To seek the views of Scrutiny Management Board on the capital investment budget proposals for 2023/24 onwards.

The chair introduced this item noting that it is open to scrutiny management board to recommend alternative spending proposals or strategic priorities.  It is a legal requirement to set a balanced budget, should additional expenditure be proposed compensatory savings proposals must also be identified.  It was explained that the committee will consider this item at ‘whole budget’ as opposed to examining directorate by directorate.

Cabinet members – opening remarks - confirmed that the investment budget sets out financially and legally compliant proposals.  A budget that is balanced and achievable, within the context of:

• Continuing investment in council priority spend and making savings in other areas of council business; 
• A better local government settlement than expected, but real term deficits compared to previous years, and
• Unknown variability within the economy, as will be the case will for all other LAs, resulting from increasing inflationary pressures.

The committees principal lines of enquiry centred upon:

Borrowing – is this prudent and affordable. 

• Cabinet proposals for borrowing are designed to enable some projects to get started earlier – bringing borrowing forward into 2023/24 from 2024/25 provides smoother running of delivery plan priorities. 

• Borrowing is set within the context of the council being able to demonstrate the ability to service its debt with increased revenue

Use of reserves:

• Committee referred to Appendix A where details were provided details of the proposed additions to the existing capital programme that have been identified and the impact of approving these additions.
• A significant use of reserves was noted and questioned as to whether this was sustainable and whether the reserve budget would be replenished.
• It was explained that the reserves are to cover urgent matters this year (such as the shortfall in children’s services) – to not have added monies from reserves was not an option. 
• Longer term – the ambition is to build up the reserves.

Resolved:

With the significant drop in reserves in 22/23 of some 32%, the committee recommends greater transparency on the cabinet approach to the use of reserves and the level to be kept and what this means for the future sustainability and credibility of the MTFS

A more robust reserves policy supporting the budget is developed for future years.

Contingency planning:   Have contingencies, financial health warnings have been built in to the deliverability of the capital programme given the aforementioned inflationary pressures.

• It was explained that contingency measures have been built in the business cases.  The reality being, however that contingency planning can only ever be founded on the best information available at the time of drafting. 
• The budget has been predicate around the best view possible from the best expert advice. 
• However, we must expect that some projects/initiatives will come in at different prices, with the prospect of double digit inflation remaining a factor.
• Business cases have been underpinned by ‘live market’ knowledge and this will be kept under review.
• Where certain projects demonstrate a lack of viability they are unlikely to be progressed unless they can demonstrate additional and favourable public interest tests.  For example, creating a larger number of school places for disabled students.
• Deliverability has been greatly improved as a result of the programme management office introducing new expertise and an ability to bring projects forward more quickly

RESOLVED:

The committee supports the approach to pull more funding forward for capital projects, with the assurances given of the increased capacity to deliver through the Project Management Office, in to 23/24.