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Agenda item

Capital Strategy Assessment and Capital Budget Proposals 2019/20

Minutes:

Purpose:

1. Chartered institute of Public Finance and Accountancy (CIPFA) produced a revised regulatory Code in December 2017, which included a need for local authorities to produce a Capital Strategy. The requirements were staggered with an aim for reporting compliance during 2018/19 with a full Capital Strategy implemented for 2019/20. This report concentrates on the former in evaluating the governance, planning and priority setting involved in presenting 2019-20 capital budget proposals and the 3 years thereafter making up the collective capital medium term financial plan.

2. CIPFA report that a Capital Strategy should be tailored to individual circumstances and consequentially don’t volunteer a prescriptive format. The overall intent is that any Capital Strategy should allow Members to understand how stewardship, value for money, prudence, sustainability and affordability will be secured. The overall purpose of a capital strategy being to provide opportunity for engagement with Full Council to ensure overall strategy, governance procedures and risk appetite are fully understood by all elected members

3. The code, in describing the Capital Strategy, reports it can be delegated to Cabinet (or similar body) with Full Council being responsible. MCC’s approach is to report budget setting process through Cabinet, with consideration and approval of the future capital programmes resting with full Council. The Council’s Constitution is consistent with compliance requirements. It is anticipated that the actual resulting capital strategy will be reconciled and consistent with a wider financial strategy and both available for consideration during Spring cycle of meetings.

 

Key Issues:

Children and Young People Select Committee to consider and provide feedback upon the budget assumptions, pressures and savings proforma affecting this Select portfolio area.

 

1. That Cabinet considers the capital strategy requirements and assesses the preparedness of current practices to satisfy capital strategy compliance obligations for onward endorsement to Council as part of capital strategy report in January 2019.

2. That Cabinet considers the annual core capital programme identified in

Appendix 2 for 2019-20, together with the additions proposed in paras 6.14 to

6.18, and issues its draft capital budget proposals for 2019/20 to 2022/23 for consultation purposes.

3. That Cabinet reaffirms the principle that during the financial year, any new schemes volunteered can only be added to the programme if the business case demonstrates that they are self-financing or if the scheme is deemed a higher priority than current schemes in the programme and therefore displaces it.

4. When considering the relative merits of projects and potential displacement, that Cabinet consider the indicative priority matrix supplied in para 4.15, either endorsing or amending it for onward consideration by full Council.

5. That Cabinet considers the extent of proposed sale of assets captured in exempt Appendix 5, in order to support the capital programme, and that once agreed, no further options are considered for these assets.

6. That Cabinet note the potential forecast of capital receipt levels, prior to the consideration of using £75,000 of receipts balance to afford condition survey work to update historic condition survey information and a ceiling of capital receipts funding of £300k to assist with the business case affordability of

Severn View Residential Home replacement. Any excess of capital receipts generated thereafter is proposed to be applied by Treasury colleagues in a fashion that will mitigate minimum revenue provision costs and interest payments, to assist with revenue budget management. This is a change in capital receipt strategy to that applied in earmarking receipt generation to afford Members tranche A Future Schools aspirations. This will mean that any further school redevelopment will need to derive a greater extent of revenue headroom to afford the prudential borrowing financing of such developments.

 

Capital Strategy Summary Considerations

 

7. The Capital Strategy sets out the council’s approach to capital investment over a longer timeframe than is traditional in the 4 year medium term financial plan and will provide a framework through which our resources, and those matched with key partners, are allocated to help meet strategic priorities.

It is about planning, prioritisation, management and funding and is more informed by the council’s consideration of:

·         Corporate Plan

·         Asset Management Plan

·         Commercial Investments Strategy

·         Treasury Management

 

Member Scrutiny:

 

The Assistant Head of Finance/ Deputy Section 151 Officer presented the report and invited questions and comments from the Select Committee as follows:

 

·         In response to a query on pressures, it was answered that the figures are in respect of liability related to assets held.  The capital programme of £40million annually was highlighted; the 2 largest items being school replacement. Other infrastructure items (e.g. highways maintenance, Disabled Facility Grant) have been kept at historic levels.  The list is useful in the event that money becomes available.  It is proposed that any extra money is used for the £80million highways maintenance scheme.  The sewerage treatment work is also highlighted as a priority. Priorities for schools are the Band B 3-19 replacement of King Henry VIII Comprehensive School. The Cabinet Member for Resources referred to the development of a new Local Development Plan (LDP) that will include consideration of sufficient primary and secondary school places.  The Cabinet Member noted that Welsh Government will now contribute 65%.

·         A Member commented that there is a low amount earmarked for property maintenance and expressed concern that problems could be stored up for the future and that there would be a noticeable contrast between schools with outstanding maintenance issues and the new schools.

·         Text Box: Committee Conclusion: The Chair, on behalf of the committee was pleased to receive the report and noted that no objections were raised. The Assistant Head of Finance/ Deputy Section 151 Officer was thanked for the report. Regarding 21st C Schools, an update was provided by the Chief Officer, Children and Young People that the new team should be in place before half term, the first 21st C Schools Board has met and will have overview of all schools estates to meet the needs of future learners in the longer term.

Supporting documents: