Agenda item

Budget Setting 2023/24 - Final Draft Capital Budget Proposals

To present the report of the Scrutiny Manager and the Director of Function (Resources)/Section 151 Officer.


The report of the Scrutiny Manager was presented for the Committee’s consideration. The report outlined the context to the 2023/24 Capital Budget setting process including the key role of the Council’s Capital Strategy the principles of which underpin the Council’s capital programme. The report of the Director of Function (Resources)/Section 151 Officer to be presented to the 2 March 2023 meeting of the Executive setting out the final draft capital budget proposals for 2023/24 for recommendation to the 9 March meeting of Full Council was attached at Appendix 1.

Councillor Robin Williams, Portfolio Member for Finance, Corporate Business and Customer Experience reported that capital investment is becoming more difficult as the resources to support capital expenditure specifically the General Capital Funding received from Welsh Government have not increased by any great amount over a number of years and the value of the funding has been significantly eroded in the past twelve months due to inflation. The Executive proposes a capital budget for 2023/24 of £37.962m comprising of 2022/23 schemes brought forward; refurbishment and/or replacement of assets; new one-off capital projects; 21st century school programme and the Housing Revenue Account which is to be funded by a combination of the General Capital Grant, Supported Borrowing and Capital Receipts and in the case of the HRA, the HRA reserve.

The Director of Function (Resources)/Resources advised that additional grants are likely to be received during the year and these will be incorporated within the capital budget. Welsh Government capital funding including the General Capital Grant and supported borrowing has remained largely unchanged over a number of years and additional grant funding has become an increasingly important element of capital resourcing. The scope to use capital receipts is also very limited as any unsold assets are already earmarked for existing plans. The Council is therefore increasingly reliant upon additional capital grants in the year to fund any investments beyond the upkeep of its existing assets. 

In considering the capital budget proposals the following issues were raised by the Committee -

·                Whether the 2023/24 capital proposals enable the delivery of the Council’s medium-term priorities whilst balancing short term pressures and whether the principles of the Council’s Capital Strategy allow the Council to meet its corporate objectives.

The Committee was advised that the core capital funding received from Welsh Government is only sufficient to cover the costs of repairing and refurbishing the Council’s existing assets with grant funding being relied upon to undertake any new investment. The Housing Revenue Account position is different in that the HRA has a healthy level of reserves that are used to fund the development of new housing. The HRA will undertake borrowing once its reserves have reduced to the minimum level set out in the HRA Business Plan in order to continue with that development work; the HRA generates enough revenue from rental income to meet future borrowing costs. The HRA position is therefore such that it allows a much greater level of capital investment and expenditure on the housing side than what the General Capital Grant is able to deliver for other aspects of capital activity in the Capital Strategy; however, the HRA is ring-fenced and cannot by law be used to fund any activity or investment that is not related to the Council’s housing stock.

The Committee was further advised by the Chief Executive that if the financial and economic prospects remain as they are in the medium to long term then the Council will have to consider whether it can continue to maintain all its buildings/assets to a serviceable level hence some difficult decisions may have to be taken. Grant funding is not guaranteed as grants are often awarded on a competitive basis which does not provide the ideal environment in which to plan for capital expenditure and investment in the long-term.

·      The extent to which the Council has autonomy to spend capital funding on local priorities.

The Committee was advised that the General Capital Grant and supported borrowing element from Welsh Government can be spent as the Council wishes but that this funding is by now only sufficient to cover the costs of maintaining existing assets. For additional capital investment the Council is dependent on capital grants many of which come with conditions attached restricting their use to a specific service area or activity. The Council can undertake borrowing on an unsupported basis meaning it would have to fund the cost of borrowing from its own revenue resources; the Prudential Code places limits on Council borrowing to ensure that it is affordable and sustainable unless it can be demonstrated that the borrowing is for schemes that cover their costs or can deliver revenue savings.

Councillor Dafydd Roberts, Chair of the Finance Scrutiny Panel confirmed that the Panel had scrutinised the final proposed capital budget at its meeting on 15 January 2023 and had raised as an issue the extent of slippage annually on the Council’s capital programme suggesting that the Council may be overly optimistic in its projections for capital expenditure. The Panel had considered ways in which it could help with monitoring the progress of capital expenditure.


Having considered the information presented both written and verbally at the meeting and having regard to the feedback from the Finance Scrutiny Panel, it was resolved to recommend to the Executive a proposed capital budget of £37.962m for 2023/24.


(Councillor Aled M. Jones abstained from voting)


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