Prudential Indicators
Appendix 2
Recent changes to Capital Expenditure by Service
This table shows the first Prudential Indicator, which highlights the actual 2004/05 position and changes between the original capital programme and the current position for 2005/06.
TABLE 1
Capital Expenditure by Service
2004/05
Actual
£000
1,966
2,186
16,491
805
2,424
250
3,498
5,632
Total non- HRA -
Total HRA -
33,252
9,690
42,942
2005/06
Original
Estimate
£000
530
7,053
8,711
602
1,224
775
3,948
4,625
27,468
15,071
42,539
2005/06
Revised
Estimate
£000
655
7,039
8,675
671
948
875
3,877
4,728
27,467
15,565
43,032
2005/06
Variance
£000
+125
-14
-36
+69
-276
+100
-71
+103
-1
+494
+493
Explanation of Variances
Costs of proposed sale of former Groves Sc hool site + £105k
Western Gateway + £1496k, Brymbo Community Enterprise Centre
-
£1,520
Coedpoeth Primary Schools + £440k, Secondary Schools
Reorganisation - £413k Wat’s Dyke School - £172k
County Borough Museum + £53k
Cemetery Land -
£250k,
Residential Child Care relocation + £100k
Bridges - £156k, Industrial Estate Access road + £85k
Contaminated Land Investigation & Remediation + £92k
Door & Window replacements - £800k, Re roofing + £247k,
DDA + £225k, Ruthin Road Offices + £485k
Welfare Adaptations + 245k
Total
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Appendix 2
Changes to the financing of the capital programme and estimates and actuals for the capital financing requirement and the external debt
The table below draws together the main strategy elements of the capital plans, highlighting the original supported and unsupported elements of the capital programme, and the expected financing arrangements for this capital expenditure. The second half of the table shows the Capital
Financing Requirement, which is the Council’s underlying external indebtedness for a capital purpose, compared to the expected borrowing and financing position. The actual 2004/05 position is shown for comparative purposes.
TABLE 2
Total spend
2004/05
Actual
£000
42,942
2005/06
Original
Estimate
£000
42,539
2005/06
Revised
Estimate
£000
2005/06
Variance
£000
43,032 +493
Explanation of Variances
See table 1 above
Borrowing – Supported
Un- supported
Capital receipts
6,865
3,264
13,285
19,528
5,700
-623
13,525
23,937
5,700
-1,952
15,887
23,397
0
-1,329
+2,362
-540
Secondary Schools Reorganisation £821k,
Western Gateway Railway Land - £508k
Rescheduling of receipts for Secondary Schools Reorganisation from 2004/05 to 2005/06
Revised phasing of grant funded projects Capital grants &
Contributions
CFR – Non Housing
CFR - Housing
Total CFR
Net movement in CFR
Borrowing
Other long term liabilities
Total Debt 31 March
Net movement in Debt
Notes:
£000
113,375
31,660
145,035
149,456
540
149,996
£000
114,504
24,353
138,857
138,856
450
139,306
£000
112,788
25,707
138,495
-362
138,156
623
138,779
-527
£000
-362
-700
+173
-527
-1,716
+1,354
Capital Receipts substituted for Unsupported Borrowing
Reduction in Capital Receipts set aside for debt repayment
Finance leases
Housing Capital Receipts are set aside for debt repayment in the proportion required to ensure that housing capital charges are matched by housing subsidy
Debt repayments are planned in 2005/06 to equate outstanding debt with CFR.
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Appendix 2
Limits to Borrowing Activity
The first key control over the Council’s activity is a Prudential Indicator to ensure that over the medium term, net borrowing will only be for a capital purpose. Net external borrowing should not, except in the short term, exceed the total of capital financing requirement in the preceding year plus the estimates of any additional capital financing requirement for 2005/06 and next two financial years. This allows some flexibility for limited early borrowing for future years.
The Chief Finance & Performance Officer reports that the Council complied with the requirement to keep net borrowing below the relevant CFR in 2004/05, and no difficulties are envisaged for the current or future years. This view takes into account current commitments approved by the Executive Board
A further two Prudential Indicators control the overall level of borrowing which support, these are:
1. The authorised limit – This represents the limit beyond which borrowing is prohibited, and needs to be set and revised by members. It reflects the level of borrowing which, while not desired, could be afforded in the short term, but is not sustainable. It is the expected maximum borrowing need with some headroom for unexpected movements. This is the statutory limit determined under section 3 (1) of the Local Government Act 2003 .The Authorised Limit set by the Council at its mee ting on 9 March 2005 was £170,518k. This has
not been exceeded during 2005/06
2. The operational boundary
–This indicator is based on the probable external debt during the course of the year; it is not a limit and actual borrowing could vary around this boundary for short times during the year. CIPFA anticipate that this should act as an indicator to ensure the authorised limit is not breached. During 2005/06 actual debt has temporarily exceeded the Operational Boundary of
£147,796k pending the repayment of debt. This was originally planned to take place in March 2005 but due to adverse market
conditions this has been postponed until later in the financial year when interest rates are anticipated to improve.
Affordability Prudential Indicators
Actual and estimates of the ratio of financing costs to net revenue stream – This indicator identifies the trend in the cost of capital
(borrowing costs net of investment income) against the net revenue stream.
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TABLE 3
Appendix 2
Non-HRA
HRA
2004/05
Actual
5.91%
11.80%
2005/06
Original
Estimate
6.36%
8.35%
2005/06
Revised
Estimate
6.49%
8.71%
2005/06
Variance
0.13%
0.36%
Estimates of the incremental impact of capital investment decisions on the council tax – This indicator identifies the trend in the cost of chang es in the capital programme compared to the Council’s original budget commitments. In calculating the impact of supported borrowing, it is assumed that 80% of the cost is met by Revenue Support Grant and 20% from Council Tax.
TABLE 4
2004/05
Actual
2005/06
Original
Estimate
£13.65
2005/06
Revised
Estimate
£9.00
2005/06
Variance
Explanation of Variance
Council Tax
Band D
£3.22 £4.65 Anticipated reduction in Unsupported Borrowing
Actual and estimates of the incremental impact of capital investment decisions on housing rent levels – Similar to the Council tax calculation this indicator identifies the trend in the cost of changes in the housing capital programme compared to the Counc il’s original commitments, expressed as a change in weekly rent levels. This indicator is calculated as nil as there is no planned funding of Council
Housing capital funding by borrowing.
Treasury Management Prudential Indicators
The first treasury indicator requires the adoption of the CIPFA Code of practice on Treasury management. This Council adopted the Code of
Practice on Treasury Management, and as a result adopted a treasury management policy statement (Executive Board 19/03/2002,
DFIS/20/02).
There are four further indicators:
Upper Limits On Fixed Rate Exposure – Similar to the previous indicator this covers a maximum limit on fixed interest rates.
Upper Limits On Variable Rate Exposure – This indicator identifies a maximum limit for variable interest rates based upon the debt position net of investments.
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TABLE 5
Appendix 2
Limits on fixed interest rates
Limits on variable interest rates
2004/05
Actual
£000
9,065
-1,335
2005/06
Original
Estimate
£000
9,526
953
2005/06
Revised
Estimate
£000
9,347
935
2005/06
Variance
£000
-179
-18
Maturity Structures Of Borrowing – These gross limits are set to reduce the Council’s exposure to large fixed rate loans (those instruments which carry a fixed interest rate for the duration of the instrument) falling due for refinancing.
TABLE 6
2004/05
Actual
%
Under 12 months 20
12 months to 2 years
20
2 years to 5 years 60
75
100
2005/06
Original
Estimate
%
20
20
60
75
100
2005/06
Revised
Estimate
%
20
20
60
75
100
2005/06
Variance
0
0
0
%
0
0
Total Principal Funds Invested – These limits are set to reduce the need for early sale of an investment, and are based on the availability of investments after each year-end
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