PAPER
C2
Purpose : For Decision
REPORT
TO THE EXECUTIVE
Date : 12 FEBRUARY 2003
Title : CAPITAL PROGRAMME 2003/04
REPORT OF THE PORTFOLIO HOLDER FOR RESOURCES
IMPLEMENTATION DATE : I APRIL 2003
1.
The
report presents the recommendations of the Directors Group in respect of
capital expenditure bids and capital resources for the 2003/04 financial
year. The Executive are requested to
consider such and approve a capital programme for the 2003/04 financial year.
2. Government capital allocations (and associated borrowing approvals) for the year are detailed at Appendix A, and the corresponding figures for the current year are included for comparison purposes.
The Receipts Taken Into Account (RTIA) reduction in credit approvals to give our Basic Credit Approval (borrowing power) has been abolished by Government with effect from the 2003/04 financial year. This is consistent with the new Prudential Capital Regime which is planned for introduction in the 2004/05 year. A full report on the development of the new Prudential Capital System will be presented to the Executive in the coming months.
3. The 2003/04 financial year is the second
year of the Governments Single Capital Pot proposals for the capital
programme. Government Office for the
South East have advised that the above allocations now constitute the Single
Capital Pot (SCP), that they are not ring fenced, and that the Council has the
discretion to use as it chooses.
However service plans as submitted to individual Government Departments
such as Education, Housing and Transport mean that the Council is inhibited in
the use of this discretion if it is to maintain current levels of Annual Capital Guidelines.
4. The Performance Related allocation is funded by the national ‘top slicing’ of other allocations, with distribution to individual authorities based on Government assessment of their capital investment plans. The £478,000 total allocation includes £100,000 as a reward for the Capital Strategy and Asset Management Plan submission. This submission was approved by the Executive and submitted to Government Office (GOSE) in July 2002. Both documents were assessed as good by GOSE and attracted the maximum reward of £50,000 each.
5. The recommended capital
programme has regard to the Councils Capital Strategy, which details how the
Council plans and applies its capital resources.
6. The overall capital programme provides for consultation
with a wide range of parties and stakeholders, as detailed in the Council’s
Capital Strategy and Asset Management Plan.
7. Having regard to the abolition of RTIA (see 2 above), the Credit
Approvals in respect of Resources and Environment are now fully available to
fund any new capital expenditure outside of the main service allocation blocks
of Education, Highways, Housing and Social Services. In past years the allocation of resources to services outside of
these main blocks has been dependent on the generation of capital receipts from
surplus land and property.
8. The current years approved capital
programme was based on an ambitious programme of new useable capital receipts totalling
£1.6 million. This programme has proved to be unattainable and a likely over
commitment on available resources of £1 million was reported to the Executive
in October 2002. Directors have
subsequently considered this position and advised the Executive that the over
commitment can be managed by slippage in the current year’s programme. It is therefore felt that this element of
the programme be reduced back to £1 million for 2003/04, funded by the
Performance and Environment capital allocations and supplemented by £300,000 of
new useable capital receipts. It is
important to note that the extent of capitalised salaries in Legal and Property
Services means £250,000 of capital receipts have to be realised to fund these
salaries each year before any become
available for new capital investment.
9. The proposals of the Capital Strategy Group
and their recommendations for capital releases are contained at Appendix
B. The above bids have been analysed
on the basis of the scoring mechanism as detailed in the Council’s approved
capital strategy. At this point no
allowance has been made for any capital sums that may be required in respect of
the transfer of leisure services to Trust status.
10.
The Education
capital programme is assumed to be met through its Annual Capital
Allocation. Capital expenditure bids
relating to Community Development projects have been included in the
deliberations of the Directors Group having regard to corporate priorities and
the likely level of £1 million of available resources as detailed in 8 above.
11. The Head of Housing Services is currently
inviting bids from local Housing Associations in respect of next years Housing
Investment Programme. A schedule of
proposed new Housing Schemes will be brought to the Executive in due course. Having regard to the additional capital
investment in Housing in recent years, it is also recommended that further
housing investment is considered later in the year when the likely level of
capital receipts is reviewed. The
recommendations of the Directors Group provide for resources of £240,000 to
meet this Council’s share of the estimated Disabled Facilities Grant Allocation
of £360,000, giving a total programme of £600,000.
12. Coast Protection schemes are approved on an individual
basis by the Department for Environment, Food and Rural Areas (DEFRA). These schemes bring with them capital
funding resources in the form of Supplementary Credit Approval (SCA) and
Government Grant. The 2003/04 financial
year programme will include the major scheme at Castlehaven at a cost of £4
million. This scheme has the approval
of DEFRA and a further scheme at Seaview Duver has now been approved at a cost
of £3.5 million.
13. A proposed Highways programme is contained on
the Executive Agenda for its 29th January meeting, and it is
recommended that the total Highways programme be determined in accordance with
its Annual Capital Guideline.
14. Additional resources for Ventnor Harbour of
£175,000 in 2003/04, have previously been approved by the Executive and are
included in the total funding package for that scheme as detailed below.
The total estimated cost of this project is £2.4
million and the anticipated funding package as previously reported to Members
is as follows:
£
Single Regeneration Budget 1,225,000
DEFRA Grant 250,000
Lottery 300,000
Private Sector 200,000
Previously agreed capital receipts 250,000
Capital Bid 175,000
2,400,000
The proposed funding from
the private sector and lottery cannot be guaranteed at this stage of the
project, but Funding is currently being led by the Coast Manager. The Coastal Manager is to continue to seek
funding to reduce the financial input required from Council capital resources.
15. Bids totalling £7.9 million have been made by
service managers against assumed available resources of £1 million. A complete listing of all bids, set out by
reference to their relevant Select Committee, is set out at Appendix C. Select committees have not made
recommendations in relation to Appendix C, the bids have been scored according
to the approved capital strategy.
16. Having regard to the amount of bids the
Directors Group are of the view that the Council has insufficient capital resources
for new capital development works and that resources should be concentrated on
the way existing assets could be best utilised in the delivery of the Council’s
objectives.
Should more capital resources become
available during the course of the 2003/04 financial year then the Group’s
recommendation would be that it be allocated to Housing in support of the
Housing Investment Programme for the provision of further housing accommodation
by Island Housing Associations.
17. The
continued use of operating leases for the acquisition of plant and equipment is
recommended where it is economically viable and that there is sufficient cover
in the revenue budget to finance the ongoing lease premiums and running
costs. In order that leases comply with
criteria contained in the Capital Finance Regulations 1997, and to ensure that
the Council benefits from economies of scale, all leases should continue to be
made through the Council’s Finance Unit.
18. There are no direct legal implications arising from the report. The Council does however have a number of statutory obligations which may be affected by the level of capital investment in its services. These can include for specific service obligations or for Health & Safety issues across a whole range of services.
19. 1. To
approve the recommended Capital Programme for 2003/04.
2. To
amend the proposed programme having regard to other budget pressures and/or
other capital bids that have been received.
20. All capital investment carries risk, and
available resources to finance such investment are increasingly limited. Capital Bids as contained in Appendix C have
been evaluated on a scoring mechanism in order to prioritise against available
resources. This appraisal mechanism is
described in the Council’s approved Capital Strategy and includes for Council
policies, its Strategic Objectives, and its Resource and Service Planning
implications.
RECOMMENDATIONS 21. 1 That the
Education and Highways capital programmes be determined within their
respective Annual Capital Guidelines. 2 That Officers proceed with a Housing
Investment Programme consistent with the Housing Annual Capital Guideline and
that further investment in Housing be considered in due course having regard
to available resources. 3 That
the Annual Capital Guideline of £105,000 relating to Social Services be used
in accordance with a
programme to be determined by the
Strategic Director for Social Services
and Housing. 4 That the bids contained at
Appendix B be approved, in accordance with the recommendations of the
Directors Group. 5 That Coast Protection Schemes
proceed on the basis of DEFRA approval, funded by SCA and Government Grant. 6 That any further SCA
received in respect of specific schemes be approved subject to release by the
Directors Group. 7 That the acquisition of plant and equipment by operating lease
be considered where it is cost
effective to do so and where sufficient revenue resources exist to fund the
leasing premiums and any other associated costs. Such leases to be made centrally through the Council’s Finance
Unit. |
22. Government Annual Capital Guidelines.
Capital Bid submissions.
23. The Capital programme represents the Council’s
capital budget for investment in its services for the 2003/04 financial year.
Contact
Point : Gareth Hughes, Corporate
Finance Manager (01983) 823604
JOHN PULSFORDStrategic
Director Finance
and Information |
R R BARRYPortfolio
Holder for for
Resources |
CAPITAL ALLOCATIONS 2003/4
2003/4 2002/3 %
£000 £000 Change
1 Annual Capital Guideline (ACG) 14,207 12,908 +10.1
Receipts Taken Into Account (RTIA) 0 754 -100.0
Basic Credit Approval (BCA) 14,207 12,154 +16.9
The breakdown of ACG between services is as follows:-
2003/4 2002/3 %
£000 £000 Change
Education 6,357 3,508 +81.2
Environment 240 284 -15.5
Highways 5,495 6,782 -19.0
Housing 1,532 1,781 -14.0
Social Services 105 120 -8.8
Performance related 478 433 +10.4
14,207 12,908 +10.1
Notes:
1 In 2002/03
an additional total of £1,819,000 was allocated to Education through
Supplementary Credit Approval (SCA).
The total capital allocation for 2003/04 has been made in the form of
ACG.
2. The reduced Highways allocation arises from the 2002/03 year containing additional allocation relating to the Niton Undercliff situation.
3 The
performance related total relates to Government’s overall assessment of our
capital investment plans including a total reward of £100,000 relating to our
good assessment for both Capital Strategy and Asset Management Plan submission.
4 RTIA
is the amount of ACG that the Government assumes will be met from our capital
receipts. It has been calculated by
reference to capital receipts in the past financial year, but has been abolished
with effect from the 2003/04 financial year.
5 BCA represents the Council’s capital basic borrowing approval for the year
CAPITAL BIDS 2003/04
RECOMMENDATIONS OF CAPITAL STRATEGY GROUP
|
HOUSING 1. Major Repairs to Jellicoe and Wrafton House, Ryde. These properties are used for homeless temporary accommodation. They have serious damp/disrepair problems and a number of rooms which cannot currently be used. 2. Council resources required to match the Government allocation in respect of Disabled Facilities Grants. Government Grant is paid at the rate of 60% of expenditure incurred. |
£30,000 £240,000 |
|
PROPERTY MANAGEMENT To be prioritised over the following areas: - Management of Abestos in Council buildings - Disability Discrimination Act - Upgrade of hot and cold water supplies in Council buildings - Planned maintenance of buildings |
£300,000 |
|
VENTNOR HARBOUR This contribution has already been approved by the Executive. |
£175,000 |
|
COMMUNITY 1. Conversion of the lst floor of the Guildhall at Newport into public spaces for an Art Gallery, Exhibition Gallery and Educational use. Total works are estimated at £300,000, ninety per cent of which would be funded from external grants. 2. Refurbishment of the Fairway Running Track, Sandown. The track is now 10 years old and has developed into a nationally recognised centre of development. The works include essential works to the track surface and have Health and Safety implications. Sport England have pledged a grant of up to £80,000 based on 75% of expenditure incurred. With the capital bid a total of almost £110,000 would be available for identified works. |
£30,000 £30,000 |
|
ENVIRONMENT 1. A detailed programme of works totalling £1.2 million has been produced in respect of Parks, Gardens, Recreation Grounds and Seashore areas. An allocation of £100,000 per annum is recommended in order to commence priority areas. 2. A three year programme of £50,000 per annum on Cemeteries is recommended to include for risk assessment, urgent remedial works in respect of Health and Safety. |
£100,000 £50,000 |
|
WIGHT LEISURE Capital bids totalling £1.7 million have been received, including for major development work at the Heights, Browns and Ryde Harbour. The allocation of £40,000 is to enable urgent works in respect of Health and Safety to be undertaken. |
£40,000 |
|
TOTAL CAPITAL EXPENDITURE RECOMMENDED |
£995,000 |