Agenda item

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

4.1       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 to the report reported on actual expenditure to 31 December 2022.  Key issues and highlights identified in those tables were summarised within the report.  The December month end position reflected a projected outturn of £75.119m, with a net budget variance of £22.892m.  This included net timing movements from 2022/23 of £25.596m.  The current forecasts continued to present challenging delivery timescales therefore there might be further slippage at year end.  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 laid in the contracts being tendered this year which might result in a budget pressure.  Any financial implications from those market conditions will continue to 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.  That contingency was increased by £0.496m at the first two quarters and was being increased by a further £1.752m in this third quarterly monitoring, giving a revised contingency of £3.501m which a timing movement was being requested for into 2023/24 to support the 2023/24-2032/33 Capital Investment Plan.  Appendix 2 to the report contained a list of the block allocations approved for this year and the various approved and proposed projects to be allocated from them within the 2022/23 Capital Plan, whilst Appendix 3 contained a list of estimated whole project capital costs for single projects which would not be completed in the current financial year. 

4.2       Members highlighted that it was encouraging that various projects relating to the early years expansion and new school provision were continuing.  In response to a question regarding the level of expected spending on the Hawick Flood Protection Scheme to 31 March 2023, the Acting Chief Financial Officer confirmed that significant works were expected within this financial quarter, and that the projected spend was expected to be reached.  The Chief Executive confirmed that the scale and volume of work on the project was increasing, and it was expected that the forecast would be proved accurate.  Regarding spending within Land and Property Infrastructure on free school meals, Ms Douglas explained that the spending referred to in the report related to works to improve the capacity of kitchens in schools to allow them to deliver meals to a greater number of pupils across the region.  

DECISION

AGREED:-

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

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

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