Appendix 2 - Wrexham County Borough Council

advertisement

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

Corporate Services

Economic

Development

Education

£000

1,966

2,186

16,491

2005/06

Original

Estimate

£000

530

7,053

8,711

602

1,224

2005/06

Revised

Estimate

£000

655

7,039

8,675

671

948

2005/06

Variance

£000

+125

-14

-36

+69

-276

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,

Leisure

Environmental

Services

Social Services

Transportation &

Engineering

Private Sector Housing

& Public Protection

Total non- HRA

-

Total HRA

-

805

2,424

250

3,498

5,632

33,252

9,690

42,942

775

3,948

4,625

27,468

15,071

42,539

875

3,877

4,728

27,467

15,565

43,032

+100

-71

+103

-1

+494

+493

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

6

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

43,032

2005/06

Variance

£000

+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.

7

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.

8

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.

9

TABLE 5

Appendix 2

Limits on interest rates fixed

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

Under 12 months

12 months to 2 years

2 years to 5 years

5 years to 10 years

10 years and above

2004/05

Actual

%

20

20

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

.

The Investment Strategy approved as part of the Treasury Management Strategy by the Council on 9 March

2005 provided that a maximum of 50% of the total investments could be in the form of investments with a maturity of greater than one year provided that counterparties meet specified credit rating criteria. To date no investments greater than 1 year have been made.

10

Download