The Joint Executive Advisory Board (JEAB) considered a report concerning the Council’s Capital and Investment Strategy 2023-24 to 2027-28.
The Lead Specialist Finance presented the report and explained that the Strategy gave an overview of how capital expenditure, capital financing and treasury management activity contributed to the provision of local public services. The Strategy also detailed how associated risks were managed and the implications for future sustainability.
Decisions made now, and during the period of the Strategy, in respect of capital and treasury management would have financial consequences for the Council for many years into the future. The report, therefore, included details of the capital programme, any new bids / mandates submitted for approval, plus the requirements of the Prudential Code and the investment strategy regarding treasury management investments, service investments and commercial investments. The report also covered the requirements of the Treasury Management Code and the prevailing Department for Levelling Up, Housing and Communities Statutory Guidance.
It was highlighted that the Housing Revenue Account (HRA) capital programme anticipated a considerable spend of £20 million in 2023/24 in respect of major repairs and improvements to the existing housing stock, in addition to the budget allocation of £26 million for such works in the current financial year. The General Fund (GF) had seven new bids totalling £10.4 million identified in the Strategy over 5 years increasing the Council’s underlying need to borrow to £296 million from 2022-23 to 2027-28. Other bids in respect of the Spectrum and the Council’s Operational Depot would come forward as separate mandates in due course. No further investment in North Downs Housing would be made until the Company’s operation had been reviewed and its business plan updated accordingly.
Subject to Council approving the budget on 8 February 2023, the Executive would be asked to agree that the amount of £500,000 earmarked for the North Street scheme be removed from the capital programme owing to significant changes in the scheme and that the new bids, as shown in Paragraph 4.12 of the report, be approved for inclusion in the capital programme as indicated.
The JEAB received supplementary information advising that, at its meeting held on 19 January 2023, the Corporate Governance and Standards Committee had also considered this report and endorsed the recommendations to the Executive and Council in respect of this matter.
The following points arose from the ensuing discussion, comments and questions for forwarding to the Executive:
1. The Strategy was intended to represent an appropriate balance between risk and cost effectiveness in relation to new capital bids and mandates. Although some alternative borrowing / investment strategies and risk management implications were highlighted in the report for comparative purposes, none were recommended for adoption as the present approach of a mixture of policies was felt to be the most appropriate. It was acknowledged that, owing to constraints within its reserves, the Council was now entering a period where it would increasingly rely on external borrowing to fund schemes which would lead to ... view the full minutes text for item 60
The Committee considered a report on the Council’s capital and investment strategy, which gave a high-level overview of how capital expenditure, capital financing and treasury management activity contributed to the provision of local public services along with an overview of how associated risk was managed and the implications for future financial sustainability.
Decisions made now, and during the period of the strategy on capital and treasury management would have financial consequences for the Council for many years into the future. The report therefore included details of the capital programme, any new bids/mandates submitted for approval plus the requirements of the Prudential Code and the investment strategy covering treasury management investments, service investments, and commercial investments. The report had also covered the requirements of the Treasury Management Code and the prevailing DLUHC Statutory Guidance.
The Committee noted that in order to achieve the ambitious targets within the Corporate Plan, the Council needed to invest in its assets, via capital expenditure, which was split into the General Fund (GF) and Housing Revenue Account (HRA).
All projects, regardless of the fund, would be funded by capital receipts, grants and contributions, reserves, and finally borrowing. When preparing the budget reports, it was not known how each scheme would be funded and, in the case of regeneration projects, what the delivery model would be. The report showed a high-level position. The business case for each individual project would set out the detailed funding arrangements for the project.
The Committee noted that some capital receipts or revenue income streams might arise as a result of regeneration schemes, but in most cases the position was currently uncertain, and it was too early at this stage to make assumptions. It was likely that there would be cash-flow implications of the development schemes, where income would come in after the five-year time horizon of the report and the expenditure incurred earlier in the programme.
The Council had an underlying need to borrow for the General Fund capital programme of £286 million between 2022-23 and 2027-28. Officers had put forward bids, with a net cost over the same period of £10 million, increasing this underlying need to borrow to £296 million should these proposals be approved for inclusion in the programme.
The capital programme included several significant regeneration schemes, which it was assumed would be financed from GF resources. However, subject to detailed design of the schemes, there might be scope to fund them from HRA resources rather than the GF resources in due course. Detailed funding proposals for each scheme would be considered when their Outline Business Case was presented to the Executive for approval.
The main areas of expenditure (shown gross), as set out in the report, were:
· £274 million Weyside Urban Village (WUV)
· £62 million strategic property purchases
· £32 million North Downs Housing (NDH)
· £28 million Ash road bridge and footbridge
Upon reviewing the current capital programme, officers had identified that there was a separate scheme for the bus station, the cost of which had also been ... view the full minutes text for item 54
The Joint Executive Advisory Board (EAB) was invited to consider this report regarding the Capital and Investment Strategy 2022-23 to 2025-26 at its meeting held on 10 January 2022.
The Lead Specialist - Finance introduced the report and sought comments from the Joint EAB in respect of the capital bids outlined within the appendices to the report. The following points arose from related questions, comments and discussion relating to the bids for forwarding to the Executive:
Guildford Economic Regeneration (GER) Programme
This programme, which consisted of the delivery of a proactive strategy incorporating a master plan for the comprehensive economic and physical regeneration of Guildford town centre, involved expenditure in the region of £3 million over a two year period. In response to some expressed concern, the Joint EAB was assured that full consultation would be undertaken in respect of each element of this long term scheme, such as flooding, transportation, and delivery of homes. Early work was likely to involve flood remediation measures. Once the current work in this regard had been progressed to a sufficient stage with evidence of the intention to pursue the programme, available grants would be applied for to provide the necessary funding.
Stoke Park Paddling Pool
This bid sought capital funding to replace the Stoke Park paddling pool rubber crumb surface during April 2022 to enable the paddling pool to be operated for the next season and beyond. Full support was expressed for the safe and hygienic continuation of this service which was highly valued by many families. A query as to whether the service would be open from the commencement of the season for use of the pool would be referred back to relevant officers for a response.
Albury Closed Burial Grounds
There was a statutory obligation and health and safety reasons to maintain the heritage boundary wall of the closed burial ground at the old parish church of St Peter and St Paul, Albury. Whilst these were recognised, some concern regarding the related level of expenditure, involving the engagement of specialist architects, was expressed in the light of the Council’s Savings Strategy. It was confirmed that the burial ground was closed to new burials and not to visitors of the existing burials. Queries around the timing of the bid to undertake the maintenance work and the estimated cost of the wall repairs could be referred to relevant officers for a response and explanation of the amount of the budget bid.
Chilworth Gunpowder Mills
Recent renovation and repair work at the Gunpowder Mills had led to the discovery of a significant defect with a stone culvert and spillway beneath the main access path into the site. The possibility of temporarily or permanently closing this site was suggested in reflection of the Council’s financial constraints which limited its ability to address the related health and safety liability which would render the Council culpable in the event of any injuries. Councillors were reminded of the outcome of the recent public consultation which had indicated that ... view the full minutes text for item 49