Borrowing

Prudential Borrowing

Scheme

2018/19

2019/20

2020/21

2021/22

2022/23

 Total

 

       £000

     £000

     £000

     £000

       £000

     £000

 

 

 

 

 

 

 

21st Century Schools Band B

              0

           0

           0

    2,000

      1,116

    3,116

Housing Improvement Programme

    12,765

    7,756

    5,930

    2,862

      1,096

  30,409

Borrowing Pending Capital   Receipt

             0

           0

       919

       774

       2,290

    3,983

City Deal

      1,501

       429

       429

       675

          675

    3,709

Total

    14,266

    8,185

    7,278

    6,311

       5,177

  41,217

 

Total new Prudential Borrowing over the next 5 years was estimated at £41.217m of which £30.409m related to the Housing Improvement Programme.

 

Future Prudential Borrowing for School Investment Programme Band B schemes totalled £3.116m over the five year Capital Programme.

 

A significant proportion of the Band B funding was projected to come from capital receipts some of these sites would only be vacated as a result of building a new school and therefore funding was required to bridge the timing differences between when the funding was required and when the funding would actually be received by the authority. It was proposed that prudential borrowing was used in the short term to provide the temporary funding. It was noted that there were revenue costs associated with this approach.

 

At the end of the Capital Programme period (31 March, 2023) the outstanding prudential borrowing taking into account repayments was expected to be £25.726m General Fund and £98.8m HRA.

 

Amendments to the 2017/18 Capital Programme

 

Reprofiling was required across some significant schemes in the Capital Programme which was set out below;

 

Band B Preparatory Works, Changing Rooms etc. - Work was anticipated on site after Easter however, the only spend this year would relate to fees. It was therefore requested to carry forward £210k into the 2018/19 Capital Programme.

 

St Joseph's Nursery and Early Intervention Base (EIB) - Work on delivering on-going large projects had taken priority over this scheme and therefore resulted in a delay in its progression.  Work would now be undertaken from Easter 2019 with a completion date of August 2019. It was therefore requested to re-profile the scheme budget as shown below:-

 

Amendments

 

2017/18   

2018/19

2019/20

2020/21

   Total

 

     £000

     £000

     £000

     £000

     £000

Original   Budget

         67

       964

           0

           0

    1,031

Revised   Budget

         10

       150

       864

           7

    1,031

 

Band A Romilly Primary - It had previously been reported that this scheme had been delayed due to inaccurate utility plans and the consequential need to redesign the scheme.  Work was anticipated to commence late March 2018 and complete late August 2018. It was requested that the scheme budget be reprofiled as shown below:-

 

Borrowing

 

2017/18   

2018/19

2019/20

       Total

 

     £000

       £000

     £000

       £000

Original   Budget

       285

         894

           0

       1,179

Revised   Budget

       210

         961

           8

       1,179

 

Victorian Schools -  Final agreed accounts for works carried out in year were lower than originally anticipated and it was therefore requested to carry forward £50k into the 2018/19 Capital Programme.

 

St Richard Gwyn R/C School Window Renewal Phase 1 - This scheme had previously been tendered however no tenders were returned. The scheme would be retendered in March 2018. It was requested to carry forward £95k into the 2018/19 Capital Programme.

 

Legionella Control - Further legionella testing works were planned however they would not be carried out until next financial year, it was therefore requested to carry forward £17k into the 2018/19 Capital Programme for remedial works if necessary following testing.

 

Disabled Access Improvements - Works were based on referrals from Pupil Support.  Referrals had been low this year and it was therefore requested to carry forward £15k into the 2018/19 Capital Programme.

 

Social Services

 

ICT Infrastructure - This funding had been allocated to implement an all Wales ICT system which would enable the interfacing of a range of different systems across local authorities and NHS organisations. The system had been implemented in part however it was requested that £370k be carried forward into the 2018/19 Capital Programme to complete full implementation.

 

Environment and Housing

 

Dinas Powys Library Bridge - Due to capacity to implement this scheme this financial year it was requested to carry forward £170k into the 2018/19 Capital Programme.

 

Murchfield Access Bridge - Due to capacity to implement this scheme this financial year it was requested to carry forward £44k into the 2018/19 Capital Programme.

 

Boverton Flooding - This scheme was due to complete by the end of March 2018. It was requested to carry forward £631k into the 2018/19 Capital Programme to finalise accounts.

 

Coldbrook Flood Risk Management Construction Phase - A report on the same agenda requests an increase in the capital programme of £525k in 2017/18 and £58k in 2018/19.  These changes had been reflected in Appendix 1 attached to the report. 

 

Cemetery Approach - Tenders for the community building were to be returned by 2 March, 2018 and would need to be evaluated.  It was therefore requested that £198k be carried forward into the 2018/19 Capital Programme.

 

Leisure Centre Capital Bids - Within this programme there was a £242k budget for electrical rewiring at Llantwit Leisure Centre. Tenders had been returned and the contractor was being appointed.  Works were anticipated to commence late February 2018. It was therefore requested that £175k be carried forward into the 2018/19 capital programme. There was also a budget of £25k in 2017/18 for Cowbridge Leisure Centre Roofing works. This scheme was being redesigned and only fees would be charged this year. It was therefore requested that £10k be carried forward into the 2018/19 Capital Programme.

 

Housing Improvement Programme 2017/18 – Slippage of £4.581m.

 

Internals – The contract for Housing Electrical Installations was to be presented to Cabinet for approval during February 2018. Delays in the tendering process had meant that the anticipated level of work during 2017/18 had not been achieved and would therefore continue into 2018/19. It was requested that £850k be carried forward to 2018/19.

 

Externals – The contract for Gibbonsdown External Wall Insulation (EWI) was yet to be confirmed. Tenders were to be returned and assessed by the beginning of March 2018 with work commencing in due course. It was therefore requested that £805k was carried forward to 2018/19.

 

Common Parts – Works to communal areas were not included in the original framework agreement and as a result, had to be tendered. This, along with contractor capacity issues had caused delays, pushing the work back to 2018/19. It was requested that £2.75m be carried forward to 2018/19.

 

Williams Crescent – Works to the communal areas at Williams Crescent were delayed due to the issues described above. It was therefore requested that £176k be carried forward to 2018/19.

 

Managing Director and Resources

 

Penarth Pier Pavilion - £70k had been included in the capital programme as a contingency to cover any repairs and maintenance work required at the Pavilion.  To date no works had been identified and it was therefore requested that the £70k be removed from the capital programme. Any future requirement for repairs would be considered as they were identified.

 

Tackling Poverty - There was £5k unallocated within the Tackling Poverty Scheme.  It was requested to vire and carry this forward to the Barry Regeneration Partnership Project Fund scheme to contribute towards the Main Street area improvements.  Works would include the construction of a new boundary wall.

 

Barry Regeneration Partnership Project Fund - Within this scheme there was a budget of £19k for Main Street Area improvements, which would include the construction of a new boundary wall.  Work would require planning consent and a licence agreement.  It was therefore requested to carry forward £19k into the 2018/19 Capital programme.

 

Five Mile Lane - Delays with regard to compulsory purchase orders along with programme delays appointing the main contractor had meant that the full budget would not be spent in 2017/18. It was requested that £1.7m be carried forward into the 2018/19 Capital Programme.

 

Innovation Quarter Regeneration Fund - Due to a change in the scope of the project this scheme was expected to underspend. It was therefore requested that the budget for the scheme be reduced by £124k.

 

North Penarth Open Space Improvements - Plassey Square had now been completed, albeit some wild flower planting which would be implemented in the Spring. The new play area and multi-use games area proposed at Paget Road was being tendered (closing mid-February). It was anticipated that works would start on site in April 2018, subject to contracts. A project team comprising Highway Officers and Landscape Architects was working together to undertake feasibility for improvements to The Dingle and associated highway works on Windsor Road/Plassey Street. Cogan Skate Park required further consultation. It was therefore requested to carry forward £475k into the 2018/19 Capital Programme.

 

Civic Offices Re-wire/ Space Project - Reduced Office accommodation - There had been some delays due to additional fire precaution works and the scheme was anticipated to complete in May 2018. It was requested to carry forward £198k into the 2018/19 Capital Programme.

 

Carbon Management Fund - £387k was ring-fenced within the scheme to match fund the Street Lighting Energy Reduction Strategy Salix Scheme. The application for an interest free loan to Salix would be made imminently and if successful works would commence next financial year. It was therefore requested to carry forward the £387k into the 2018/19 Capital Programme as a new scheme called 'Street Lighting Energy Reduction Strategy'.

 

Carbon Management Allowances - The advance purchase of Carbon Management Allowances attracted a reduction in cost and was therefore more cost effective.  However when purchased in advance, the expenditure had to be classed as capital.  Purchases to the sum of £261k would be undertaken this year and it was therefore requested that the 2017/18 Capital Programme be increased accordingly, funded by a revenue contribution from the Policy budget. 

 

City Deal - The Cardiff Capital Region joint Cabinet was responsible for preparing the Joint Working Agreement (JWA) Business Plan in respect of the wider investment fund. The JWA Business Plan would then be submitted to each of the ten Local Authority partners for approval. At its meeting on 15 January, 2018 joint Cabinet reviewed proposals for the financing of the JWA Business Plan which included £120m of Local Authority funding. The Vale of Glamorgan Council's share of this was £10.17m in the period to 2026/27 as set out below. It was requested that these current indicative funding proposals were reflected in the Capital Programme. At the time of writing the report the final Business Plan had not been approved and therefore the figures in the report were indicative only. The development of the Business Plan would be kept under review by the Section 151 Officer and when approved by all ten Local Authority partners Council's the Capital Programme would be amended accordingly.

 

Proposed Capital Programme 2018/19 to 2022/23

 

Following consideration of all of the above, the proposed 5-year Capital Programme 2018/19 to 2022/23 was attached at Appendix 1 to the report.

 

Slippage requested in the report had been included in Appendix 1 attached to the report.

 

Since the Initial Capital Programme Proposals were prepared, a small number of amendments were received and are outlined below.

 

Llansannor Extension - It was requested to include a new scheme into the 2018/19 Capital programme with a budget of £120k, to be funded £85k from s106 monies and £35k from the 2018/19 schools asset renewal allocation. Works included an extension of a small teaching room and were anticipated to start on site June 2018 and complete August 2018.

 

Gwenfo Primary Extension - It was requested to include a new scheme into the capital programme with a budget of £75k, split £5k in 2017/18 and £70k in 2018/19.  This scheme would be funded from s106 monies. Works would include a classroom extension to increase capacity at the school and were anticipated to start during the Easter School holidays.

 

Social Services Asset Renewal - Social Services had a £100k asset renewal budget for 2018/19 and it was requested that £80k of the budget was allocated to the following schemes:- 

  • Hen Goleg Day Centre Fire Alarm £35k
  • Hen Goleg Day Centre Lighting Upgrade £20k
  • External ground works to Youth Offending and Cartref Porthceri buildings £25k 

Several schemes had been included in Appendix 1 attached to the report which would be funded from S106 monies. These included Maes Dyfan Open Space Improvements, North Penarth Open Space Improvements, Colwinston play area, Court Ward park improvements, improving the pedestrian and cycling facilities between St Joseph's School and Ash Path and sustainable transport improvements at Maendy, St Athan and Fferm Goch. Schemes to implement Nursery and Early Intervention provision at St Josephs, Llansannor Extension, Wick Primary Nursery and Remodel of Building and the Band B schemes also had significant contributions from S106 as a result of local developments in the respective areas.

 

Vehicle Replacement Programme - An amendment to the level of expenditure in the Capital Programme was required, to reflect the continuing need to replace vehicles across the Council. The latest revised budget profile was set out in the table below.  Vehicles could be funded from the Vehicle Renewals Fund, alternatively the vehicles could be leased or financed by a loan using prudential borrowing. The level of and financing of this expenditure would be reviewed during 2018/19.

 

Borrowing

 

2018/19

2019/20

2020/21

2021/22

2022/23

 

     £000 

     £000

     £000

     £000

     £000

Original Expenditure

    2,256

    1,184

       900

       900

       900

Revised Expenditure

    2,256

       684

       900

       900

       900

 

Welsh Government Highway Refurbishment Fund - A road refurbishment scheme of up to £30m across Wales had been announced by Welsh Government and the Vale of Glamorgan Council had been awarded a grant allocation of £1.136m based on an established highway allocation formula. This grant would provide vital new investment for the Council's roads. This allocation was for one year and would be received for 2017/18. It would operated as a capital displacement fund allowing the Council to fund expenditure it had incurred during 2017/18 from the grant which would allow the Council to carry its original funding forward into 2018/19 for further resurfacing works to be carried out. It was proposed that a budget of £1.136m was included in the 2018/19 Capital Programme to be funded from the funds no longer required in 2017/18.

 

As part of the Initial Revenue Proposals report presented to Cabinet on 20 November, 2017 it was projected that the outturn for Policy for 2017/18 would be a favourable variance of £4m. Cabinet resolved " T H A T a sum of £2m be set aside in the Schools Investment Strategy reserve, funded by the projected underspend on revenue in 2017/18, with further details in the Initial Capital Programme Proposals 2018/19 report." and "T H A T a sum of £2m be set aside in the Council Fund, with its use being considered as part of the final budget proposals for 2018/19."

 

As noted earlier in the report, Environment and Regeneration Scrutiny Committee recommended 'T H A T in noting the healthy position of the reserves, the Corporate Performance and Resources Scrutiny Committee be requested to recommend to Cabinet that the use of further reserves for resurfacing throughout the Vale of Glamorgan be considered'.  The Budget Working group considered options for this funding and it was proposed that £500k be transferred into the Visible Services reserve and used to carry out additional road and pavement resurfacing works in 2018/19.

 

Energy Conservation Refit Programme - On 4 September, 2017 a report was considered by Cabinet on Refit works for Council Building Assets (Minute C63 refers). Refit Cymru was a Welsh Government promoted scheme that aimed to accelerate the energy efficiency improvement of all public sector buildings in Wales. Refit Cymru gave Welsh public bodies the opportunity to use a UK framework comprising 16 contractors to undertake works to improve the energy efficiency of their buildings. Measures such as energy efficient lighting upgrades, boiler system upgrades and fabric insulation are some of sixty three potential measures that could be included within Refit.

 

Loans could be made available for Refit phases that included measures with an overall 8 year simple payback through the guaranteed energy savings. It was the appointed contractor that guaranteed the savings, over the loan term. The monitoring and verification report that they provided alongside their saving predictions specified an agreed methodology for how the savings were going to be measured. If there was an under performance then the contractor would make payments to the Council against the guarantee. The loans had to be repaid by the Council through the savings over what could be up to a maximum term of 10 years. The costs of the Refit works would be resourced through interest free invest to save loans from the Welsh Government. The loans would be repaid through the guaranteed savings resulting from the installed measures. Refit works would be carried out in phases, and for each phase a loan would be bid for from Welsh Government. At the present time the cost of the first phase was unknown therefore delegated authority had been requested within this report to increase the capital programme as and when the information becomes available.

 

Carbon Management Fund - The Carbon Management Fund Scheme was an on-going scheme to assist with the Council's energy reduction measures. To enable these works to continue, it was proposed that a budget of £200k be included in the 2018/19 Capital Programme. This would be funded from the Energy Management Fund Reserve.

 

Delivering Well Being

 

The Capital Programme was set having regard to the Council’s corporate priorities, which were included in the Corporate Plan through the 4 well-being outcomes which were: - 

  • An Inclusive and Safe Vale
  • An Environmentally Responsible and Prosperous Vale
  • An Aspirational and Culturally Vibrant Vale
  • An Active and Healthy Vale 

These outcomes demonstrated the Council’s commitment to the Well-being of Future Generations Act which aimed to improve the social, economic, environmental and cultural well-being of Wales and ensured that the needs of the present were met without compromising the ability of future generations to meet their own need.  Examples were:-

 

Continued investment in housing through the Housing Improvement Programme to maintain the Welsh Housing Quality Standard and plans for new build and environment and regeneration programmes;

 

  • Investing in the introduction of LED street lighting would bring environmental benefits;
  • Further investment in schools through the School Investment Programme with Band A substantially complete and future development under Band B anticipated to commence in 2019/20;
  • Additional funding being provided in 2018/19 through to 2022/23 for Disabled Facilities grants; and
  • Investment in the Leisure Centres to encourage more use and activity. 

In developing the Corporate Plan, the Council had reflected on the way it worked and had stated 5 principles it would follow.  These budget proposals reflected the new approach to working.  The 5 ways of working were :

 

Looking to the long term  - The capital proposals were a means of planning for the future and takes a strategic approach to ensure services were sustainable and that future need and demand for services was understood;

 

Taking an integrated approach - The capital proposals highlighted and encouraged ways of working with partners as it utilised funding received from various sources to deliver schemes such as Welsh Government and S106 funding;

 

Involving the population in decisions – As part of the budget proposal process there had been engagement with residents, customers and partners;

 

Working in a collaborative way – The capital proposals recognised that more could be achieved and better services could be provided by collaboration and it encouraged the a way of working in the future which includes providing funding to work with local communities; and

 

Understanding the root cause of issues and preventing them – The capital budget setting process was proactive and allowed an understanding of the financial position so that issues could be tackled at the source.

 

Financial Strategy

 

In previous Capital proposals a number of pressures had been identified that would need to be subject to on-going review and management as follows;

 

Financial Strategy

Capital Budget Pressure

Mitigating Action Taken

The possibility of increased   demands upon flooding, coastal protection and the environment generally   (including an accelerated deterioration of the highways infrastructure).

Recurring sums had been set   aside to fund annual works for flood and coastal protection. Recurring sums   had also been set aside for resurfacing. An additional sum of £500k was to be   set aside from the projected 2017/18 underspend into the Visible Services   Reserve to assist with the pressures in these areas.

The general shortfall of   funding available to address the Council’s asset renewal requirements.

Rationalisation of   accommodation should assist with this pressure as it would minimise the   number of properties with Asset Renewal requirements. The asset renewal   budget for schools was £965k in 2018/19 but dropped to £550k in 2019/20. In the   2018/19 to 2022/23 Capital proposals a recurrent £100k for Social Services   asset renewal was allocated. Any underspends against these budgets should be   reported and would be ring-fenced for future asset renewal requirements   against the service's assets.

The Council’s ambitions for   further regeneration and how they could be realised.

Regeneration was a central   theme of the capital programme. The Council had committed to a recurring sum   for Regeneration of £300k within the Capital Programme.

The continued expansion over   time of the Schools Investment Programme.

Band B Schemes for the School   Investment Strategy had been included in the Capital Programme. Welsh   Government had confirmed that Band B would commence in 2019/20. It was   estimated that the cost of Band B would be in the region of £142.417m and   that the Welsh Government grant intervention rate would be 50%, the   intervention rate for Faith schools would be 85%.

Funding of Renewal Areas to   address housing, social and environmental problems in the light of reduced   grant availability.

The WG renewal area grant came   to an end in March 2017. The Council had allocated in the capital programme a   sum of £300k in 2018/19 and 2019/20 to Housing Regeneration and this could be   used as match funding for any potential future sources of WG funding.

 

School Investment Programme

 

The 21st Century Schools Programme was the Welsh Government's funding initiative for investment in schools. The first tranche of schemes under the Band A funding were submitted prior to November 2011. Band A schemes ran between 2013/14 and 2018/19. Band B schemes were expected to commence in 2019/20.

 

The schemes included under the Band A submission for construction between 2013/14 and 2018/19 were as follows; Ysgol Nant Talwg, Ysgol Dewi Sant, Ysgol Gwaun Y Nant and Oakfield , Colcot, Llantwit Learning Community and Romilly Primary School. The Ysgol Nant Talwg, Ysgol Dewi Sant, Ysgol Gwaun Y Nant and Oakfield schemes were now complete. The tenders for the Romilly Primary School scheme were in the process of being evaluated and Llantwit Learning Community was complete, except for minor snagging items and grass seeding and planting which would take place at Easter 2018.

 

Band B Schemes were expected to commence in 2019/20 and in December 2014 the Council submitted proposals for a number of schemes to Welsh Government. During 2016/17 reports were taken to Cabinet regarding two key schemes to be progressed under Band B, namely, a proposal to establish new Mixed Sex Secondary Schools in Barry and a proposal to increase Welsh Medium Secondary School Places.

 

At the end of July 2017 the Council had to submit a Strategic Outline Programme to Welsh Government for Band B. Based on latest indications, it had been advised that 50% funding would be available from Welsh Government to fund non faith school schemes and 85% funding would be available for faith school schemes.

 

On 6 December, 2017 the Council received an approval in principal letter for Band B with an estimated programme envelope cost of £142.4m, subject to the approval of individual project business cases. A report was presented to Cabinet on 22 January, 2018 (Minute C199 refers) to seek Cabinet approval to progress the proposed Band B phase of the 21st Century Schools Programme subject to the approval of the final Capital Programme 2018/19 by Full Council.  A detailed business case would be required for each scheme contained in the Band B Programme.

 

Band B schemes were included in the Initial Budget Proposals however it was proposed that Band B schemes were reprofiled as shown in the table below and were included in Appendix 1 attached to the report:-

  

Funding for the above proposals were set out below:-

Funding

£000

WG Grant

      83,823

S106

      18,211

Borrowing Pending Capital Receipts

        3,982

Capital Receipts

      11,496

General Capital Funding

        5,430

Reserves and Revenue Contribution

      13,488

Prudential Borrowing

        5,987

Total

    142,417

 

The total allocation for Victorian Schools in 2018/19 was £1.438m to support on-going works across 21 Victorian Schools to address the existing issues with lath and plaster and masonry deterioration. These works were expected to be completed during 2018/19.

 

There was an asset renewal budget of £0.965m in 2018/19. From 2019/20 the asset renewal budget would reduce to £550k due to increasing constraints on resources due to the funding of the 21st Century Schools Band B Programme. This also allowed for a £50k contingency budget each year within the Capital Programme. Education in consultation with Property Services, allocate this budget in year to various schemes including rolling programmes of boiler and toilet renewal.

 

Appendix 1 attached to the report detailed the planned spend on the Education Capital Programme from 2018/19 to 2022/23 incorporating expenditure under Band A and Band B schemes funded under 21st Century Schools Programme. Gross expenditure totalled £130.484m.

 

The Education Capital programme was anticipated to be funded as follows;

 

Funding Source

By Funding Source

18/19

19/20

20/21

21/22

22/23

Total

 

   £000

   £000

     £000

     £000

   £000

     £000

General Capital Funding

  2,001

  2,448

    2,204

    1,972

     956

    9,581

Capital Receipts

  2,296

  3,664

    6,905

       455

        0

  13,320

Other Reserves and Revenue   Contribution

       25

  1,066

       504

          0

        0

    1,595

School Investment Reserve

     467

  9,114

       685

       875

        0

  11,141

IT Fund

       46

     200

       981

       200

     200

    1,627

Prudential Borrowing

         0

         0

           0

    2,000

  1,116

    3,116

Prudential Borrowing pending   capital receipts

         0

         0

       919

       774

  2,290

    3,983

Total Internal Funding

  4,835

16,492

  12,198

    6,276

  4,562

  44,363

S106 Agreements

  1,111

  5,078

    7,384

    2,223

  1,549

  17,345

Welsh Government Grant

     508

17,488

  24,070

    9,930

16,780

  68,776

Total Funding

  6,454

39,058

  43,652

  18,429

22,891

130,484

 

Housing Improvement Programme

 

The Welsh Government required all local authorities who retained their housing stock to submit an acceptable Housing Business Plan annually that incorporated a detailed financial forecast in the form of a 30 year financial model. The Business Plan was the primary tool for a local authority’s housing landlord service and includes all assets within the Council’s Housing Revenue Account (HRA).

 

The Housing Business Plan would be reported to Cabinet during March 2018 and would also need to be approved by Council. The Plan would form the basis of the Major Repairs Allowance (MRA) grant application, which was a pivotal financing component for the Housing Improvement Programme.

 

The MRA for 2018/19 had not yet been announced by the Welsh Government but the assumed budget in Appendix 1 attached to the report remained at £2.779m per annum as received in 2017/18.

 

The Final Capital Programme Proposals reflected the level of works required to maintain WHQS. It was expected that WHQS would be attained by 31 March, 2018, with on-going work required to maintain the standard based on component lifecycles.  In addition, the proposed Housing Improvement Programme included new build and regeneration work from 2018/2019 going forward.

 

The budget for the Housing Improvement Programme had been re-profiled since the Initial Capital Proposals report in line with the Housing Business Plan and was shown in Appendix 1 attached to the report. A slippage request of £4.581m had been made as part of the report and was detailed in paragraph 50 of the report. The sources of funding were detailed in the table below.

 

funding

Funding

2018/19  £000

2019/20 £000

2020/21 £000

2021/22 £000

2022/23   £000

Revenue/Reserves

  4,585

5,152

5,540

6,157

6,746

MRA Grant

  2,779

2,779

2,779

2,779

2,779

Unsupported Borrowing

12,765

7,756

5,930

2,862

1,096

Total Budget

20,129

15,687

14,249

11,798

10,621

 

Other Schemes

 

A sum of £2.986m in 2018/19 and £800k per annum in 2019/20 - 2022/23 was included to address high priority Visible Services assets and infrastructure improvements.

 

Flood Risk Management funding of £100k per annum was provided in addition to recurring coastal protection funding of £110k per annum. The Llanmaes, Coldbrook and Boverton schemes which were included in the Capital Programme would also enhance flood protection in the area.

 

A sum of £324k (including slippage from 2017/18) in 2018/19 and £300k from 2019/20-2022/23 had been allocated in relation to the Barry Regeneration Partnership. As well as being used for preparatory work (e.g. site investigations), this may also be applied as match funding to lever additional sources of grant funding.

 

Funding for Disabled Facilities Grants of £5.750m had been provided in total over the 5 years.

 

At the Meeting the Cabinet Member for Neighbourhood Services and Transport commented that he welcomed the additional finance that was going into highway resurfacing.

 

This was a matter for Executive and Council decision

 

Cabinet, having considered the report and all the issues and implications contained therein

 

RESOLVED –

 

That Cabinet recommend to Council that:-

 

(1)       T H A T the final budget proposals for the Capital Programme for the years 2018/19 to 2022/23 as set out in Appendix  1attached to the report be approved.

 

(2)       T H A T delegated authority be granted to the Managing Director and the Head of Finance, in consultation with the Cabinet Member for Performance and Resources, to make additions, deletions or transfers to or from the 2018/19 to 2022/23 Housing Improvement Programme as appropriate.

 

(3)       T H A T delegated authority be granted to the Managing Director and the Head of Finance, in consultation with the Cabinet Member for Performance and Resources, to make additions, deletions or transfers to or from the 2018/19 to 2022/23 Asset Renewal budgets as appropriate.

 

(4)       T H A T delegated authority be granted to the Managing Director and the Head of Finance, in consultation with the Cabinet Member for Performance and Resources, to make additions, deletions or transfers to or from the 2018/19 Victorian Schools budget as appropriate.

 

(5)       T H A T delegated authority be granted to the Managing Director and the Head of Finance, in consultation with the Cabinet Member for Performance and Resources, to make additions, deletions or transfers to S106 funded schemes subject to Member consultation as required under the existing process.

 

(6)       T H A T delegated authority be granted to the Managing Director and the Head of Finance, in consultation with the Cabinet Member for Performance and Resources, to make additions, deletions or transfers to or from the 2018/19 Energy Conservation Refit budget as appropriate.

 

(7)          T H A T the following changes to the 2017/18 and  2018/19 to 2022/23 Capital Programme be approved:

  • Band B Preparatory Works Changing Rooms etc. - The carry forward of £210k into the 2018/19 Capital Programme.
  • St Joseph's Nursery and Early Intervention Base (EIB) - That the budget for this scheme be re-profiled as set out in paragraph 37 of the report.
  • Band A Romilly Primary - That the budget for this scheme be re-profiled as set out in paragraph 38 of the report.
  • Victorian Schools - The carry forward of £50k into the 2018/19 Capital Programme.
  • St Richard Gwyn R/C School Window Renewal Phase 1 - The carry forward of £95k into the 2018/19 Capital Programme.
  • Legionella Control - The carry forward £17k into the 2018/19 Capital Programme.
  • Disabled Access Improvements - The carry forward of £15k into the 2018/19 Capital Programme.
  • Band B Schemes - That the budget for these schemes be re-profiled as set out in paragraph 84 of the report.
  • Gwenfo Primary Extension - Request to include a new scheme into the capital programme with a budget of £75k, split £5k in 2017/18 and £70k in 2018/19, to be funded from s106 monies. 
  • ICT Infrastructure - The carry forward £370k into the 2018/19 Capital Programme.
  • Dinas Powys Library Bridge - The carry forward of £170k into the 2018/19 Capital Programme.
  • Murchfield Access Bridge - The carry forward of £44k into the 2018/19 Capital Programme.
  • Boverton Flooding - The carry forward of £631k into the 2018/19 Capital Programme.
  • Cemetery Approach - The carry forward of £198k into the 2018/19 Capital Programme.
  • Leisure Centre Capital Bids - The carry forward of £185k into the 2018/19 capital programme, £10k for Cowbridge Leisure Centre Roofing and £175k for Llantwit Leisure Centre Electrical Works.
  • Housing Improvement Programme 2017/18 – The carry forward of £4.581m into the 2018/19 Capital Programme.
  • Penarth Pier Pavilion - Remove the £70k scheme from the 2017/18 capital programme.
  • Tackling Poverty - Request to vire and carry forward £5k to the Barry Regeneration Partnership Project Fund scheme.
  • Barry Regeneration Partnership Project Fund - The carry forward of £19k into the 2018/19 Capital programme.
  • Five Mile Lane - The carry forward of £1.7m into the 2018/19 Capital Programme.
  • Innovation Quarter Regeneration Fund - Reduce the 2017/18 budget by £124k.
  • North Penarth Open Space Improvements - The carry forward of £475k into the 2018/19 Capital Programme.
  • Civic Offices Re-wire/ Space Project - Reduced Office accommodation -The carry forward of £198k into the 2018/19 Capital Programme.
  • Carbon Management Fund - The carry forward of £387k into the 2018/19 Capital Programme into new scheme called 'Street Lighting Energy Reduction Strategy'.
  • Carbon Management Allowances - It was requested to increase the 2017/18 Capital Programme by £261k to be funded by a revenue contribution from the Policy budget.
  • City Deal - Increase the capital programme as set out in paragraph 60 of the report

Reasons for decisions

 

(1)       To set and approve future capital programmes to 2022/23.

 

(2)       To enable the Housing Capital budget to be managed effectively.

 

(3)       To enable the Asset Renewal budgets to be managed effectively.

 

(4)       To enable the Victorian Schools budget to be managed effectively.

 

(5)       To enable S106 schemes to be managed effectively.

 

(6)       To enable the Energy Conservation Refit budget to be managed effectively.

 

(7)       To amend the 2017/18 and future years Capital Programme and to seek approval from Cabinet and Council.

 

[View Cabinet Report]