This is a question on the Capital Monitoring report, Agenda Item 79.
At the July Executive meeting, at the end of Q1 of the 2017/18 financial year, it was reported that the value of the capital programme for this year was £124,044,000 all of which was planned to be spent this year.
At the October Executive meeting, at the end of Q2 of the 2017/18 financial year, it was reported that the value of the capital programme for this year had gone up by £700,000 to £124,744,000, but the amount that would be spent this year had gone down to £99,236,000 meaning £24,600,000 had slipped into next year.
At this Executive meeting, at the end of Q3 of the 2017/18 financial year, it is reported that the value of the capital programme for this year has gone up again, this time by £3 million, to £127,720,000 but that the amount that will be spent this year has gone down again, by £4 million to £95,337,000, with the amount that has slipped into next year now therefore reaching £31,528,000.
This means that currently 25% of the programme has slipped into next year. At the present rate of progress, that figure could be even higher by the end of Q4.
In February, you will be proposing a new capital programme for 2018/19. That programme has £60,705,000 of previously planned work and £31,528,000 of work that has slipped, meaning it will have a value of over £91 million. That is very close to this year’s total deliverable programme before you add any new schemes in the budget.
A similar pattern of unrealistic timescales, failure to understand capacity to deliver, and working to wish lists rather than business planning, has been repeated year after year, with similar results, with no-one in the Executive seemingly able to exercise any competent control.
You have just been appointed as the new Executive Member for Finance. What are you doing to ensure that the Council’s capital programme is actually realistic, and deliverable both to budget and in the promised timescales?
I think it is worth putting into context the sizes of the variances you are referring to; a variance of £0.7m amounts to 0.6% of the budget, £3m is a variance of 2.4%. These are not projected overspends or underspends but revisions to profiling of expenditure. Furthermore increases to the capital budget are made in year when new resources become available such as developers’ contributions, new grants and contributions from other organisations.
The Council’s Capital Programme now includes many large infrastructure schemes that span a number of years. It is not uncommon or unreasonable for the profiling of these to be refined once the initial budget has been approved and the precise timing of expenditure becomes clearer as the projects move from feasibility, planning, through to delivery.
Our capital finance specialists meet regularly with our key project and programme managers to update predictions and find ways to improve the accuracy of our capital monitoring. This has included the receipt of more detailed information on projects and a new profiling methodology for the Capital Programme in accordance with The Royal Institute of British Architects planned stage process. Work will continue to do what we can to improve the financial arrangements, however it should be recognised that it contains by its nature, sizeable and often uncontrollable, fluctuations.
It is however worth noting that the forecasting of the most significant component of the Capital Programme, the actual scheme overspends and underspends, is extremely accurate when compared with previous years. Furthermore, the total capital spend delivered last year totalled just under £80m.
Among the items that have slipped is the 21st Century Council project. Back in September, when we proposed some re-evaluation of this project, the Conservative Group argued strongly that it could not be delayed as it was critical to the Council’s finances. Does the fact that this project has now slipped mean that you accept that you were wrong in September and we were right or does it mean that you simple haven’t managed to control the project properly?
It means that we have had some changes in Peoples’ Services which we did not envisage; we lost the Director and we have a new Director coming in. We have got a number of things that have changed within Peoples’ Services, both within adults and within children’s. What I am very keen to do is that we don’t make any rash decisions on how we are going to correct those and that we actually have a detailed view and with Paul Senior being our interim Director, who is new to the organisation, he is undertaking a root and branch review and he will report to my colleague Richard Dolinski later on in the coming weeks and it will be reviewed by the Executive then. But we anticipate that if we had not had those changes and we had not had some of the other things that have come through we would actually be on target. So this is one area that we are all over. We will review it and we will constantly update it and it is my job to ensure that this improves performance going forward.