Agenda item

The Leader presented the report, which provided an overview of the updated capital budgets for this financial year and the remainder of the capital programme window, alongside the projected outturn position as at July of this year.

This represented the first capital monitoring report of the 2022/23 financial year.

The last report received by Cabinet for the Capital Budget was the 2021/22 outturn report, which identified the total capital budget heading into 2022/23. At that point in time, the total budget for this year was £117.4m, which represented a significant increase in levels of spend compared with previous years.

An exercise to review the anticipated profile of spend for each scheme was undertaken by officers over the summer, with the aim of ensuring that a more realistic starting budget was reported against during the year.

The culmination of this exercise was that a total of £51.8m was reprofiled into future years.

It was hoped that by undertaking this exercise, and reducing the 2022/23 budget, the levels of slippage reported throughout the year would be reduced, in comparison to previous years.

In addition to the reprofiling exercise, there were a number of additions and amendments made to the programme, most of which related to the addition of specific grant-funded schemes. These total £25.550m,  detailed in Appendix A, impacted across multiple financial years, with £15.8m added to 2022/23 alone. Cabinet was asked to approve these additions to the programme. 

The total net impact of these additions and revisions were to reduce the total budget for 2022/23 to £81.4m.

In a change to previous years, Cabinet were not being asked to approve slippage at this stage of the year. Instead, slippage would be identified in each monitoring report and only in the final report of the year would we be asked to approve a total amount to be transferred to future years. The intention was to give greater clarity and accountability, as reports would be against a fixed budget, rather than one that moved on a quarterly basis.

Against the revised budget of £81.4m in 2022/23, the outturn expenditure totalling £80.9m was projected.

This variance was comprised of £433k of slippage and £106k of “true” net underspends and overspends.

This level of slippage being reported was considerably lower than in previous years, because of the reprofiling exercise described earlier.

There were no major items of slippage to outline at this stage, however a number of schemes requiring close monitoring were highlighted for our information. These included the Transporter Bridge and Leisure Centre, where the risk of further delays could result in slippage being identified later in the year.

The report also outlines the current position in relation to the available capital headroom.

Having been updated for a recent new commitment and an equivalent increase in resources, the total headroom still stood at £2.354m and comprised of the following:

-         £57k borrowing headroom.

-         £258k uncommitted capital expenditure reserve

-         £2.039m of uncommitted capital receipts

The balance of headroom available took account of commitments already reflected within the Capital Programme, as well as two provisional commitments in relation to the Council’s share of the demolition costs for Newport Centre and additional funding to take the overall Band B funding envelope to £90m, the latter being detailed within the report.

This overall amount of headroom, which steadily reduced over recent years, would need to be carefully managed and monitored 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.

This need for careful monitoring and prioritisation of resources was heightened considering the challenges currently being faced in relation to rising construction industry costs and the competing priorities for capital resources. 

Comments of Cabinet Members:

§  Councillor Batrouni considered that it was important to recognise what the Council was still investing money on areas such as £37M on education and £15M on regeneration and was therefore still considering capital projects that delivered better services to residents.  The Leader agreed with Councillor Batrouni’s comments.

§  The Leader reiterated that under both the financial items discussed, there were teams of officers working very hard to maintain prudent financial management across the whole of the authority as well as doing their best to work under extreme external pressures.  With this in mind, the Leader wanted to thank officers for their contribution.  The Leader also mentioned to the Chief Executive that the Cabinet valued the contribution that officers made.

Decision:

That Cabinet -

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

2. Noted the predicated capital expenditure outturn position for 2022/23.

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