Issue - meetings

(To receive a report from the Executive Director – Resources which provides an update on capital spending compared with budgets for the financial year which started on 30 September 2021)

That the position on the capital programme be noted.

The Assistant Director – Finance presented a report on Capital Budget Monitoring Report 2021/22 – Quarter 2 to 30 September 2021.  The Executive was advised that the current 2021/22 forecasted position was an underspend of £33.9m, which was a movement of £7.9m from the Quarter 1 reporting, and whilst it was recorded as an underspend position, it reflected some slippage in the delivery of the programme, and the budgets would be rephased to reflect that.  There was not an expectation that the budgets would not be required for the purposes they were allocated for.

On the Block schemes, the main underspend was from the contingency of £7.5m which was held to deal with any issues as they arose and reflected the requests which had been received.  In terms of projects, the main variances were in relation to a couple of the major highways projects, such as the Spalding Western Relief road and delays due to land acquisition and design requirements causing the project to slip.

The Chairman of the Overview and Scrutiny Management Board presented the comments following its consideration of the report on 25 November 2021.  The Board noted in particular the supply issues which were impacting the construction industry leading to delays.  However, there was nothing that the Board felt it needed to bring particular attention to, and the situation was being monitored regularly.

During discussion by the Executive, the following was noted:

·       It was queried what actions were being taken to mitigate inflationary pressures, and the Executive was advised that there was a need to understand whether this would be a long term increase in costs, or whether it was just temporary.  However, it may be too early at this point to know this.  It was acknowledged that there were issues with costs of materials, particularly timber and steel, and limited supply at this time, but a levelling out was starting to be seen.  It was possible that costs would stabilise at a higher level than they were previously. 

·       In addition, there were issues around technological equipment, particularly in relation to computer chips, which whilst there was not a significant increase in cost, there were delays in obtaining this equipment, which could lead to problems in the future.  However, officers were working with Microsoft and Serco to minimise delays and ensure that the necessary equipment could be obtained.

·       The capital programme was substantial, and there would be a need in future to consider how long it would take to deliver particular projects.

·       Ongoing discussions were taking place with contractors in terms of being more commercially aware to manage challenges within the programme.

RESOLVED

          That the position on the capital programme be noted.