Agenda item

Consideration was given to a report of the Director of Finance which set out the Capital Strategy for 2022/23 to 2026/27 and thereby the proposed 2022/23 capital programme, including identified capital investment priorities, together with the indicative capital programme for 2023/24 to 2026/27, having

regard to the resources available over the life of the programme.

The Council’s Capital Strategy and capital programme were set over a five-year timeframe. The proposed Capital Strategy and programme for 2022/23 to 2026/27 took the essential elements of the 2021/22 to 2025/26 and previous years’ strategies and programmes and moved them forward in the context of the financial and political environment for 2022/23.

The Strategy included a longer-term vision, a forward look at those projects that were likely to run beyond the five-year strategy and programme period or be initiated subsequently. This covered a timeframe for the 10 years from 2027/28 to 2036/37.

The format of the Capital Strategy reflected the latest Prudential and Treasury Management Codes issued by the Chartered Institute of Public Finance and Accountancy (CIPFA). The strategy therefore presented:

·         A high-level long-term overview of how capital expenditure, capital financing and treasury management activity contribute to the provision of services

·         An overview of how the associated risk is managed

·         The implications for future financial sustainability

The Capital Strategy was presented at Appendix 1. It was prepared in 15 sections and ensured that all Members were presented with the overall long-term capital investment policy objectives and resulting Capital Strategy requirements, governance procedures and risk appetite.

The Strategy is aligned with the Creating a Better Place programme which is focused on building more homes for the borough’s residents, creating new jobs through regeneration and ensuring Oldham is a great place to visit with lots of family friendly and accessible places to go. This also incorporates the Medium-Term Property Strategy and Housing Strategy and aims to deliver its ambition in ways that contribute to a reduction in carbon emissions in support of the Council’s Green New Deal strategy.

The Capital Strategy section (section 1) highlighted the impact of COVID-19 pandemic on programme delivery, summarised the recently announced revisions to Prudential and Treasury Management Codes of Practice and described how the Capital Strategy was shaped by the ethos of being a Co-operative Council, the Corporate Plan and COVID-19 Recovery Strategy. The section of the report also described more fully the Creating a Better Place programme (encompassing the Medium-Term Property Strategy and Housing Strategy) which accounted for around 2/3rds of planned Capital Expenditure over the five-year period 2022/23 to 2026/27.

The National Infrastructure Strategy (NIS) published alongside the Chancellor’s 2020 Spending Review had, in the last year, overseen the launch of the UK Infrastructure Bank. It had confirmed a further 15 Towns Deals worth £335 million (including Oldham’s worth £24.4m) to revitalise towns across England; and provided £1.2 billion up to 2024/25 for gigabit broadband rollout across the UK.

The Council would aim to access the maximum level of NIS resources to support projects in Oldham and the wider Greater Manchester region, working with the Greater Manchester Combined Authority (GMCA)and other GM Authorities as necessary.

The Strategy also advised that the Council was proposing to continue to use the flexibility provided by the Government to use capital receipts to fund the revenue cost of transformation. The 2022/23 revenue budget would rely on up to £2.500m of such funding from capital receipts. Annex C of Appendix 1 set out the proposed capital expenditure and financing for the period covered by the Capital Strategy, 2022/23 to 2026/27.

Capital Programme 2021/22 to 2025/26

The 2021/22 month 8 capital monitoring position presented expenditure projections that were a key determinant of the 2022/23 programme. As many schemes spanned more than one year, the anticipated level of reprofiling between years sets the underlying position.

The projected outturn spending position for 2021/22 was £52.558m. The People and Place Directorate which managed all of the major regeneration projects, constituted the main area of expenditure. Grants and Other Contributions (£19.850m) followed by Prudential Borrowing provided the main source of financing (£26.294m).

Actual expenditure to 30 November 2021 was £23.801m (45.29% of the forecast outturn). This spending profile was in line with that in previous years, however the position would be kept under review and budgets would continue to be managed in accordance with forecasts.

Capital Programme 2022/23 to 2026/27

The Council had set out its capital programme for the period 2022/23 to 2026/27 based on the principles of the Capital Strategy. The Capital Programme and Capital Strategy had been influenced by the level of resources considered available. The level of prudential borrowing included reflected the financing available in the revenue budget, capital receipts aligned with forecasts and grant funding and other contributions were based

on already notified allocations or best estimates at time of preparation. If additional resources became available, projects that met the Council’s strategic capital objectives would be brought forward for approval.

As at the month 8 capital monitoring position, the anticipated expenditure over the five-year life of the 2021/22 to 2025/26 strategy was £368.705m, taking 2021/22 aside (£52.558m) left £316.147m for the remainder of the approved 2022/23 to 2025/26 capital programme. Following the refresh of existing strategies and the Creating a Better Place programme, and moving forward the planning period by one year, the Capital Strategy for 2022/23 to 2026/27 totals £347.387m.

The capital programme included proposed expenditure for 2022/23 of £100.248m of which £81.465m, was the largest area of expenditure being on regeneration, schools, transport and infrastructure projects within the People and Place Directorate. Total expenditure decreased to £86.993m, £64.253m, £48.810m and £47.083m in 2023/24, 2024/25, 2025/26 and 2026/27 respectively.

Resources Available to Support the Capital Programme

The Government was continuing to provide significant levels of grant funding. The main sources of grant income were the Towns Fund at £24.400m (£24.200m over the period 2022/23 to 2026/27), along with Education-related Basic Need Capital grant provision of £10.104m over the life of the programme. There were also considerable resources allocated to the Council via the GMCA including the Mayors Cycling and Walking Challenge Fund (£10.125m in 2022/23) and Local Transport Programme – Highway Maintenance Grant totals £14.812m over the strategy period.

The grant funding provided by Government could be split into two categories: un-ringfenced and ringfenced resources, as explained in Section 10 of the Capital Strategy. The majority of capital Government Grant funding was un-ringfenced. Resources classified as ringfenced had to be utilised to finance particular categories of expenditure and therefore were restricted in their use. The 2022/23 capital programme relies on £11.714m of un-ringfenced and £33.787m of ringfenced grants.

As in previous years, a major source of financing remained prudential borrowing. The amount required in 2022/23 (£46.990m) included borrowing attributed to schemes that had slipped from prior years as well as new borrowing associated with the regeneration programme. The timing of the borrowing was linked to the cash position of the Council and might therefore not mirror the spending/financing profile.

On-going Review of the Capital Programme

Members noted there would be a continued review of capital spending requirements as the Council had further regeneration ambitions, but affordability and deliverability would be a key consideration in this regard. It was, however, possible that the capital position may change prior to the start of 2022/23 and during the year as:

·         The outcome of specific grant bids which will be announced during 2022/23.

·         It is also likely that there will be new initiatives announced later in the financial year.

·         There may also be the opportunity to bid for additional funding.

·         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 regarding funding allocations would be presented to Members in future reports.

RESOLVED that the following be accepted and recommended to Cabinet:

1.    The Capital Strategy for 2022/23 to 2026/27 at Appendix 1 of this report and summarised at section 2.1.

2.    The capital programme for 2022/23 and indicative programmes for 2023/24 to 2026/27 at Annex C of Appendix 1 and summarised at sections 2.2 to 2.6 of this report.

3.    The Flexible Use of Capital Receipts Strategy as presented at Annex D of Appendix 1.