Agenda item

Report attached.

The Cabinet considered a joint report of Councillors Noordad Aziz, Joint Deputy Leader and Portfolio Holder for Transformation, Education and Skills and Vanessa Alexander, Portfolio Holder for Resources and Operations. The report provided 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 Meeting on 13^th February 2024.

Councillor Aziz highlighted the current approved total for the Capital Programme, which was £45.3m. He indicated that the new controlling group had reviewed the existing projects to ensure that they would provide added value to the Borough. In a number of cases, it would not have been prudent to terminate the projects at this stage. The new political administration would continue to seek more capital investment for the Borough through the new Labour Government.

Approval of the report was not considered to be a key decision.

Reasons for Decision

2024/2025 Capital Programme

The Council had authorised new additions to the capital programme of £4.404m at its meeting on the 13^th February 2024.

Since the Council meeting in February 2024 new schemes totalling £0.160m had been approved and added to the programme. The additional expenditure approved was to be fully funded by external grants and receipts that had been awarded and or / received.

In addition, the capital spend outturn from 2023/2024 had slipped £40.656m into 2024/2025, of which £37.769m 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 £45.315m and was shown in the table below:

The financing of the programme in 2024/2025 was set out in a pie chart within the report. This demonstrated that the majority of funding was provided from external grants and contributions (64%), earmarked reserves (25%) and capital receipts (11%), with a very small percentage financed by other sources including revenue, s106 monies and commuted sums.

The current programme of £45.315m would not be capable of being delivered in the current financial year and it was proposed to rephase the programme into the years in which it was now expected to be spent. The new phasing of the programme was as summarised below.

Summary of the Scheme Profiles over the Medium-Term Financial Strategy.

1st Quarter Update Position

The Actual expenditure to 30^th June 2024 was £3.358m against the latest rephased budget for 2024/2025 of £44.851m.  This equated to 7.53% spend.

As shown in the table above, there was expected to be £0.734m of budget to be rephased into 2025/2026 for operational building improvements.

As the programme had been rephased, the latest forecasts remained in 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 with a more detailed breakdown provided in the report as Appendix 1.

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 considered 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 £4.688m, 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 £1.675m to achieve all its required financing from capital receipts. It was expected that all 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 £29.119m in external funding, with the Council providing additional match funding. It was crucial that the external funding was secured, and grant works were claimed on a frequent basis. To date £0.767m had been received, leaving £24.109m still to be received / claimed over the next two years.

The majority of external funding was to be provided by:

·         Levelling Up Project (LUF) – this scheme was largely funded by a Government grant of £20m and a further £1.5m contribution from Lancashire Council.  To date the Council had received just over £5.9m of this funding and further claims were being submitted on a quarterly basis to minimise the impact on cash flow.  The Government had prepaid some elements of this grant to assist councils with their cash flows.

·         UK Shared Prosperity – The Council had already received the full allocation £1.030m for 2023/24 and 2024/25.  All these works would have to be completed within the agreed timescales to ensure that there was no threat of clawback.

·         Disabled Facilities Grant – the Council received grant funding from the Better Care Fund via Lancashire County Council which included £1.195m of funding that the Council was expecting to receive shortly.

·         Leisure Estate Investment Programme – The Council had been successful in obtaining external funding of around £2.4m from Sport England.  Most of this grant had already been received by the Council, with the remainder to be claimed at a later stage of this scheme.

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:

·         Levelling Up Programme - with £26.524m in year

·         Disabled Facilities Grant  - with £1.942m in year

·         UK Shared Prosperity Grant – with £0.858m in year

·         Leisure Estate Investment Programme - £11.625m in year

·         Asset Programme works £3.633m in year and £0.734m in 2025/26.  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 £45.315m. Although the programme was approximately 64% 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 time limits.

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