Invitees:

Councillor Hywel Williams – Deputy Leader

Gill Lewis - Interim Head of Finance

Mary Williams - Group Manager - Chief Accountant

The Interim Head of Finance and Section 151 Officer submitted a report, the purpose of which, was to present to the Committee the draft Capital Strategy 2019-20 to 2028-29, including the Prudential Indicators (Appendix A to the report referred.)

By way of background, she advised that the control on Capital Expenditure is based on legislation. The Local Authorities(Capital Finance and Accounting) (Wales) Regulations, as amended, contain 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.

In December 2017, CIPFA published a new edition of the Prudential Code for Capital Finance in Local Authorities. The above revised Code has placed a requirement on local authorities to determine a Capital Strategy, to be approved by full Council, which will demonstrate 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.

She advised that following approval of the Capital Strategy, any schemes for which external funding has been approved will be added to the Capital Programme once the funding has been accepted and included in the next capital programme report to Council.

She referred Members to the draft Capital Strategy and associated schedules which were contained in Appendix A of the report.

This, which would be the subject of reports to both Cabinet and Council in February, would confirm the Council’s compliance with the Prudential Code for Capital Finance in Local Authorities. It would set out certain guiding principles for capital decisions, as well as setting out a framework for the self-management of capital finance and examines key financial areas as shown in bullet point format in paragraph 4.4 of the report.

The Interim Head of Finance and Section 151 Officer added that the Strategy also reports on the delivery, affordability and risks associated with the long-term context in which capital expenditure and investment decisions are made.

Finally, she referred to the key aims and guiding principles of the Capital Strategy, giving a resume upon each of these also.

A Member referred to page 52 of the Appendix, half way down this page where it confirmed that the total value of Investment Properties was £4.360m as at 31 March 2018, which has generated a rental income of £438,000 per annum. She asked if this was gross or net income.

The Interim Head of Finance and Section 151 Officer advised that this was net income.

A Member referred to page 61 of the Appendix and Risk Management, where it listed three risks that the Council’s activities exposes itself to, ie Credit risk, Liquidity risk and Market risk. In relation to these, he asked what mitigations the Authority had in place to prepare itself for the outcome of Brexit.

The Interim Chief Executive confirmed that a Brexit Forum had been set-up within the Council, in order to establish the possible impact the outcome of Brexit would have on business organisations comprising both the public and the private sector and the Forum intended to put together a Risk Register (identifying key potential risks to BCBC), that would in due course, be presented to Cabinet for consideration. As soon as these risks were fully established then these in turn, would look to be mitigated.

The WLGA were also in the next few weeks, intending to hold a meeting regarding Brexit and he confirmed that he would establish the date of this and put it in Members calendars accordingly.

A Member referred to page 68 of the Appendix where it advised, that though S106 monies come from developer contributions through the planning system, unless there are service specific conditions on the use of the S106 (which generally there are), the monies should be used to support existing Council priorities and commitments rather than be allocated to new schemes. Any S106 monies received without a service or scheme specific allocation within the planning agreement will be allocated in line with Council’s capital scheme priorities. He disagreed with this principle, adding that any S106 allocation should be committed to the development or failing that, the area it was intended for.

The Interim Head of Finance and Section 151 Officer, advised that most S106 contributions were very specific and were being spent within areas they were allocated for. However, historically if small amounts or pockets of such finance were not fully utilised or exhausted, then they could be used to financially support other Capital Schemes.

The Interim Chief Executive advised that he would link in with the Planning Department and ask for further information in respect of the above, and in turn, provide this to all Members and not just members of the Corporate Overview and Scrutiny Committee and/or Development Control Committee.

A Member felt that the subject of Community Asset Transfer needed to feature in the Capital Strategy, in order that some financial commitment should be made to Council assets so that these can be improved and then possibly be taken over by certain local community groups or organisations. This initial outgoing would in time save money for the Council (if such assets were taken out of its hands) and operated and maintained independently by others.

The Interim Chief Executive advised that the Council had committed around £1m to parks and playing facilities, sports pavilions and changing rooms etc, in order to undertake much needed maintenance to these buildings, so that there would be an increased chance of these being taken over by Sports Clubs and Associations, hence saving the Council money in the longer term. The allocation of this commitment had now been relaxed he added, to cover a wider area of assets than just the above.

The Interim Head of Finance and Section 151 Officer advised the Committee that there were some guiding principles that required consideration in respect of the Authority’s plans with regard to spend of its Capital Allocation and these were required to be both prudent and sustainable.

In terms of the Council’s assets overall, it was necessary to carry out any maintenance or undertake any improvement/renovation works to these buildings in order of priority, following consideration any element of risk in accordance with health and safety regulations.

A Member pointed out that the Council now unfortunately had very limited scope to allocate resources to improve its building assets to any significant degree under its MTFS and possible when there had been increased finances available to pursue this prior to austerity, more work should have been carried out to these then.

The Interim Head of Finance advised that the Corporate Landlord section of the Council had instigated a number of Condition Surveys of its assets and arising from this, put together an Inventory of all of these. There were plans to carry out improvements to its stock, but she agreed that there was only a limited level of resources available to do this on a priority by priority basis. It was conceivable that if certain outside organisations did not show an interest in taking of the maintenance of some of these and they fell into a bad state of repair, then they would close due to failing health and safety requirements.

As this concluded the business the Invitees had been asked to attend the meeting for, the Chairperson thanked them on behalf of Members, following which they retired from the meeting.         

 Recommendations:

• Further clarification is needed on the wording on page 68 in terms of S106 contributions.

• It was also discussed that the information would be circulated to all Members in respect of S106. Members recommend that this include the following:-

• Members further recommend that the information should be broken down into wards so that each and every Councillor can easily relate the funds to their ward.

• Members have requested further clarity about interest accrued on funds sitting in the BCBC Section 106 account and what it is used for.

The Committee asked for condition surveys to be brought back to members in terms of assets.