Agenda item

(To receive a report by Michelle Grady, Assistant Director – Finance, which invites the Board to consider a report on the Capital Budget Monitoring 2021/22, which is due to be considered by the Executive on 07 September 2021. The views of the Board will be presented to the Executive as part of its consideration of this item)

Consideration was given to a report by the Assistant Director – Finance, which invited Board to consider a report on Capital Budget Monitoring, which was due to be presented to the Executive on 07 September 2021.

The Capital Budget Monitoring Report compared the Council's projected expenditure with the approved Capital Programme, and provided explanations for any significant forecast over or under spending.

The Assistant Director – Finance gave an overview of the report, advising Members that the current 2021/22 forecasted position was an underspend of £26.913m (Block schemes £13.400m, Project schemes £13.513m). For the project schemes, the whole life budget was forecast to be underspent by £0.560m. Members were referred to Appendix A to the Executive report which provided a more detailed breakdown of the overall financial position for the council's capital budget programme.

Members were invited to consider the report and during the discussion, the following points were noted:

·         The capital programme was at risk of either overspends or delays causing underspends. Some schemes were delayed because of availability and supply issues with raw materials due to a combination of the Covid-19 pandemic, Brexit, and the Suez Canal blockage, and also due to a shortage of labour. In addition, there was an increase in global demand for construction material, particularly in the US where there was a huge growth in construction which was impacting on the availability of raw materials. A report on the supply issues and the significant impact on the delivery of the capital programme would be produced shortly.

·         The forecast underspend for 2021/22 of £13.513m in the project schemes was mainly due to two projects relating to the Spalding Western Relief Road which were forecasted to underspend in year by over £18m in total. 

·         The funding for the two Spalding Western Relief Road schemes that were currently underspending was committed and could not be diverted elsewhere otherwise the schemes would not be able to be completed. Instead, consideration would be given to bringing forward other schemes to reduce the level of underspend. However given the current issues with supply and availability of raw materials and labour, these schemes could face similar challenges and increased costs, and it was currently unclear whether this was a short or long term issue. In addition, bringing forward other schemes in the current financial year would be challenging due to the short timeframe. There was a need for caution about making any dramatic changes to the capital programme.

·         There was a forecast overspend on Highways Asset Protection of £4.145m. Approval would be sought from the County Council in September 2021 for an additional £10m of funding to be added to the capital programme budget for Highways. 

·         The A16/A1073 Spalding to Eye Road Improvement scheme was completed but still listed to account for any new or on-going compensation claims. Officers agreed to review how this scheme was reported in future.

·         The £1.468m funding allocated for the fire station projects in Grantham and Leverton was previously contingency funding held for the property scheme. This would now be separated out from the block funding of around £3m for property maintenance.

·         It was currently budgeted that the whole life cost of the Grantham Southern Relief Road scheme would be £104m, including grant funding from the Government, but this was still subject to considerable change due to supply and labour issues.

·         The funding allocated for the Linelands –Extra Care Housing scheme, which was no longer going ahead, would now be used for the Welton - Extra Care Housing scheme instead.

·         For the North Hykeham Relief Road scheme, £48m had been allocated in the capital programme to help fund the scheme. In addition, there would be an additional £110m of funding from the Department of Transport, subject to a highways business case for the earmarked funding. It was proposed to start the scheme in 2025, subject to receiving the earmarked funding.

RESOLVED:

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

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