Issue - meetings

Report of the Head of Financial Services.

(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  ...  view the full minutes text for item 71