Agenda item

A report was presented to the meeting in December requesting Members to give initial consideration to the Capital Programme for 2017/18-2021/22. The report highlighted anticipated spending of £23.1m compared with available funding of £26.1m, a funding surplus of £3.0m.  There were no changes to the draft programme as presented in December, as a result the overall capital programme remained:-

Although there were no changes to the draft programme it was noted that there was a possibility that the £0.8m budget in 2017/18 in relation to the Emergency Services Mobile Communications Programme (ESMCP) may slip into 2018/19 should the national programme milestones be moved further backwards.  It was also noted that there was £0.2m capital budget allocated in 2016/17 for ESMCP which would be in a similar position.

A full breakdown of the programme was considered by Members.

The majority of the expenditure in the capital programme related to:-

• The on-going vehicle replacement programme;
• Replacement of operational equipment in line with assets lives;
• Building projects; and
• Replacement of ICT equipment in line with the current Asset Management Plan.

A further report would be presented to the Resources Committee in June, confirming the final year end capital outturn for 2016/17 and the impact of slippage from this on the programme.

Available Resources

The draft capital budget report identified total available funding of £26.1m to be used in the period. The Local Government Finance Settlement did not include any reference to any other future capital grant and hence no allowance had been made for this.

As referred to in the December capital budget report it was proposed to utilise £2.6m of general reserves to fund the 5 year programme, resulting in the Authority still holding £3.0m of capital receipts and reserves at the end of the  period, and therefore being in a stronger position to meet recurring capital requirements.

The final funding for the programme is set out below:-

Summary Position

The capital programme breaks even over the 5 year period:-

The overall programme showed a balanced position and hence the capital programme was considered affordable, prudent and sustainable.

Capital Reserves/Receipts

The table in the report showed the anticipated movements on both capital reserves and capital receipts during the course of the 5-year programme; showing that at the end of the 5?year programme the Authority would still hold £3.0m which could be used to supplement the revenue contributions in future years, thus providing a sustainable capital position in the medium to long term.

Prudential Indicators

The Prudential Code gave the Authority increased flexibility over its level of capital investment and much greater freedom to borrow, should this be necessary, to finance planned expenditure.  However, in determining the level of borrowing, the Authority must prepare and take account of a number of Prudential Indicators aimed at demonstrating that the level and method of financing capital expenditure was affordable, prudent and sustainable.  Members considered the Indicators that were set out at Appendix 1 now presented, along with a brief commentary on each.   The Prudential Indicators included projected slippage of £4.3m from the 2016/17 capital programme.  These indicators would be updated to reflect the final capital outturn position which would be reported to the Resources Committee at its meeting in June.

The main emphasis of these Indicators was to enable the Authority to assess whether its proposed spending and its financing was affordable, prudent and sustainable and in this context, the Treasurer's assessment was that, based on the Indicators, this was the case for the following reasons: -

·      In terms of affordability, the negative ratio of financing costs arising from borrowing reflected interest receivable exceeding interest payable and Minimum Revenue Provision payments in each of the three years.  This reflected the effect of the previous decision to set aside monies to repay debt.

·      The estimated impact of the planned spends on the Band D Council Tax was again felt to be within affordable limits. The overall impact on council tax in 2017/18 was £26.55 per Band D property (40% of total council tax). However, all of this arose from the utilisation of capital reserves, which had been charged to council tax in previous years and the revenue contributions to support capital expenditure built into the 2017/18 revenue budget.  The actual impact of the capital programme in terms of new borrowing was £0.00 per band D property (0 % of total council tax).

·      In terms of prudence, the level of capital expenditure, in absolute terms, was considered to be prudent and sustainable at an annual average of £8.1m over the 3-year period after allowing for anticipated slippage from 2016/17.  The trend in the capital financing requirement and the level of external debt were both considered to be within prudent and sustainable levels.  No borrowing was planned during the three years.

RESOLVED: - That the Authority approve the Capital Budget together with the Prudential Indicators as presented.