Agenda item

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

The report of the Scrutiny Manager was presented for the Committee’s consideration. The report outlined the context to the 2024/25 Budget setting process along with the key issues and questions for Scrutiny in evaluating the Executive’s capital budget proposals. The report of the Director of Function (Resources)/Section 151 Officer to be presented to the 29 February, 2024 meeting of the Executive setting out the proposed capital budget for 2024/25 for recommendation to the Full Council was attached at Appendix 1.

Councillor Robin Williams, Deputy Leader and Portfolio Member for Finance presented the report and he referred to the funds available to finance the capital programme for 2024/25 as shown in Table 1 of the report. The HRA covers income and expenditure relating to the Council’s housing stock and its funds cannot be used for any other purpose. The General Capital funding from Welsh Government for 2024/25 is £12k higher than the allocation for 2023/24 and is in line with funding levels seen over the past 12 years. There has been no significant increase in the funding despite the fact that its value has been significantly eroded by inflation over this period meaning that it is becoming increasingly challenging to maintain and invest in the Council’s capital assets. The recommended capital programme for 2024/25 is summarised in Table 3 of the report and totals £43.838m.

The Director of Function (Resources)/Section 151 Officer advised that the options regarding capital expenditure and investment are limited because of the constraints on capital resources. The Executive has considered the feasibility of taking out unsupported borrowing but due to interest rate levels and the fact that the cost of unsupported borrowing would have to be met from the revenue budget, which is already under pressure, this option has been discounted in 2024/25. The Communities for Learning Programme currently only includes the completion of the Ysgol y Graig extension. The proposed HRA programme for 2024/25 will see continued investment in the existing stock to ensure continued compliance with the WHQS and will be funded as outlined in section 7 of the report which includes an element of unsupported borrowing which is planned as part of the HRA Business Plan.

Councillor Geraint Bebb, Chair of the Finance Scrutiny Panel reported from the Panel’s 15 February 2024 meeting at which consideration was given to the 2024/25 capital budget proposals. The issues discussed by the Panel included the limited sources of capital funding available to the Council for major projects apart from the HRA which can only be spent on the Council’s housing stock, the resources that would be needed to enable the Council to invest in its assets in the medium term and the challenges in completing disabled facilities grant projects which has implications for the Council’s ability to spend its capital budget resources in a timely way. Having considered all the information and evidence presented the Panel was supportive of the capital budget proposals for 2024/25 as presented and recommended the proposals to the Corporate Scrutiny Committee.

The following were points of discussion by the Committee –

·      Whether the Council’s longer term capital strategy includes plans for investing in the Island’s secondary schools.

·      Whether given the limited capital funding available for the General Fund, the proposals focus on where expenditure and investment are needed most

·      How any unspent Disabled Facilities Grant (DFG) money is dealt with at the end of the financial year

The Portfolio Member for Finance and the Officers responded to the points raised as follows –

·      That a Strategic Outline Programme is being developed which will set out the Council’s plans for education investment over the coming years and will include reference to the secondary sector. The Programme is subject to Welsh Government approval.

·      That the capital programme for 2024/25 considers the principles set out in the Capital Strategy in respect of the areas in which capital resources are spent having regard also to the limited capital funding available. There has been no significant increase in the capital grant provided by Welsh Government in recent years and because of inflation, the value of the funding has reduced. The capital programme focuses on maintaining the Council’s assets at their current standard and is largely reactive as capital resources are not sufficient to enable the Council to undertake any major improvement to its assets.

·      That any DFG funding not spent during the year will slip into the next financial year. The amount of slippage is subject to the Executive’s approval and depends on the level of underspend and the number of applications awaiting a grant allocation.

·      In response to a suggestion about floating the possibility of removing the ring-fence around the HRA, the Committee was advised that the law does not allow the ring-fence to be broken by using HRA funds for any purpose not related to the Council’s housing stock. The HRA surplus is generated by rental income the purpose being that the funds are used for the benefit of the tenants.

The Chief Executive highlighted that the Council has a range of assets which because of the insufficiency of capital funding it is unable to maintain to the desired quality and standard. Whilst the Council has a vision and long -term objectives for its assets, the resources at its disposal make it difficult to realise those aspirations. Capital grants for specific projects which are often awarded competitively are becoming increasingly important in terms of supplementing and adding value to the Council’s core capital funding. A Capital Strategic Plan, Capital Budget and Asset Management Strategic Plan will be presented to the Executive over the course of the next few weeks which will generate discussions regarding the Council’s priorities and how it should invest time and resources in its projects.

Having scrutinised the Executive’s final draft capital budget proposals for 2024/25 and having considered the information presented both in writing and orally at the meeting as well as the views of the Finance Scrutiny Panel, it was resolved to support and to recommend the draft capital budget proposals for 2024/25 to the Executive as presented.