Agenda item

Report of the Corporate Director of Finance and Resources (S151 Officer). To be presented by the Cabinet Member for Finance & Corporate Services

DECLARATIONS OF INTEREST MADE FOR THIS ITEM:

None

RESOLVED:

That Cabinet:

1.    Noted the proposed Capital Strategy 2026–2036 (Appendix A) and agree to recommend that Full Council approve and adopt the strategy as the Council’s overarching framework for capital investment, financing and governance.

2.    Noted that the Strategy would be reviewed annually alongside the MTFS and TMSS and reported to Cabinet and Full Council.

3.    Endorsed the Capital Framework and governance arrangements.

Reasons for decision

The Capital Strategy set out the Council’s statutory responsibility to define a clear approach for capital investment and financing. The 2026–2036 strategy built on previous iterations to reinforce affordability, prudence and sustainability in line with the CIPFA Prudential Code. It underpinned financial resilience by aligning the Council’s strategic objectives with the Treasury Management Strategy to provide a coherent framework supporting investment in delivering the Borough Vision 2035 outcomes through the Capital Programme.

The Strategy provided a framework for long?term investment, setting out an evidence?led approach to allocating limited capital resources to projects that fulfilled the Council’s legal and health and safety obligations, met contractual commitments and, where affordable, delivered its strategic priorities. It responded to significant financial challenges, including:

Rising inflation and higher interest rates, which had significantly increased the cost of borrowing and future debt?servicing pressures.
Continuing growth in demand for housing, adult social care and temporary accommodation.
Limited government funding, alongside the use of Exceptional Financial Support (EFS), which was used to fund immediate budget pressures but increased long?term revenue commitments through higher capital financing costs and long?term debt for the Council.

In this context, the Capital Strategy set out a disciplined approach to capital investment, prioritising schemes essential for the delivery of statutory services, health and safety compliance and the reduction of long?term revenue pressures. A significant proportion of the capital programme was funded through borrowing, and the year?on?year increase needed to be reversed to protect the Council’s financial sustainability and ensure affordability within prudential limits.

The Strategy brought together the Housing Revenue Account and the General Fund into a single strategic portfolio view for governance and reporting, while fully maintaining statutory and ring?fencing requirements.

It embedded robust business planning, risk management and benefits?realisation arrangements, strengthening transparency and confidence in decision?making. By prioritising affordability while retaining flexibility, the Strategy supported long?term financial sustainability and enabled the Council to respond effectively to changing economic conditions and strategic priorities.

Financing and Affordability

The Capital Strategy, alongside the Treasury Management Strategy Statement (TMSS) and the Medium Term Financial Strategy (MTFS), set the parameters for a financially sustainable capital programme. Borrowing had to remain within approved prudential limits, with the Council prioritising external grant funding, ringfenced Housing Revenue Account resources and capital receipts before undertaking prudent borrowing in accordance with the Prudential Code. The Council remained within its approved prudential limits set out in the Treasury Management Strategy Statement elsewhere on the agenda, but debt levels were high compared to others, and the capital financing costs of the capital programme alone amounted to £55m for the General Fund and £32m for the HRA.

The use of Exceptional Financial Support (EFS) was a measure that increased future debt?servicing costs. The Strategy therefore sought to reduce reliance on EFS over time and prioritised investment in schemes mitigating longer?term revenue pressures, such as housing delivery to reduce temporary accommodation costs and energy?efficiency measures to lower utility expenditure.

All capital schemes were required to demonstrate affordability on a whole?life basis, including robust revenue implications, realistic contingency provision and sensitivity analysis. Clear mitigation or reprofiling options needed to be identified where affordability was affected by funding changes, cost inflation or delivery risk, ensuring the overall programme remained affordable, prudent and sustainable.

Governance, Assurance and Delivery

Delivery of the Strategy was supported by the Council’s Capital Delivery Framework and capital governance model, adopted in July 2025, which provided a consistent approach to business?case development, approval, monitoring and benefits?realisation across the General Fund and Housing Revenue Account programmes.

Cabinet held overall strategic oversight of the Capital Strategy and Capital Programme. Regular scrutiny and due diligence were provided through quarterly capital monitoring reports to the Corporate Leadership Team, Cabinet and Scrutiny, enabling Members to oversee affordability, delivery performance, risks and alignment with corporate priorities. Operational oversight was exercised through the Strategic Capital Board and Directorate Capital Boards, which managed programme delivery, interdependencies and escalation.

Assurance was provided through a layered monitoring and reporting framework, including:

Monthly project and programme monitoring, providing detailed performance, financial and risk oversight at Capital Programme Board level; and
Quarterly portfolio?level capital monitoring and assurance, providing Members with a consolidated view of spend, forecast, risks, benefits and compliance with prudential indicators and governance requirements.

Risk Management

The Council maintained a low?risk appetite for borrowing and exposure to market volatility, reflecting financial context and the need to safeguard long?term financial resilience. Capital investment decisions were informed by robust risk assessment and mitigation planning at both scheme and portfolio level.

Key risks and mitigating actions included, but were not limited to:

Interest rates and inflation: Use of prudent financial assumptions, regular benchmarking and realistic contingency allowances.
Legislative and policy change: Horizon scanning and early compliance planning to mitigate cost and delivery impacts.
Capital receipts and grant dependency: Conservative forecasting, active disposals management and strict compliance with grant conditions.
Delivery capacity and supply chain: Investment in internal project?management capability, robust procurement and due?diligence processes and risk?sharing contract forms.

Where affordability or deliverability was challenged, the Council took early action to reprofile or pause lower?priority schemes, while protecting statutory compliance and projects already in delivery to avoid sunk costs and reputational risk.

Alternative options considered

Do Nothing – Not Recommended
Failing to adopt a Capital Strategy would have undermined compliance with the CIPFA Prudential Code, which required local authorities to maintain an up?to?date capital strategy. It would have increased the risk of uncoordinated and unaffordable investment decisions and reduced transparency and assurance in the public interest. In the context of sustained financial pressure, this would have significantly heightened the risk of an unsustainable capital programme, adversely affecting the Council’s financial resilience and its ability to deliver outcomes for residents.

The Cabinet Member for Finance and Corporate Services introduced the report.

The Cabinet Member explained that the Council’s mission was to build a fairer and greener borough. The strategy set out the approach to public investment in local public infrastructure, including parks, roads, leisure centres, libraries and other facilities. The aim was to provide good?quality infrastructure for residents across all neighbourhoods.

It was noted that, since 2022, the Council had improved more than 30 public parks, investing more than £18m. It had refurbished four public libraries, investing nearly £5m. The four public leisure centres had returned to public management, and £4.1m had already been invested in repairs and improvements, with further work planned. These activities were carried out in collaboration with residents to ensure public services and infrastructure met identified needs.

The Cabinet Member highlighted that the Council recognised the need to keep borrowing requirements as low as possible to ensure that debt and associated costs to the Revenue Account and Housing Revenue Account remained sustainable in the medium to longer term. Where possible, alternative funding sources were used. The council’s responsibility was to invest responsibly and safeguard essential local public services. The strategy also set out the council’s intentions for the future of the borough. It translated the Borough Vision 2035 and the Haringey Deal into a practical and affordable programme focused on providing safe and affordable homes, improving public spaces, supporting children and young people, advancing climate objectives, and improving health and wellbeing.

By focusing on three principles—maintaining core services, delivering projects on time, and responding to local priorities—the council aimed to maximise external funding, reduce long?term revenue pressures and ensure effective use of resources. The approach recognised that capital investment was not limited to infrastructure delivery but also supported growth, preventative measures and reduced future revenue pressures. With established governance arrangements and annual review processes, the strategy provided a framework intended to maintain discipline and flexibility and support the development of a fairer and greener borough.

Following questions from Councillor Connor, the following information was shared:

• It was explained that the Council was working to ensure financial sustainability and that the Council would continuously review the Capital programme to ensure sustainability and best value for money. It was explained that there was a rigorous programme to ensure that spend was closely monitored across the Council.
  
  
• It was explained that the Council had some Capital receipts which could be utilised to undertake the proposed Capital programme and that not all Capital projects would be undertaken through borrowing.
  
  
• It was explained that there had been some work in invest to save opportunities, such as investment into Safety Valve, which would work to reduce costs in other areas of the Council.

RESOLVED:

That Cabinet:

1.    Noted the proposed Capital Strategy 2026–2036 (Appendix A) and agree to recommend that Full Council approve and adopt the strategy as the Council’s overarching framework for capital investment, financing and governance.

2.    Noted that the Strategy would be reviewed annually alongside the MTFS and TMSS and reported to Cabinet and Full Council.

3.    Endorsed the Capital Framework and governance arrangements.

Reasons for decision

The Capital Strategy set out the Council’s statutory responsibility to define a clear approach for capital investment and financing. The 2026–2036 strategy built on previous iterations to reinforce affordability, prudence and sustainability in line with the CIPFA Prudential Code. It underpinned financial resilience by aligning the Council’s strategic objectives with the Treasury Management Strategy to provide a coherent framework supporting investment in delivering the Borough Vision 2035 outcomes through the Capital Programme.

The Strategy provided a framework for long?term investment, setting out an evidence?led approach to allocating limited capital resources to projects that fulfilled the Council’s legal and health and safety obligations, met contractual commitments and, where affordable, delivered its strategic priorities. It responded to significant financial challenges, including:

Rising inflation and higher interest rates, which had significantly increased the cost of borrowing and future debt?servicing pressures.
Continuing growth in demand for housing, adult social care and temporary accommodation.
Limited government funding, alongside the use of Exceptional Financial Support (EFS), which was used to fund immediate budget pressures but increased long?term revenue commitments through higher capital financing costs and long?term debt for the Council.

In this context, the Capital Strategy set out a disciplined approach to capital investment, prioritising schemes essential for the delivery of statutory services, health and safety compliance and the reduction of long?term revenue pressures. A significant proportion of the capital programme was funded through borrowing, and the year?on?year increase needed to be reversed to protect the Council’s financial sustainability and ensure affordability within prudential limits.

The Strategy brought together the Housing Revenue Account and the General Fund into a single strategic portfolio view for governance and reporting, while fully maintaining statutory and ring?fencing requirements.

It embedded robust business planning, risk management and benefits?realisation arrangements, strengthening transparency and confidence in decision?making. By prioritising affordability while retaining flexibility, the Strategy supported long?term financial sustainability and enabled the Council to respond effectively to changing economic conditions and strategic priorities.

Financing and Affordability

The Capital Strategy, alongside the Treasury Management Strategy Statement (TMSS) and the Medium Term Financial Strategy (MTFS), set the parameters for a financially sustainable capital programme. Borrowing had to remain within approved prudential limits, with the Council prioritising external grant funding, ringfenced Housing Revenue Account resources and capital receipts before undertaking prudent borrowing in accordance with the Prudential Code. The Council remained within its approved prudential limits set out in the Treasury Management Strategy Statement elsewhere on the agenda, but debt levels were high compared to others, and the capital financing costs of the capital programme alone amounted to £55m for the General Fund and £32m for the HRA.

The use of Exceptional Financial Support (EFS) was a measure that increased future debt?servicing costs. The Strategy therefore sought to reduce reliance on EFS over time and prioritised investment in schemes mitigating longer?term revenue pressures, such as housing delivery to reduce temporary accommodation costs and energy?efficiency measures to lower utility expenditure.

All capital schemes were required to demonstrate affordability on a whole?life basis, including robust revenue implications, realistic contingency provision and sensitivity analysis. Clear mitigation or reprofiling options needed to be identified where affordability was affected by funding changes, cost inflation or delivery risk, ensuring the overall programme remained affordable, prudent and sustainable.

Governance, Assurance and Delivery

Delivery of the Strategy was supported by the Council’s Capital Delivery Framework and capital governance model, adopted in July 2025, which provided a consistent approach to business?case development, approval, monitoring and benefits?realisation across the General Fund and Housing Revenue Account programmes.

Cabinet held overall strategic oversight of the Capital Strategy and Capital Programme. Regular scrutiny and due diligence were provided through quarterly capital monitoring reports to the Corporate Leadership Team, Cabinet and Scrutiny, enabling Members to oversee affordability, delivery performance, risks and alignment with corporate priorities. Operational oversight was exercised through the Strategic Capital Board and Directorate Capital Boards, which managed programme delivery, interdependencies and escalation.

Assurance was provided through a layered monitoring and reporting framework, including:

Monthly project and programme monitoring, providing detailed performance, financial and risk oversight at Capital Programme Board level; and
Quarterly portfolio?level capital monitoring and assurance, providing Members with a consolidated view of spend, forecast, risks, benefits and compliance with prudential indicators and governance requirements.

Risk Management

The Council maintained a low?risk appetite for borrowing and exposure to market volatility, reflecting financial context and the need to safeguard long?term financial resilience. Capital investment decisions were informed by robust risk assessment and mitigation planning at both scheme and portfolio level.

Key risks and mitigating actions included, but were not limited to:

Interest rates and inflation: Use of prudent financial assumptions, regular benchmarking and realistic contingency allowances.
Legislative and policy change: Horizon scanning and early compliance planning to mitigate cost and delivery impacts.
Capital receipts and grant dependency: Conservative forecasting, active disposals management and strict compliance with grant conditions.
Delivery capacity and supply chain: Investment in internal project?management capability, robust procurement and due?diligence processes and risk?sharing contract forms.

Where affordability or deliverability was challenged, the Council took early action to reprofile or pause lower?priority schemes, while protecting statutory compliance and projects already in delivery to avoid sunk costs and reputational risk.

Alternative options considered

Do Nothing – Not Recommended
Failing to adopt a Capital Strategy would have undermined compliance with the CIPFA Prudential Code, which required local authorities to maintain an up?to?date capital strategy. It would have increased the risk of uncoordinated and unaffordable investment decisions and reduced transparency and assurance in the public interest. In the context of sustained financial pressure, this would have significantly heightened the risk of an unsustainable capital programme, adversely affecting the Council’s financial resilience and its ability to deliver outcomes for residents.