ENVIRONMENT AND TRANSPORT SELECT COMMITTEE - 30TH JANUARY 2003
CAPITAL BUDGET MONITORING REPORT AS
AT END OF DECEMBER 2002
STRATEGIC DIRECTOR FOR FINANCE & INFORMATION AND
COUNTY TREASURER
REASON FOR SELECT COMMITTEE
CONSIDERATION
This report sets out the budget and
spending position on the highways capital programme as at the end of December.
Within the Comprehensive Performance Assessment framework, one of the key
criteria used is that financial reports relating to underlying financial
records are prepared and reported to members on a regular basis in order that
focus is maintained on the Council’s strategic priorities. On this occasion,
the regular monitoring report is focussed exclusively on the capital budget
because of the nature and financial impact of the highways capital programme in
this financial year, and because another report focussing on the revenue budget
for 2003/04 features elsewhere on the agenda.
ACTION REQUIRED BY THE SELECT
COMMIITTEE
Members are invited to note
the content of the report, and to ask questions and seek explanations about the
various projects as necessary.
BACKGROUND
- CAPITAL EXPENDITURE
Expenditure
against each scheme is shown at appendix 1.
The
budgets shown are those approved for the current financial year, described as
2002-2003 schemes, and those slipped from the previous year, described as
2001-2002 slippage. The current years budget forms a part of the single capital
pot, for which expenditure must be completed by 31 March 2003. Last year’s
capital settlement was in the form of 2 year supplementary credit approval for
which expenditure also has to be completed by 31 March 2003. The total approved
budget for the year is in excess of £11.5 million, of which £6.0 million has
been spent by the end of December, with a further £0.8 million committed.
Within the
total approved budget figure there is some £1.9 million for the Military Road
project, on which negotiations have taken place with contractors and a contract
awarded. The existing budget for the project has been in place for some years
now, and the net underspend has been carried forward year on year to ensure the
maximum amount is available when tenders are received. Consequently, there is
flexibility to carry forward any underspend once again, should that prove to be
necessary.
As stated
above, the basic credit approval for the current year needs to be applied in
full if it is not to be lost. However, the single capital pot regime means that
it need not necessarily be applied to highways schemes. In other words, other
services capital expenditure could be substituted for highways expenditure on
the basis that the reverse situation would happen next financial year; that is,
highways capital expenditure slipped from the current year would be charged
against other available resources in next year. This has a number of advantages
in that it allows the highways department the ability to spend their budget at
their own pace, rather than be dictated to by one specific day in the calendar
year which may not be ideal from a service delivery point of view in terms of
both weather and availability of contractors; secondly, it allows the Council
more flexibility in its management of capital expenditure from a corporate
perspective, and its ability to manage its capital resources year on year; and
finally, it should ensure value for money in terms of use of resources for
highways purposes. Ideally, around £9 million of the available £11.5 million
for highways would be spent this year, thus allowing £2.5 million to be
substituted from elsewhere. The full amount of this slippage would be funded
corporately next year.
The
capital settlement for 2003-2004 was announced by the Government Office for the
South East on 10 December 2002. In total it amounts to £5,495,000 which is
£1,287,000 less than the settlement for the current financial year. Much of
that reduction can be attributed to the additional sum of £950,000 received in
2002-2003 to cover emergency repairs to the A3055 Undercliff Drive. However,
the original indicative allocation for 2003-2004 announced in December 2000
suggested that the settlement for next year would be £5,096,000. The settlement
for next year is, therefore, £399,000 greater than the indicative allocation.
Members
are reminded that existing proposals for the allocation of resources to both
the Military Road project and the deferred Newport to Cowes Strategic Corridor
will mean that a significant proportion of the £5,495,000 settlement will be
effectively ‘committed’ prior to commencement of the financial year.
RELEVANT
PLANS, POLICIES, STRATEGIES AND PERFORMANCE INDICATORS
The
services included within this report are linked to a number of the Council’s
key strategic objectives, specifically Improving health, housing and the
quality of life for all; Creating safe and crime-free communities; Improving
public transport and the highways infrastructure; and Protecting the Island’s
physical environment.
They are
also linked to a number of the Council’s plans, in particular the Local
Transport Plan (LTP) and Annual Progress Report (APR).
Whilst
there are no direct implications for performance indicators arising from the
production of this report, clearly there will be implications for future
performance measures and indicators arising from the information contained
within it, specifically any cost based indicators, but also the outcomes
arising from the services and projects to which this report refers. The LTP
sets out the Council’s transport policy and includes within it agreed targets
and indicators. The APR, submitted to Government every year, must explain how
successful the Council has been in reaching its targets. The Government have
made it clear that future transport settlements will be based on the
authority’s performance and success in reaching its own targets. Any possible
reductions in funding could hamper the Council’s ability to meet its targets
and, in doing so, possibly reduce the amount of government support in future.
CONSULTATION
PROCESS
No
specific consultation has been undertaken in the production of this report.
However, a number of the capital projects and services included within the
report will have been the subject of consultation with a range of external
agencies and members of the public.
FINANCIAL,
LEGAL, CRIME AND DISORDER IMPLICATIONS
Since this
is a budget monitoring report there are a number of financial implications
arising from it, including allocation of budgets to agreed projects, monitoring
of expenditure against approved budgets, financial control, and utilisation of
available resources for the benefit of the Council as a whole, linked to the
Council’s strategic objectives.
There are
no direct legal or crime and disorder issues arising from the production of
this report.
BACKGROUND
PAPERS
Council
publication ‘Budget 2002-03’
Letter
from GOSE of 10 December 2002 – ‘LTP Settlement 2002’
Letter
from GOSE of 13 December 2001 – ‘Local Transport Capital Settlement 2002-03’
Letter
from GOSE of 14 December 2000 – ‘2001-02 Local Transport Capital Expenditure
Settlement’
Contact
Point : Stuart Fraser Φ 823657
JOHN PULSFORD
Strategic Director for Finance and Information and
County Treasurer