Strategic Investment and Composite Capital Budget Update 2025/26 - 2030/31
Perth and Kinross Council · 26 February 2025
Back to Perth and Kinross Council — 26 February 2025 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
Page 1
PERTH AND KINROSS COUNCIL Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee or Board: Perth and Kinross Council Date of Meeting: 26 February 2025 Report Title: Strategic Investment and Composite Capital Budget Update 2025/26 to 2030/31 Report Number: 25/37 Report Author: John Jennings, Senior Accountant Gregor Walker, Asset Management Officer Organisational Lead: Scott Walker, Chief Finance Officer ___________________________________________________________________ 1. Purpose 1.1 The purpose of this Report is to outline the proposed budget for the Composite Capital Programme for the six years from 2025/26 to 2030/31. 1.2 Sections 1. Purpose 2. Recommendations 3. Background 4. Asset Management Plans and Strategy 5. Capital Budget 2025/26 to 2029/30 6. Capital Budget 2030/31 7. Funding Strategy 8. Impact Value Assessment 9. Appendices 2. Recommendations 2.1 It is recommended that the Council: (i) Approves the adjustments to the existing Capital Budget from 2025/26 to 2029/30 set out in Section 5. (ii) Approves the estimated new capital resources available for the year 2030/31, as detailed at Section 6 of this report and included in Appendix I.
Page 2
(iii) Approve the proposed Composite Capital Budget for 2030/31 outlined in Section 6 (iv) Approve the six-year Composite Capital Budget for 2025/26 to 2030/31 as shown at Appendix II of this report. 3. Background Historic Information/Context 3.1 At its meeting on 28 February 2024, the Council approved the six-year Composite Capital Budget for 2024/25 to 2029/30 (Report 24/64 refers). The Finance and Resources Committee subsequently approved updates to this programme throughout the year. In order to maintain a six-year budget, proposals for 2030/31 are now required to be developed. The estimated resources and the process for this year are outlined below. 3.2 This report outlines the estimated resources available for the Composite Capital Budget and details the proposed Composite Capital Programme for the years 2025/26 to 2030/31, thus maintaining a six-year programme. 4. Asset Management Plans and Strategy 4.1 In January 2024, Council approved the Corporate Asset Management Framework (Report 24/18 refers). This included an overarching Corporate Asset Management Policy and Strategy which set out the corporate approach to the management of assets to deliver the Council’s strategic priorities. 4.2 This is supported by 5 stream asset management plans covering: Community Greenspace Fleet ICT Property Roads 4.3 The asset plans describe how individual asset streams adhere to the corporate policy and provide an assessment of the 30-year investment requirement for each asset stream based upon life cycle planning for the existing asset base and existing levels of service. The asset plans are intended to be iterative documents and will be updated on an annual basis to incorporate additional investment and disinvestment decisions. 4.4 Asset management strategy and planning for the Council’s social housing stock is undertaken through the separate Strategic Housing Investment Programme (SHIP) which is developed in consultation with Council tenants and funded through the Housing Revenue Account. 4.5 The critical importance for service delivery of the Council’s assets and infrastructure is reflected within the 5 stream asset management plans.
Page 3
The asset plans also highlight the long-term financial challenge presented through investing in and operating these assets. 4.6 Detailed information on each asset stream was set out within the Corporate Asset Management Framework (Report 24/18 refers). This position has been updated and the total investment required, based on existing service levels, not updated for inflation, is now £3.324 billion which is set out in Table 1 below: Table 1: Corporate Asset Management Overview and Life Cycle Planning Investment Projections (30 Year Plan) (2025/26 -2053/54) Asset Stream Current Asset Base Lifecycle Planning Investment Projections (30 Year Plan) Community Greenspace 1,649 greenspace sites £0.123 billion Fleet 2,535 items of fleet and mechanical equipment £0.102 billion Information and Communication Technology (ICT) 23,025 items of hardware and all corporate software £0.220 billion Property 970 sites within the property estate £2.202 billion Roads 1,548 miles of carriageway and related infrastructure £0.677 billion Total £3.324 billion 4.7 The Corporate Asset Management Plan and Strategy underlines the importance of the Council committing a significant element of its available Capital resources on a recurring basis towards investment in our existing assets and infrastructure. 4.8 It is anticipated that the Strategic Investment Advisory Group (SIAG) will take part in a workshop late this year. The purpose of this session will be to provide an overview of how the Council can take steps to address the gap between the investment requirements and funding. This may involve both investment and disinvestment in assets. Furthermore, the SIAG will consider future capital investment / expenditure plans. Any future proposals for future capital investment will be presented to future meetings of the Finance and Resource Committee or the Council for final decisions.
Page 4
5. Capital Budget 2025/26 To 2029/30 Adjustments to Resources 5.1 Following receipt of the latest funding information from the Scottish Government, there are several adjustments affecting the resources in the current approved programme. 5.2 With the Scone Flood Protection Scheme no longer being included in the Scottish Government priority list, no further grant funding is available for the scheme. Consequently, the Capital Grant settlement for 2025/26 includes the removal of grant for the Scone scheme, with only historic expenditure receiving grant (at 80%), together with some rephasing of grant for the other schemes. 5.3 It is therefore proposed to remove the Scone Flood Protection Scheme from the approved programme, with a reduction of budgeted expenditure of £767,000 and grant income of £576,000 in the years 2024/25 to 2028/29, resulting in a net saving of £191,000. This amount has therefore been added to the total available resources for the Programme outlined at Section 6 below. 5.4 Surface drainage works are currently being investigated at Scone in conjunction with the Flood Protection works, and it is also anticipated that a revised scheme will be submitted for consideration for inclusion in a future Capital Budget once it has been further developed. 5.5 The Scottish Government Capital Grant settlement for 2025/26 also includes £665,000 of ring-fenced grant for Active Travel. This is an increase of £65,000 from the amount previously assumed for 2025/26, and it is therefore proposed to increase the Active Travel programme by this amount. 6.6 However, the General Capital Grant for 2025/26 is £255,000 lower than previously assumed, and this has also been incorporated into the overall available resources outlined at Section 6. 6.7 A summary of the adjustments to the previously assumed Resources in the current programme are shown in Table 2 below: Table 2 – Reduction in Assumed Resources 2025/26 to 2029/30 £’000 Reduction in Grant - Scone Flood Protection Scheme (576) Reduction in General Capital Grant (255) Reduction in Budgeted Expenditure – Scone Flood Protection Scheme 767 Reduction in Available Resources 2025/26 to 2029/30 (64)
Page 5
Adjustments to Approved Budgets 6.8 The Finance and Resources Committee approved the last Capital Monitoring report for the Composite programme at its meeting on 5 February 2025 (Report 25/25 refers), covering the period up to 2029/30. It is proposed to make one further adjustment to the current approved Programme, before the remaining available resources as outlined at Section 6 below are allocated. 6.9 Technology Enabled Telecare was added to the Programme in 2022/23 in order to allow for the replacement of the old analogue Community Alarm system and equipment which were no longer being supported, with digital equipment. This was included as an annual programme, with the refreshment of digital equipment required in later years. However, it was not included within the Capital Budget report in February 2024, therefore there is currently no allocation for 2029/30. It is therefore proposed to include £1 million in 2029/30 to ensure the programme can continue across all years. 7. Capital Budget 2030/31 Resources 7.1 It is currently estimated that the Council will have total new capital resources of £40.750 million available for the Composite Programme in 2030/31 which is summarised in Table 3 below. Table 3 - Estimated New Resources 2030/31 2030/31 £m Long Term Borrowing 26.000 General Capital Grant 12.150 Ring Fenced Grant – Active Travel 0.600 Developer Contributions 2.000 Property Disposals 0.000 TOTAL RESOURCES 40.750 7.2 Under the Local Government in Scotland Act 2003 and the Prudential Code, the Council is required to determine how much it can afford to allocate each year for capital expenditure. This includes determining how much it can afford to borrow, based on its Loan Charge Budgets and forecasts of interest rates. Based on the approved Loans Fund and Capital Fund Strategy within the Medium-Term Financial Plan, including the top-slicing of 1.25% of Council Tax to increase the Loan Charges budget, it has been determined that £26 million of new borrowing is available to support the 2030/31 Capital Programme. 7.3 The level of General Capital Grant for 2030/31 has been estimated at £13.75 million. After allowing for the annual amount which is applied in the Revenue Budget (£1.6 million), the balance of £12.15 million is available for the Capital Programme, and included in Table 2. These amounts are based on recent allocations, with no inflationary uplift applied.
Page 6
It has also been assumed that the ring-fenced Capital Grant for Active Travel will continue in the years to 2030/31 at an assumed level of £600,000 each year. However, it should be noted that the Scottish Government has not announced allocations for Capital Grants beyond 2025/26, therefore there remains uncertainty over the actual level to be received in each subsequent year to 2030/31. 7.4 Developer Contributions of £2 million have also been assumed in 2030/31. This is slightly lower than estimates included each year in the current Capital Programme, however the amounts receivable are uncertain and variable, and are dependent on the rate of local house building. There are no Third Party and Revenue Contributions assumed at this stage. This reflects the expenditure proposals outlined in Section 6 relating to annual programmes only. Contributions may therefore be identified once specific work programmes are developed over time. 7.5 There are also no receipts assumed at this stage from property disposals, with fewer surplus properties being identified in recent years. This will also be kept under review over the coming years. 7.6 In addition, Third Party Developer Contributions of £1 million and receipts of £650,000 have been included in the programme for 2030/31 in relation to the Perth Eco-Innovation Park at Perth West. These are part of the original funding strategy for this project, with receipts forecast for several years beyond the end of current budgeted 6-year programme. Therefore, these receipts are ring-fenced for this project and are not available for distribution and have not been included in the New Resources in Table 2 above, however they have been included in the total Resources at Appendix I. Expenditure 7.7 Given the constrained resources available, it is proposed that the available funds are allocated only to ongoing annual rolling programmes in 2030/31 in line with recent annual allocations, with no further adjustments for new projects. The proposed annual allocations are set out in Table 4 as follows: Table 4 - Proposed Allocation of Resources 2030/31 £m Structural Maintenance 9.500 Bridges and Parapet Refurbishments 1.500 Footways 0.400 Road Safety 0.450 Traffic Signals 0.120 Street Lighting 0.600 Play Area Improvements 0.500 Community Greenspace 0.250 Cemetery Extensions 0.200 ICT Infrastructure 5.000 Supporting Digital and Data Analytics 1.650
Page 7
Schools Audio Visual Equipment 0.200 Property (including School Estate) 11.000 Health and Social Care – OT Equipment 0.300 Health and Social Care Telecare 1.000 IT Licences (HSC and ex-Communities) 0.170 TOTAL 32.840 7.8 The Scottish Government ring-fenced Capital Grant for Active Travel projects (previously Cycling Walking and Safer Streets) has also been included in 2030/31. Any differences in the actual amount of grant allocated in each year will be adjusted once the allocations are announced. 7.9 A summary of the overall proposed allocations from the available resources are shown in Table 5 below: Table 5 – Summary of the Allocation of new Resources £ million Annual Allocation for Programmes 2030/31 (Section 6.7) 32.840 Active Travel – Ring Fenced Expenditure 2030/31 (Section 6.8) 0.600 Increase in Technology Enabled Telecare 2029/30 (Section 5.9) 1.000 Reduction in Resources 2025/26 to 2029/30 (Section 5.7) 0.064 Unallocated Resources 2030/31 (see Section 6.10 below) 6.246 TOTAL NEW RESOURCES 2030/31 (Section 6.1) 40.750 7.10 The Finance and Resources Committee on 5 February 2025 (Report 25/25 refers) approved the principle of retaining any budget savings as Unallocated Resources, pending the identification and consideration of future priorities. It is proposed that this principle is extended, with the balance of available resources of £6.246 million added to the Unallocated Resources in 2030/31. 7.11 In addition to the programmes above, it is proposed to include several projects in 2030/31 funded by “Prudential Borrowing”, and the proposed projects are as follows: Fleet Vehicle Replacement Programme - £3.5 million for Vehicle Purchases, less £350,000 of estimated vehicle disposals. Wheeled Bin Replacement Programme - £255,000 for Domestic wheeled Bins and £25,000 for Commercial Wheeled Bins. Recycling Skips and Containers - £75,000 Litter Bins - £55,000 Energy Conservation and Carbon Reduction - £150,000 for each year 2028/29, 2029/30 and 2030/31. 7.12 All the above projects are included in the proposed Composite Capital Budget for 2025/26 to 2030/31 shown at Appendix II. This shows that the Council’s proposed total gross investment on the Composite Capital Programme in the six years to 2030/31 amounts to over £503.628 million.
Page 8
8. Funding Strategy. 8.1 The funding of the Composite programme will be managed by the continuation of the Capital Fund Strategy over the medium to long term. This includes continuing the top-slicing of 1.25% of the Council Tax each year to increase the Loan Charges Budget. Updated Loan Charge estimates will be included in the proposed Prudential Indicators within the Annual Treasury Strategy report to be considered by the Council on 5 March 2025, whilst updated Loans Fund and Capital Fund estimates show that the proposed capital plans in this report are affordable, prudent and sustainable. 9. Impact Value Assessment Strategic Investment and Composite Capital Budget Update 2025/26 to 2030/31 10. Appendices Appendix I – Capital Resources 2025/26 to 2030/31 Appendix II – Proposed Composite Capital Budget 2025/26 to 2030/31