Capital Programme and Financing 2014/2017
- Meeting of Budget Meeting, Cabinet, Wednesday, 12th February 2014 6.15 p.m. (Item 144.)
- View the background to item 144.
The Director of Resources presented for consideration and referral to Council for approval, a draft Capital Programme for 2014/2017, together with the related capital financing requirements based upon the prudential indicators that informed the Treasury Management Strategy. As the Council had to manage demands for investment within the financial constraints that Wirral operated, prioritisation criteria had been developed to assess capital bids to ensure that the Programme was targeted to Council priority areas. The Programme therefore consisted of a combination of –
(i) Schemes originally approved as part of the 2013/2016 Programme and updated through the Capital Monitoring reports in 2013/2014, with schemes re-profiled into 2014/2015.
(ii) New/revised bids for consideration, with details of the schemes and the criteria against which they were scored.
The Council had also identified a requirement to upgrade the IT and, whilst it was an essential investment, the cost would vary, dependent on the chosen route of working more closely with others and alternative methods of delivery being investigated. The Director therefore recommended at this stage, that £4m be included in the Capital Programme 2014/2015, which would be refined over the coming months.
Capital receipts generated from the sale of Council assets were an important element of funding the Capital Programme and the assumption for capital receipts for the next three years was partly based upon the work of Lambert, Smith, Hampton who had been commissioned to advise and market a number of major assets, estimated at up to £20m, which were anticipated to be realised from 2015/2016 onwards. However, the Director commented that the usage of capital receipts could only be when the receipt was guaranteed so at this stage the projections were that there would be £6.2m available at 31 March 2014. Over £4m of that sum had provisionally been identified as funding for the 2014/2015 Programme and this would be re-assessed as further information became available in relation to both the Disposals and the Council Remodelling Programme.
The Director advised the Cabinet that, in considering the Capital Programme for 2014/2017, there was a need to fund up to £13.1m of new unsupported borrowing in 2014/2015 which, based upon current interest rates, equated to an increase of £1.2m in revenue borrowing costs. This, and the impact of a £0.5m reduction in investment income, could be accommodated within the £1.7m included for Capital Financing in the Revenue Budget projections for 2014/2015. The Cabinet was also advised that if a decision was taken to spend in excess of the level of identified resources, then this would require increased use of borrowing, which incurred annual revenue costs at the rate of £90,000 per £1m of capital expenditure. In considering the impact upon Council Tax levels, each 1% rise in Council Tax equated to £1.1m of increased expenditure.
(1) That the new bids as detailed in Sections 2.7 and 2.8 of the report of the Director of Resources be approved.
(2) That the overall Capital Programme 2014/2017, as detailed in Appendix 4 to the report of the Director of Resources be agreed and referred to the Council for approval.
(3) That the capital financing requirements be reflected in the revenue budget.
(4) That the Prudential Indicators be noted and reported to Cabinet as part of the Treasury Management Strategy.
(5) That progress on delivering the Capital Programme be presented in accordance with the agreed Capital Monitoring arrangements.