Report of the Deputy Chief Executive and City Treasurer attached

The Executive considered a report of the Deputy Chief Executive and City Treasurer, which outlined the capital outturn position for 2020/21 including total expenditure and funding, confirmed that funding sources had been managed to best utilise resources available to fund the capital programme; and presented a revised capital programme for the 2022/23 financial year after taking into account the final outturn position as reported.

The main changes to the programme since the report to Executive in June 2021 were as follows:-

·                £29m Highways – The Active Travel Fund and Northern Quarter Cycling scheme have reprofiled £5.1m and £3m respectively into futures years.  In addition, inclement weather and capacity issues with third parties had delayed the Highways Maintenance Programme with £4.5m slipping into 2022/23;

·                £16m Neighbourhoods – This included Beswick Hub Rugby Football League £2.6m reprofiling and £2.2m relating to Indoor Leisure - Abraham Moss. The Manchester Aquatic Centre would reprofile £4.5m into future years to reflect the fact the main contract was signed in April 2022, which had had an impact on the progress on site; 

·                £51m Growth and Development – £7.1m of the Housing Infrastructure Fund (HIF) funding for enabling works in Victoria North would move into 2022/23. There was also £9.3m reprofiling required for Hammerstone Road Depot, and £8.9m Carbon Reduction Programme/Public Sector Decarbonisation Fund With other major variances of £4.1m for House of Sport and £4.4m for Campfield Development;

·                £21m Our Town Hall – This would now be spent in 2022/23 in line with the current programme of works which was agreed and revised after the budget was set;

·                £17m Children’s Services - £11.6m of this related to the revised start on site date for the Co-op Academy in Belle Vue;

·                Expenditure was almost £36m lower than that forecast in the report to Executive in February 2022. The largest change related to the £8.2m reprofiling across the Public Sector Decarbonisation Scheme and the Carbon Reduction programme which had seen delays in designs and contract approvals linked to the supply chains.

Overall, the spend against the approved in year programme of £458.3m was £165m lower

It was reported that the programme had delivered over £293m of capital investment during the 2021/22 and whilst the outturn position was higher than the average spend over the past three years, it represented the continued significant investment in Manchester with over 220 live projects progressing during the year, a major achievement given the impact of the pandemic. 

It was noted that there was no sign of inflationary pressures abating, with companies continuing to issue warnings on future cost increases As such, in addition to a proportion of  the contingent budgets for each major capital project earmarked for inflationary pressures, a further £28m and had been profiled over a number of financial years to reflect the expected timing of any contract increases over the life of the programme.

Unlike the Revenue Budget the Capital Budget was subject to change as new schemes and /or external funding was received.  The budget was prepared in February each year on the best estimate of the start date and spend profile for each scheme and was refreshed in June for the Outturn Position.  Most capital schemes covered multiple years and as schemes developed the spending profile across financial years changed to reflect the agreed start on site date and delivery of the work packages.  Based on the monitoring information, it was proposed that the capital programme budget was re-phased to reflect the planned delivery of projects in 2022/23 to 2025/26 which would be reviewed throughout 2022/23 to reflect changes to the proposed profile of spend.

In addition it was reported that there were schemes that had been developed or have received external funding that were now ready for inclusion in the Capital Programme.  The proposals which required Council approval were those which were funded by the use of reserves above a cumulative total of £2million, where the use of borrowing was required or a virement exceeds £0.500m. These included the  following proposed changes:-

·                Public Sector Housing – Northwards Housing Capital Programme 2022/23.  . A capital budget increase of £2.475m in 2022/23, £21.047m in 2023/24 and £7.599m in 2024/25 is requested, funded by an RCCO from the HRA to deliver essential health and safety work, security improvements and environmental improvements across the Council’s Housing estate.

·                Corporate Programme - Elizabeth Tower GP surgery.  A capital budget increase of £2.6m in 2022/23, funded by RCCO from Integration Reserve to support the fit out of the GP surgery and ancillary facilities to service the city centre’s growing residential population.

The report then went on to detail the proposals that did not require Council approval which were funded by the use of external resources, use of capital receipts, use of reserves below £2million, where the proposal could be funded from existing revenue budgets or where the use of borrowing on a spend to save basis was required.  These included:-

·                Neighbourhoods – Off Street Car Parks.  A capital budget increase of £0.369m in 2022/23 requested, funded by Parking Reserve to carry out works to one of the Council’s multi storey car parks, identified as part of the Fire Risk Assessment. This included internal fire doors and a new fire alarm. Electric works were also required to Bloom Street Car Park for a new power supply for lighting.

·                Northwards ICT Work.  A capital budget increase of £2.491m in 2022/23 and £1.599m in 2023/24 requested, funded from a revenue contribution from the HRA to finance a multi-disciplinary migration team as well as the required hardware, software and supplier fees to conduct the migration of Northwards ICT infrastructure in the City Council infrastructure in a fashion that protects live services to tenants.

·                Private Sector Housing – Disabled Facilities Grant (DFG).  A capital budget increase of £0.855m in 2022/23 and £7.628m in 2023/24 requested, funded by Government Grant for home adaptations for people with disabilities.

It was noted that the forecast budget for 2022/23 was ambitious compared to previous annual expenditure with a number of large scale projects due to begin in 2022/23 and that the budget would change as new schemes were added throughout the year, and specific projects funded through the contingent budgets were brought forward through the Council’s capital approval process.  Current funding assumptions for the Capital Programme based on the current forecast were detailed and these would continue to be reviewed to ensure that optimum value for money was achieved.  The current modelling forecasted that the programme remained affordable within the revenue budget available. The model was based on a number of assumptions however, including the timing of future borrowing and forecast future interest rates. As these assumptions changed, the capital financing model including use of capital financing reserves would be updated and reported back

Decisions

The Executive:-

(1)      Recommend that the Council approve the virements over £0.5m between capital schemes to maximise use of funding resources available to the City Council set out in Appendix C.

(2)      Note the outturn of capital expenditure 2021/22 is £293.2m.

(3)      Note the changes to the outturn attributable to movement in the programme that occurred after the previous monitoring report to Executive in February 2022,

(4)      Approve virements under £0.5m within the capital programme as outlined in Appendix B, including those related to inflation.

(5)      Recommends that the Council approve the following changes to Manchester City Council’s capital programme:-

·                Public Sector Housing – Northwards Housing Capital Programme 2022/23.  . A capital budget increase of £2.475m in 2022/23, £21.047m in 2023/24 and £7.599m in 2024/25 funded by an RCCO from the HRA

·                Corporate Programme - Elizabeth Tower GP surgery.  A capital budget increase of £2.6m in 2022/23, funded by RCCO from Integration Reserve

(6)      Approves the following changes to the City Council’s capital programme:-

·                Neighbourhoods – Off Street Car Parks.  A capital budget increase of £0.369m in 2022/23 funded by Parking Reserve

·                Northwards ICT Work.  A capital budget increase of £2.491m in 2022/23 and £1.599m in 2023/24, funded from a revenue contribution from the HRA

·                Private Sector Housing – Disabled Facilities Grant (DFG).  A capital budget increase of £0.855m in 2022/23 and £7.628m in 2023/24, funded by Government Grant.

(7)      Note the decisions of the Deputy Chief Executive and City Treasurer regarding the funding of capital expenditure in 2021/22 including the use of £99.6m Grants and Contributions, £12.3m Capital receipts, £28.3m Revenue funding and £153.0m Borrowing.

(8)      Note the revised capital programme for 2022/23 shown in Section 9 and Appendix F.