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APPENDIX 2
AGENDA ITEM NO. 5
REPORT TO:
Member/Officer Working Group
REPORT NO.
DFIS/57/03
DATE:
17 December 2003
REPORTING OFFICER: Director of Finance & Information Services
CONTACT OFFICER:
Martyn G Scholes (292700)
SUBJECT:
Revised Funding Plan
WARD:
Maesydre
PURPOSE OF THE REPORT
To enable the Working Group to consider a revised funding plan for the Secondary
Schools Project.
INFORMATION
A. CAPITAL RECEIPTS
1. The Council’s capital receipts policy provides that 25% of capital receipts from the
sale of surplus assets be retained by the service generating the receipt apart from
economic development where all of the receipts are earmarked for reinvestment in the
industrial portfolio. In addition the policy also provides for the reinvestment of 100%
of the capital receipts from the agricultural estates sales provided that capital projects
are agreed at the time of the decision to sell the assets.
Housing capital receipts from the sale of council houses are currently subject to the
requirement under the Local Government and Housing Act 1989 that 75% of the
receipts are reserved or set aside to repay debt. Consequently, only 25 % of HRA
receipts can be used to fund capital expenditure.
Subject to the above, capital receipts can be applied “corporately” to finance capital
investment for any service as required. However, in practice the Council has
reinvested the “usable” element of the housing capital receipts in the council’s
housing stock.
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2. Members will be aware from the Statement of Accounts for 2002/03 approved by the
Council in July, that at the 31 March 2003 the Council had accumulated income from
the sale of surplus assets and “right to buy” council house sales as follows: £m
5.1
2.3
£7.4 m
General
Housing
Total
This accumulated income is referred to as “capital receipts unapplied”.
3. Right to buy sales of council houses have increased significantly in 2003/04. Even
after allowing for the reinvestment of some of the usable capital receipts in the
procurement of the new housing offices and depot at the former Lego factory and
other planned housing capital investment, the estimated usable housing receipts at 31
March 2004 is £3.4 million. Members are asked to consider whether to recommend
to the Executive Board the use of the £3.4 million housing capital receipts unapplied
at 31 March 2004 to part fund the secondary schools project on a “borrow and return”
basis in the event of a “no vote” in the housing stock transfer process.
Members should note that new draft Welsh Assembly Government regulations will
mean that from 1 April 2004 capital receipts generated from the sale of council
houses can be used for housing capital purposes only. However, the balance of
unapplied housing receipts at 31 March 2004 will still be available to fund capital
projects corporately.
4. The balance of general capital receipts unapplied at 31 March 2004 is estimated at
£2.7 million. Again this accumulated balance could be used to part fund the
secondary schools project, although members would need to agree the acceleration of
the planned sale of surplus assets to replenish the balance of capital receipts
unapplied at future meetings of the working group.
5. Earlier in the agenda for this meeting members will have considered the generation of
capital receipts from the sale of the Groves site and the “nine acre field” site. Subject
to members views, it should be possible to realise up to £1.5 million from the sale of
part of the “nine acre field” site subject to a satisfactory resolution of the legal and
planning issues detailed in report DDS/13/03.
B. SCHOOL BUILDINGS IMPROVEMENT GRANT
6. The Welsh Assembly Government has approved in principal the payment of the
2005/06 School Buildings Improvement Grant estimated to be £1.4 million one year
in advance. Subject to confirmation the grant will be available in 2004/05 to fund
spending on secondary schools project. However, use of the grant in this way will
impact on other schools schemes planned to be funded from this source in 2005/06 so
it is suggested that this grant be applied on a “borrow and return” basis.
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7. The table shown in Appendix 1 summarises the funding proposals described above. It
can be seen that the planned capital funding can be used in 2003/04 to meet the
estimated payments. Further planned funding together with the unplanned funding
referred to earlier in this report can, if agreed by members, fully meet the estimated
payments in 2004/05. In 2005/06 a funding deficit of £1.1 million is forecast.
Members will need to consider at a future meeting of the enlarged group an
accelerated programme for the disposal of surplus assets to cover this deficit and the
need to “repay” borrowed funding.
RECOMMENDATIONS
That the group recommends to the Executive Board:
i)
the revised funding plan for the secondary schools’ project detailed in Appendix 1.
ii)
that the Capital Receipts policy be waived to allow the capital receipts unapplied
to be allocated in full to the Secondary Schools’ Reorganisation project.
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