Download Report

SOLIHULL METROPOLITAN BOROUGH COUNCIL
Report to:
Full Cabinet
Meeting date:
19 March 2015
Subject/Report Title:
CORPORATE CAPITAL STRATEGY (INCORPORATING THE
CAPITAL PROGRAMME) 2015/16 – 2017/18
Report from:
Director of Resources
Report Author/Lead
Contact Officer:
Dean Bowd, Senior Accountant
0121 704 6224 [email protected]
All Wards
Wards affected:
Bickenhill
Blythe
Castle Bromwich
Chelmsley Wood
Dorridge/Hockley Heath
Elmdon
Kingshurst/Fordbridge
Knowle
Lyndon
Meriden
Olton
Shirley East
Shirley South
Shirley West
Silhill
Smith's Wood
St Alphege
Public/Private
report:
Public
Exempt by virtue of
Paragraph:
N/A
1.
Purpose of Report
1.1
The purpose of the report is to set out the proposed Capital Strategy for 2015/16 –
2017/18, which incorporates the Capital Programme.
2.
Decision(s) Recommended
2.1
Note the Government capital allocations for 2015/16, detailed in Table 2, paragraphs
3.7 to 3.8, passported to individual Cabinet Portfolios for project allocation.
2.2
Approve the 3 year Capital Strategy for 2015/16 - 2017/18 as presented in Appendix
A, detailed in paragraphs 3.9 to 3.10.
2.3
Approve the Capital Programme for 2015/16 as detailed in Table 3, paragraph 3.11
to 3.12 and note the provisional programmes for 2016/17 and 2017/18.
2.4
Approve that £1 million single capital pot funding is used to fund the maintenance of
corporate buildings from 2016/17 onwards, detailed in paragraphs 3.15 to 3.17 with
the subsequent impact on the forecast cumulative surplus and the revised capital
programme presented in Table 4 and paragraph 3.18.
3.
Background
3.1
Members receive a rolling 3 year capital programme which is regularly reviewed to
ensure expenditure is sustainable in terms of available funding. This funding
currently consists of a combination of grant allocations from central government;
prudential borrowing within Council approved limits; specific capital grants; and
capital receipts from the sale of Council assets.
Increasing Resource Constraints
3.2
The Council continues to face the challenge to effectively prioritise and manage
capital investment. Recent years have seen a decline in the value of the capital
receipts that have been received and this culminated in a forecast deficit of £9.2
million in the 2009/10 programme. Subsequently Members have considered reports
throughout the course of 2008 to 2014 and approved measures which have brought
the programme back into balance.
3.3
The difference between the capital funding available and the proposed Capital
Programme is shown in Table 1 below. This shows that there is a forecast surplus.
Table 1
Forecast cumulative surplus
2015/16
£m
2016/17
£m
2017/18
£m
2.597
3.410
4.584
3.4
The outlook for significant receipts in future financial years from asset disposals is
improving compared to recent years. With the exception of specific receipts from
housing and school related asset disposals, capital receipts are treated as a
corporate resource available to fund the Corporate Capital programme. Full Cabinet
is responsible for deciding how corporate capital receipts are to be utilised in line
with Council objectives.
3.5
The Capital Strategy is supported by the Council’s Corporate Asset Management
Plan which includes an objective to optimise the Council’s land and property portfolio
through proactive estate management and effective corporate arrangements for the
acquisition and disposal of land and property assets.
3.6
The Council will continue to realise the value of any properties that have been
declared surplus to requirements in a timely manner, having regard to the prevailing
market conditions.
Capital Expenditure Supported by Government Grants 2015/16
3.7
The capital programme is affected fundamentally by the capital allocations
announced by the Government. Government support for capital is provided through
capital grants.
3.8
As of March 2015 the known capital allocations are as shown in Table 2 below. The
passporting of these allocations to individual Cabinet Portfolios for detailed allocation
to projects was agreed by Full Cabinet at its meeting in December 2014.
Table 2
Cabinet Allocation
£m
Grant
Funding
2014/15
(For information)
£m
5.277
0
1.752
0.388
0
0*
0.882
1.901
0.405
0.425
0.485
0.477
0.910
0.778
0.990
2.620
0
1.665
2.279
0.235
Grant
Funding
2015/16
Department for Education
(passported to Education, Skills & Culture
portfolio)
- Basic Need
- Targeted Basic Need
- Capital Maintenance
- Devolved Formula Capital
- Universal Free School Meals
*Allocation of £0.706m apportioned over
two financial
years (2013/14 & 2014/15).
Better Care Fund
(passported to Health & Wellbeing portfolio)
- Social Care Capital Grant
(passported to Environment & Housing
portfolio)
- Disabled Facilities Grant
Department for Transport
(passported to Transport & Highways
portfolio)
- Integrated Transport Block
- Highways Maintenance Block
- Additional Highways Maintenance Block
3 Year Capital Strategy 2015/16 – 2017/18
3.9
Detailed in this report so far is the capital funding available to the Council. The
Corporate Capital Strategy sets out the Council’s approach to the allocation of its
capital resources and how this links to its strategic priorities and objectives at a
corporate and service level. This informs the schemes and projects which make up
the Capital Programme.
3.10
Cabinet are asked to approve the 3 year Capital Strategy for 2015/16 to 2017/18 as
presented in Appendix A.
Capital Programme 2014/15 – 2017/18
3.11
The Council’s current and proposed capital programme is summarised in Table 3
below for the period 2014/15 to 2017/18. This is based on the current approved
programme for 2014/15 and a provisional forecast for future years based on actual
funding allocations where known and estimates based on current allocations where a
3 year allocation has not been provided by Central Government.
3.12
The Revenue and Capital Monitoring Quarter 3 report presented to Cabinet on the
12th February 2015 stated a Corporate Capital programme (excluding Housing
Revenue Account (HRA)) of £40.995 million. This has been increased by £1.072
million to £42.067 million. The main reasons for the increase in the 2014/15 budget
reported to Cabinet: are the additions to the capital programme for the Arden
Academy Rural East Places Project (£600,000) as a contribution for the expansion of
the campus; and School Contributions (£210,000) for the redevelopment of
Fordbridge and Coleshill Heath primary schools.
Table 3
Summary of the Capital Programme 2014/15 to 2017/18
Cabinet Portfolio
3.13
2014/15
£m
2015/16
£m
2016/17
£m
2017/18
£m
Resources
Education, Skills & Culture
Health & Wellbeing
Environment & Housing
Community & Partnerships
Economic Development & Land
Transport & Highways
Total Cabinet Portfolios (Projection)
Housing Revenue Account
3.603
17.897
1.577
9.075
0.145
1.069
8.701
42.067
17.182
5.105
19.096
0.861
11.991
0.650
0.722
9.991
48.416
16.967
11.093
13.457
0.490
2.912
0.000
0.400
7.146
35.498
15.255
2.713
9.092
0.490
3.904
0.000
0.000
3.393
19.592
15.338
Total Council Capital Programme
59.249
65.383
50.753
34.930
It is worth noting the reasons for some of the significant variances between years as
follows:
(a)
Resources – Capital programme peaks in 2016/17 in delivering the Council
House redevelopment.
(b)
Education, Skills & Culture – maintains significant levels of investment
primarily due to approved prudential borrowing for the part financing of the
North Solihull Primary School Programme. The variances reflect the phasing
of school construction.
(c)
Environment & Housing – Chelmunds Cross Village Centre project represents
the higher value of capital programme in 2014/15 and 2015/16.
(d)
Transport & Highways– In 2017/18 the programme reduces in line with the
planned completion of the A45 South Bridge replacement project.
(e)
Other programme variances are in relation to external grant funded projects
that are included in the current capital programme, covering the period
predominately 2014/15 – 2016/17. As further external funding is successfully
bid for and awarded the capital programme in future years will continue to
increase in value and be reported to Members.
Funding Pressure on the Future Capital Programme
3.14
The balance of the future capital programme as highlighted in Table 1 in paragraph
3.3 is based on the current project commitments. There is however an unfunded
capital pressure requiring Member consideration, which is detailed below.
Maintenance of Corporate Buildings
3.15
Full Cabinet had previously approved prudential borrowing funding for maintenance
of corporate buildings at £1million per annum for ten years. This funding source
finishes in 2015/16 and will create a funding pressure.
3.16
Members had further agreed in 2011 that the £1million which had historically been
used to support the single capital pot bidding process be suspended with the
resources redeployed to re-balance the funding of the overall capital programme.
3.17
Table 1 in paragraph 3.3 demonstrates that the capital programme has been rebalanced. Members are therefore requested to approve that the £1million single
capital pot funding is now used to fund the maintenance of corporate buildings from
2016/17 onwards.
Impact of Funding Pressure
3.18
If Cabinet approves the funding of the capital pressure detailed in paragraphs 3.15 to
3.17 above, the impact on available capital resources and the revised Capital
Programme is shown in Table 4 below.
Table 4
2015/16
£m
2016/17
£m
2017/18
£m
Revised Forecast Cumulative
Surplus
2.597
2.410
2.584
Revised Council Capital Programme
65.383
51.753
35.930
4.
Evaluation of Alternative Option(s)
4.1
Not Applicable.
5.
Reasons for Recommending Preferred Option
5.1
Not Applicable.
6.
Scrutiny
6.1
This report has not been presented to a Scrutiny Board.
7.
Implications
7.1
Delivery of the Council’s Priorities – The Corporate Capital Strategy summarised
in this report will contribute towards the delivery of elements of all the Council’s
Priorities.
7.2
Policy/Strategy Implications - Approval for the Capital Strategy is part of this
report.
7.3
Meeting the duty to involve – The report has been shared with the Director of
Resources and the Corporate Finance Manager and service representatives in terms
of their service priorities for the Strategy.
7.4
Financial Implications – In line with accounting practice, the revised programme
will require adjustments to the Council’s prudential indicators. The Capital
Programme for 2015/16 will be translated into capital budgets for 2015/16. The
performance against the capital budgets will then be monitored and reported on
throughout the year to individual Budget Managers, Directorate Leadership Teams,
Corporate Leadership Team, Full Cabinet and individual Cabinet portfolio holders.
7.5
Legal implications – Not applicable.
7.6
Risk Implications – Not applicable.
7.7
Statutory Equality Duty – Not applicable.
7.8
Carbon Management/Environmental – Not applicable.
7.9
Partner Organisations – Not applicable.
7.10
Safeguarding/Corporate Parenting Implications – Not applicable.
7.11
Customer Impact – Not applicable.
7.12
Other implications – Not applicable.
8.
List of Appendices Referred to
8.1
Appendix A – Capital Strategy 2015/16 – 2017/18
9.
Background Papers Used to Compile this Report
9.1
Corporate Capital Programme 2014/15 18th December 2014 Full Cabinet
9.2
Corporate Capital Strategy 2014/15-2016/17 13th March 2014 Full Cabinet
10.
List of Other Relevant Documents
10.1
Not applicable.