To receive and consider the report of the Cabinet Member for Finance and Corporate Transformation.
Minutes:
Documents Considered:
· Report of the Cabinet Member for Finance and Corporate Transformation.
Issues Discussed:
· The revised programme is budgeted at £96.46m following the awarding of additional grants and the reprofiling of budgets between financial years.
· Actual spend amounts to £24.37m (25% of the total budget).
· 42% or £40.66m of the capital programme will be supported through borrowing.
· The continued increase in inflation is having an impact on schemes as materials and construction costs rise. Interest rates are also rising increasing the cost of borrowing.
· Service managers are monitoring schemes and mitigating increases where possible.
· Some schemes may be reduced or paused until there is more certainty about cost and funding. Any additional funding required is likely to increase borrowing which will increase costs on the revenue budget. To reduce expenditure some pipeline capital schemes that have not progressed to approval stage have been delayed, thus reducing the immediate need to borrow, delivering an underspend on borrowing costs for the year of £0.5m.
· Capital receipts - £810k have been received and further sales agreed to the value of £870k. It was expected that sales totalling £2m would be achieved in the financial year.
· Questions:
Question |
Response |
What is the current cost of borrowing and how much has it gone up |
Officer Response: It has gone up and down. In the last financial year the Council managed to borrow at under 2%. At points this year it had been well over 4%. Currently it was around 3.6% and that trend was expected to continue and reduce to about 3% next year. The Council has mitigated the higher rates by only taking out 12 month borrowing at slightly higher rates in the anticipation that rates would fall and longer term borrowing would be undertaken when rates were more reasonable. |
What are the advisers forecasting as far as rates next year, are they expecting them to be above 3%. |
Officer Response: The advisers are expecting rates to reduce to 3% / 3.5% next year and then reducing to 2.5% / 3% the following year. |
It is prudent to reprofile and delay capital projects under the circumstances. It is noted that around 40% of funding comes from grants from Welsh Government. Can assurance be provided that by delaying projects this does not compromise or reduce the amount of Welsh Government grant. |
Officer Response: The grants identified will be spend this year within the terms of the grant. There are schemes where there is a finite date by which funding has to be spent and the Council works to ensure that this funding is spent. There is a longer term envelope for the funding on other schemes such as for school projects and there are opportunities to reprofile these in consultation with Welsh Government so grant funding is not lost. Therefore there are no major risks.
Services are cutting their cloth accordingly with the in year grant schemes. |
The percentage of grant expected will follow through so it will be 50% / 60% of the total cost. Are we not expecting much variation in that. |
Officer Response: No and borrowing would be expected to reduce towards the end of the year as more up to date forecasts and spend is known. |
Page 46 - Appendix B – Head of Service commentary for Adult Services. Did not find the commentary very explanatory / helpful. It states that the capital funds would be fully utilised then stated that the funding would be fully spent or carried forward. We do need the funding but if the funding was not spent this year could it be taken out of the current year’s budget and put in next year’s budget |
Officer Response: The £1m budget for Adult Services is comprised of several different pots. A certain part of it is set aside to undertake capital works for the refurbishment of care homes which it is expected will be fully utilised during the year. Other funding for other schemes may be spent if possible but could be carried forward to next year depending on the feasibility of schemes currently. It was expected that the service would spend about half of the funding in the current financial year. |
Outcomes:
· Noted.
· The Cabinet Member for Finance was asked to challenge services to include more useful commentary in the report in future.
Supporting documents: