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 31 December 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, and was last updated on 23 October 2019.  She stated that the revised programme for 2019-20 totals £33.700m, of which £15.057m is met from the Council’s resources, with the remaining £18.643m 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 3, the total requested slippage is £5.158m in relation to:

·         Maesteg Town Hall (£1.6m)

·         Community Hub – Brynteg Comprehensive School (£0.768m)

·         Additional Learning Needs provision at Cefn Cribwr Primary School (£0.387m)

·         Ravens Court (£0.442m)

·         Parks / Pavilions Community Centres CAT (£0.66m)

·         Non Operational Assets (£0.48m)

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

·         Community Hub – Brynteg Comprehensive (£0.284m)

·       Capital support for the implementation and expansion of separate household collections of absorbent hygiene product (AHP) waste (£0.238m)

·       Urban Centre Property Enhancement Fund (£0.1m) and Urban Centre Living Grant (£0.5m)

·         Coastal Risk Management Scheme – Porthcawl (£6.032m)

·         21^st Century Schools Band B Programme

·         Welsh Medium Childcare Provision

·         School Maintenance Grant

·         Complex and Medical Needs Works in Schools

·         Llynfi Valley Loan   

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 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 shows 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 has a number of Other Long Term Liabilities included within the Capital Strategy, no new loans have been taken out in Quarter 3. 

A member of Council was pleased to note the funding of works to complete the ALN provision at Pencoed Comprehensive School.  The Corporate Director Education and Family Support informed Council that changes would be made to the environment of the school to enable learners with mobility issues to access all the facilities in the school.

A member of Council expressed concern that additional survey work and asbestos removal work had increased the cost of the Maesteg Town Hall scheme and that the Council would have to fund an additional £1.9m increasing the project cost from £6.3m to £8.2m.  The member questioned whether the Council should have a report on the scheme due to the increase in costs.  The Leader informed Council that Cabinet on the previous day had received a report on the revised project budget.  He stated that the decision to proceed with the replacement roof would ensure that the Town Hall is carried out properly and that the building would be the landmark building the Council want it to be as opposed to patching the roof.  He stated that it was important to manage the flood risk to the building and that the Council did not want to return in the future to fix the roof.  He stressed the importance of making the investment in the Town Hall as predecessor authorities had not made that investment.  A member of Council whilst welcoming the investment in the Town Hall which would benefit the groups who use the facility shared concerns at the additional cost to the project.  The Chief Executive informed Council that at the time the project was placed in the capital programme it was based on conceptual drawings and until such time as tenders are received.  He stated that a range of feasibility studies and surveys had been undertaken with the projectnearing Royal Institute of British Architects stage 4 technical design and cost completion.  There is a contingency sum of £500k and the project is subject to a value engineering exercise to seek reductions in the total scheme cost where possible, without detriment to the overall redevelopment.  He believed the project cost to be realistic and there was always a consideration as to whether to incur spend up front or to manage the project as a design and build.  The Chief Executive explained that it was a better investment to protect the iconic building by replacing the roof as opposed to patching the roof. 

A member of Council believed that Council should have been presented with information on the costs of the project and results of the surveys and that a 30% uplift of costs was excessive and that the Audit Committee should review this project and other capital schemes.  A member of Council also believed that there was a need to ensure value for money on construction projects.     

The Leader informed Council that the roof could have been repaired, however the project had been re-specified to replace the roof so that future generations would benefit from the building and for the project to be of the highest quality.  The Chief Executive informed Council that the approach to funding capital projects had been considered in that a line could be created in the budget whereby feasibility is done upfront or proceed by way of a design and build contract.  If expenditure was incurred upfront, money could be spent on a project which did not come to fruition.  The Leader stated that the Audit Committee could look at the process for funding capital projects.  The Cabinet Member Social Services and Early Help informed Council that the local members had been briefed on the expenditure on the project. 

A member of Council referred to the Ewenny Road site being   undevelopable due to the presence of mine workings and asked whether officers could work with the Welsh Government to fund remediation works to develop the site.  The Chief Executive stated that discussions are progressing with the Welsh Government on the site, which remains a priority which could have development potential for a park and ride facility, an enterprise hub and housing. 

RESOLVED:            That Council:

·         noted the Council’s Capital Programme for 2019-20 for the period to 31 December 2019;

·         approved the revised Capital Programme;

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