Report Cabinet Part 1 Date: 11 th January 2016 Item No: Please see above Subject Capital Programme Monitoring and Additions January 2016 Purpose To submit to Cabinet for approval, requests for new capital schemes to be added to the Council’s Capital Programme. To submit the re-profiled Capital Programme budgets to Cabinet for approval. To update Cabinet on current spending against the revised Capital Programme schemes highlighting the forecast outturn position for the programme as at January 2016. Author Senior Finance Business Partner (Capital) Ward All Wards Summary The report requests that new schemes be added to the programme, and updates Cabinet on the budget re-profiling undertaken. The report also updates Cabinet on the capital expenditure forecast position and the current position regarding capital receipts. Proposals To approve the additions to the Capital Programme requested in the report. To approve the re-profiled capital budgets and note the capital expenditure forecast position as at January 2016. To note and approve the allocation of in-year capital receipts. Action by Assistant Head of Finance Timetable Immediate This report was prepared after consultation with: Heads of Service Directors Accountancy teams for relevant service areas Relevant Service Area Project Managers NORSE Property Services
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Report Cabinet Part 1 Date: 11th January 2016 Item No: Please see above
Subject Capital Programme Monitoring and Additions January 2016
Purpose To submit to Cabinet for approval, requests for new capital schemes to be added to the
Council’s Capital Programme. To submit the re-profiled Capital Programme budgets to Cabinet for approval. To update Cabinet on current spending against the revised Capital Programme schemes
highlighting the forecast outturn position for the programme as at January 2016.
Author Senior Finance Business Partner (Capital)
Ward All Wards
Summary The report requests that new schemes be added to the programme, and updates Cabinet
on the budget re-profiling undertaken. The report also updates Cabinet on the capital expenditure forecast position and the
current position regarding capital receipts.
Proposals To approve the additions to the Capital Programme requested in the report.
To approve the re-profiled capital budgets and note the capital expenditure forecast
position as at January 2016. To note and approve the allocation of in-year capital receipts.
Action by Assistant Head of Finance
Timetable Immediate
This report was prepared after consultation with:
Heads of Service Directors Accountancy teams for relevant service areas Relevant Service Area Project Managers NORSE Property Services
Background In February 2014, the Council approved a four year Capital Programme to cover the financial years
2014/15 to 2017/18 totalling £80.551 million. We are now in the second year of the four-year programme, and over time changes have been made to the programme to revise the total budget to £110.577 million. The most recent changes are based on the reprofiling exercise that has been undertaken during the past three months, as well as the addition of new capital schemes. The table below shows the changes made to date:
Report 2014/15 £000’s
2015/16 £000’s
2016/17 £000’s
2017/18 £000’s
Total £000’s
Budget Budget Budget Budget
Original Programme 42,619 12,222 11,414 14,296 80,551
Capital Programme Outturn Report 14/15 (budgets)
52,160 16,083 28,629 20,063 116,935
Actual Budget Budget Budget
Capital Programme Outturn Report 14/15 (revised for slippage)
27,197 39,993 27,813 20,063 115,066
July 2015 Additions Report 27,197 42,198 27,813 20,063 117,271
October 2015 Monitoring Report 27,197 41,153 27,797 20,063 116,210
This Report 27,197 26,095 39,087 18,198 110,577
Changes to the approved Capital Programme The changes to the capital programme identified in this report have decreased the overall size of the
remaining three year programme by £5,633k. The revised capital programme is shown in Appendix A, with the overall changes summarised below: New external grant funded schemes – £1,620k
Schools Challenge Cymru (£159k) – Welsh Government have approved this allocation for 2015/16, with the schools benefitting from an improved teaching and learning environment being Llanwern High, Lliswerry High, and St Julians School.
Flying Start (£124k) – additional funding awarded by WG to be used for small projects at six LSOAs.
Energy Efficiency (£402k) – remaining grant money available from WG to enable NCC to administer grant awards to qualifying social housing tenants to fund improvements to efficiency via insulation works, boiler replacements and overcladding works.
Substance Misuse Action Fund (£935k) – NCC acts as an agent, administering this grant on behalf of WG, who provide full funding for applicable schemes annually. The approved schemes for 2015/16 have been confirmed.
Increase in S106 and other contributions – £80k
Street Lighting (£80k) – additional funding has been secured by Streetscene from an external developer, which is being used to supplement the existing annual sums allocation for this year.
Use of earmarked reserve – £46k
Usk Plaza Fountains (£46k) – the reinstallation of the fountains to coincide with the opening of the Friars Walk shopping centre has been completed; the cost of the works are to be paid for from the capital works reserve.
Budget increase, where previously omitted, to existing borrowing funded schemes – £520k 21st Century Schools Welsh Medium Primary (£395k) – sums assigned by Norse Asset
Maintenance in 2014/15 to be transferred to the Ysgol Bro Teyrnon and Ysgol Ifor Hael, previously omitted from the budget.
Telecare Service Equipment (£60k) – historic capital budgets for this scheme are now coming to an end. The business case put forward for savings consultation for the MTFP process for 2016/17 includes capital costs of £30k per year from 2016/17.
Maesglas Depot: Tredegar House Nurseries (£65k) – the closure and movement of the nurseries from Tredegar House to Maesglas Depot has now been completed; an element of the budget had been held back within the Change & Efficiency budget so now needs to be transferred across to this scheme.
Reduction of schemes/ removal of budget – £4,980k
Installation of Cashless Catering in Schools (£100k) – full rollout has been delayed into 2016/17, with costs anticipated to be significantly less than originally predicted therefore requiring a budget decrease.
21st Century Schools: Lodge Hill Reorganisation (£1k) – rounding correction following small item of expenditure in 2014/15.
Asset Maintenance (£161k) – further discussion and reconciliation of budgets with Norse have determined that the 2015/16 budget is overstated by this amount, which partly offsets the transfer of budget to 21st Century Schools.
Replacement of High Volume Printing Machines & Managed Printer Service (£230k) – the lease contracts for both arrangements have been reviewed following extension of existing contracts, which has resulted in the removal of £230k from existing budgets.
Demolition of Monnow Youth Building (£1k) – historic scheme with no payments remaining, residual budget removed.
Leisure IT Equipment various (£168k) – future programme schemes that are no longer required since the transfer of services to Newport Live.
Change & Efficiency Programme (£4,319k) – as there are no current or likely immediate calls on this budget for 2015/16, the allocation for this year is removed.
Reprofiling of budget into the four year programme starting 2018/19 – £2,919k
Replacement of High Volume Printing Machines & Managed Printer Service (£170k) – in addition to the budget reduction noted above, a review of the lease contracts cycle for these schemes has also resulted in the movement of £170k budget into 2019/20.
Fleet Replacement Programme (£2,749k) – a reprofiling exercise has removed the ‘front loading’ of this budget, which is now based on a revised spend forecast. The effect of this has been a spreading out across all years up to 2019/20.
2015/16 Capital Expenditure Position as at December 2015
The 2015/16 capital programme allocation now totals £26,146k. Capital expenditure incurred up to the end of November 2015 totalled £13,368k. An update on the headline/ high value schemes is provided in the next section; Appendix B details the progress on the remainder of this year’s programme.
The reprofiling exercise has been undertaken and completed in conjunction with the Heads of Service, to address the previous issue around slippage. Forecast outturn is now more sensible in relation to the revised budgets.
The forecast outturn position for the 2015/16 programme is estimated to be £25,557k as detailed in the table below:
Customer Services & Digital Innovation 1,429 1,114 0 (315)
People & Business Change 172 15 0 (157)
Law & Regulation 120 120 0 0
Adult & Community Services 1,075 1,075 0 0
Childen & Young People Services 0 0 0 0
Streetscene & City Services 8,609 8,539 (59) (11)
TOTAL 26,146 25,557 (105) (484)
Update on Headline/ High Value Schemes
Education
21st Century Schools (21CS) – works are complete for 6 nurseries which consumes the majority of the £1m scheme budget originally intended to provide 9 nurseries. The remaining budget of around £100k will contribute to provision of a nursery at Langstone Primary. The remaining two nurseries at Mount Pleasant Primary and Pentrepoeth Primary will be provided within the demountable replacement scheme and are expected to be completed by September 2016 and September 2017 respectively.
Works, including minor snagging issues, to both Welsh-medium primary schools within 21CS have now been completed. Communications will continue with the relevant parties until the retention period has expired. Asset Maintenance contributions that had previously been omitted in this budget have now been added following discussions with Newport Norse.
Tenders were returned in July 2015 for the ASD Project on the Gaer Primary site. Tender prices far exceeded the available budget so contractors were requested to resubmit tenders on a reduced scope of works. The re-priced documents remained in excess of the available budget so a value engineering exercise has been completed to bring the tender costs within budget. Construction works commenced in November 2015 with expected completion in December 2016.
The contract for the 21CS Welsh-medium secondary school has been awarded to the successful contractor and design work continues. Submission of designs to Planning have been delayed due to further design work being undertaken. Internal layouts have been progressed and near completion. Construction works should be able to commence in Spring 2016 once a favourable Planning decision is made.
A design and build tender is expected to be issued by January 2016 for the new Lodge Hill Primary School. Construction works are expected to commence during the Spring of 2016 with completion
expected before September. Full completion, including demolition and clearance of the sites, is expected to be by summer 2018. Regeneration, Investment and Housing
Vibrant & Viable Places – year 2 of the 3-year Welsh Government funded scheme continues, with a range of schemes completed or on site contributing to the regeneration of the city centre. Following further re-profiling by WG, the allocation for 2015/16 now stands at £4,111k, inclusive of a repayment sum of £399k against the loan to redevelop the former King’s Hotel. The issues preventing payment of the £3.6m outstanding Year 1 drawdown have largely now been resolved.
Asset Management – Newport Norse continue to work to their schedule of priority works for 2015/16. Further works are being discussed in order to allocate the remainder of the available budget allocation of £1,679k.
Renovation Grants – a number of large schemes are programmed for this year, with full spend anticipated against the £1,643k budget for Disabled Facilities Grants and Safety at Home Grants.
Customer Services and Digital Innovation
Superconnected Cities – the two DCMS funded schemes, Broadband Voucher Scheme (£388k) and WiFi In Public Buildings (£535k), are close to completion, with final grant claims being submitted imminently. People and Business Change
Implementation of HR Self-Serve – this project has commenced, with a re-profile of the majority of the £100k budget into 2016/17 to reflect the anticipated spend profile.
The capital programme amount earmarked for Scheme Preparation (£157k) currently does not have any schemes identified against it, but proposals may come forward before year-end. The Change & Efficiency (£4,319k) budget is not required for 2015/16 and is proposed to be removed from the programme, with the 206/17 and 2017/18 allocations remaining intact. Law and Regulation
CCTV Monitoring Service – this scheme is progressing, with equipment being purchased and proposals being considered for refurbishment and relocation of the service. A review of anticipated spend has resulted in a budget re-profile of £189k being pushed into 2016/17, leaving £120k expected expenditure this year. Adult and Community Services
Substance Misuse Action Fund – WG grant of £895k has been approved. The first requests for funding have recently been received from third party providers, with further claims anticipated shortly. Children and Young People Services
The budget allocation for the Residential Unit for Young People has been re-profiled to 2017/18 as no firm proposals have been worked up to date.
Streetscene and City Services
Fleet Replacement Programme – planned vehicle purchases for 2015/16 are resulting in a forecast outturn of £1,500k, which has meant a budget re-profile into future years.
Bus Station/ City Centre Redevelopment – this scheme has now completed, with final works and associated costs remaining to be processed.
Update on Capital Receipts The current position on capital receipts is shown below. The value of receipts earmarked for use as
match funding for the 21st Century Schools Programme Band A has reached its target of £7.5m. Further capital receipts will need to be maximised in order to reduce the borrowing requirement for the Welsh Medium Secondary School Project which also falls under the 21CS umbrella. Norse Property Services had anticipated that around £1m of capital receipts on property disposals would be achieved this year, so this forecast has almost been achieved already.
The table below shows capital receipts held for Newport Unlimited, which are attributable to the previous joint arrangement between Newport City Council and Welsh Government. As reported previously, we are still awaiting a decision by Welsh Government as to clarification of what regeneration projects these funds can be used for.
TOTAL NCC RECEIPTS 6,858,633 1,136,265 7,994,898 7,714,417 280,481
Risks Risk Impact of
Risk if it occurs* (H/M/L)
Probability of risk occurring (H/M/L)
What is the Council doing or what has it done to avoid the risk or reduce its effect
Who is responsible for dealing with the risk?
Overspend against approved budget
L L Regular monitoring and reporting of expenditure in accordance with the timetables set by Cabinet/Council should identify any issues at an early stage and allow for planned slippage of spend.
Corporate Directors / Heads of Service / Head of Finance
Programme growing due to unforeseen events
M M Good capital monitoring procedures and effective management of the programme should identify issues and allow for plans to defer expenditure to accommodate urgent works. Priority asset management issues are now being dealt with through a specific programme allocation.
Corporate Directors / Heads of Service / Head of Finance
* Taking account of proposed mitigation measures
Links to Council Policies and Priorities The programme supports a large number of the Council’s aims and objectives.
Options Available To approve the changes to the Capital Programme and note the monitoring position as set out in
the report.
The Cabinet has the option not to put forward some or all of the changes to the Capital Programme set out in the report.
Preferred Option To approve the changes to the Capital Programme and note the monitoring position as set out in
the report.
Comments of Chief Financial Officer The work that has been undertaken on reprofiling the Capital Programme should now address the
issues previously experienced around slippage. In some instances, budget allocations are unable to be re-profiled beyond 2016/17 due to completion timescales, so this may need to be reviewed again next year. The forecast outturn position will continue to be monitored as this informs the Council’s borrowing forecasts and MRP pressures in the Medium Term Financial Plan.
Comments of Monitoring Officer There are no legal issues arising from this report.
Staffing Implications: Comments of Head of People and Business Change There are no direct HR implications associated with the report.
Comments of Cabinet Member N/A
Local issues As the report deals with the Capital Programme for the Authority as a whole, there are no local issues.
Scrutiny Committees N/A
Equalities Impact Assessment N/A
Children and Families (Wales) Measure N/A
Consultation As set out in the early part of the report.
Background Papers Capital Programme 2014/15 to 2017/18 – February 2014 Capital Programme Monitoring and Additions Report – July 2014 Capital Programme Additions Report – October 2014 Capital Programme Monitoring Report – November 2014 2015/16 Budget & Medium Term Financial Plan – February 2015 Capital Programme Monitoring and Additions Report – February 2015 Capital Programme Outturn 2014/15 – June 2015 Capital Programme Additions Report – July 2015 Capital Programme Monitoring Report – October 2015 Dated: 18th December 2015
APPENDIX A – Revised Capital Programme 2015/16 – 2017/18