Agenda item

The Leader presented the Capital Programme monitoring and additions report for September 2023.

This was the second monitoring report of the year on capital activity and provided an overview of the updated capital programme, alongside the projected outturn position as of September of this year.

The report provided an update on the level of available capital headroom and also detailed the additions to the programme that was identified and sought approval for these additions.

The first section outlined the movement in the capital budget since the last report was presented to Cabinet in September, which was the July 2023/24 monitoring and additions report.

The net value of additions and amendments to the current capital programme in 23/24 since then was £5.5m, and a breakdown of these additions was given in Appendix A. Cabinet was required to approve these additions and amendments.

As a result of these additions as of September 2023, the current budget for 2023/24 was now £90.3m, which was still substantial and would be challenging to deliver in full.

The additions within this report included the addition of works to the Duffryn District Heating System totalling £3.139m, for which the Council was liable. The report explained the specific accounting implications surrounding this and Cabinet was specifically required to approve the retrospective use of the Capital Expenditure reserve to fund the creation of the provision that would cover these costs.

Cabinet noted that the balance in the reserve carried forward into this financial year would now be reduced by £3.139m. The overall level of capital headroom, however, was no lower than it would have been, as this was the funding source that would have been used for these works, had a provision in the 2022-2023 accounts not been required. 

The report also outlined the level of slippage currently being forecasted against the revised £90m budget.

Currently, a variance of circa £8m was being projected, the majority of which related to slippage. The report however, noted that these figures were subject to continual review and might change between now and the end of the financial year.

The report also detailed the level of capital headroom currently available, which could be used to support new schemes and emerging priorities. This was £8.259m, having decreased by £3.139m following the addition of Duffryn District Heating System onto the programme.

Whilst the level of available headroom was higher than it was a year ago, Cabinet noted that it only took a few significant issues to arise for this to be consumed. The use of this needed to be very tightly controlled, in order that the Council was able to respond to critical issues, as and when they emerged. This would require clear prioritisation of only the most pressing and urgent issues.

In addition, any opportunity to further increase the headroom needed to be taken, so that it was possible to support as many priorities as possible to ensure that sufficient funding existed to respond to any issues that arose.

These regular updates included information on the Council’s compliance with its prudential and treasury management indicators.

The Council complied with all of its indicators, as of 30 September 2023, as referred to in Appendix D. The Leader thanked the finance team for assuring the Council’s compliance.

Comments of Cabinet Members:

§  Councillor Davies noted in the report the wonderful work being undertaken in Education, such as completion of work in Bassaleg School, as well as the Whitehead site, which was on its way to being developed for the new Pillgwenlly School. The original Pillgwennlly School site would then be used for the seedling school Ysgol Gymraeg Nant Gwenlli. The Capital budget was going at pace and doing right by the children of Newport.

§  Councillor Batrouni emphasised that despite the challenges and thanks to prudence, the Council was investing in the highest level of capital in 92 years.  Significant investment as outlined in the report meant that Newport was not holding back. This was testament to the Leader, Cabinet, and the finance team.

Decision:

Cabinet:

1.            Approved the additions to the Capital Programme requested in the report (Appendix A), including the addition of the Duffryn District Heating System and the retrospective use of the Capital Expenditure Reserve to fund this.

2.            Noted the predicted capital expenditure outturn position for 2023/24.

3.            Noted the amendments to the capital programme.

4.            Noted the available remaining capital resources (‘headroom’) and the earmarked usage of that resourcing.

5.            Noted the inclusion of the treasury management prudential indicators, included within the report.