Agenda item

The Capital Strategy brings together the Council’s detailed policies, procedures and plans relating to capital expenditure, capital financing and treasury management activity.  It incorporates the Treasury Management Framework, Prudential Indicators and Asset Investment Strategy.  It also gives an overview of how associated risk is managed and the implications for future financial sustainability.

The Annual Capital Strategy forms an essential part of the Council’s integrated revenue, capital, and balance sheet planning.  It aligns to the Financial Strategy, the Medium-Term Financial Plan (MTFP), Housing Revenue Account Business Plan and the Annual Revenue Budget as shown in the attached report.

The Strategy also provides a framework by which capital expenditure decisions are made as required by the CIPFA Prudential Code for Capital Finance in Local Authorities to provide good governance.

The Overview & Scrutiny Committee is asked to consider the report and agree any comments or recommendations to be passed to the Executive on the proposed recommendations to Executive and Council as set out in the report.

Peter Vickers (Executive Head of Finance and Section 151 Officer) presented the capital strategy. He noted that the Capital Strategy brought together the Council’s detailed policies, procedures and plans related to capital expenditure, capital financing and treasury management activity. He explained that it incorporated the Treasury Management Framework, Prudential Indicators and Asset Investment Strategy. It was noted that the capital strategy provided an overview of how associated risk was managed and the implications for future financial sustainability.

Councillor Heagin raised concerns about the Treasury management policy statement and pointed out that the treasure management quarterly report did not identify risk. Peter Vickers explained that within the quarterly performance indicators, the treasury management indicators were usually reported. He agreed to amend the report in response to the Councillor’s recommendation.

Councillor Martin queried where he could find the capital expenditure in relation to climate change. Peter Vickers informed the committee that the details could be found in the Capital Programme. Officer Rosie Plaistow added that when assessing capital projects, a climate change impact column is created to score and assess projects. She noted that the column could be found at Page 42 of the papers.

Councillor Mulliner queried the Second Stage Priority Scoring; and whether a project was more desirable if it required 100% external funding or no external funding. Officer Rosie Plaistow explained that the score 5 reflected where a project had secured 90-100% external funding and the score 0 was where no external funding had been secured. She noted that a higher score was more desirable as it required less engagement from Waverley borough council. Councillor Mulliner recommended the papers were amended to make the weighting clearer.

Councillor Mulliner went on to reference page 43, more specifically the direct revenue savings, the savings from efficiencies and the cost avoidance, for example paying down MRP. He asked how they were different from each other. Peter Vickers explained that direct revenue savings referred to a project that would avoid costs going forward so it would generate direct savings. He advised that savings for efficiencies were more strategic in terms of what took place in whole teams rather than individual processes. He also noted that cost avoidance was focused on capital programme rather than service delivery.

Councillor Mulliner queried the scale of the CFR in table 1.7, he expressed that it was larger than the other previous tables. It was noted that Peter Vickers would circulate a summary of the table in a spreadsheet and accept questions from Members outside of the meeting. Councillor Mulliner suggested that the writing of the documentation in section 1 was reviewed. He suggested a sub-group should be set up to meet with officers to gain a full understanding of the concepts so this could be communicated back to the Committee effectively. He advised that the task group would essentially look at the documents and agree on more simplified wording.

The Committee resolved to make the following recommendations to the Executive:

-      To simplify the wording of the documents in section 1 so that it can be more readily understood by Members. The Chair suggested that a small task and finish group should be set up to meet with officers and gain a full understanding of the concepts so it can be communicated back to Members effectively. The task group would essentially look at the documents and agree on more simplified wording.

Members agreed to this recommendation and the motion was passed.