The Chief Officer – Finance, Performance and Change submitted a report on the above, the purpose of which was to:-

 

·         comply with the requirement of the Chartered Institute of Public Finance and Accountancy’s (CIPFA) ‘The Prudential Code for Capital Finance in Local Authorities’ (2021 edition);

·         provide details of the capital outturn for 2021-22 (Appendix A to the report);

·         provide an update of the capital position for 2022-23 as at 30 June 2022 (Appendix B);

·         seek approval for a revised capital programme for 2022-23 to 2031-32 (Appendix C);

·         note the projected Prudential and Other Indicators for 2021-22 and 2022-23 (Appendix D)

 

She explained that the Local Authorities (Capital Finance and Accounting) (Wales) Regulations 2003 as amended, contains detailed provisions for the capital finance and accounting controls, including the rules on the use of capital receipts and what is to be treated as capital expenditure. They modify accounting practice in various ways to prevent adverse impacts on authorities’ revenue resources.

 

As well as the legislation, the Council manages its Treasury Management and Capital activities in accordance with the following associated guidance:-

 

1.    CIPFA’s Treasury Management in the Public Services: Code of Practice;

2.    CIPFA’s The Prudential Code for Capital Finance in Local Authorities;

3.    Welsh Government (WG) revised Guidance on Local Authority Investments

 

The Chief Officer – Finance, Performance and Change, confirmed that n 24 February 2021, Council approved a capital budget of £62.363 million for 2021-22 as part of a capital programme covering the period 2021-22 to 2030-31 and Council received regular updates and approved revisions through the year. Although Council approved new schemes for the 2022-23 capital programme in June 22, the programme for 2021-22 was last updated and approved by Council on 23 February 2022. The report provided an update on the following:

 

•           Capital Programme outturn 2021-22;

•           Capital Programme monitoring quarter 1 2022-23;

•           A revised Capital Programme for 2022-23 to 2031-32;

•           Capital Strategy monitoring;

•           Prudential and other indicators

 

Paragraphs 4 of the report, then gave in some detail, narrative on the Capital Programme Outturn Position for 2021-22, with Appendix A of the report giving information of the various schemes within the Programme and the budget available compared to the actual spend. This included in bullet point format, some amendments to the 2021-22 Programme, including information regarding slippage of some of these schemes.

 

Section 4.2 of the report, provided Members with an update on the Council’s Capital Programme for 2022-23 since the budget was last approved by Council, this incorporated any such new schemes and grant approvals.

 

Table 1 in the report reflected the Capital Programme broken down by Directorate for 2022-23, with Table 2 (at paragraph 4.2.2) summarising the current funding assumptions for the Capital Programme for the above period.

 

The Chief Officer – Finance, Performance and Change then referred to Appendix B of the report, which provided details of the individual schemes within the Capital Programme, showing the budget available in 2022-23 compared to the projected spend at 30 June 2022.

 

This section of the report showed new and amended schemes since the Capital Programme was last approved. She added that a revised Capital Programme was therefore shown in Appendix C of the report.

 

The remainder of the submission related to information on Prudential and Other Indicators 2022-23 (Monitoring) and Capital Strategy Monitoring.

 

A Member referred to 4.1.21, page 25 of the report, where he noted that the Council has been awarded funding of £1.162 million for free school meals. He asked the Leader whether or not this will allow the BCBC administration to meet its manifesto commitment of delivering free school meals to all primary school children by September 2023.

 

He had a further question on education, in respect to paragraph 4.1.4 on page 26 of the report with regards to school capital maintenance. The report confirms that there have been a number of underspends due to internal and external resource availability, which has meant that the grant in question has been used to fund various other schemes in the Capital Programme. He asked what these schemes were.

 

Finally, once more on page 26, the report noted that £1.677 million of funding for Minor Capital Works has slipped due to delays in completing a number of schemes. He was interested to know which schemes had been delayed.

 

The Leader advised that unfortunately, due to rising costs, there are five schools that did not currently have kitchens and they therefore had no ability to cook any meals, including free school meals.

 

The aim the Leader added, was that free school meals would be available for all pupils at Reception age from this coming September and Infants aged pupils also. Everyone then of Primary school age would receive this benefit by September 2024.

 

The Corporate Director – Education and Family Support added, that there was a commitment from Welsh Government to ensure that all primary school pupils, have an offer of a free school meal by September 2024. Work was actively ongoing by the Council, to meet this target.

 

Over the last two years and as was announced back in 2021, the only formal commitment he was aware of from a Welsh Government perspective, was for all the learners in primary schools to be offered free school meals by September 2024. With regards to the other two questions, he would have to provide further information to the Member outside of the meeting, as they come under the purview of the Council’s Corporate Landlord section as they related to capital maintenance schemes. Any delays to the schemes referred to, were as a result of resourcing and supply pressures internally, as well as COVID-19 pressures and the rising cost of the materials and other contractor costs. That meant that some of the proposed schemes have had been reviewed in terms of specification and retendered, which has inevitably slowed down some of the work.

 

The Corporate Director – Education and Family support added, that he would provide the Member with a full list of schemes in relation to the minor works outside of the meeting, though this list remained unchanged with officers working through these on a prioritisation basis, albeit playing some catch-up work due to the problems experienced to date. Work was ongoing with colleagues in procurement to ensure that the schemes were being addressed, in order to achieve satisfactory further progress on these.

 

The Member then asked a further question in relation to page 29 of the report on the Levelling Up Fund. He was aware that the cost of the Penprysg Road Bridge at Pencoed was estimated to be £20m a couple of months of months ago. He asked therefore, why this cost had now escalated to £25m.

 

Finally, he asked if Heol-y-Cyw could be considered sometime in the future, as an Active Travel connection route.

 

The Corporate Director – Communities advised, that the cost of the works has increased for the Penprysg Road Bridge, ie feasibility costs. The bridge had not been fully designed yet, though this was work commissioned with Network Rail but yet to be completed.

 

The cost had originally been estimated at approximately £19m, however, colleagues at Network Rail have advised BCBC that this will be substantially more going forward. With inflation currently at 9.4%, and noting that the delivery of the bridge probably won't be in place until the Spring of 2026, if we are successful with our Levelling-Up Fund bid, the costings have been re-estimated to around £25m, to ensure that there will be enough money contained in the bid to progress fully the works.

 

She added that due to inflation and material costs rising almost daily, it was becoming increasingly difficult to accurately tie down the cost for the different schemes that made up the Capital Programme and this was a problem being experienced by local authorities across the whole of the UK.

 

In terms of Active Travel, BCBC were as far ahead as any local authority in Wales. She added that she would be happy to discuss this with the Councillor, ie the scope for a further active travel route in Heol-y-Cyw and come up hopefully with some viable options of how to achieve this.

 

A Member noted from the report that there was some slippage of monies for the Ewenny Road development, in the sum of £2.26 million. He noted that the report mentioned a revision to the engineering scope of works and to the works specification. He sought some clarification that any such revision would not result in a lowering of expectations, or be at the detriment of the extensive works required on the site.

 

He also enquired if more than one tenderer for the works had submitted a quote to ensure we were having a competitive and value for money work specification and finally, he asked when the works would be undertaken.

 

The Corporate Director – Communities advised that the slippage had been as a result of legal agreements having to be drawn up, as this was a regional project that had been planned with the 10 other local authorities that made up the Cardiff Capital Region City Deal. This process however had now been completed. A further delay had also resulted from problems with contamination of the site, which had now also been addressed and resolved. Therefore, site investigation works and planning would be carried out as soon as possible.

 

In relation to the tendering of the works, she added that interest from more than one tenderer had been received, however, only the one tenderer met all the requirements of the works specification.

 

The Member asked, how strongly the capital programme featured in the Authority’s Risk Register. Due to increased inflation, difficulties in getting labour and materials and a national skills shortage, amongst other reasons, he asked if there was an ongoing exercise looking at the deliverability of various pieces of work that may in the future unfortunately find themselves the victim of economic difficulties. 

 

The Chief Officer – Finance, Performance and Change, confirmed that the capital programme per se is not an individual risk on the programme. However, there were a number of risks identified in the Corporate Risk Assessment, which would cover exactly the issues that the Member had just raised, for example, the risk register would look at issues like the impact of inflation for tendered work. It would also examine the ability to actually successfully tender for different pieces of work.

 

BCBC wanted companies not only submitting tenders for works, but it also needed these companies to deliver the work to a high quality standard that also met our procurement requirements.

 

She reminded Members also that the Governance and Audit Committee of the Council monitors and updates the Risk Register periodically as part of its remit of functions.

 

The Cabinet Member – Communities added, that the Council now accounted for risk contingencies in the Contract documents that are sent out and returned as part of the tendering process, due to the rise of costs, such as diesel and materials, etc

 

A Member referred to page 36 of the report, where it stated there was an underspend of £49k in a safe route project. This was Welsh Government funding specifically for this project. There was also a number of projects similar to this that showed underspends against them. If these monies from Welsh Government funding specifically relate to those projects, she asked where the underspends were going. Would it able to be spent on other safe routes projects, or was it being allocated to a central Council fund.

 

The Member also asked for an explanation as to what were communities minor works and highway small schemes.

 

The Corporate Director – Communities advised that we receive Welsh Government funding for safe routes to schools in the form of a very significant amount. The underspend referred to, is very small in relation to this and should the Council be unable spend all these funding allocations in one year, it would ask Welsh Government if it could roll the money over to the following year, or alternatively, ring fence it so that it eventually can be used for the purpose it was given for.

 

She added that in terms of the communities minor works and highway small schemes, these were very small pieces of work. For instance, such as minor highway amendments, moving streetlights, small repairs, maybe a dropped kerb, etc. There was a small scheme budget for this purpose for works spanning the County Borough.

 

The Cabinet Member – Communities added that the Council had set aside a significant sum of money for highway improvement schemes going forward and he was very pleased to remind Members of this.

 

The Member also referred to page 45 of the report, where reference was made to S106 Agreement monies and an instance of slippage of £246k which had been rolled over to this financial year. She was aware, that the local authority had a five year window period to spend S106 allocations at different site developments, so she sought an assurance that the Council never puts itself in a position whereby any such monies were given back to the developers should they not be spent within the above period.

 

The Corporate Director – Communities assured Members that the Council would always spend these allocations within the five year period as this money was needed to provide on-site, facilities such as maybe a children’s playground or other assets and improvements that may be required as part of the development. Legal agreements were put in place for this purpose, in order to protect this money, she added.

 

RESOLVED:                                      That Council:

 

·         Noted the capital outturn for 2021-22 (Appendix A to the report)

·         Noted the Council’s Capital Programme 2022-23 Quarter 1 update to 30 June 2022 (Appendix B)

·         Approved the revised Capital Programme (Appendix C)

·         Noted the projected Prudential and Other Indicators for 2021-22 and 2022-23 (Appendix D).