Agenda item

Report attached.

Members considered a report of Councillor Vanessa Alexander, Portfolio Holder for Resources and Council Operations, providingan update on the delivery and financial performance of the capital programme as at Quarter 3 (Q3) 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.

 

The Leader of the Council introduced this report on behalf of Councillor Alexander.  Councillor Dad highlighted the amounts of new additions to the programme at the start of the year, items carried forward from the previous year and new authorisations in year forming the final scheme approvals of £56.351m.  He also outlined the slippage into future years and forecast spend in-year as a percentage of the capital budget for 2025/26 (72.7%).  In addition, he drew members attention to the sources of funding, as well as risks around the shortfall in capital receipts and from potential areas of spending not currently contained within the capital programme.  The programme was central to the Council’s need to maintain and develop its assets and its ambition to achieve key corporate objectives for the benefit of local residents.

 

Councillor Khan made the following observations and asked various questions as follows:

 

• Appendix 3 of the report set out slippage into future years, for example expenditure on Wilsons Playing Fields Drainage, Hyndburn Leisure Centre Efficiencies and the Market Hall development.  Was this linked to a lack of staff capacity, expertise or delays affecting delivery of the project?  The Conservative Group had proposed additional project staff during the last Budget process.
• In connection with Paragraph 5.2 of the report, on the Levelling Up Town Centre projects, what was the ‘challenge referred to?

 

Councillor Dad responded that the Council’s organisational review had sought to introduce more streamlined systems and structures.  In general, all capital programmes gave rise to an element of slippage.  However, the planned projects would all be completed in due course.  The employment of additional staff would not provide a solution to slippage of the type identified.  The controlling group would make additional staff available where this was necessary to support service delivery.  Overall, he was confident that the programmed projects would be successfully delivered.  Regarding the Levelling Up Town Centre projects, the finish date for the Market Hall would still be in 2026, but there had been a need to reconsider the facility’s operator.

 

Councillor Pritchard added that a new operator for the Market Hall had now been identified.  The initial preferred operator had parted company with the Council amicably, in part, due to insufficient funding being available to carry out the proposals as originally envisaged.  Other delays had been caused by the discovery of further asbestos on site.  The Council was currently seeking additional stall holders for the development and the majority of stall holders in the temporary cabins were expected to return to the Market Hall.  She offered to arrange a site visit if Councillor Khan so wished.  The project had been a ‘challenge’ and progress had been slower than the Council would have liked.  However, the renovation of old buildings could often throw up unexpected complications.

 

Councillor Khan raised the following additional matters:

 

• Was an update available regarding project delivery and expenditure in Year 1 concerning the £20m Pride in Place Funding?
• He noted that, at Paragraph 5.9 of the report, the Huncoat Garden Village development was being supported by consultants.  His understanding was that the controlling group had previously disapproved of the use of consultants for projects.  He speculated as to whether the cost of using consultants had risen in recent years.

 

Councillor Dad responded that the Pride of Place Impact Fund referred to in the report was, in fact, the £1.5m offered to targeted councils across England, Scotland and Wales.  This was a two year programme with £750k being allocated in each of the years2025/26 and 2026/27.  The schemes brought forward would complement those being developed by the Accrington Neighbourhoods Board from the £20m grant.

 

On the matter of consultants, Councillor Dad indicated that the controlling group was against engaging them unnecessarily, but inevitably there were times when the Council needed a particular expertise which could not be provided in-house.  He did not have any information to hand about whether the cost of using consultants had risen or fallen.

 

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 had 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 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 had been 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 Market Hall, which was funded from reserves.  £0.094m related to several smaller projects.

 

Approval had been received at Q2 to add a further £0.681m to the capital programme, of which, £0.128m was for the scheme at Wilsons Playing Fields, £0.250m related to the Market Development Works, £0.120m related to Mercer Hall Repurposing and £0.183m related to several smaller projects.  These were funded from earmarked reserves.

 

This report requested a further £0.084m to be added to the Capital Programme at Q3.  £0.111m related to further development work spend at the market which would be funded from earmarked reserves.  There was also an offset (£0.027m) relating to lower spend on playground improvements.

 

Details of all in-year budget adjustments could be found 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, Huncoat Garden Village was £26.076m.

Therefore, the Capital Budget for 2025/26 now totalled £30.041m, as shown in Table 1 below:

 

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 Approved in Year (QTR2)	681
Schemes Recommended for Approval (QTR3)	84
Proposed Capital Programme 2025-28	56,351
Less Approved Slippage into Future Years	-26,310
Proposed Capital Budget 2025-26	30,041

 

 

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 £30,041m 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 £56.351m, 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
Levelling Up Town Centre	13,460	0	0	13,460
Operational Buildings	1,156	234	0	1,390
Parks & Open Spaces	1,216	0	0	1,216
Planned Asset Improvements	217	0	0	217
UK Shared Prosperity Fund	255	0	0	255
Vehicles & Equipment	683	0	0	683
Total Approved Capital Spend Budgets	30,041	22,495	3,815	56,351

 

 

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 £56.351m for 2025/26 – 2027/28 was shown as a pie chart (Chart 2) in the report.

 

2025/26 Capital Budget – Q3 Forecast Outturn

 

As of 31^st December 2025, actual and committed expenditure totalled £18.995m, representing 63.23% of the rephased 2025/26 budget of £30.041m.  Table 3 below showed the committed expenditure and forecasted outturn by service area.

 

Table 3 - 2025/26 Capital Budget – Q3 Forecast Outturn:

 

Programme Area - Budgets	Proposed Capital Budget 2025/26   £’000	Actuals & Commitments - Q3     £’000	Forecast Outturn - Q3     £’000	Forecast Variance - Q3     £’000
Community Projects	728	325	630	98
Housing Improvement Programme	1,769	1,162	1,619	150
Huncoat Garden Village	3,110	2,836	3,006	105
IT Projects	527	438	524	3
Leisure Estate Investment	6,921	5,859	6,521	400
Levelling Up Town Centre	13,460	7,209	7,209	6,251
Operational Buildings	1,156	92	735	421
Parks & Open Spaces	1,216	614	993	222
Planned Asset Improvements	217	10	100	117
UK Shared Prosperity Fund	255	201	255	0
Vehicles & Equipment	683	251	270	413
Total Approved Capital Spend Budgets	30,041	18,995	21,861	8,180

 

 

Further forecast expenditure of £8.180m was anticipated before the end of the financial year, resulting in a total forecast outturn figure of £21.861m.  This represented 72.77% of the allocated budget and an underspend of £8.180m against the 2025/26 proposed budget.

 

Of the £8.180m underspend on the 2025/26 budget, most 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 due to complete July 2026, for which a more detailed cashflow was being developed by the contractor for the final works.  While a more detailed cashflow was being developed by the contractor, initial estimates proposed that £6.251m of budget would be slipped into next year.

 

A further £0.192m of the £8.180m underspend on the 2025/26 budget related to delayed civic theatre refurbishment works and £0.153m slippage in fire safety improvements works.

 

The Leeds/Liverpool cycle path works £0.195m had slipped till next year. The food waste collection caddies should be received by the year end preventing an underspend.

 

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 shown in 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:

 

• Levelling Up Town Centre – The redevelopment of Market Hall, Market Chambers, and Burtons Chambers remained a 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 £13.460m.  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 £2.843m 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 writing, the contractor was working with the Council to finalise the spend profile.  Nonetheless, the programme remained on track for completion at the end of Q2 of the 2026/27 financial year.

 

• Leisure Estate Investment – 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 efficiency project of £0.767m was expected to underspend by approximately £0.100m which would be slipped into next year.  This, along with the £0.300m budget allocated for Wilson Playing Fields 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 £29.187m grant from Homes England.  Forecast expenditure was phased over three financial years, with £3.110m in 2025/26, £22.261m in 2026/27, and £3.816m 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 Q3 2025/26, Grants represented £19.451m, Capital Receipts £4.249m, Reserves £6.291m, s106 and Revenue £0.500m to total £30.041m of capital funding for the programmes of works and projects.  The total proposed capital budget £30.041m was reduced due to proposed slippage of £7,766m into 2026/27.  This reduced the need for the full capital receipts this year and brought it down to a need for £0.961m.

 

2025/26 Forecast - The proposed capital budgets for the next few years were 2025/26 £30.041m, 2026/27 £22.495m and 2027/28 £3.815m.  Even though the capital receipt requirement had fallen this year as outlined above for future years the authority still needed £2.053m of new capital receipts to fund the proposed capital budgets.

 

Future Requirements and Risks - In 2026/27, further capital receipts were 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.  Homes England 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 final claim recently submitted.

 

• Pride of Place Impact Fund – The Council had been awarded £1.5m through the Pride in Place Impact Fund.  As of December 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 would have 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 £56.351m.  While approximately 78% 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                                 (1)   That Cabinet notes the financial position of the Capital Budget at Q3 of the 2025/26 financial year, as shown in Section 4 of the report.

 

(2)   That Cabinet approves the in-year addition to the Capital Programme of £0.084m of capital projects, as shown in Appendix 1 of the report.