Agenda item

Consider report by the Acting Chief Financial Officer. (Copy attached.)

            There had been circulated copies of a report by the Acting Chief Financial Officer which provided an update on the progress of the 2022/23 Capital Financial Plan and sought approval for virements and the reallocation of funds.  The monitoring tables in Appendix 1 of the report reported on actual expenditure to 30 June 2022.  Key issues and highlights identified in those tables were summarised within the report.  The June month end positon reflected a projected outturn of £113.190m with a net budget variance of £0.342m, which included net timing movements from 2022/23 of £0.792m.  A number of macro-economic factors continued to affect the Capital Plan in 2022/23.  Unprecedented levels of inflation along with disruption in the construction materials supply chain continued to impact on the wider economy and consequently the Council.  A surge in demand coupled with constraints on supply had led to price increases, shortages and longer lead times.  The impact of that on tender prices for major projects and the wider Capital Plan continued to be assessed.  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, however would impact on the scale of project delivery from the blocks.  The most significant risk therefore was in the contracts tendered this year which may result in a 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.  In anticipation of inflationary pressures an inflation contingency of £1.253m was established at the 2021/22 year end to support potential budget pressures.  Through the first quarterly monitoring process this contingency had been increased by a further £0.179m, giving a revised contingency of £1.432m to support the Capital Plan as the year progressed.  The list of block allocations approved for the year and various approved and proposed projects to be allocation from them within the 2022/23 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.  In response to a question regarding the size and ambition of the Plan in the face of rising inflation and costs, the Acting Chief Financial Officer explained that a number of large projects were ongoing and that she expected movement in the Plan as the year progressed.  The Acting Chief Executive explained that the strategy to progress with the Plan involved going to market for tender as quickly as possible to get prices, before considering potential changes to the Plan.  In response to a question regarding staffing capacity to deliver the Plan, the Acting Chief Executive, Mr David Robertson, confirmed that external project managers were used to balance the workload across the Council.

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 Directors, detailed in Appendix 2 to the report, under delegated authority;

(ii)       the final block allocations in Appendix 2 to the report; and

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