Agenda item

(Finance Portfolio Holder) To consider the attached report (C-054-2015/16).

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

(2) That the level of usable Capital receipts currently predicted to be £5,891,000 at 31 March 2020 be noted;

(3) That increased external borrowing of an estimated £25,000,000 to support the General Fund Capital Programme be noted;

(4) That the following amendments to the Capital Programme be recommended to the Council for approval:

(a) a supplementary Capital estimate in the sum of £88,000 for the museum development project;

(b) a supplementary Capital estimate in the sum of £49,000 for planned maintenance works at the Civic Offices, previously included in the Revenue accounts;

(c) a supplementary Capital estimate in the sum of £12,000 for two remaining private sector housing grants; and

(d) a supplementary Capital estimate in the sum of £7,000 for CCTV equipment at Town Mead depot, previously included in the Revenue accounts;

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

(a) carry forwards totaling £18,024,000 from 2015/16 to 2016/17 and 2017/18 in respect of the General Fund Capital schemes listed below:

(i) Planned Maintenance Programme £70,000;

(ii) Upgrade of Industrial Units £200,000;

(iii) General ICT £89,000;

(iv) Langston Road Shopping Park £16,200,000;

(v) Oakwood Hill Depot £200,000;

(vi) Flood Alleviation Schemes £31,000;

(vii) Housing Estate Parking £400,000;

(viii) Purchase of Bridgeman House £309,000;

(ix) CCTV Systems £124,000;

(x) Open Market Shared Ownership Scheme £211,000; and

(xi) Parking Review Schemes £190,000;

(b) a reduction of £151,000 for replacement refuse bins to be compensated by an equivalent revenue allocation and a reduction of £447,000 as a result of discontinuing the Open Market Home Ownership scheme;

(c) virements within the General Fund and Housing Revenue Account in respect of:

(i) £310,000 for increased electrical testing in Council flats from the Small Capital Repairs & Voids budget; and

(ii) £200,000 for Other Categories of Work from the Kitchen & Bathroom Replacements budget; and

(d) re-phasing of the Council Housebuilding Programme, Planned Maintenance Programme and Off-Street Parking initiative financed within the Housing Revenue Account, with carry forwards of £3,663,000 as listed below:

(i) New House Building & Conversions £2,395,000;

(ii) Heating/Rewiring/Water Tanks £100,000;

(iii) Other Planned Maintenance £150,000;

(iv) Structural Schemes £100,000;

(v) Garages & Environmental Improvements £685,000;

(vi) Capital Service Enhancements £175,000; and

(vii) Housing DLO Vehicles £58,000; and

(6) That the appropriation of Lindsey House from the Housing Revenue Account to the General Fund be approved.

The Finance Portfolio Holder presented a report on the review of the Capital Programme for the period 2015/16 to 2019/20.

The Portfolio Holder set out the Council’s Capital Programme for the five year period 2015/16 to 2019/20. This 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 2015, amended for any slippage and re-phasing approved in June 2015, as well as new schemes and allocations approved by Cabinet since then.

The Portfolio Holder stated that the allocations included in 2015/16 and 2016/17 represented approved sums for capital schemes which the Council was committed to deliver. Allocations given for the years 2017/18 to 2019/20 represented forecast sums as a guide to future capital investment and the schemes to which they related would require Cabinet approval before going ahead. The projects already approved within the Capital Programme had been reviewed and Spending Control Officers had reassessed the estimated final costs and the phasing of the expenditure profiles for each scheme as part of the Review. Recommendations had been made to make amendments as appropriate.

The Portfolio Holder reported that the Council’s overall programme of capital expenditure was summarised for each Directorate in Appendix 1 of the report and showed forecast investments of £152,689,000 in Council-owned assets over the five year period under consideration. Details of individual schemes or groups of projects were detailed in Appendix 2 of the report for the General Fund Capital Programme and an analysis of works into specific categories was shown at Appendix 3 of the report for the Housing Revenue Account (HRA) Capital Programme. Appendix 1 also disclosed the Council’s forecast to finance capital loans up to a maximum of £5,298,000 and planned expenditure of £3,713,000 - which was classified as revenue expenditure but which could be financed from capital resources, over the five year period. Analyses of these figures were given in Appendices 4 and 5 of the report respectively.

The Portfolio Holder informed the Cabinet that Appendix 1 of the report also detailed the proposed sources of finance over the five-year period from 2015/16 to 2019/20, based on maximising the funding available to finance each scheme. Estimated external funding from grants and private sources of £6,150,000 was identified, and it was proposed that capital receipts of an estimated £34,087,000 and direct revenue funding of an estimated £96,463,000 be applied to finance the Capital Programme over the next five years. It was forecast that external borrowing of an estimated £25,000,000 would be necessary to support the Council’s investments in new developments within the General Fund. The estimated level of capital resources available now and in the future were given in Appendix 6 of the report.

The Portfolio Holder concluded that the balance of capital receipts was expected to fall from £19,615,000 as at 1 April 2015 to £5,891,000 by 31 March 2020 and the Major Repairs Fund balance was expected to decrease from £11,154,000 to £0 by 31 March 2018, with annual contributions to be used in full each year thereafter.

A local Member for Epping Hemnall queried the figures quoted for the re-development of the St John’s Road site in Epping, as the £6million estimated cost of the scheme was more than the anticipated £5million return from the sale of the site to the Developer and this did not seem like a good financial deal for the Council. The Director of Resources reminded the Cabinet that the original deal involved a fixed sum for the sale of the site to the Developer, but then the County Council had decided that they could obtain better value by not being part of the scheme, so different ways were examined to keep the scheme alive. Ultimately, it was agreed to purchase the land owned by the County Council for a sum of £6million. The Chief Executive added that both the Town Council and the Developer had provided additional funding for the scheme, although the District Council had provided the largest amount, and it should also be remembered that the District Council would receive business rates from the scheme once it had been completed. The objective had always been to promote the right scheme to regenerate the St John’s Road area of Epping.

A local Member for Chigwell Village noted that the Capital Programme was very ambitious, and advised the Cabinet that more major items should not be added for the time being.

Decision: