The Interim Head of Finance and Section 151 Officer presented a report, the purpose of which, was to:-

•            Comply with the requirement of the Chartered Institute of Public Finance and Accountancy’s (CIPFA) Prudential Code for Capital Finance 2018

•            Provide an update of the Capital Programme from 1 April to 30 June 2019 (Appendix A)

•            Seek approval for a revised capital programme for 2019-20 to 2028-29 (Appendix B)

•            Note the projected Prudential and Other Indicators for 2019-20     (Appendix C)

•            approve a revenue budget virement of £2,349,797 from school delegated budgets to council wide budgets, following the receipt of grant funding from Welsh Government to that same value, to contribute towards capital expenditure as outlined in paragraph 4.7.

 By way of background, she advised that in December 2017, CIPFA published a new edition of the Prudential Code for Capital Finance in local authorities. The revised Code placed a new requirement on local authorities to determine a Capital Strategy, to be approved by Council, demonstrating 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, added that local authorities were required to have in place a Capital Strategy that sets out the long-term context in which capital expenditure and investment decisions are made and gives due consideration to both risk and reward, and impact on the achievement of priority outcomes.

In terms of the monitoring of the Capital Programme 2019-20, the Interim Head of Finance and Section 151 Officer confirmed that the revised programme for the above period, currently totalled £54.471m, of which £36.665m was met from BCBC resources, including capital receipts and revenue contributions from earmarked reserves, with the remaining £17.806m coming from external resources. A breakdown of this was given in Table 1 in this section of the report on a Directorate by Directorate basis.

Table 2 in the report, then summarised the current funding assumptions for the capital programme for 2019-20. The capital resources are managed to ensure that maximum financial benefit for the Council is achieved. This may include the realignment of funding, to maximise government grants.

Appendix A to the report provided details of the individual schemes within the capital programme, showing the budget available in 2019-20 (as well as some commentary associated with the programme), compared to the projected spend. £8.286m of funding was slipped forward into 2019-20 for schemes not completed in 2018-19, as outlined in the report to Cabinet on Financial Performance 2018-19, which included the schemes shown in paragraph 4.3 of the report.

The report then referred to a scheme that slipped into 2020-21 as detailed in paragraph 4.4 of the report, as well as a re-profiling of the Maesteg Town Hall scheme.

The next section of the report, outlined a number of new externally funded schemes approved, which had also been incorporated into the Council’s Capital Programme.

Paragraph 4.7 of the report then outlined a number of new schemes, funded by the Council, to be included in the Capital Programme. These were:-

• ICT Data Centre;
• Heol Mostyn Junction, Pyle;
• Evergreen Hall;
• Investing in Communities

Paragraph 4.8 advised that in March 2019, Council approved a change to the funding envelope for Band B of the School Modernisation Programme and for this to be incorporated into the Capital Programme. The reasons for this were expanded upon in this section of the report.

The Interim Head of Finance and Section 151 Officer added that there were a number of other schemes within the above Programme that were awaiting confirmation of external funding over the summer period. These would form further reports to both Cabinet and Council in due course. The revised Capital Programme was included at Appendix B to the report.

She then explained that in February 2019, Council approved the revised Financial Procedure Rules, determining Cabinet as the body to receive the monitoring report on the Capital Strategy and Prudential Indicators. Appendix C to the report 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.

The final section of the report’s narrative referred to the subject of Capital Strategy Monitoring.

This also required the monitoring of non-treasury management investments and other long term liabilities.

The Council previously approved £1m within the Capital Programme for the purchase of investment assets and spent £520k on acquiring an office building, which generated a rental income of £56k per year or just over 9% return on the investment. There was a further £480k available within the Capital Programme, but as yet no suitable options have been identified within the Bridgend area, which would produce a reasonable return and at acceptable levels of risk. The Council could, in the future, consider expanding its property investment portfolio, in which case, it would require reviewing the criteria and investment strategy and this would be on a risk based approach.

She concluded her submission, by advising that the Council had a number of other Long Term Liabilities which were included in the Capital Strategy, and examples of these were shown in paragraph 4.15 of the report.

A Member referred to paragraph 4.7 of the report headed Capital Programme 2019-20 onwards and the fact that earlier in the debate the Cabinet Member – Education and Regeneration had expressed his concern regarding the budget for the Education Department. The section of this report advised that the Quarter 1 budget monitoring report to Cabinet earlier this month outlined the revenue funding released as a result of late notification of one-off grant funding from WG towards teachers’ and firefighters’ pay and pensions. This paragraph of the report then went on to say that Cabinet had proposed that an ‘Investing in Communities Fund’ be established with £2m of this funding to support the capital minor works programme, by enabling more capital improvement works to be carried out on Council assets in BCB local communities. Knowing the continued pressure upon Schools funding, she asked if it was prudent to put this funding into the Capital Works Programme (as opposed to committing it to schools).

The Leader advised that this would have limited impact in respect of allocation of future funding for teachers pensions etc, because if grant funding is not made available by Welsh Government from 2020/21 for this on a recurrent basis, then the funding that the Council has allocated will be passported back to schools’ delegated budgets so they are not at detriment. 

RESOLVED:                    That Council:-

(1)               Noted the Capital Programme for the period 1  April 2019 to 30 June 2019 (Appendix A).

(2)               Approved the revised Capital Programme (Appendix B).

(3)               Noted the projected Prudential and Other Indicators for 2019-20 (Appendix C).

Approved a revenue budget virement of £2,349,797 from school delegated budgets to Council wide budgets, to fund Capital Expenditure, as outlined in paragraph 4.7 of the report.