Decision details

(Cabinet Member with Special Responsibility Councillor Mace)

The Head of Financial Services presented a report updating Cabinet on the position regarding the progress on the Capital Programme and the overall funding position, in line with the requirements of the Capital Investment Strategy, and to gain Cabinet’s approval for updating both this year’s capital funding assumptions and the draft funding principles for the period from 2009/10 onwards.

The options and options analysis, including risk assessment, were set out in the report as follows:

With regard to the current year, basic options are as follows:

To approve the updated programme as set out in Appendix A and the way forward as set out in section 4.2 of the report.

The main risk attached to this course of action is that sufficient capital receipts will not be generated in future, to offset the short-term increase in borrowing.  This would increase the pressure on the revenue budget and therefore on service delivery and Council Tax.  Given the potential for receipts generation, this risk is felt manageable in order to deliver key capital schemes.  Furthermore there would be an opportunity to take further action later during the budget process if need be.  It would not be possible to contractually commit all outstanding schemes in such a short period of time, and so opportunities for other remedial action would still exist.

To defer approval of the programme pending work being done to identify alternative funding sources, and / or to consider deferring or cutting schemes that have not yet started.

Given that some of this work will be done as part of the budget anyway, there is little tangible benefit in deferring the programme.  The recommended programme as set out represents best information available at this time and therefore the Head of Financial Services would advise reflecting this in the financial plans of the Council. It is recognised, however, that there will be significant slippage as only half of this financial year now remains – though the slippage can only be quantified once the funding position is clarified.   Deferring approval could avoid some additional costs in this year (see financial implications later), but not all outstanding works could be deferred.   Some key works would still need to be progressed on health and safety grounds, irrespective of any Member decision in force.  This is provided for under Financial Regulations.

In considering whether to defer or cut schemes that have not yet started, only full Council may delete schemes (in their entirety) from the approved Programme.  This control exists to ensure that Cabinet undertakes capital investment in line with the budget and policy framework set by Council.  Risks would very much depend on the schemes being considered.

Other potential funding arrangements, such as drawing on the extra revenue funds available following the outturn, have been discounted for now as they can be picked up during the budget in any event.

With regard to future years’ funding principles, options are basically to approve the principles as set out in section 6, together with the supporting reviews, or to determine alternative proposals.  In doing so however, Cabinet would need to have regard to their proposed corporate priorities and the principles of the Prudential Code, namely prudence, affordability and sustainability.  Risks would depend very much on the nature of any alternatives put forward.

The Officer preferred options are to approve:

·         the updated capital programme as set out at Appendix A and the way forward as set out at section 4.2 of the report;

·         the draft capital investment and funding principles as set out in section 6.

Councillor Mace proposed, and Councillor Archer seconded:-

“That the recommendations, as set out in the report, be approved.”

Members then voted as follows:

Resolved unanimously:

(1)         That the current position regarding the Capital Programme position be noted, and that the updated Capital Programme as set out at Appendix A to the report be approved, subject to any other amendments arising from items elsewhere on the agenda.

(2)         That the 2008/09 Capital Programme funding be updated to provide for a £1.4M underlying increase in unsupported borrowing, on the basis that this be ‘repaid’ in 2009/10, and that this be referred on to Council for approval.

(3)         That the funding changes in (2) above be reviewed further as part of the 2009/10 Budget.

(4)         That the draft capital funding principles as set out in section 6 of the report be approved, and that they form the initial basis on which Cabinet develops its capital programme proposals for the five year period from 2009/10 onwards, subject to:

·         a separate review of potential asset sales being reported back to the December Cabinet meeting;

·         any other potential changes in investment needs arising from the review of priorities;

·         the outcome of the position regarding Luneside East; and

·         the levels of any unsupported borrowing being reviewed regularly throughout the budget process, as the revenue position develops.

Officers responsible for effecting the decision:

Corporate Director (Finance and Performance)

Head of Financial Services

Reason for making the decision:

The decision is taken in line with the requirements of the Capital Investment Strategy.

At this point the press and public were re-admitted to the meeting.