Agenda item

(To consider a report from Michelle Grady, Assistant Director – Finance, which invites the Board to consider the Capital Budget Monitoring Report 2020/21 – Quarter 2 which is being presented to the Executive on 1 December 2020. The views of the Board will be reported to the Executive as part of its consideration of this item)

Consideration was given to a report from the Assistant Director – Strategic Finance, which invited the Board to consider the Capital Budget Monitoring Report 2020/21 – Quarter 2 which was being presented to the Executive on 1 December 2020. The views of the Board would be reported to the Executive as part of its consideration of this item.

The report compared the Council's projected expenditure with the approved budget for 2020/21 and provided explanations for any significant over or under spending. It also compared total projected expenditure for capital projects spanning more than one year with the total approved budget. The current forecasted position was an underspend of £5.424m(Block schemes £0.763m, Project schemes £4.661m). For the project schemes, the whole life budget was forecast to be overspent by £22.542m.The whole life position would be considered as part of the forthcoming budget setting process to ensure that the overall capital programme remained affordable.

The current year's forecast underspend of £5.424m would not increase the need to borrow. The forecast underspend in the current year on Capital Projects would not adversely impact on the Council's financial resilience. However, the forecast whole life overspend was a significant amount and was currently being considered as part of the budget setting process. The Capital Strategy 2020/21 required the capital programme to be affordable over the longer term and this assessment of affordability would need to be made. If necessary the capital programme would need to be modified to ensure this affordability, thereby maintaining financial resilience.

Members discussed the report, and during the discussion the following points were noted:

·              Overspend of £8.755m on the Lincoln Eastern Bypass – the forecast overspend on the Lincoln Eastern Bypass was due to a number of issues which could not be foreseen. This included the public inquiry, the bankruptcy of the original contractor Carillion, flooding, redesigns and Covid-19. There were always a number of unknowns, such as bad weather, which were factored in as risks. The project should be physically completed this calendar year, but would not be financially completed for some time due to outstanding claims such as for bad weather.

·              Overspend of £8.833m on Grantham Southern Relief Road – Delays and costs were increasing, mainly due to Covid-19 and waiting for third parties, namely Network Rail, Highways England and utility companies, to divert power and water supplies. 

·              Overspend trends – the Board suggested that it would be useful to have a breakdown of overspends in previous quarters included in the report going forward so that quarters could be compared and any trends could be identified.

·              Review and analysis of major projects on completion – there was no formal process to review and consider lessons learnt at the end of a major project. An officer led Capital Review Group was in place to strengthen reporting to scrutiny committees and the Executive. Lessons learnt from major projects could be considered by the Capital Review Group going forward.

·              Managing overspends from within the existing capital programme – it was likely that there would be an impact on other capital projects from managing forecast overspends for the Lincoln Eastern Bypass and the Grantham Southern Relief Road. Work was being undertaken to rebalance the programme and this would be set out in the Budget report for 2021/22 which would be presented to the Board early in the new year.

·              Risk assessments for funding from other developments for highways projects – Section 106 agreements would be put in place to ensure funding from developers was made available to help provide infrastructure. The Council was reliant on developers working with district councils to deliver developments and provide funding. The Council forward funded infrastructure, such as roads, in case there was any delay to funding being received from developers.

RESOLVED:

1.        That the Board unanimously support the recommendations to the Executive, as set out in the report;

2.            That a summary of the above comments be passed on to the Executive as part of its consideration of this item.