To seek the views of the Scrutiny Management Board on the draft capital investment budget and capital strategy proposals for 2026/27.

The Chair took the Draft 2026/27 Capital Investment Budget and Capital Strategy Update Report as read and opened the item up for debate. The key points of discussion included:

Western Bypass / Southern Link Road

1. Cabinet stated that borrowing to fund the Western Bypass was necessary following the cancellation of the previous scheme. The bypass was described as essential infrastructure to enable economic growth, housing delivery, and increased council tax and business rate income.

2. Members enquired as to why borrowing should continue for a scheme previously approved when financial circumstances may have changed? Cabinet members advised that circumstances had changed due to the cancellation of the scheme, which had increased costs. It was stated that further delay would continue to raise costs and constrain future growth.

3. Officers confirmed that the additional £5m provision for the bypass in the current capital programme was to allow for updated design checks, compliance with current standards, and contractor engagement prior to contract award. Cabinet stated that updated costs would be reviewed once contractor pricing and design compliance work was complete, and the business case would be reassessed at that stage.

4. Cabinet members confirmed that a full business case would be brought forward before construction commenced. Current expenditure related to preparatory and compliance activity. In response to a question as to whether the scheme still met Department for Transport value-for-money requirement, Cabinet members advised that a business case had previously been approved when external funding was secured and that an updated full business case would be produced in line with current requirements.

Alignment of Capital Programme, Revenue Budget, and Treasury Management

5. Cabinet confirmed that the additional £44 million capital allocation had been assessed with a focus on revenue impact, with lower-priority schemes removed and new schemes selected to mitigate future revenue pressures.

6. Members enquired as to whether the Treasury Management Strategy was sufficiently flexible to support additional borrowing if it reduced long-term revenue pressures. The Section 151 Officer advised that borrowing capacity was monitored against prudential indicators and reported quarterly. Any change in risk appetite would require full Council approval.

7. The committee asked if revenue savings associated with capital investments were reflected in the MTFS. Officers clarified that many benefits related to future costs avoided rather than immediate savings and as such were not yet reflected in the base MTFS.

Housing, Education, and Service Investments

8. Cabinet members explained that that the £10 million investment in housing would reduce the use of expensive bed and breakfast, and hotel accommodation, with estimated annual revenue savings of approximately £480,000. Officers advised that acquiring and repurposing existing buildings was intended to improve deliverability of pupil referral unit and alternative provision schemes compared with new-build options, while acknowledging risks related to site availability.

9. Officers stated that out-of-county alternative education provision was significantly more expensive than in-county provision and that the business cases for in-county settings projected payback within approximately five years.

Historic Buildings and Asset Strategy

10. Officers advised that the £5million historic building allocation was supported by an outline strategic business case and would be underpinned by a wider estate strategy, including asset disposal to support repayment.

11. Members enquired whether it was appropriate to rely on asset disposals unrelated to the historic buildings to support the business case. Officers stated that the council’s asset portfolio should be considered as a whole and that further detail would be provided as part of the full business case and estate strategy.

Highways Maintenance

12. The committee heard from officers, that investment focused on preventative maintenance to extend asset life and that improvements would be reflected in future condition data. Officers advised that precise timescales could not be provided regarding how long current investment levels would need to be sustained to materially improve road conditions, however, condition trends were monitored through national scanner data and reported to the Department for Transport.

Governance and Financial Transparency

13. Officers acknowledged inconsistencies in business case presentation in terms of revenue impact, borrowing costs and return on investment, and committed to improving standardisation and clarity in future business cases.

14. Regarding capital provision for a council-owned care home, Cabinet members advised that discussions with market providers indicated that facilities could potentially be built externally and operated by the council, with capital provision to be brought forward only if that approach did not proceed.

At the conclusion of the debate on Item 7 and Item 8 the committee discussed and agreed the following recommendations to the executive.

Recommendations, that:

1. The executive should conclude an exercise to identify recurrent savings for the medium-term financial strategy period by the end of September 2026.?
2. Medium-term financial strategy risks should reflect the most current financial information known to the executive at the time of publication and should include savings known to be at risk.?
3. The medium-term financial strategy should report what scenario planning has been undertaken and highlight the key sensitivities in the medium-term position.?
4. The executive should report separately savings, initiatives funded from reserves and grants, and planned additional income.?
5. The executive should report income and expenditure at sub-directorate level in the directorate budget position statements.