Invitees:

Councillor Huw David, Leader

Councillor Hywel Williams, Deputy Leader

Gill Lewis, Interim Head of Finance and S151 Officer

Nigel Smith, Finance Manager

The Interim Head of Finance and S151 Officer began by saying that she was indebted to the Deputy Head of Finance and the Interim Group Manager – Chief Accountant in terms of the Capital Strategy. She continued by explaining that the controls around Capital Expenditure were based on legislation and this was the second report, following the requirement to publish a Capital Strategy last year. The Capital Strategy is presented to Council as a Policy Framework document and links with the Corporate Plan, Treasury Management Strategy (TMS), Medium Term Financial Strategy (MTFS) and the Council’s Asset Management Plan (AMP). The MTFS has 13 principles, 3 which refer to the Capital Programme. Section 2 talks about capital expenditure and table 1 on page 91 sets out the estimates of capital expenditure and table 2 the Capital financing. Section 3 is linked to the wellbeing objectives, previously the corporate objectives, with other key drivers the asset management requirements and health and safety works plus commercial activities.  The rest of section 3 links to the objectives of capital security, liquidity and then yield. Section 4 sets out the financial context, section 5 looks at capital expenditure bids, section 6 governance and risk management and section 7 knowledge and skills.

The Deputy Head of Finance noted that whilst the report had been updated, figures would change for the final version to be presented alongside the MTFS in February, in line with the updated capital programme.

A member noted on page 97, that the table seemed to show a variety of jumps in terms of total borrowing and long-term liabilities e.g. £117m in 18-19, £130m in 20-21, £135m in 21-22 and £143m in 22-23 and asked if there was any particularly reason for 2021 looking very different. The Interim Group Manager – Chief Accountant explained that the debt increase next year related to the increase in spending on the Capital Programme and related increase in borrowing.

A member noted the guiding principles on page 89, and understood that the Corporate Plan drives capital investment, but how do we ensure parity across all four corners of the borough.  He further asked what was being done to manage the risk and remain in budget.  The Deputy Leader explained that there was a whole borough approach whilst considering areas of priority e.g. Maesteg Town Hall.  We will consider if we can get match funding to support that project e.g. sea defences in Porthcawl. In terms of managing the risk, that is a far more difficult exercise, and you can over estimate to make sure you come in budget. You can either put the risk on the authority or on the contractor, who carries that risk. We need to manage that and have a happy medium.   The Interim Head of Finance and S151 Officer echoed the Deputy Leader, confirming that this had been previously raised at council, and that we rarely see schemes come in under budget. Either you try really hard to get it as accurate as possible, but it could then become an abortive scheme or you get a happy medium.  Audit committee have taken a keen interest and are completing a piece of work to look at the variance e.g., builder, price, and variances we get in terms of procurement.

A member raised the issue of interest rates and asked if we were getting the best deal.  The Interim Head of Finance and S151 Officer explained that whilst interest rates were at an all-time low, our rate would be historically higher and cannot just be changed.  It would have to be profiled carefully.

A member asked for clarification in terms of knowledge and skills.  The Interim Head of Finance and S151 Officer explained that we haven’t stopped training people.  We try to accommodate people training and working and continue to train staff to study CIPFA and AAT, and we have also asked to be part of the new apprenticeships scheme.

Members wished to make the following comments and conclusions:

Members questioned how the Authority could ensure that communities across the county borough had parity of capital investment and would like to see a more strategic approach being made to capital investment.

A Member commented upon an error in the Table 2 on page 91, which should read 2020-21.

A Member referred to Section 7, page 107 Knowledge and Skills and welcomed the CIPFA and AAT training being provided corporately and the request to be included in the apprenticeship funding.