Capital spending programme
Capital spending is money spent on creating or improving assets where the benefits last more than 12 months. This often means spending on things such as buildings or equipment, which can be used over a long period.
This kind of spending is different to revenue spending, which covers day-to-day items to run services such as staffing and purchase of services, so it is budgeted for separately.
Our five-year capital spending programme is updated continually for agreed changes, and is reported to the executive member for resources three times per year.
The Five-Year Capital Programme
Capital Programme and Core Major Asset Plan
- The Council strategically manages its operational properties through the Core and Major Asset Plan. The Council's operational properties include office accommodation, depots, yards and venues such as the markets and open space facilities. In addition the City has a Victorian legacy of the Grade I listed Harris Museum, cemetery, urban parks and dock estate.
- The Core and Major Asset Plan is informed by regular stock condition surveys to establish a rolling programme of improvement and refurbishment. In addition we have a major repairs programme. Both of these take account of the need for efficiency and environmental impact issues.
- The Council has an investment property portfolio managed to generate income to support the revenue budget and maximise opportunities for regeneration. Performance of this portfolio is reported quarterly to the Cabinet Member. As part of the efficiency plan work we engaged external property advisors to undertake a review of all property and land assets held by the Council. The aim is to identify opportunities for disposal of assets for development and other available options. The disposal of freeholds or changes to leases on existing buildings producing potential receipts was also considered. An action plan was developed and is in the process of being implemented to maximise the investment returns and potential capital receipts from the portfolio.
- The Cabinet have already agreed the sale of previous operational city centre assets which results in a capital receipt and reduces the annual cost burden of maintaining empty operational properties.
- The opportunity for new schemes to be added to the Capital Programme is limited. This is due to the continued reduction in capital funding and the pressure on the revenue budget which limits the capacity to fund borrowing repayments. The Council has a five-year programme, however the core and major asset programme extends over ten years. There is a significant amount of capital expenditure required in the future which is outside the current programme.
Background to the Capital Programme
- The Council has a five-year capital spending programme. The programme includes capital expenditure scheduled for the Council's operational assets. The Council ensures all capital expenditure is directly linked to the Council's priorities, affordable and delivered through key corporate projects. Any spends on the Council's operational assets is scheduled in line with the Council's Core Major Asset Plan. Expenditure in respect of grants or financial assistance is included if the nature of expenditure, when incurred by the Council, is classed as capital expenditure.
- Capital expenditure is usually of a one-off nature, it can be a significant amount and can span over a number of financial years. Examples of capital schemes include the purchase and installation of a new lift or major construction works that includes extending the life of a building e.g. new waterproof roof. Other examples include the purchase of a new vehicle or the refurbishment of a park & open space.
- The Capital Programme is updated continually for agreed changes and reported to the Cabinet Member (Resources). It is also updated during the financial year on a quarterly basis and to Cabinet and Council as part of any financial forecast updates. A prudent approach is taken when preparing the programme to ensure that financing resources are only estimated for when there is relative certainty that they will be received.
- In accordance with CIPFA's Prudential Code the Council's Chief Finance Officer is required to have full regard for affordability, sustainability and prudence when making recommendations about the Council's future capital programme. Such consideration includes the level of long term revenue commitments. The Council considers the affordability of capital investment and the impact on revenue forecasts when formulating its capital spending plans.
- Capital schemes are directly linked with the Council's priorities. Major items of enhancement or renewal are identified via the Council's Core and Major Asset Plan.
- The latest Capital Programme is attached at Appendix G and totals £40.6m. The planned spend over the life of the programme is continuously reviewed and any scheme profiling changes are reflected in quarterly update reports. The table below sets out the latest Capital Programme summary. This has been updated for agreed changes up to the end of December 2019:
Table: Capital Investment Programme Summary 2019/20 to 2023/24:
The table below highlights spend in relation to the Council's key priorities.
|2019 / 2020
|2020 / 2021
|2021 / 2022
|2022 / 2023
|2023 / 2024
|Fairness for You
Capital spending over the next five years by Priority
- Fairness for You - £7.6m - 19%
- Your City - £20.2m - 50%
- Your Council - £12.8m - 31%
Examples of capital schemes by Council Priority
The following shows major planned capital spending by Council priority:
- Parks and Open Spaces - £1m
- Harris Museum - £1.3m
- City Centre Investment Project - £2.1m
- City Deal Community Infrastructure Levy - £14.6m
- Winckley Square Townscape Heritage Initiative - £0.4m
- Regeneration (including Traffic Management) - £0.8m
Fairness for you
- Housing Schemes - £6.1, Including Disabled Facilities Grants, Renovation Grants and Empty Dwellings
- In Investment Strategy Fund - £0.5m
- Community Bank - £1m
- Fleet/Vehicle Replacement - £7.7m
- ICT Schemes - £0.1m
- Council Buildings - Town Hall - £4.9m
Capital Programme - Financing the Capital Programme
The Council has estimated the following financing sources will be available to fund the capital investment programme:
- Disabled Facilities Grant - £4.1m
- Capital Receipts - £0.6m
- Revenue Funding - £1.7m
- Borrowing - £16.2m
- External Contributions - £3.5m
- Community Infrastructure Levy - £14.6m
1. The Council's Budget Working Group have undertaken a review of the financing of the five-year capital programme. The proposals are:
- a reduction to the level of existing prudential borrowing by £500k (excluding borrowing for vehicles);
- removal of the Empty Homes scheme for £50k in 2020/2021. The outcomes of this scheme are included in the Affordable Housing scheme included in the programme in 2019/2020.
2. A review of the phasing of schemes was undertaken to produce a more accurate projection of expenditure and reduce the impact of financing costs within the 5-year programme.
3. A review of proposed new schemes was undertaken to examine the future requirements not only within the current five year programme but in the years beyond. Budget Working Group has produced proposals for new schemes to be added to the current five-year programme along with their financing proposals below.
Capital Programme Proposed Schemes
|2019 / 2020
|2020 / 2021
|2021 / 2022
|2022 / 2023
|2023 / 2024
|Avenham Car Park Security Works
|Vehicle Replacement Programme
|City Centre Asset Management