Agenda item

Capital Programme and Capital Strategy 2024-30

Decision:

The Executive Mayor and Cabinet RESOLVED, to recommend to Full Council for consideration and approval:

 

2.1 The Council’s 2024-30 General Fund Capital Programme which includes planned expenditure of £554.3m (including capitalisation directions) across the six year period. This includes expenditure financed through borrowing of £250.7m over the six years, during which time the Minimum Revenue Provision (MRP) “paying down” of the capital financing requirement would be £186.7m. The MRP annual borrowing cost would increase incrementally by an average £2.1m each year over the six years. The cost of this future borrowing will be factored into the Council’s Medium Term Financial Strategy.

 

2.2 The transformation projects set out in the table at paragraph 4.33 of this report to be included into the 2024-30 General Fund Capital Programme.

 

2.3 The 2024-30 Housing Revenue Account (HRA) Capital Programme which includes planned expenditure of £394.7m with borrowing of £153.4m.

 

2.4 The Council’s Capital Strategy, as detailed within Appendix A of this report.

 

2.5 Note the Council’s historic legacy borrowing and debt burden continues to be critical to the non-sustainability of the Council’s revenue budget. Dialogue with MHCLG continues, and the Council is seeking further financial support from Government in regard to its level of indebtedness to ensure it can deliver sustainable local government services.

 

Minutes:

The Executive Mayor introduced the strategy, this represented the minimum capital spending necessary to maintain the Council's statutory duties, noting under the previous administration unviable and unmanaged capital schemes had wasted tax payers money. The strategy offered a select number of prudent opportunities to invest to save over the longer term and with no additional discretionary spend.

 

Cabinet Member for Finance, Councillor Jason Cummings reiterated that the Capital Strategy and spend was focussed on the maintenance of statutory services and invest to save opportunities. The Council was unable to justify capital expenditure beyond this. Many other local authorities were in a similar position and significantly reducing their capital expenditure. 

 

Section 151 Officer and Corporate Director of Resources, Jane West advised the report set out the framework and a detailed plan for 2025/26 would brought to Cabinet in February/March 2025.

 

Shadow Cabinet Member for Finance, Councillor Callton Young welcomed the report and queried the capitalisation direction figures, the requirement for future borrowing set out in the report at Paragraph 4.4.0 and an update on the debt write off negotiations with the Ministry for Housing, Communities and Local Government (MHCLG).

 

Section 151 Officer and Corporate Director of Resources, Jane West clarified the paragraph cited set out the position as of the previous budget setting process in March 2024. The Medium Term Financial Strategy had subsequently set out the gap identified. The impact of the new government's financial settlements for Croydon was still unknown. Borrowing figures would need to revisited as income generation from capital receipts was finite and therefore some of the balance would need to be borrowed.

 

The Council continued to pursue conversations with government regarding the Council's debt burden and was awaiting the financial settlement expected on 19 December which would provide further clarity.

 

Cabinet Member for Finance, Councillor Jason Cummings suggested the opposition group could support the council's requests for the new government to come forward with assistance for Croydon.

 

The Executive Mayor and Cabinet RESOLVED, to recommend to Full Council for consideration and approval:

 

2.1 The Council’s 2024-30 General Fund Capital Programme which includes planned expenditure of £554.3m (including capitalisation directions) across the six year period. This includes expenditure financed through borrowing of £250.7m over the six years, during which time the Minimum Revenue Provision (MRP) “paying down” of the capital financing requirement would be £186.7m. The MRP annual borrowing cost would increase incrementally by an average £2.1m each year over the six years. The cost of this future borrowing will be factored into the Council’s Medium Term Financial Strategy.

 

2.2 The transformation projects set out in the table at paragraph 4.33 of this report to be included into the 2024-30 General Fund Capital Programme.

 

2.3 The 2024-30 Housing Revenue Account (HRA) Capital Programme which includes planned expenditure of £394.7m with borrowing of £153.4m.

 

2.4 The Council’s Capital Strategy, as detailed within Appendix A of this report.

 

2.5 Note the Council’s historic legacy borrowing and debt burden continues to be critical to the non-sustainability of the Council’s revenue budget. Dialogue with MHCLG continues, and the Council is seeking further financial support from Government in regard to its level of indebtedness to ensure it can deliver sustainable local government services.

 

Supporting documents: