Agenda item

Context:

 

To outline the proposed capital budget for 2017/18 and the indicative capital budgets for the three years 2018/19 to 2020/21.

 

Recommendations:

 

1. That Select Committee scrutinizes the draft capital budget proposals for 2017/18 to 2020/21 released for consultation purposes as set out below and referred to in Appendix 2.

 

2. That Select Committee notes the following recommendations approved by Cabinet:

 

3. That Cabinet confirms a capital strategy, which seeks to prioritise the Council’s Future Schools programme and other commitments whilst also continuing to finance a minimum core capital programme, recognizing the risks associated with this approach.

 

4. That Cabinet reviews the priorities in the Capital programme in the light of the issues raised in 3.7 and other demands for capital resources.

 

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

 

6. That Cabinet agrees to maximize the use of capital receipts when received to fund the capital programme (therefore reducing the need to borrow) and/or set aside to repay debt.

 

7. That Cabinet agrees to the sale of the assets in accordance with the Asset Management Plan and identified in the exempt background paper in order to support the capital programme, and that once agreed, no further options are considered for these assets.

 

Key Issues:

 

1. The capital MTFP strategy put in place in the face of an ever reducing resource base from Welsh Government has been reviewed. The strategy going forward has the following key components:

 

 The core MTFP capital programme needs to be financially sustainable without drawing on further funding.

 

 The original Match funding identified for the Council’s priority of the Future schools programme (£40 million) has been supplemented with £11.9 million additional funding.

 

 Budgets for Disabled Facilities Grants and Access for all schemes will be maintained in line with the Council’s priority of protecting services to vulnerable adults and children.

 No inflation increases will be applied to any of the capital programme with property maintenance budget and Infrastructure maintenance budget set at the same level as last year

 

 The County farms maintenance and reinvestment programme is based on the revised asset management plan for County farms, supported by the latest condition survey data

 

 Budget for Area Management of £20k in the programme could be further reduced or cut in the face of other pressures

 

 £1m unsupported prudential borrowing per annum has been contained in the programme for a number of years and this will continue in the current 4 year programme

 

 The capital MTFP currently projects no increase in supported borrowing for 2016/17 onwards (provisional settlement received October 2016)

 

 Use of the capital investment reserve to ease the transition to a balanced budget

 

 Budget to enhance or prepare assets for sale will be maintained and funded through the capital receipt regeneration reserve in order to maximize this funding stream for the Future schools programme priority

 

2. The four year capital programme is reviewed annually and updated to take account of any new information that is relevant.

 

3. The major component of the capital MTFP for the next few years is the Future schools programme, and the Council has recently approved further funding for this programme at its meeting on the 20th October 2016.

 

4. There are a number of other areas where there is a commitment to invest, however the schemes currently sit outside the programme as work progresses to identify the funding requirements. These are:

 

 Monmouth Pool – commitment to reprovide the pool in Monmouth as a consequence of the Future schools programme

 

 Abergavenny Hub – commitment to reprovide the library with the One Stop Shop in Abergavenny to conclude the creation of a Hub in each of the towns

 

 Disabled Facilities Grants – the demand for grants is currently outstripping the budget, work is being undertaken to assess the level of investment required to maximize the impact and benefit for recipients.

 City Deal - 10 Authorities in the Cardiff City region are looking at a potential £1.2 billion City Deal. Agreement to commit to this programme is being sought across the region in January and so would impact on the capital MTFP. The potential impact on individual authority budgets is currently being modelled in advance of decisions on specific projects and profiles in order for authorities to start reflecting the commitment in their MTFPs.

 

 J and E Block – the office rationalization programme is being considered to see if there is a solution that would enable the Magor and Usk sites to be consolidated, releasing funding to pay for the necessary investment to bring the blocks into use.

 

5. A strategy that enables the core programme, Future schools and the above schemes to be accommodated is being developed. Notwithstanding this there will still remain a considerable number of pressures that sit outside of any potential to fund them within the Capital MTFP and this has significant risk associated with it. Cabinet have previously accepted this risk.

 

6. The current policy is that further new schemes can only be added to the programme if the business case demonstrates that they are self-financing or the scheme is deemed a higher priority than current schemes in the programme and therefore displaces it.

 

7. In summary the following other issues and pressures have been identified:

 

 Long list of back log pressures – infrastructure, property, DDA work, Public rights of way, as outlined in Appendix 1. None of these pressures are included in the current capital MTFP, but this carries with it a considerable risk.

 

 Capital investment required to deliver revenue savings – this is principally in the area of office accommodation and looking at alternative delivery models for leisure and culture, and social care, property investment and possibly Additional Learning needs. The level of investment is currently being assessed however, in accordance with the principle already set above, if the schemes are not going to displace anything already in the programme then the cost of any additional borrowing will need to be netted off the saving to be made.

 

 The IT reserve is depleted so funding for any major new IT investment is limited. Any additional IT schemes will need to either be able to pay for themselves or displace other schemes in the programme.

 

 Circuit of Wales – the Authority has undertaken due diligence work on a version of the proposal which concluded not to proceed, the current proposal is being considered by Welsh Government without recourse to Local Authority funding.

 

Member Scrutiny:

 

It was asked what was the deadline date to realise the money from the capital receipts in order to pay the 21^st century school bill and if it cannot be done, is there and alternative plan. The Head of Finance advised that in terms of inflows & outflow there is a constant juggle in process. We have received one of our major receipts and in terms of planning for the programme we plan in terms of the indicative spend our project manager gives us. If there is slippage we bridge the gap with temporary borrowing.

 

In regard to the exempt document the Chair asked for an explanation as to why it was exempt and we were told that one of the appendix lists actual capital assets which Monmouthshire County Council are proposing to sell.

 

A Member asked if the £20,000 grant shared between the four area committees was under threat and we were told that was waiting for the work community governance to be finished and would come forward to a future Council meeting.

 

The Chair asked about the building development to J&E block and looked forward to seeing the proposals.

 

It was proposed that a working group be set up to monitor assets.

 

A question was raised in regard to public toilets and we were told by the Head of Operations that Monmouthshire County Council propose to keep one public toilet in Abergavenny.

 

It was asked if school governors were aware that school kitchens needed having substantial maintenance issues.

 

A member asked how the Agri-Urban project was funded. (ACTION J.R.)

 

Committee’s Conclusion:   In respect to assets, the Economy and Development Select Committee monitor this as part of their portfolio and it was asked if the Chair of E&D update members of the Committee.   It was noted that the proposals were ambitious and that proposals to public rights of way would be difficult to fulfil.