Agenda item

To submit a report by the Director of Function (Resources)/Section 151 Officer.

The report of the Director of Function (Resources)/Section 151 Officer setting out the financial performance of the capital budget for the 2022/23 financial year (subject to audit) was presented for the Executive’s consideration.

Councillor Robin Williams, Portfolio Member for Finance provided an overview of the Capital Budget for 2022/23 and expenditure as summarised in the table at paragraph 1.2 of the report. When slippage from 2021/22, additional schemes since budget setting and adjustments to the Housing Revenue Account Budget have been taken into account, the total capital budget for 2023/24 was £54.564m. Total expenditure for the year ending 31 March, 2023 was £40.690m leaving an underspend of £13.874m. Most of the underspending relates to large projects (Sustainable Communities for Learning programmes, infrastructure, and flood scheme projects as well as HRA expenditure) which can be influenced by a number of factors. In all cases the funding for the projects has been secured and will be carried forward into 2023/24 with no loss of resources for the Council.

The Director of Function (Resources)/Section 151 Officer referred to the importance of grant funding in the Council’s capital programme with 40% of the budget and 56% of the actual expenditure being funded from capital grants. Of the £11.110m of additional schemes added to the capital programme since the original budget was set, £9.9m is made of grant funding, (Appendix C refers). Although the Council receives some grants as part of an all-Wales allocation, many are only awarded after a competitive process with Council staff having to bid for grants. While pressures on the Council’s revenue expenditure have been highlighted the capital budget is also becoming increasingly tight with the capital funding which the Council receives from Welsh Government in the form of the General Capital Grant and supported borrowing having remained largely static in recent years and now barely covering the cost of maintaining existing assets. New investment projects are therefore increasingly reliant on grant funding for their delivery.

The Executive’s Members although they acknowledged the importance of grant funding for the delivery of the Council’s capital programme which they welcomed,  highlighted the difficulties created when grant awards are not confirmed in time to be planned for and included in the annual capital programme at the beginning of the year with some grants being awarded late in the financial year for schemes that may not be a local priority for the Council.

The Chief Executive said that the Council has a good track record of attracting grant funding and of delivering schemes within budget and timescale. However, estimating capital costs has become increasingly challenging thereby creating more risk for the Council and while it is important that the Council continues to compete for grant funding, it needs to do so without becoming overly exposed to additional risks. The issue with grants that are announced during or late in the year is that they create extra work and divert resources away from planned activity to responding to the grant opportunity. Projects which the Council has planned and has committed to are then set aside whilst scarce staff resources are engaged with the grant bidding process. This makes managing performance more challenging but is necessary if the Council wishes to achieve more in terms of capital delivery than the bare minimum of maintaining the assets it has. There is room to improve the reporting of capital expenditure in terms of differentiating for the public’s understanding what the Council is able to achieve with its core capital funding and what it accomplishes because it has the confidence to compete against others for additional grants whilst also recognising that this will have an impact on day-to-day activities. 

It was resolved –

·                To note the draft outturn position of the Capital Programme 2022/23 that is subject to audit, and

·                To approve the carry-forward of £13.477m to 2023/24 for the underspend on the programme due to slippage. The funding will also carry forward to 2023/24 as per Appendix A, paragraph 4.3. The revised capital budget for 2023/24 is £51.439m.