Agenda item

The Cabinet gave consideration to a report of the Director of Finance which set out the proposed Capital Strategy for 2019/20 to 2023/24, and thereby the proposed 2019/20 Capital Programme, including identified capital investment priorities, together with the indicative capital programme for 2020/21 to 2023/24, having regard to resources available over the lifetime of the programme.

Capital Strategy

The Council’s Capital Strategy and Capital Programme were set over a five year timeframe.

In preparing the 2019/20-2023/24 Capital Strategy, essential elements of the 2018/22 and previous years and strategies and programmes were moved forward in the context of the financial and political environment for 2019/20.

The principles of the Strategy had been prepared in light of all available information and listed areas of potential future investment, subject to the availability of resources.

The Chartered Institute of Public Finance and Accountancy (CIPFA) revised 2017 Prudential Code and Treasury Management Code required, for 2019/20 all Local Authorities to prepare an additional report, a capital strategy report. Whilst the Council had traditionally prepared a capital strategy, the presentation had been changed to ensure compliance with the new guidance.  The strategy was therefore presented so that it provided:

• A high level long term overview of how capital expenditure, capital financing and treasury management activity contributed to the provision of services.
• An overview of how the associated risk was managed
• The implications for future financial sustainability

The strategy was presented in 15 sections to ensure all Council Members were presented with the overall long term capital investment policy objectives and resulting Capital Strategy requirements, governance procedures and risk appetite.

Capital Programme 2018/19-2022/23

The Council capital spending in relation 2018/19 was a key determinant of the 2019/20 programme. The latest available capital monitoring report for the period 2018/19 to 2022/23 at month 8 included capital expenditure totalling £48.952m for 2018/19 matched with corresponding financing.

The People and Place Directorate which managed all of the major regeneration projects had the largest area of expenditure (£31.265m). Prudential borrowing provided the main source of financing (£26.995m) followed by grants and other contributions (£16.068m).

Actual expenditure to 30 November 2018 was £24.637m. The spending profile was in line with previous years, and the position would be kept under review.

Capital Programme 2019/20-2023/24

The Council had set out its Capital Programme for the period based on the principles of the Capital Strategy. The Capital Programme and Strategy had been influenced by the level of resources available.

Anticipated expenditure and matched financing for the period 2019/20 to 2023/24 totalled £262.198m. This incorporated resources expected to be carried forward from 2018/19 and reflected the 2018/19 month 8 monitoring position together with enhanced projection of expenditure.

The detailed programme was set out at Annex C of the Appendix 1.

Proposed expenditure for 2019/20 was £84.332m with the largest area of being on schools, development and infrastructure projects within the People and Place Directorate.

As in previous years a major source of financing was prudential borrowing and Government grants.

It was, however, likely that the capital position would change prior to the start of 2019/20 and during the year as:

-       it was possible that there would be further Government funding allocations prior to the start of 2019/20.

-       the outcome of specific grant bids would become known.

-       it was likely that there would be additional initiatives announced.

-       there may also be the opportunity to bid for additional funding e.g. transport initiatives.

-       the Council may identify other funding sources, including capital receipts, to finance additional capital expenditure.

Therefore the overall Capital Programme position would be kept under review and any new information about funding allocations would be presented to Members in future reports.

The proposed Capital Strategy and Capital Programme for 2019/20 to 2023/24 was presented for scrutiny to the Overview and Scrutiny Performance and Value for Money Select Committee on 24 January 2018. The Select Committee was content to commend the report to Cabinet for approval.

Options/Alternatives considered

Members could choose to accept the proposed Capital Strategy and Capital Programme or revise and suggest an alternative approach to capital investment.

RESOLVED – That:

1. The Capital Strategy for 2019/20 to 2023/24 detailed at Appendix 1 and summarised at section 2.1 of the report be approved and commended to Council.
2. The Capital Programme for 2019/20 and indicative programmes for 2020/21 to 2023/24 at Annex C of Appendix 1 and summarised at section 2.2 to 2.6 of the report be approved and commended to Council.
3. The Flexible Use of Capital Receipts Strategy as presented at Annex D of Appendix 1 of the report be approved and commended to Council.