Agenda item

(a)       That the Committee supports the allocations and schemes in Table 4 (paragraph 1.06.1) for the Statutory/Regulatory and Retained Assets sections of the Council Fund Capital Programme 2018/19 - 2020/21;

(b)       That the Committee supports the schemes included in Table 5 (paragraph 1.07.1) for the Investment section of the Council Fund Capital Programme 2018/19 -2020/21;

(c)       That the Committee notes that the shortfall in funding schemes in 2019/20 and 2020/21 (paragraphs 1.08) at this point in the approval process is flexible.  Options including a combination of future capital receipts, alternative grants (if available), prudential borrowing or scheme phasing over several years will be considered during 2018/19 and included in future capital programme reports;

(d)       That the Committee notes the further development and refresh of a forward Capital Strategy and Asset Management Plan; and

(e)       That the Committee informs the Cabinet:

(i)    that it has requested a report which outlines the effect of capital expenditure (new schemes for approval) and detailing the effects on the revenue account, including cost of borrowing, operational revenue costs and operational benefits, for the March meeting if possible, otherwise April;

(ii)   that there are concerns about the cost of any remedial works required as a result of the inspection of the Flintshire Bridge.  Early negotiations with WG on shared responsibility for costs, in advance of any changes arising from the Red route implementation are welcomed.  The results of the inspection to be reported to Environment Overview & Scrutiny Committee and if affecting the Capital Programme, to Corporate Resources Overview & Scrutiny Committee as well; and

(iii)  that it invites the Cabinet to consider making representations to Welsh Government about the wear and tear to Flintshire roads being used as diverted routes as a result of work on the A55.

The Chief Officer (Organisational Change) introduced a report on developing the Capital Programme 2018/19-2020/21.  This linked to the Capital Strategy and Asset Management Plan which was due to be updated later in the year to support current and emerging longer term Council priorities and to reflect changes to the Chartered Institute of Public Finance & Accountancy (CIPFA) Codes of Practice.

The Finance Manager - Technical Accountancy provided explanation on the various tables in the report showing the allocated schemes split into three sections - Statutory/Regulatory, Retained Assets and Investment.  Progress to address the estimated £3.187m shortfall for 2017/18-19/20 had formed part of regular budget monitoring reports to the Committee and the achievement of forecasted capital receipts had helped to fully fund the approved programme for 2017/18-20/21.  This demonstrated the effectiveness of the Council’s prudent policy in only applying capital receipts when achieved.

The report indicated that the Council’s ambitions outweighed the funding available to support the programme over the next three years and it was reported that Welsh Government (WG) funding would reduce by £0.118m for 2018/19.  An overall shortfall in projected funding of £8.216m to support proposed schemes for the period would need to be met by the achievement of future capital receipts (currently estimated to be around £8.3m) or other options such as alternative grants, prudential borrowing or further scheme phasing.

Councillor Shotton referred to various schemes in the Housing Revenue Account Capital Programme which supplemented the Council Fund Capital Programme, and the use of capital assets on the Social Housing and Regeneration Programme.  He highlighted a number of additional allocations in the Capital Programme such as school toilet upgrades, school extension/remodelling in Hope and Bagillt and replacement of the Glanrafon learning disability day services facility.  He also expressed his thanks to his Welsh Local Government Associate colleague, Councillor Andrew Morgan (the Leader of Rhondda Cynon Taf) for his involvement in negotiations with WG to secure funding to support local highway improvements, including a £1.427m share for Flintshire.

Councillor Cunningham asked about the approved allocation for the Flintshire bridge inspection and was informed that the results would need to be analysed.  Whilst the Council was currently liable for the cost of any remedial works identified from the inspection, responsibility for the road over the bridge could change once the A494 ‘Red route’ was enacted as it would become part of a trunk road and thus a WG responsibility.  Following further discussion, Councillor Marion Bateman proposed that the Committee welcome early discussions with WG on shared responsibility for any costs arising from the inspection, given the potential scale of this risk.  It was clarified that the outcome of the inspection would be reported to the Environment Overview & Scrutiny Committee and, if affecting the Capital Programme, to this Committee as well.

Councillor Jones said it was important to understand the effect of capital expenditure on new schemes on the revenue account.  The Finance Manager said that it was difficult to provide a total figure as each scheme allowed consideration of revenue consequences, however, the Investment section of the programme was likely to incur the main revenue pressures.  She explained that the two schemes added to the programme during 2018/19 had nil impact on the revenue budget.

The Chief Executive clarified the two types of revenue strains caused by some schemes and spoke about the Council’s lower risk approach to borrowing.  The potential revenue impact of new capital schemes could be due to the financing costs of additional borrowing and /or the additional running costs of maintaining a new asset such as staffing, energy, maintenance etc.

On the Highways Asset Management Plan, Councillor Johnson asked if additional funding could be sought from WG to repair rural roads damaged by diverted traffic as a result of work along the A55.  The Chief Executive and Councillor Shotton agreed that this was a fair request to make.

In response to a question from Councillor Woolley on the redevelopment of Theatr Clwyd, the Chief Executive said that assurances were being sought from WG and the Arts Council for Wales that the project would be recognised and funded as a strategic project of national significance before the Council could commit to further investment.

Councillor Haydn Bateman was given explanation on the allocation for the North Wales Residual Waste Treatment Project in line with the joint agreement had been made for shared responsibilities.

Following his earlier comments, Councillor Jones proposed that the Committee receive a report outlining the effects of the capital expenditure (new schemes for approval) and detailing the effects on the revenue account, including cost of borrowing, operational revenue costs and operational benefits.  Councillor Shotton said that as well as additional costs, the savings should also be reflected to give a full picture.  The Chief Executive advised that the report would be scheduled for March or April.

RESOLVED:

(a)       That the Committee supports the allocations and schemes in Table 4 (paragraph 1.06.1) for the Statutory/Regulatory and Retained Assets sections of the Council Fund Capital Programme 2018/19 - 2020/21;

(b)       That the Committee supports the schemes included in Table 5 (paragraph 1.07.1) for the Investment section of the Council Fund Capital Programme 2018/19 -2020/21;

(c)       That the Committee notes that the shortfall in funding schemes in 2019/20 and 2020/21 (paragraphs 1.08) at this point in the approval process is flexible.  Options including a combination of future capital receipts, alternative grants (if available), prudential borrowing or scheme phasing over several years will be considered during 2018/19 and included in future capital programme reports;

(d)       That the Committee notes the further development and refresh of a forward Capital Strategy and Asset Management Plan; and

(e)       That the Committee informs the Cabinet:

(i)    that it has requested a report which outlines the effect of capital expenditure (new schemes for approval) and detailing the effects on the revenue account, including cost of borrowing, operational revenue costs and operational benefits, for the March meeting if possible, otherwise April;

(ii)   that there are concerns about the cost of any remedial works required as a result of the inspection of the Flintshire Bridge.  Early negotiations with WG on shared responsibility for costs, in advance of any changes arising from the Red route implementation are welcomed.  The results of the inspection to be reported to Environment Overview & Scrutiny Committee and if affecting the Capital Programme, to Corporate Resources Overview & Scrutiny Committee as well; and

(iii)  that it invites the Cabinet to consider making representations to Welsh Government about the wear and tear to Flintshire roads being used as diverted routes as a result of work on the A55.