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A capital idea

February 28, 2013

How can the council possibly have to save £100m when it’s got £400m to spend on capital projects across the city?

Capital money is separate to what we spend day to day on running services and paying wages. These operating costs are known as the revenue budget, and this is where we have to save £100m. We cannot use capital money to avoid making cuts to services.

Our capital money has to be spent on fixed or physical assets like buildings, schools, council owned housing and includes things like superfast broadband and preparing land an transport links for new investment sites, for example in Scotswood, around Central Station and at Science Central.

The main source of capital money comes from our ability to borrow – it’s not money sitting in our account ready to spend on day to day activities. We are able to borrow money where we can demonstrate that it will lead to a long term return on our investment on behalf of the city. By investing up front, we can often demonstrate that spending will reduce in later years because the investment generates income, or because it helps make services more efficient.

Whilst we face some tough decisions about cuts to services, we’ll still be doing our bit to invest in the jobs and infrastructure our city needs to be ambitious and lead the region’s economic recovery. Our capital investment plays an important role in improving economic opportunities across all parts of Newcastle.

Why are you investing capital monies in the Civic Centre but not in the City Pool?

Capital spending is financed by commercial return on assets, for example rental income, or savings we can secure on our revenue budget by investing up-front in assets to reduce our costs.

We will cut costs by closing council buildings and moving staff into three offices, one of which is the Civic Centre. The Civic Centre is a high-cost environment for a modern organisation, with high energy costs and inefficient use of space. Following detailed analysis, we will implement plans for an investment programme to increase the capacity of the Civic Centre by 800 people, allowing us to bring the majority of our staff together in one place. This will save energy and maintenance costs.

Two other, smaller sites will be maintained in Allendale Road and Westgate College. This means that 13 other office buildings can, over a three year period, be reused for other purposes or sold with the receipts used for reinvestment. If we make the capital investment now, the overall accommodation costs should fall by around £2.1m by 2016. If we do not make the capital investment, then the building running costs will continue to increase, making our overall budget position worse.

The City Pool is difficult to sustain in the current financial environment. It has decreasing attendance and income, and currently requires an annual subsidy of £360k. Substantial additional investment is likely to be required for safety reasons in the near future. The repair and maintenance costs to bring the City Pool up to standard are estimated at £2.5 million, and a further £0.5m is estimated for works to make the pool more accessible. The usage of the City Pool has decreased which has had a direct impact on income to a point where we would not be able to repay the capital investment required.

Paul Woods is Director of Finance and Resources at Newcastle City council.

8 Comments leave one →
  1. samantha hall permalink
    February 28, 2013 10:52 am

    What about all the people losing their jobs it means higher unemployment in newcastle &half of the people ie librarians will find it hard 2find new jobs which means long term unemployment which in few month u will all b complaining about I live in walker &we have nothing here 4the kids as it is the 1place my 3kids can go that’s local &free is walker library which is over 100 year old &u r taking it away from us to put in the lightfoot which will b a lot smaller so my kids will have no where 2go as I can’t afford bus fares up byker all time &the staff at walker library are the best staff I have found in any of the libraries please reconsider closing it down

    • Paul Woods permalink
      March 1, 2013 3:02 pm

      Hi Samantha, Walker Library will not be closing and has been proposed to be relocated to the Walker Activity Dome. You can read more about this in the budget recommendations that will go to Full Council on 6 March, http://www.newcastle.gov.uk/sites/drupalncc.newcastle.gov.uk/files/wwwfileroot/your-council/budget_and_annual_report/budget_2016_-_9_-_library_network_reduction.pdf
      Thanks.

      • sam98762002@yahoo.co.uk permalink
        March 1, 2013 3:16 pm

        We have been told that it is closing but we don’t want walker library relocating to the activity dome it is an old building and it is part of walker history I understand there has to be cuts but I also think closing things like the library is a really bad idea there is nowhere for me to take my 3young boys and money is tight and they love going to the library not a scaled down version of it where they can’t move around or sit and read books or go in the holidays to do the crafts that they have now
        Sent using BlackBerry® from Orange

      • samantha hall permalink
        March 2, 2013 9:27 am

        hi paul we were told it is set out that walker library will close and the building demolished and the land sold we dont want a reduced service at the lightfoot centre as there is enough going on there with the gym etc to be able to enjoy quiet time me and my 3boys regular go to the library to take books out and to do crafts in the holidays and this wont happen if they have a little room in the centre the staff at the library are great with the boys and help them to look for books they will enjoy and give them things to do while they are there we go to the library and we are still there after an hour which can only be a good thing for a 7 3 and 1 year old the library building is a landmark of walker and i feel without it there is taking walker history away then you also have to take into account the playgroup that is attached to the library they have been there since 1979 i went and my older son went there and my 3year old is there now instead of going to nursery as the times were not suitable at the nursery for me and my youngest was due to start this christmas time if they move i will not be able to put my youngest in as i wont be able to pick him up at the correct time as they will be too far away from walkergate school i do understand cuts etc but please dont take our library or the staff away from us like i said it is part of the history the building has always been there and we dont have any of our history left anymore

  2. sandy lonsdale permalink
    March 6, 2013 1:20 pm

    What is happening to Newburn library?

  3. Paul Harrison permalink
    March 18, 2013 11:23 am

    Q. How are the potential savings that could possibly be made by spending a kings ransom on the Civic Center going to be measured and reported?

    Q. If and when the potential savings are not realised, as is more than likely. Who’s job is on the line?
    Will it be Paul Woods’.
    A. Not likely.

    I believe the fact that the £2.5M cost of bringing the City Pool up to standard was proven to be a misnomer when the true facts and figures were released under the Freedom Of Information act.
    To what ‘standard’ this refers to was never detailed and the costs were not an up front cost but spread over an extended period, which is bending the truth to say the least.

    Q. Is there no limit to the depths to which Nick Forbes will stoop to make a political point?

    • Paul Woods permalink
      March 21, 2013 11:11 am

      We have always ensured that the City Pool is maintained in a safe and functional condition. The building does require investment – a simple visual inspection reveals the state of the décor and the fixtures and fittings. Our survey reveals that there is £2.5m worth of work needed to the building, but that is not the main reason why it has been proposed for closure – it’s the fact that the city council can no longer afford to pay the subsidy required to keep it open. At some point in the near future, as a minimum, the building will need a rewire, extensive roof repairs and redecoration. The city council is not in a position to afford these works any more.

      In comparison to many other buildings in Leisure Services, the City Pool is in relatively poor condition. Consequently we don’t think it is a good candidate for asset transfer, so the decision has been made to close the pool. The last public swimming session will be on Thursday 28th March.

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