Agenda item

Report attached.

Members considered a report of Councillor Peter Britcliffe, Deputy Leader of the Council and Portfolio Holder for Resources, providing an update for Cabinet of the Council’s Capital Programme Monitoring.  It set out the latest phasing of the programme including the latest estimate of available resources and any additions or changes in forecast outturn since the last current position had been presented to the Council on 23^rd February 2023.

Councillor Britcliffe commented that the report that had been circulated close to the meeting date so as to provide the most up to date information possible.  He summarised the total amounts of new additions to the programme and slippages and approvals from 2022/23.  He also noted that much of the programme would be funded by external grants and capital receipts, with a modest amount funded from reserves and balances.  Overall, Hyndburn had the 4^th lowest borrowing in Lancashire at 10.57% of the capital requirement.  He named a number of authorities with a significantly higher proportion of borrowing.

Approval of the report was not deemed a key decision.

Reasons for Decision

The Council had authorised new additions to the capital programme of £8.374m at its meeting on the 23^rd February 2023.

Since the Council meeting in February 2023 new schemes totalling £1.302m had been approved and added to the programme.  The additional expenditure approved was to be fully funded from external grants and receipts that had been awarded and or / received.

In addition, the capital spend outturn from 2022/2023 had slipped £37.615m into 2023/2024, of which £35.294m related to the Levelling Up scheme for Accrington Town Centre, the Leisure Estate Investment and Housing Schemes including Disabled Facilities Grants.

The total approved Capital programme now totalled £47.291m and was shown in the table below:

The financing of the programme in 2023/2024 was illustrated in the report by way of a pie chart.  The chart showed that there was approval to fund £5m of the capital programme through external borrowing, if required.  The Council continued to maximise the use of its capital receipts, reserve balances and attempted to draw down additional external funding that would delay or potentially reduce its need for borrowing.

The current programme of £47.291m would not be capable of being delivered in the current financial year and it was proposed to now re-phase the programme into the years in which it was now expected to be spent.  The phasing of the programme was now summarised as shown below.

1^st Quarter Update Position

The Actual expenditure to 30^th June 2023 was £0.818m against the latest re-phased budget for 2023/2024 of £14.479m.  This equated to 5.65% spend. 

As shown in the table above, there was expected to be £32.812m of budget to be re-phased into 2024/2025 of which £14.960m related to the Levelling Up scheme for Accrington Town Centre, £16.891m to the Leisure Estate Investment, £0.767m to Shared Prosperity Funded schemes and the balance to miscellaneous capital schemes.

As the programme had been re-phased, the latest forecasts were now that all schemes would be line with the budgeted profile and were expected to be spent in year. 

The significant elements of the programme to be spent in year were shown in the table below.  A more detailed breakdown appeared at Appendix A to the report.

Close monitoring of the capital programme would be undertaken throughout the year to ensure that the projects were kept in line with spend forecasts and were considered in the Council’s cash flow forecasts.  Deviations from the spending profiles and any financial implications would be taken into account in future treasury and revenue budget forecasts.

Financial Risks of the Capital Programme

·     Capital Receipts - The financing of the programme was reliant on using receipts of £4.351m, which had been generated from the sale of Council land and buildings.  To date the Council still needed to sell land and buildings to the value of £2.724m to achieve all its required financing from capital receipts.  It was expected that all of these receipts would be achieved by the end of 2024/2025.  It was crucial that the planned sales continued to be progressed to ensure the required financing was in place.

This was a medium level risk

·       External Grants and Contributions - The Capital Programme was reliant on £31.088m in external funding, with the Council providing additional match funding of over £16m.  It was crucial that the external funding was secured and grant works were claimed on a frequent basis.  To date £5.256m had been received, leaving £26.187m still to be received / claimed over the next two years.  The majority of external funding was to be provided by:

o   Levelling Up Project (LUF)

o   UK Shared Prosperity

o   Disabled Facilities Grant

o   Leisure Estate Investment Programme.

This was a medium level risk

·       External Borrowing - The Capital Programme had approval for £5m of external borrowing as part of the Leisure Transformation Programme.  The impact of inflation had seen some significant increases in interest rates for borrowing and these rises would have an impact of the revenue budget for interest costs if there was a need for the Council to borrow to fund this project.  External borrowing would only occur at the end of any project and would be reduced wherever possible by the use of any additional capital receipts, other external funding available and through increased reserves / in year surpluses achieved through good financial management.

This was a medium level risk

·       Major Schemes in Capital Programme - The programme contained some major schemes that required close monitoring to ensure they were on target and that any external financing had been secured and was being claimed frequently.  Major schemes included: 

o   Levelling Up Programme - with £7.798m in year and £16.89m in 2024/2025.

o   Disabled Facilities Grant  - with £2.042m in year

o   UK Shared Prosperity Grant – with £0.274m in year and £0.767m in 2024/2025.

o   Leisure Estate Investment Programme - £0.269m in year with further works in 2024/2025 of potentially £16.892m dependent on the success of external funding bids.

o   Asset Programme works £3.8m in year. These works included maintenance of operational buildings and the continued investment in Parks and Playgrounds

Conclusion

The capital programme had significantly grown over the past two financial years to a current programme totalling £47.291m.  Although the programme was approximately 66% funded from external grants and contributions, it nevertheless put a strain on the Council’s staffing resources to be able to procure and deliver these projects.  It was therefore key to ensure that projects were well planned and phased to deliver within the required timeframes.

The Programme would continue to be carefully monitored and it might require further revisions in its phasing in the future.

There were no alternative options for consideration or reasons

Resolved                                    -    Cabinet notes the progress on capital expenditure to date.