(OPEN TO THE PUBLIC) / ITEM NO. 8
REPORT OF THE DIRECTOR OF CUSTOMER AND SUPPORT SERVICES
TO THE BUDGET AND AUDIT SCRUTINY COMMITTEE
ON WEDNESDAY 3rd November 2004
TITLE : CAPITAL MONITORING 2004/05
RECOMMENDATION :
Members are requested to note the current position regarding the 2004/05 capital programme.
EXECUTIVE SUMMARY :
The report provides details of the funding of the 2004/05 capital programme and a report on expenditure to date.
BACKGROUND DOCUMENTS :
(Available for public inspection)
1. Capital Monitoring Report to Budget Scrutiny Committee 6th October 2004
2. Various working papers within the Finance Division
CONTACT OFFICER :Tony Thompstone 793-2685
E-mail :
ASSESSMENT OF RISK :
Any increase to the planned programme or reduction to resources included in this report will require action to be taken to ensure the capital programme for 2004/05 remains fully funded.
SOURCE OF FUNDING :
This report identifies the sources of funding for the 2004/05 Capital Programme.
LEGAL ADVICE OBTAINED : Not Applicable
FINANCIAL ADVICE OBTAINED :
This report concerns key aspects of Council’s capital finance and has been produced by the Finance Division of Corporate Services.
WARD(S) TO WHICH REPORT RELATE(S) : ALL WARDS
KEY COUNCIL POLICIES : : Budget Strategy
REPORT DETAILS
1. INTRODUCTION
1.1 At the meeting of the Budget Scrutiny Committee on the 6th October 2004 members were informed that the current capital programme for 2004/05 was £122.848m with assumed external funding of £85.489m and estimated internal funding of £35.240m and a shortfall of £2.119m. This included the effect of the 2003/04 final outturn on the 2004/05 programme and resources.
1.2 This report now advises members of recent developments regarding funding the 2004/05 capital programme.
2. 2004/05 CAPITAL PROGRAMME
2.1 Members are asked to note the following adjustments to the capital programme and resources:-
Capital Programme and Resources
Programme / Resource Level / Surplus/ (Shortfall) / Comments£m / £m / £m
Approved capital programme 04/05 before forecasting adjustment / 122.848 / 120.729 / (2.119)
2004/05 Monitoring Adjustments
Private Sector Housing / (0.229) / (0.229) / Reduction in ERDF
Education / (1.046) / (1.046) / Slippage of out of school childcare and Childrens Centres
Highways / (1.332) / (1.332) / Slippage on Inner Relief Road
Social Services / (0.061) / (0.061) / Monitoring adjustments
Environmental Services / 0.141 / 0.141 / Monitoring adjustments
Arts and Leisure / (1.798) / (1.798) / Slippage on PE/Sports NOF and Littleton Road Sports Village
Corporate Services / 0.200 / 0.200 / Relocation of the data centre
Chief Executives / (5.300) / (5.300) / Slippage on Pendleton Roundabout
Development Services / (2.795) / (2.795) / Slippage of Ordsall Neighbourhood Office, Detroit Bridge and Salford Central Station
Total / 110.628 / 108.509 / (2.119)
Less Capital Receipts forecasting adjustment / 0.473 / 0.473
Shortfall in resources
/ 110.628 / 108.982 / (1.646)2.2 A summary of the revised capital programme by service is attached at Appendix 1 which also details an analysis of the profiled expenditure to date.
2.3 Appendix 2 shows the latest position on capital receipts and Appendix 3 shows progress with the capital receipts with a value over £100k expected in the year.
2.4 Members will recall that the capital programme was approved subject to close monitoring of contractual commitments as they are entered into during the year, to ensure schemes are only committed when funding is identified. Appendix 4 details tenders for individual contracts approved up to 20th October 2004 by the appropriate lead member, service director and Lead Member for Corporate Services.
3. COMMENTS
3.1 There is a shortfall in resources of £1.646m in the 2004/05 capital programme following monitoring adjustments for the capital programme and for the estimated receipts for the year. The shortfall has reduced by £0.473m since last month due to an increase in expected capital receipts.
3.2 The capital programme will need careful monitoring and may require a programming adjustment and/ or withholding payment at year end and/ or the use of unsupported borrowing, in order to keep expenditure within available resource.
3.3 The increase in capital receipts is due to the expected disposal of Brentnall Primary School and increased right to buys but has been offset by the slippage of the estimated disposal dates for Mere Drive, Wilburn Street and Willowbank into 2005/06.
3.4 Approval was given to funding an access road to the City Academy in the 2005/06. The likely sources of funding for it are capital receipts, Highways block 3 and contributions from Education and/or Housing, the precise make up of the resources will be determined in early 2005 when notifications of supported borrowing and government grants have been received.
3.5 As part of this month’s monitoring a number of schemes have been slipped from the 2004/05 programme. For the schemes that have slipped the resources have not been lost as they will be available in a future year.
3.6 The data centre relocation is to be funded from unsupported borrowing with the consequential revenue financing costs being met from savings on the related maintenance contracts and the Oracle software licence.
4 EXPENDITURE TO DATE
4.1Members are asked to note the following summary of actual expenditure against expected expenditure as at the end of September.
Actual Spend Against Profile to 30th September 2004
Programme / Expected Spend to date / Actual Spend to date / Variance / Commitments£m / £m / £m / £m / £m
Private sector housing / 28.982 / 8.968 / 6.797 / 2.171 / 0.380
Public sector housing / 21.922 / 7.322 / 5.130 / 2.192 / 11.396
Education / 15.153 / 4.525 / 4.857 / -0.332 / 0.769
Highways / 25.865 / 7.306 / 6.316 / 0.990 / 0.280
Social Services / 1.213 / 0.257 / 0.274 / -0.017 / 0.124
Environmental Services / 0.781 / 0.161 / 0.178 / -0.017 / 0.044
Arts and Leisure / 2.842 / 0.573 / 0.468 / 0.105 / 0.009
Corporate Services / 5.369 / 0.740 / 0.550 / 0.190 / 0.006
Development Services / 2.977 / 0.793 / 0.789 / 0.004 / 0.067
Chief Executives / 2.854 / 0.685 / 0.474 / 0.211 / 0.000
Expenditure b/fwd / 2.670 / 2.670 / 2.670 / 0.000 / 0.000
/ Total / 110.628 / 34.000 / 28.503 / 5.497 / 13.075
4.2 The current actual spend to date is less that the expected spend to date required in order to deliver the programme in full. With actual spend to date of 28.503m against an expected spend of £34.000m. However, there are a further £13.075m of contractual commitments which should be paid in the year.
4.3 It should be noted that the full programme requires a further £82.125m of expenditure before the end of the financial year, compared with £28.503m spend to date and this will require a significant increase in the rate of expenditure.
5. RISKS
5.1 The current position with regard to potential areas of risk previously identified in the assumed level of programme and resources is as follows: -
- Usable Capital Receipts – the current capital programme envisages the use of £15.773m of usable capital receipts. The current estimate for usable capital receipts is £14.127m, which gives an overall funding shortfall of £1.646m. To date 5.723m of the receipts anticipated in 2004/05 have been received.
- The Private Sector Housing Programme assumes a grant from English Partnerships of £4.689m, which has yet to be confirmed. There is committed spend of £1.170m for which an alternative source of funding would be needed if the English Partnerships grant was not forthcoming or if spend prior to approval is ineligible for grant.
- The Public Sector Housing programme and the Highways programme contain overprogramming levels of £3.592m and £0.366m respectively. These will require monitoring in order to ensure that outturn expenditure matches the resources available.
- The Private Sector Housing Programme has an under programming level of £1.506m, of which £1.047m relates to HMRF funding. Options to utilise the resources are being developed. The underprogramming is a result of a failed acquisition, rephasing of Broughton Homeswops expenditure and a transfer of expenditure related to the international design competition for Central Salford from capital to revenue.
- A relatively large proportion, 74% of the programme is yet to be spent. The programme will require monitoring to ensure that it is achievable and to avoid a shortfall in expenditure. With the bulk of expenditure expected to be in the later half of the year there is a risk that delays in progress will result in the programme not being delivered.
6. RECOMMENDATION
6.1Members are requested to note the current position regarding the 2004/05 capital programme.
A. WESTWOOD