Agenda item

The Leader informed colleagues that report provided an overview of the final outturn position and completed the annual monitoring cycle for capital.

Since the last report, received by Cabinet in January of this year, a number of additions and amendments were made to the programme, outlined in Appendix A. Most of these took the form of new grant funded schemes and their addition resulted in a total 2021/22 budget of £67.7m, compared to a budget of £57.5m as at November.

Included within these additions were grant allocations from Welsh Government for free school meal kitchen works and bus electrification, which required the Council to use this against existing expenditure, displacing the Council’s planned funding in the process.

This displaced funding would be carried forward into 2022/23, for use in line with WG’s planned intentions.

As well as these additions and amendments, slippage totalling £13.9m was reported at the end of the year. This slippage total also included the effect of the displaced funding just referenced.

This slippage was due to a number of reasons, including the effects of inclement weather, supply chain challenges and some overly optimistic profiling when schemes were initially added to the programme. Slippage for the whole year, including that approved earlier in the year, totalled £60m.

This resulted in a final budget of £53.791m, against which a final spend of £52.7m was recorded, reflecting a net underspend of £1.12m. This net underspend included some small overspends, more than offset by underspends, most of which were the result of not being able to fully utilise grant funding awarded by WG for specific schemes. 

The report also outlined the current position in relation to the available capital headroom. Having been updated for several recently approved commitments, the total headroom now stands at £2.354m, comprised of the following:

-         £57k borrowing headroom.

-         £258k uncommitted capital expenditure reserve, after allowing for

-         £2.040m of uncommitted capital receipts

In the case of the borrowing headroom, recent commitments against this included the increased budget for the Transporter Bridge project and the Information Station, as well as a decommitted renewable energy scheme, which was no longer deliverable. In addition, the provisional commitment for the Northern Gateway Scheme was removed and a provisional commitment for the Levelling Up Fund Round 2 bid was included.

Other potential commitments against the overall headroom include the Council’s share of the demolition costs for Newport Centre and additional funding to take the overall Band B funding envelope to £90m.

This overall amount of headroom, which steadily reduced over recent years, would need to be carefully managed and monitored in order to ensure that it could be utilised when needed for the most critical issues prior to the new capital programme coming into existence in 2023/24.

The report also outlined the current total budget for 2022/23, which currently stands at £117m. This was considerably more than had been spent in previous years and would potentially be a challenge for the Council to deliver in full. Therefore, there was a significant risk of slippage and, in anticipation of that, work was currently ongoing to revise the current expenditure profile across all services, in the hope that a more realistic profile would result.

This would be an important piece of work, as it would inform the Council’s actual borrowing for the year and ensure that the Council did not undertake borrowing earlier than actually required.

Comments of Cabinet Members:

§  Councillor Batrouni emphasised the importance of the re-profiling exercise.  The slippage was due to circumstances that every local authority has faced.  It was also healthy to re-prioritise under the current climate what could be delivered to the residents in Newport and welcomed the report.

Decision:

That Cabinet:

1.               Approved the additions to the Capital Programme requested in the report (Appendix A).

2.               Approved slippage of £13.9m from the 2021/22 budget into future years, noting the re-profiling of the programme that this gave rise to.

3.               Noted the capital expenditure outturn position for 2021/22.

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