The Interim Head of Finance and Section 151 Officer presented a report to comply with the requirement of the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Prudential Code for Capital Finance 2018; provided an update of the Capital Programme for 2019-20 at 30 September 2019; sought approval for a revised capital programme for 2019-20 to 2028-29 and for Council to note the projected Prudential and Other Indicators for 2019-20.

The Interim Head of Finance and Section 151 Officer reported that the Local Authorities (Capital Finance and Accounting) (Wales) Regulations 2003, as amended contain detailed provisions for capital finance and accounting controls, including the rules on the use of capital receipts and what is to be treated as capital expenditure.  Additionally, the Council manages its Treasury Management and Capital activities in accordance with associated guidance.  The Prudential Code for Capital Finance in Local Authorities requires Local Authorities to have in place a Capital Strategy which demonstrates that the authority takes capital expenditure and investment decisions in line with service objectives and properly takes account of stewardship, value for money, prudence, sustainability and affordability.

The Interim Head of Finance and Section 151 Officer reported that Council on 20 February 2019, approved a capital programme, which was updated on 24 July 2019.  She stated that the revised programme for 2019-20 totals £38.133m, of which £18.504m is met from the Council’s resources, with the remaining £19.629 met from external resources.  She summarised the position per Directorate and the current funding assumptions for the capital programme for 2019-20.  She provided detail of the projected spend on individual schemes within the programme compared to the budget available.  A number of schemes had been identified as requiring slippage to future years, at quarter 2, the total requested slippage is £18.858m in relation to:

·       Depot Rationalisation (£7.802m)

·       Fleet Replacement Programme (£1.672m)

·       21^st Century Schools Programme (£0.543m)

·       Relocation of Household Waste Recycling Centre (£1.292m)

·       Highways Bridge Strengthening / Carriageway Resurfacing (£3.583m)

·       Capital Asset Management Fund (£0.8m)

·       Corporate Landlord Energy Savings Strategy (£0.585m)

The Interim Head of Finance and Section 151 Officer reported that a number of new externally funded schemes have been approved, which have been incorporated into the capital programme:

·       Community Hub – Brynteg Comprehensive

·       Valleys Regional Park – Bryngarw and Parc Slip

·       Caerau Heat Network

·       Economic Stimulus Grant

A number of schemes within the capital programme are awaiting confirmation of external funding and once approval is known, it may result in some schemes needing re-profiling. 

The Interim Head of Finance and Section 151 Officer also reported on the monitoring of Prudential and other indicators for 2019-20.  The Capital Strategy which was approved in February 2019 is intended to give an overview of how capital expenditure, capital financing and treasury management activity contribute to the provision of services along with an overview of how associated risk is managed and the implications for future sustainability.  A number of prudential indicators were included, and approved by Council in line with the requirements of the Prudential Code, The Chief Finance Officer is required to establish procedures to monitor both performance against all forward-looking prudential indicators and the requirement specified.  She detailed the actual indicators for 2018-19, the estimated indicators for 2019-20 set out in the Council’s Capital Strategy and the projected indicators for 2019-20 based on the revised Capital Programme, which show that the Council is operating in line with the approved limits.

The Interim Head of Finance and Section 151 Officer reported that the Capital Strategy also requires the monitoring of non-treasury management investments and other long term liabilities.  She stated that the Council does have an existing investment portfolio which is 100% based within the County Borough and primarily the office and industrial sectors.  Income streams are spread between the single and multi-let office investments on Bridgend Science Park, the multi-let industrial estates and the freehold ground rent investments.  The total value of Investment Properties was £4.635 million at 31 March 2019.  She informed Council that it had previously approved £1 million within the capital programme for the purchase of investment assets and spent £520,000 on acquiring an office building, which generates a rental income of £56,000 per year or just over 9% return on the investment.  There is a further £480,000 available within the capital programme but as yet no suitable options have been identified within the Bridgend area, which would produce a reasonable return and at acceptable levels of risk.  She stated that the Council may in the future wish to consider expanding its property investment portfolio, in which case it would need to review the criteria and investment strategy but this would be on a risk based approach.  She informed Council that it has a number of Other Long Term Liabilities, included within the Capital Strategy, which are the Private Finance Initiative; Llynfi Valley Loan and Salix Loan. 

A member of Council questioned the reason for the lack of spend on Parks/Pavilions/ Community Centres CAT.  The Interim Head of Finance and Section 151 Officer Parks/Pavilions/Community Centres CAT stated she would provide information on the reasons for the lack of spend on Parks/Pavilions/Community Centres CAT in 2019/20.

A member of Council questioned the reason for the slippage on the Extension to the Porthcawl Cemetery scheme.  The Chief Executive stated that he would provide information on the reasons for slippage on the Extension to Porthcawl Cemetery scheme.

A member of Council questioned whether funding on the Caerau Heat Network would be lost due to the withdrawal of the UK from the EU.  The Interim Head of Finance and Section 151 Officer stated that an offer letter had been received and funding for the scheme would be honoured.

RESOLVED:            That Council:

·       noted the Council’s Capital Programme for 2019-20 for the period to 30 September 2019;

·       approved the revised Capital Programme;

noted the projected Prudential and Other Indicators for 2019-20.