Agenda item

This report presents the results of the third round of the Council’s capital budget monitoring process for 2022/23.

Discussion:

The Head of Revenue Accounts introduced the report which presented the results of the third round of capital budget monitoring for 2022/23.

Members then raised a number of questions and comments, which included:

·      Housing Infrastructure Fund (HIF) rail element – reference was made to the reports that the rail element of the project had been paused and it was asked whether this would mean the Council would have to return the circa £62m that was aligned with that element of the project. Officers confirmed that, as could be seen across all projects, the inflation pressures had negatively impacted on the HIF project and it would no longer be possible to deliver the original specification within the £170m budget.  The initial action taken had been to approach Homes England (HE) to request the additional funding required. However, HE had rejected this and requested the Council to review its proposals to deliver the project within the £170m budget.  Therefore, the rail element of the project had been paused and officers were working on alternative proposals. Criticism was made as to why it had taken so long to establish that the rail element of the project was unaffordable when this had been a concern raised by some from the beginning.

·      HIF and member oversight – concern was raised about a lack of member oversight and public transparency which the Committee considered had been missing.  Officers explained that the Cabinet had set up a Cabinet Advisory Group to monitor the project and that Cabinet had also delegated authority of some decisions in relation to HIF to officers, in consultation with Portfolio Holders, and undertook to circulate these to the Committee. It was reiterated that no decisions had been made in relation to the revised plans and that once proposals were at a point which would be acceptable to HE, they would be presented to the Cabinet for approval.

·      HIF spending deadline – reference was made to the delays to the project due to the redesigns required and how this could impact on the deadline to spend the funding by 2025 and whether the Council would be successful in negotiating a further extension.

·      HIF spend – in response to a question about how much of the funding had been drawn down from the £170m total and how much had been spent on the scheme to date, officers reiterated the figures in the report, which stated that £11.2m had been spent up to March 2022 and a further forecast £8.2m in the 2022/23 financial year, as at Quarter 3.  It was added that, as far as the officers present understood, HE had agreed claims up to the end of January 2023 and would honour those and did not anticipate clawing back any of that expenditure.  Members expressed a request to see a breakdown of the monies spent so far on HIF.  Officers added that everything spent and reclaimed on the project was also scrutinised by HE, who had rejected some early claims that related to management officer time on the project.

·      HIF and aspirations for a green community – concern was raised that if the rail aspect of the project did not materialise, then extra road infrastructure would be required and the environmentally friendly community that had been envisaged would be much harder to achieve.

·      HIF and forthcoming planning applications – reference was made that the developer consortium had agreed to not submit applications until the Local Plan reached Regulation 19 stage (Grampian agreement) but as this was now delayed it was suggested that the first consortium developer application would be submitted to the Council shortly and would therefore put Hoo at risk of unplanned large developments without the infrastructure to support it.

·      Funding for leisure centres – in response to a question about the funding for maintenance of leisure centres, officers confirmed that spend in relation to building maintenance of leisure centre buildings was within the revenue budget for leisure centres.  It was also confirmed that a historic management fee grant for Lordswood Leisure Centre was due to cease from April 2024.

·      Section 106 agreement (s106) funding – concern was raised about the reliance given to s106 funding which was not guaranteed and on which some developers had been approaching the Council to renegotiate.  Officers understood the concerns but explained that the majority of such funding’s use was put towards education provision in order to fulfil the Council’s statutory duty to provide sufficient school places and the Council could rarely wait for the s106 monies before creating the addition school places required.  Where the funding for school project works fell short, officers confirmed that a number of projects were overspending due to inflation pressures and that from 2023/24, any gaps would initially be funded by the Basic Needs allocation.

·      Pentagon Heathy Living Centre – in response to concerns raised about the timescales relating to this project, officers confirmed that timescales were tight but all senior officers were working on this project closely with NHS colleagues at the Integrated Care Board.

·      Lordswood Community Hub – clarification was sought regarding the appropriate approvals as the narrative sounded ambiguous as to whether or not the required approval was in place.  Officers undertook to report back on this issue.

·      Innovation Park Medway (IPM) – in response to a question about how many organisations had signed a tenancy contract with IPM, officers undertook to report back on this.

·      Splashes – reference was made to the report which suggested work would commence in March 2023.  Officers undertook to confirm if the works had begun.

Decision:

1)         The Committee noted the results of the third round of capital budget monitoring for 2022/23, and the management actions to resolve the projected overspend in Children’s & Adults which would be the subject of a future report to both Cabinet and Council.

2)         The Committee noted that on 7 February 2023, the Cabinet agreed a virement of £748k between the Abbey Court scheme and the Bradfields scheme.

3)         The Committee noted that on 7 February 2023, the Cabinet recommended that Council approve the following changes to the capital budget:

·        The addition of £14k to the Maundene scheme to be funded by s106 contributions (MC/07/0032 Land at Hoo Road, Liberty Park), for which funds had been received.

·        The addition of £25k to the Wayfield Basic Need scheme to be funded from Basic Need Grant.

4)         In the light of the decision to pause the rail element of the HIF scheme and concerns over the related Grampian agreement currently in place for the housing developments, the Committee sought the following:

a)    From officers:

·     A breakdown of the £20m spent and the funding sources on the project so far;

·     A record of the conversation/agreements with Homes England and a new timetable for completion by 2025;

·     That the results of the transport assessment and environmental surveys related to the project be placed in the public domain to determine the impact of those on proposals;

b)    From the Cabinet:

·     A commitment to revisiting the consultation process if changes are proposed;

·     A refreshed governance structure for the project going forward to include the relevant community groups such as councillors, parish councillors and other community groups.