To approve the revised capital investment budget and capital strategy for 2025/26 onwards.

Council considered a report by the Cabinet Member Finance and Corporate Services to approve the 2025/26 capital investment budget and capital strategy update. Council noted those supplements published following the despatch of the agenda including the Budget Council meeting procedure 2025 and the Section 151 officer’s section 25 statement both published on 3 February.

The Cabinet Member Finance and, Corporate Services moved the report and proposed the recommendations.

The Leader seconded the report and the recommendations.

Council debated the report.

The 2025/26 capital investment budget and capital strategy update was put to the recorded vote and carried by a simple majority.

FOR (34): Councillors Andrews, Baker, Bartrum, Biggs, Bramer, Carwardine, Cole, Cornthwaite, Clare Davies, Dave Davies, Durkin, Gandy, Hamblin, Highfield, Hurcomb, James, Kenyon, Lester, Mason, O’Driscoll, Oliver, Owens, Phillips, Dan Powell, Ivan Powell, Price, Proctor, Stark, Stoddart, Swinglehurst, Thomas, Tillett, Allan Williams and Robert Williams.

Against (5): Councillors Foxton, Gennard, Heathfield, Hitchiner and Peberdy.

Abstentions (10): Councillors Bartlett, Boulter, Engel, Fagan, Harvey, Simmons, Spencer, Toynbee, Tully and Woodall.

RESOLVED:

That: Council:

a)    Approve the revised capital programme for 2025/26 attached at appendix C;

b)    Approve the capital strategy at appendix D; and

c)    Approve the Flexible Use of Capital Receipts of up to £0.6million in 2024/25 and £0.6million in 2025/26, to support transformation to generate ongoing revenue savings and reduce service delivery costs in future years.

To recommend to Council for approval the revised capital investment budget and capital strategy for 2025/26 onwards.

The member for finance and corporate services introduced the report.  The capital programme reflects capital investment which generates benefits for the county. It was noted that on 6^th December 2024 at full Council an amendment for several IT projects was approved.  Appendix B set out the approved capital programme, as of December 2024. 

It was confirmed that the proposed capital programme for 2025/26 presented an ambitious programme of capital investment which was aligned to the priorities of the council plan across people, place, growth and transformation. 

It was highlighted that 18 capital investment budget proposals, totalling £58.12m had been identified to be funded by prudential borrowing, capital receipt reserve and reserve revenue reserves. It was also noted that to ensure the council utilised the levelling up fund grant as early as possible and used council match funding last, the Hereford city transport package for the transport hub would increase the grant funding by £2.5m and reduce the amount of council borrowing required.

It was confirmed that a review of all prospective capital funding requests had been completed to ensure the financial impact of the funding requests were taken into account in the Medium Term Financial Strategy.

It was highlighted that as part of the 2016/17 local government finance settlement the government announced new flexibilities which allowed local authorities to use capital receipts to fund transformation expenditure. This was updated in 2025/26 and extended to 2029/30. Therefore £0.6m in 24/25 and £0.6m in 25/26 revenue transformation works would be funded from the use of capital receipts reserve. 

It was confirmed that inclusion in the capital programme was not approval to proceed. Each project would be subject to its own governance, a full business case would be presented to cabinet for approval, where required, and compliance with the council's contract procedure rules. 

It was confirmed that the council is committed to the first phase of the western bypass, and is aiming to be on site to deliver the current scheme to the South of the city in 2026.   Once completed this new bypass connection for the A49 from the South to the North of the city will deliver the western growth corridor creating over 10,000 new homes and over 300 acres of new employment land. It was noted that this project, previously named as the ‘Southern Link Road’, had been renamed in the capital programme to ‘Hereford Western Bypass Phase 1’. The increase in capital budget is proposed to be funded from borrowing, and grants would be sought to reduce the amount of borrowing required.

It was confirmed that social and affordable housing needs across the county remained a high priority for the council. It was noted that the acquisition for housing provision of £5m (which was added to the capital programme in July 2024), was already being used to bring forward schemes to deliver social housing to meet the county’s urgent need. The £5m funding was considered adequate for 2025/26.  However, should other opportunities come forward, council approval would be  ...  view the full minutes text for item 53