Agenda item

A report of the Head of Financial Services considering the Draft Capital Plan 2022/23 to 2024/25 as well as possible sources of funding and to begin a period of consultation.

Considered a report of the Head of Financial Services considering the Draft Capital Plan 2022/23 to 2024/25 as well as possible sources of funding and to begin a period of consultation (item 8 on the agenda).

Assisting with consideration of the report: Lead Member for Finance and Property Services, Strategic Director, Environmental and Corporate Services, Head of Financial Services.

Summary, key points of discussion:

• The plan spanned the next three years.  £3.54m had been identified for the Loughborough Town deal monies and £0.9m had been identified for the Shepshed Public Realm project. The total funding for the HRA was £23.3m.  Every scheme had been noted and every project had been allocated.  Plans that had been committed but not costed would be submitted for due process.
• There was a new Capital Plan every two years for a three-year period, so the first year of the new plan was also the last year of the previous plan, so in order to get the context of the next financial year it was necessary to read both plans.  If money was not spent on the current plan it could be rolled over to future years and would end up with a merger Capital Plan for the ensuing three years.  The new plan had a limited set of proposals reflecting overall funding and most proposals concerned looking after existing assets.  The biggest item in the new plan concerned continuing funding for Disabled Facilities Grants (DFG), which was government funding within the General Fund.
• It was noted that the cost of the Bedford Square project had increased, however, the scheme was also expanding in order to attract Town Deal funding.  This meant that additional Council funding was a relatively small amount.  It was added that the Bedford Square project had been based on quotes that were over one year old.
• Regarding the Shepshed Bullring, a Senior Leadership Team meeting had taken place to discuss contingency.  There was a potential of feasibility work and costs could be revisited, producing different numbers to the plan, which members could then vote on if there was a significant change.  It was added that the £0.9m in the plan for Shepshed Public Realm was on top of 0.5m in the current plan, which made a total of £1.4m.  Current plans would roll forward.
• Of the £6.3m of external funding, £3.5m was coming from the Loughborough Town Deal and £600k was coming from the Leicester and Leicestershire Local Enterprise Partnership (LLEP), the balance then came from the DFG.
• Expenditure was profiled, and then funding was profiled to match it.  Projected receipts were based on profiling Right to Buy (RTB) receipts, and that Limehurst Depot was possibly also contained within the funding projections. 
• There was no capital in new expenditure for commercial property.  The purchase of commercial properties and the reduction in the treasury would not have an impact on capital planning.  There was a new prudential code coming out that would contain new rules on borrowing.  As such, whilst it was not impossible to buy commercial property, it was difficult and as such there was not much expansion as the Council did not want to over-commit.  The treasury balances were still healthy and more funding for the Enterprise Zone was possible. 
• It was noted that there had been no money allocated for certain ongoing schemes in 2022/23 within the new plan because there were equivalent amounts in the current plan.
• In terms of security of funding, the bulk of it was DFG, and as such it was up to the Government.  The Government had received a report on how able people were to live in their own homes which resulted in grants being increases.  These grants had been challenging to spend logistically as it had involved carrying out assessments, involving many private sector companies and getting contracts which had been time consuming.  This process had also been hindered by the Covid-19 pandemic.  If money from the Government ceased, then the programme would be restricted.  Money had been received from the Leicestershire Business Rate pool.  However, there was uncertainty from the LLEP and if external funding failed to materialise then use of reserves would need to be considered.
• Member grants had been reduced to £500 per member, half from revenue and half from capital.
• Members would have visibility of any new borrowing for forward funding schemes in respect of the Enterprise Zone.  The money allocated was closely linked to the projected development on the Loughborough University and Charnwood Campus sites.   Some plans were in progress that could draw down on some of this money if a forward funding agreement could be arranged.  In practice it was thought likely that a proposal would come via a report to Council.  All funding above £50m needed to come through Cabinet, so any carry-forward should come through Council.  All money for such projects would be borrowed.  It was added that business rates retention rules in the Enterprise Zone operated differently to business rates generally, some of the revenue went to the LLEP.  As such, if sites were developed, forward funding could be entered into and rates could be kept to pay the loan.
• Ward councillors could be engaged through officers and Heads of Service who could put plans forward for the next three years.
• In the event that the LLEP ceased to operate, the Council would look for alternative vehicles and structures via Leicestershire County Council or Leicester City Council to become a body to collect business rates form the pool and redistribute.  There would be risks surrounding the pool and the ability to generate funds and keep them in Leicestershire rather than them being remitted to central government.  It would still be possible to get funding without the LLEP if business rates could be kept.

RESOLVED to note the report.

Reason

Members were satisfied with its reflection on the Draft Capital Plan 2022/23.