Agenda item

Report attached.

Members considered a report of Councillor Vanessa Alexander, Portfolio Holder for Resources and Council Operations, providing an update on the delivery and financial performance of the capital programme as at Quarter 2 of 2025/26, highlighting progress against budget, identifying any variances, risks or slippage and forecasting the expected outturn.  Overall, the report supported effective decision-making, ensured transparency and accountability, and informed any necessary adjustments to project timelines, funding allocations, or future financial planning.

 

In the absence of Councillor Alexander, the Leader of the Council provided a brief introduction to the report, highlighting the figures set out at Table 1 of the report showing approved projects in 2025/26 of £2.726m and in-year additions of £53.541m giving a proposed programme of £56.276m for 2025-28, of which £29.957 would be the working capital budget for 2025/26, with the remainder slipped into future years.  Of the approved capital spend in 2025/26 some £12.598m had been committed as at Quarter 2.

 

Councillor Zak Khan asked if the amount of underspend of £0.428m referred to in Paragraph 4.6 of the report, could be reallocated to be spent on other projects in-year, or if it would only be considered at year end for slippage into future years.  Councillor Dad and Martin Dyson, Executive Director (Resources) indicated that the majority of the anticipated underspend related to Accrington town centre projects and was likely to slip into next year’s programme.  Members and officers were not aware of any alternative capital projects deliverable in-year.

 

Approval of the report was not deemed a key decision.

 

Reasons for Decision

 

2025/26 Capital Budget

 

The Capital Budget for 2025/26 was Year One of the Capital Programme 2025/26 – 2027/28.  At the Council meeting on 27^th February 2025, Members approved a capital budget for 2025/26 of £2.726m.

 

A further £23.236m had been added to this budget from rephased capital projects carried forward from 2024/25.  Of this, £19.370m related to major projects, such as the Levelling Up funded schemes for Accrington town centre and the Leisure Estate Investment programme.

 

Ad hoc budget adjustments had reduced the Capital programme by £0.157m.  Of which, £0.178m had been removed from the Capital Programme relating to a UK Shared Prosperity Fund (UKSPF) funding adjustment.  A further £0.021m of capital receipts funding had been added, which was brought forward from 2024/25.

 

Approval had been received at Q1 to add a further £29.780m to the capital programme.  Of which, £29.187m was for the scheme at Huncoat Garden Village (HGV), which was fully funded from external grants.  £0.500m related to the addition of solar panels at the Market Hall, which was funded from reserves.  £0.094m related to several smaller projects.

 

The report requested a further £0.681m to be added to the Capital Programme at Q2.  £0.115m related to Parks & Open Spaces, on projects such as improvements at Lowerfold Park and Bullough Park, which were mostly funded by grants, contributions, and earmarked reserves.

 

£0.120m was the Council’s contribution to the repurposing of Mercer Hall and £0.010m was for the purchase of vehicles & equipment funded from a revenue contribution.  A further £0.250m for Market Development Works and £0.128m for Leisure Estate Investment had also been added.  These works were funded by earmarked reserves.

 

Additional funding of £0.028m had been allocated to the Lee Lane Cemetery tap project and a new capital project had been added for £0.030m to proceed with the installation of a wireless conference system.  Details of all in-year budget adjustments were included in Appendix 1 of the report.

 

Several projects had been identified to be rephased into future years of the Capital Programme, which totalled £26.310m.  Of which, HGV was £26.076m.

 

Therefore, the Capital Budget for 2025/26 now totalled £29.957m, as shown in Table 1below:

 

Table 1: Capital Budget 2025/26 Reconciliation:

 

Capital Budget 2025/26	Amounts   £’000
Budget Approvals (Council Feb-25)	2,726
Slippage b/f from 2024-25	23,236
Budget Adjustments in Year	-157
Schemes Approved in Year (QTR1)	29,780
Schemes Recommended for Approval (QTR2)	681
Proposed Capital Programme 2025-28	56,267
Less Approved Slippage into Future Years	-26,310
Proposed Capital Budget 2025-26	29,957

 

 

A more detailed set of tables showing movements by service area were provided at Appendix 2 of the report.

 

The proposed financing of the Capital Budget of £29.957m for 2025/26 was shown as a pie chart (Chart 1) in the report.

 

Following all budget adjustments as detailed above, this had resulted in a proposed revised Capital programme of £56.267m, which could be seen in Table 2 below:

 

Table 2: Capital Programme Budgets by Service Area

 

Programme Area - Budgets	Proposed Capital Budget 2025/26   £’000	Proposed Capital Budget 2026/27   £’000	Proposed Capital Budget 2027/28   £’000	Proposed Capital Programme     £’000
Community Projects	728	0	0	728
Housing Improvement programme	1,769	0	0	1,769
Huncoat Garden Village	3,110	22,261	3,815	29,186
IT Projects	527	0	0	527
Leisure Estate Investment	6,921	0	0	6,921
Market Development Works	13,349	0	0	13,349
Operational Buildings	1,156	234	0	1,390
Parks & Open Spaces	1,246	0	0	1,246
Planned Asset Improvements	217	0	0	217
UK Shared Prosperity Fund	255	0	0	255
Vehicles & Equipment	680	0	0	680
Total Approved Capital Spend Budgets	29,957	22,495	3,815	56,267

 

 

As shown above, £22.495m had been rephased to 2026/27 and £3.815m to 2027/28, reflecting the forecasted expenditure in those years.

 

The proposed financing of the Capital Programme of £56.267m for 2025/26 – 2027/28 was shown as a pie chart (Chart 2) in the report.

 

2025/26 Capital Budget - Q2 Forecast Outturn

 

As of 30^th September 2025, actual and committed expenditure totalled £12.598m, representing 42.05% of the rephased 2025/26 budget of £29.957m.  Table 3 below showed the committed expenditure and forecasted outturn by service area.

 

Table 3: 2025/26 Capital Budget - Q2 Forecast Outturn

 

Programme Area - Budgets	Proposed Capital Budget 2025/26   £’000	Actuals & Commitments - Q2     £’000	Forecast Outturn - Q2       £’000	Forecast Variance - Q2   £’000
Community Projects	728	410	628	99
Housing Improvement programme	1,769	841	1,619	150
Huncoat Garden Village	3,110	2,682	3,006	105
IT Projects	527	430	522	6
Leisure Estate Investment	6,921	4,827	6,521	400
Market Development Works	13,349	2,383	6,469	6,879
Operational Buildings	1,156	46	717	439
Parks & Open Spaces	1,246	547	941	305
Planned Asset Improvements	217	4	100	117
UK Shared Prosperity Fund	255	177	255	0
Vehicles & Equipment	680	251	271	409
Total Approved Capital Spend Budgets	29,957	12,598	21,048	8,909

 

 

Further forecast expenditure of £8.450m was anticipated before the end of the financial year, resulting in a total forecast outturn figure of £21.048m.  This represented 70.26% of the allocated budget and an underspend of £8.909m against the 2025/26 proposed budget.  Of the £8.909m underspend on the 2025/26 budget, £8.481m was due to natural slippage of capital projects, or where projects had not commenced - mainly due to the absence of funding.  Subject to Cabinet approval at year end, these projects would be rephased to subsequent years.

 

The largest area of slippage related to the LUF-funded Market Development Works.  While a more detailed cashflow was being developed by the contractor, initial estimates proposed that £6.879m of budget would be slipped into next year.  Further details of all proposed slippage was included within Appendix 3 of the report.

 

A further £0.428m of the £8.909m underspend on the 2025/26 budget related to completed or closed projects.  This was a net amount consisting of a £0.443m underspend and a £0.015m overspend.  Subject to Cabinet approval at year end, this funding would be released to other capital projects.

 

Of the £0.443m underspend, £0.409m related to capital costs for expanding food waste collection rounds.  The original project bid had been based on the Government grant’s terms, which supported capital purchases like food caddies and waste vehicles.  However, instead of buying food waste vehicles outright, the Council had leased new refuse collection vehicles that were adapted for food waste.  This approach aligned with the Council’s vehicle leasing policy.  As a result, the unused portion of the grant would be used to offset the capital financing costs of these leased vehicles.

 

The capital programme was closely monitored throughout the financial year to ensure spending stayed in line with forecasts and was accurately reflected in the Council’s cash flow.  Any significant variances would be reviewed, and their financial impact would be factored into future treasury management and budget planning.

 

A more detailed breakdown of the forecast outturn for 2025/26 was provided at Appendix 3 of the report.

 

Major Schemes

 

The Capital Programme included several major schemes that required robust and continuous monitoring to ensure they were delivered on time, within budget, and that all external funding was both secured and claimed promptly.  The following had been identified as key major schemes currently requiring close oversight:

 

• Market Development Works – The redevelopment of Market Hall, Market Chambers, and Burton Chambers remained a significant challenge for the Council.  However, enhanced monitoring and management arrangements had ensured that key milestones were being met, with the project progressing on time and within budget.

 

The programme had a remaining budget of £13.349m.  This was funded by £10.617m from the Levelling Up Fund and other grants, the majority of which had already been claimed

 

The balance of £2.732m would be met from available capital receipts and revenue reserves, ensuring the Council had the necessary resources in place to deliver the scheme as planned.

 

At the time of drafting the report, the contractor was working with the Council to finalise the spend profile.  Nonetheless, the programme remained on track for completion in Q2 of the 2026/27 financial year.

 

• Leisure Estate Investment – This comprised two key projects: the construction of the Cath Thom Leisure Centre and efficiency works at Hyndburn Leisure Centre.  The overall programme budget was £6.921m, which included provision for future pitch drainage works.

 

Construction of the Cath Thom Leisure Centre was now complete, with final accounts and outstanding project costs currently being finalised, with any minor overspends covered by the £0.128m underspend reserve previously approved by Cabinet.

 

The Hyndburn Leisure Centre project was expected to underspend by approximately £0.100m this year.  This, along with the £0.300m allocated for pitch drainage works was expected to be slipped into the 2026/27 financial year.

 

• Huncoat Garden Village – Huncoat Garden Village remained a major strategic scheme for the Council, fully funded by a £29.186 million grant from Homes England.  Forecast expenditure was phased over three financial years, with £3.110m in 2025/26, £22.261m in 2026/27, and £3.800m in 2027/28.

 

Current activity was focused on progressing key preparatory work, including planning, legal, and land acquisition processes.  Consultants were supporting the Council across several workstreams, including the residential relief road design, compulsory purchase order (CPO) documentation, landowner negotiations, and overall programme management.  These activities were essential to enabling delivery of the scheme in line with the agreed programme.

 

Funding Risks

 

Capital Receipts

 

·         Capital Receipts and Funding Position - At Q2 2025/26, the Council had a Capital Receipts balance of £2.666m.  The latest Capital Programme required £4.989m - leaving a shortfall of £2.323m over the Capital Programme period 2025/26 – 2027/28.

 

·         2025/26 Forecast - For 2025/26, the forecast requirement at Q2 was £2.079m.  However, of the £2.666m total available, £1.719m was earmarked for Market Development Works and £0.153m for fire compliance works, which would both be delivered in 2026/27.  Therefore, only £0.794m was available for 2025/26.  It was proposed that the shortfall in 2025/26 was funded from eligible grants and earmarked reserves.

 

·         Future Requirements and Risks - In 2026/27, a further £1.000m in Capital receipts was required to fund all approved projects.  Funding for these future commitments had not yet been identified and excluded any new capital bids submitted for that year.  Progress was being made on planned asset disposals to generate the necessary receipts, but delays might require temporary use of reserves or pausing elements of the programme.

 

·         Next Steps - Officers would continue to review the Council’s operational asset base to identify further disposal opportunities.  The funding strategy and associated risks would be monitored closely to ensure the programme remained deliverable and financially sustainable.

 

This was a high-level risk.

 

External Grants and Contributions

 

• Levelling Up Project (LUF) – this scheme was primarily funded through a government grant, supplemented by a contribution from Lancashire County Council.  A total of £10.617m in grant funding was required to complete the scheme.  To date, the Council had received £9.634m, with further claims being submitted on a quarterly basis to help manage cash flow effectively.

 

To support local authorities, the Government had prepaid certain elements of the grant, easing short-term cash flow pressures.

 

• Huncoat Garden Village – The Council had been awarded a Government grant of £29.187m to support this scheme.  Grant claims were submitted monthly, following the incurrence of eligible expenditure, to help manage the Council’s cash flow.

 

To date, the Council had received over £2.0m in grant funding.  The Government had structured the grant to allow for prepayment of certain elements, further supporting local authority cash flow management.

 

• Disabled Facilities Grant – the Council received grant funding from the Better Care Fund via Lancashire County Council, which included £1.360m of funding for 2025/26.  All grant funding had been received.

 

• Leisure Estate Investment Programme – The Council had been successful in obtaining external funding of around £2.64m 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.

 

• Pride of Place Impact Fund - The Council had been awarded £1.5m through the Pride in Place Impact Fund.  As of November 2025, no decisions had been made regarding allocation.  Schemes would be developed collaboratively with officers, Cabinet, the local MP, and the community to ensure the funding delivered maximum benefit across the borough.  All funds had to be spent by 31^st March 2027.

 

This was a low-level risk.

 

Conclusion

 

The Capital Programme had grown substantially over the past two financial years and now totalled £56.267m.  While approximately 79% of this funding was secured through external grants and contributions, the increased scale and complexity of the programme were placing significant demands on the Council’s staffing and delivery capacity.  To ensure successful delivery within agreed timescales and budgets, it was essential that all projects were strategically planned, adequately resourced, and appropriately phased.  Effective programme management and coordination would be critical to maintaining progress and achieving intended outcomes.

 

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:

 

(1)   Notes the financial position of the Capital Budget at Q2 of the 2025/26 financial year, as shown in Section 4 of the report.