Agenda item

(Finance Portfolio Holder) To consider the attached report (C-047-2014/15).

(1)       That the latest five-year forecast of capital receipts be noted;

(2)        That the level of usable capital receipts currently predicted to be £4,715,000 at 31 March 2019 be noted;

(3)        That the following amendments to the Capital Programme be approved:

            (a)        carry forwards totaling £2,051,000 from 2014/15 to 2015/16 in respect of    General Fund capital schemes as outlined in the report;

            (b)        an additional allocation of £12,000 to purchase a franking machine for the Business Administration team;

            (c)        an overspend of £49,000 in respect of fees on the purchase of the lease at            Torrington Drive;

            (d)        a carry forward of £473,000 from 2014/15 to 2015/16 and 2016/17 in          respect of the Open Market Shared Ownership initiative and a reduction of          £292,000 for Private sector Housing Loans in 2014/15;

            (e)        re-phasing the Disabled Facility Grant budget as outlined in the report and an         additional allocation of £9,000 to complete the programme of non-repayable Private   Sector Housing Grants;

            (f)         virements within the Housing Revenue Account in respect of the categories of       work identified in the report; and

            (g)        re-phasing of the Council Housebuilding programme, Planned Maintenance           programme and Off-Street Parking Initiative financed within the Housing Revenue    Account as identified in the report.

The Finance Portfolio Holder presented a report on the Annual Review of the Capital Programme for the period 2014/15 to 2018/19.

The Portfolio Holder set out the Council’s Capital Programme for the five year period 2014/15 to 2018/19, which included: the forecast capital investment in Council owned assets; estimates of capital loans to be made for private housing initiatives; and projected levels of revenue expenditure funded from capital under statute. The capital programme had been prepared by updating the programme approved in February 2014, amended for any slippage and re-phasing approved in June 2014, as well as new schemes and allocations approved by the Cabinet subsequently. Each scheme within the Capital Programme had been reviewed and Spending Control Officers had reassessed estimated final costs and the phasing of expenditure profiles for each scheme. Recommendations had been made to make amendments as appropriate.

The Portfolio Holder reported that the Council’s overall programme of capital expenditure had been summarised for each Directorate in Appendix 1 of the report and this had revealed a commitment to invest £108.518million in Council-owned assets over the five year period under consideration. Of this amount, £95.781million (nearly 90%) would be spent on improving or increasing the Council’s housing stock. Details of individual schemes or groups of projects were listed in Appendix 2 of the report for the General Fund Capital Programme and an analysis of works into specific categories was listed at Appendix 3 of the report for the Housing Revenue Account (HRA) Capital Programme. Appendix 1 also highlighted the Council’s commitment to finance capital loans up to a maximum of £2.113million and planned expenditure of £2.613million, which was classified as revenue expenditure but which could be financed from capital resources over the five year period. Analysis of these figures were given in Appendices 4 and 5 of the report respectively.

The Portfolio Holder stated that Appendix 1 of the report also set out the proposed sources of finance for funding the Capital Programme over the five-year period to 2018/19, based on maximising the funding available to finance each scheme. The report identified estimated external funding from grants and private sources in the sum of £5.412million, and it was proposed that capital receipts in the sum of an estimated £23.062million and revenue contributions in the sum of an estimated £84.770million be applied to finance the capital programme over the next five years. The estimated level of capital resources available now and in the future were given in Appendix 6. In summary, the balance of capital receipts was expected to fall from £17.467million as at 1 April 2014 to £4.715million by 31 March 2019 and the Major Repairs Fund balance was expected to decrease from £11.359million to £1.927million by the end of the period.

The Cabinet welcomed the report, particularly the building of new Council Housing and the updating of the existing stock, which had been financed by prudent financial management over a number of years. It had illustrated that the Council was investing in its stock and not just ‘banking’ the rents received. The Safer, Greener & Transport Portfolio Holder highlighted the project to purchase and install new pay-and-display machines across all the Council-owned car parks. The new machines would prove to be a good purchase and offer better features than the current, obsolete machines.

The Leader of the Council highlighted the problems that the Council had experienced in performing a number of parking reviews across the District on behalf of Essex County Council. The Safer, Greener and Transport Portfolio Holder reassured the Cabinet that the Buckhurst Hill Parking Review would be completed next year, and that the final proposed scheme in Loughton Broadway (Debden) would commence immediately afterwards. The Portfolio Holder was confident that additional funding over and above that already agreed would not be needed.

The Leader of the Council also emphasised that current projections indicated there would be only £4million of usable capital receipts remaining at 312 March 2019. The Leader highlighted that the Programme currently contained annual allocations of £30,000 for both the replacement of wheeled bins to residents and the replacement of vehicles for the Ground Maintenance section, and queried whether these annual allocations were necessary. The Finance Portfolio Holder reassured the Cabinet that all Capital expenditure was regularly monitored.

Decision:

(1)       That the latest five-year forecast of capital receipts be noted;

(2)        That the level of usable capital receipts currently predicted to be £4,715,000 at 31 March 2019 be noted;

(3)        That the following amendments to the Capital Programme be approved:

            (a)        carry forwards totaling £2,051,000 from 2014/15 to 2015/16 in respect of    General Fund capital schemes as outlined in the report;

            (b)        an additional allocation in the sum of £12,000 to purchase a franking machine for the Business Administration team;

(c)        an overspend in the sum of £49,000 in respect of fees on the purchase of the lease at Torrington Drive;

            (d)        a carry forward in the sum of £473,000 from 2014/15 to 2015/16 and 2016/17 in    respect of the Open Market Shared Ownership initiative and a reduction the sum of          £292,000 for Private sector Housing Loans in 2014/15;

            (e)        re-phasing the Disabled Facility Grant budget as outlined in the report and an         additional allocation in the sum of £9,000 to complete the programme of non-repayable         Private Sector Housing Grants;

            (f)         virements within the Housing Revenue Account in respect of the categories of       work identified in the report; and

            (g)        re-phasing of the Council Housebuilding Programme, Planned Maintenance           Programme and Off-Street Parking Initiative financed within the Housing Revenue    Account as identified in the report.

Reasons for Decision:

The Capital Programme was based on previously approved decisions or decisions to be considered later in the meeting. The expenditure profiles suggested were based on agreed timescales and practical considerations. The decisions proposed were intended to make the best use of the capital resources currently available and forecast to become available for capital schemes up to 2018/19.

Other Options Considered and Rejected:

To reconsider the inclusion of some new schemes or re-assess the inclusion of some existing schemes in order to reduce overall capital expenditure as the revenue consequence of reducing the level of capital receipts over the next five years would be to reduce investment income.

To reduce the Revenue Contribution to Capital Outlay contributions by increasing the use of usable capital receipts, beyond that which was currently required. However, the levels suggested in the report were affordable within the Housing Revenue Account (HRA), according to current predictions, and any further use of usable capital receipts for HRA purposes would have the effect of reducing the capital resources available for the General Fund.