Agenda item

Capital Strategy 2023-24 Onwards


The Chief Officer, Finance Performance and Change presented to Council for approval, the Capital Strategy 2023-24 to 2032-33 (Appendix A to the report), which included the Prudential Indicators, and the Annual Minimum Revenue Provision Statement 2023-24.


She explained that local authorities were required to determine a Capital Strategy which demonstrated that the authority took capital expenditure and investment decisions in line with service objectives and properly took account of stewardship, value for money, prudence, sustainability and affordability when making these decisions. The proposed Capital Strategy for 2023 - 2024 to 2032 - 2033 was attached at Appendix A of the report.


The Chief Officer, Finance Performance and Change explained that the strategy set out the Council's plan for capital expenditure, and how that was to be funded over the coming 10 years. In developing long term investment decisions, it was crucial that decisions were based on clear information, including a long term management plan. The document was presented as an integral part of the Council's budget and policy framework. It linked with the Corporate Plan, the Treasury Management Strategy, the Medium Term Financial Strategy and the Council's Asset Management Plan.


The Chief Officer, Finance Performance and Change outlined the principles which drove the budget and spending decisions of the Council as reflected in the capital strategy. The plan detailed how any proposed investments in land and buildings would require the completion of a full feasibility study to evaluate the practicality of the capital project, and to assess its deliverability before the Council invested time and money into that project.


The Chief Officer, Finance Performance and Change added that there were a number of significant areas that would need financing going forward, including economic recovery, decarbonisation and homelessness, digitalisation and coastal defences.  As reported to Council throughout the year there were also other financial pressures arising as a result of the pandemic and Brexit, which were being seen in existing schemes, and it was anticipated this would continue for some time going forward. The pressures included supply chain difficulties leading to higher prices and delays in schemes being completed.


The Chief Officer, Finance Performance and Change explained that the strategy also referred to the changes with regards to the ability to borrow from the public works loan board with regards to borrowing to invest primarily for financial return. Major capital projects required careful management to mitigate the potential risks which could arise. The effective monitoring, management and mitigation of these risks was a key part of managing the capital strategy.


The Chief Officer, Finance Performance and Change explained that the report outlined the robust process in place to approve, manage and monitor capital projects and quarterly capital monitoring reports were prepared for Cabinet and Council which included details of any variances between projects as well as projections of likely year end spend.


The Chief Officer, Finance Performance and Change reported that in 2023 - 2024 the Council was planning capital expenditure of £69 million and this was summarised at table 2 within the capital strategy document. The Council had several funding streams available to support capital investment and these were detailed in appendix one of the capital strategy. The Council received support from Welsh government towards the cost of capital and this funding was prioritised towards investment that was required to meet health and safety requirements. There were currently no nationally imposed restrictions to the level of borrowing that the Council could incur to pay for capital investment. The Council approved its own affordable borrowing limit.

The percentage of the Councils revenue budget that was committed to capital financing costs was increasing in the long term period given the pressure on revenue budgets, this limited the affordability of other priorities in future years and should be a factor considered by members when determining the capital programme.


The Cabinet Member for Resources welcomed the strategy which provided a clear framework for Members to follow and provided a clear commitment for post project evaluation. He supported the request from Scrutiny for a member training session to ensure that going froward, all Members had a good, clear understanding of the strategy.


A Member referred to the significant pressure on the capital programme from higher prices as a result of inflation and asked the Chief Officer, Finance Performance and Change to outline the changes to the strategy or the additional considerations that had been included in the strategy to accommodate those in future. The Chief Officer, Finance Performance and Change replied that this was about future proofing the Capital Programme. It was normal practice to include contingency in individual schemes. They were aware there were pressures within existing schemes which were outside the control of officers and there were issues in relation to inflation impacting on many of the capital schemes at the moment. Tenders were coming in above anticipated estimates and they were not allocating all of the capital monies to enable them to respond to those kind of pressures going forward.


A Member asked for reassurance that the Executive would look at maximizing the opportunities that came with investing in solar energy and EV charging points to provide much needed revenue to the Council. The Leader replied that they were investing in electric vehicle charging points as reported to Council and they would consider ideas around improving energy efficiency in schools to reduce energy costs. He asked Members to support and recognise the work being done around Bridgend Heat Network, which was a pioneering project, the only one of its kind and supported the authority’s renewable energy agenda.


A Member asked if going forward, they could have better reporting of risk at project level so when faced with difficult decisions, they had the complete picture. The Chief Officer, Finance Performance and Change replied that she was happy to look at the way that information was reported. They did not want to give away commercial information but would look to see if they could address the issues raised.


RESOLVED:              That Council approved the Capital Strategy 2023-24 to 2032-33 including the Prudential Indicators 2023-24 to 2025-26 and the Annual Minimum Revenue Provision (MRP) Statement 2023- 24 at Appendix A of the report.


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