Agenda item

Consider report by Director, Finance & Corporate Governance. (Copy attached).

3.1         There had been circulated copies of a report by the Director, Finance & Corporate Governance providing an update on the progress of the 2021/22 Capital Financial Plan and seeking approval for virements and the reallocation of funds. The monitoring tables in Appendix 1 to the report detailed actual expenditure to 31 December 2021.  Key issues identified in those tables were summarised within the main report.  The report explained that the December month end of position reflected a projected outturn of £66.171m, with a net budget variance of £18.058m.  Past expenditure trends indicated that delivering the remaining expenditure of £26.9m in the final quarter of 2021/22 would be challenging, potentially leading to further slippage at year end.  There were a number of macro-economic factors affecting the Capital Plan.  It was noted that the construction materials supply chain had been subject to unprecedented disruption in recent months.  A surge in demand, coupled with constraints on supply had led to price increases, shortages and longer lead times and the impact of this on the Capital Plan was being assessed.

3.2         Current legally committed projects had a small risk of impact and block programmes of work could operate within a cash constrained budget and were considered lower risk.  The report stated that the most significant risk lay in the small number of contracts to be tendered this year which might result in budget pressure.  Any financial implications from those market conditions would be reported through the regular budget monitoring cycle, with any longer term impacts reflected in the financial planning process.

3.3         The list of block allocations approved for the year and various approved and proposed projects to be allocation from them within the 2021/22 Capital Plan was outlined in Appendix 2 to the report.  The list of estimated whole project capital costs for single projects which would not be completed in the current financial year was outlined in Appendix 3 to the report.  The Director, Finance & Corporate Governance presented the report, highlighted the success of ongoing projects and answered questions from Members.  Regarding capital costs listed as Wheeled Bins – Street Cleansing, the Director explained that the costs related to the ongoing need to replace bins that had reached the end of their useful life span or otherwise had to be replaced.  In response to a question on the repair works on the Union Chain Bridge, the Director explained that the project was being managed by Northumberland County Council, works were ongoing to understand the full extent of repairs required and that money had been earmarked from the Emergency and unplanned as contingency.  Any additional funding not required would be released back into the capital programme.  In response to a question regarding delays to Hawick Regeneration works, the Director of Infrastructure and Environment explained that errors present in the initial tenders received had led to delays in the process due to the inability to compare like for like costs between those tenders.  The tender process was now almost complete, and it was hoped that a preferred contractor would be appointed before the end of the financial year.

DECISION

(a)          AGREED the projected outturn in Appendix 1 to the report as the revised capital budget and approved the virements required.

(b)          NOTED:

(i)    the budget virements previously approved by the Executive Director, Finance & Corporate Governance and the Director Infrastructure & Environment detailed in Appendix 2  to the report under delegated authority;

(ii)  the list of block allocations detailed in Appendix 2 to the report; and

(iii)the list of whole project costs detailed in Appendix 3 to the report.