Funding and Reserve Balances ( Infrastructure Plan )
The Infrastructure Plan is funded from various sources, each described below:-
Revenue Contributions / Reserves - The base revenue budget has a level of funding which is used to support the funding of both the revenue and capital infrastructure plans. If all of this resource is not used in-year, then it is carried forward in the Infrastructure Reserve for use in future years. The Infrastructure Reserve is used to fund revenue and capital investment in infrastructure assets to ensure continuous development and improvement across the organisation.
Capital Receipts - The use of capital receipts from the disposal of assets is governed by Regulations and can only be used to fund capital expenditure and repay debt. Where properties are identified as surplus to operational requirements, Members approval is sought for their disposal. Cash receipts which are generated from the asset disposal, and which are in excess of £10k, must be used to support new capital investment or offset future debt or transitional costs. Capital Receipts cannot be used to fund day-to-day revenue expenditure. As at 31 March 2024 unapplied capital receipts, mainly arising from the previous disposal of a number of the Authority’s assets, including redundant fire stations, land and unoccupied housing are forecast to total £7.894m.
Grant Funding - On occasions, the Authority may receive grant funding that can be utilised towards various infrastructure projects if the conditions relating to the funding are met and there are no restrictions surrounding the use of the grant funding, such as the utilisation of the Grenfell Infrastructure Grant to fund the purchase of PPV fans planned for 2024/25.
Prudential Borrowing - The Authority can use prudential borrowing to fund capital expenditure provided that such borrowing is affordable, prudent and sustainable over the medium term. A range of calculations (prudential indicators) are completed as part of the annual budget setting process to evidence this. These make sure that the cost of paying for interest charges and the repayment of principal is taken into account when developing the Medium-Term Financial Plan.
Internal borrowing - will be used to finance the Ashford Fire Station Redevelopment project with a view to potentially undertaking external borrowing in later years. Internal borrowing requires an amount to be set aside in the revenue budget (Minimum Revenue Provision) to repay the principal amount and although interest charges will not be incurred on internal borrowing it will result in reduced investment income as the funds will no longer be available to invest.