Agenda item

Capital Strategy

The report allows the Audit and Governance Committee to consider and comment on the Council’s Capital Strategy 2020/21 to 2022/23 before adoption by Full Council.

 

The Committee is requested to recommend to Full Council that the Capital Strategy 2020/21 to 2022/23 be approved.

Minutes:

            The Financial Services Manager explained that the adoption of a Capital Strategy was a requirement introduced by the 2017 Prudential Code and that this had been introduced in 2019 and would continue to develop over time.

 

            She highlighted the following areas:

 

§  The aim of the strategy was to balance Capital Expenditure needs and expectations with the limited resources available to the Council

§  Members approved the strategic direction of the Council and those priorities should be reflected on the Capital Expenditure decision

§  It was good practice to adopt whole life costing to make decisions

§  Capital Expenditure was funded through a variety of sources that were extremely limited. E.g. Capital receipts had been used to fund the General Fund (GF)  for housing and the Wave in the past and Capital Expenditure associated with the GF assets e.g. potentially Fitzleet carpark.

 

There was a separate programme for the Housing Revenue Account (HRA) and the GF, because they were totally separate funds.

 

The HRA Business Plan was driven by the aim of acquiring 250 new dwellings over the next 10 years and that would be funded by 30% Right to Buy (RTB) receipts and 70% borrowing. It would need to be kept under review for affordability and potential changes in government legislation. However, RTB sales have dried up which means potentially 100% borrowing for future schemes which would have implications for the HRA. The completed Stock Condition survey had also identified the need for significant investment in the existing housing.

 

The Annual core programme included Essential I.T, Asset Management and Disabled Facilities Grants (DFG). The DFG programme would be entirely funded from the Capital Grant. The remainder would mainly be funded from revenue contributions.

 

The prioritisation of any new schemes would need to show a clear benefit to the Council if it were to use limited resources, demonstration of a sound business case and be linked to the Council’s strategic direction.

 

In summary the Capital Strategy:

 

§  Would sit above other more detailed policies, procedures and plans and references them to allow for more detail if needed

§  Shows how the Council determines its priorities for capital investment decisions

§  Clearly set out how capital would be funded

§  The Council needed to adopt a strategic approach for its capital planning based on sound principles, the plans were, affordable, prudent, sustainable and in line with service objectives.

 

The Committee had a full discussion based on the information presented to them, the key points raised were;

 

§  How would a joint partnership or venture be assessed – where would the risk lie? This would be down to the prudent assessment that would take place prior to entering such a partnership. 

§  Concern was raised regarding staffing levels to support the Digital agenda

§  The budget for future essential schemes and projects and where this money would come from. This was explained as effectively being a balancing figure that was flexible and would change.

 

The Chairman with the agreement of the Committee then invited Councillor Coster to ask a question from the public gallery. He asked what was the update regarding the Property Investment Fund (PIF) and would the Council consider more investment in property in the future? The Financial Services Manager advised that since the purchase of the Arcade in Bognor Regis there were no capital receipts in the PIF and until the Council sold something it would remain that way. The Group Head of Corporate Support then advised that there was nothing to stop the Council investing in property, it would require a full governance process and a business case as well as possible borrowing of monies as we have little or no capital receipts as earlier explained.

 

The Committee expressed their thanks to the Group Head of Corporate Support, the Financial Services Manager and their teams for their continued hard work.

 

The Committee

 

RECOMMEND to Full Council – That

  

1.    the Capital Strategy 2020/21 to 2022/23 be approved

 

Supporting documents: