Agenda item

The capital financing performance report provided to Members reports on the under or overspends against the Council’s approved capital budget and proposed reprofiling of planned expenditure into subsequent financial years.  This report presents the provisional outturn position for financial year 2024/25 and is subject to external audit scrutiny and review prior to finalisation.   

The Committee considered the report (Agenda Item 7) which presented the provisional capital outturn position for the 2024/25 financial year.

Councillor Iain Cottingham, the Portfolio Holder for Finance and Resources, presented the report and in doing so made particular reference to Appendix B to the report (Capital Financing Requirement and Liability Benchmark). The Liability Benchmark graph showed that by 2028/29 there would not be sufficient funds to deliver the Capital Programme. The primary reason for this was the growing pressures associated with the Dedicated Schools Grant (DSG) and within it the High Needs Block (HNB) which funded the provision of Special Educational Needs and Disabilities (SEND) commissioned services. The current statutory override, that allowed for HNB overspends to be held as an unusable reserve on the Council’s balance sheet, would be removed in March 2027 at which point the overspend would fall to the Council. By this time the liability, which was projected to be between £31-£37m, would have to be met by Council borrowing.

Councillor Cottingham advised that the provisional outturn was £41.1m against the 2024/25 Capital Programme of £59.2m. It was proposed that the remaining £18.3m would be reprofiled into 2025/26.

Councillor Cottingham explained that the Council undertook long-term and short-term borrowing to fund capital expenditure. Interest rates were closely analysed before any borrowing took place.

A number of points were raised and questions asked during the debate. Summarised as follows:

·         Members were concerned at the increased level of borrowing and the repayment of these sums. It was explained that the cost of borrowing was covered within the revenue budget. A repayment schedule was in place and this was based on dates of maturity. The £59.2m capital programme was funded via a combination of short-term and long-term borrowing, and consisted of Council funded expenditure (financed through external borrowing) and externally funded expenditure.

·         Clarification was sought in relation to the Exceptional Financial Support (EFS) received from the Government. Shannon Coleman-Slaughter (Section 151 Officer) explained that there was no additional borrowing for this sum, it was facilitated as an accounting adjustment with the Government enabling funding to move from revenue to capital budgets. There was no specific loan or set interest rate assigned to EFS. Repayment was required over a period of 20 years in accordance with the Minimum Revenue Provision (MRP).

·         It was clarified that use of the EFS included the delivery of the capital programme, to help meet day to day costs and to refinance existing borrowing.

·         Efforts would be made to spend the reprofiled amount of £18.3m in 2025/26, but not all areas were in the Council’s control. It was explained that if expenditure was not incurred then the borrowing would not be incurred.

·         The Capital Programme contained ambitious plans to help improve the lives of residents but it was not possible to deliver them all within the year defined in the programme. Resource limitations could be a contributing factor.

·         The Administration aimed to deliver in excess of 70% of the in-year Capital Programme and Councillor Cottingham advised of work to put in place a more robust process by which to build the Capital Programme. This included a review of the prioritisation process used for the different projects.

·         A number of factors contributed to the rising SEND cost, but local authorities had no control over the expenditure. Councillor Cottingham felt this was a factor that Central Government needed to recognise.

·         The point was made that the Oxfordshire districts which formed part of the Ridgeway proposal did not deliver Adult and Children’s Social Care. Activity was ongoing to collate data to help inform the proposals for local government reorganisation with Oxfordshire. This was needed to provide evidence of financial sustainability.

·         Positive feedback was fed through from a resident on improvements made to road surfacing.

·         Paragraph 5.5 of the report listed the key projects for 2024/25 and this list included projects up to or below £250k. Councillor Cottingham agreed to provide a full itemised list to aid debate at the Executive.

·         Councillor Cottingham also agreed to provide an explanation at the Executive on why the project ‘Special Education Mental Health and Autism Spectrum Disorder Resourced Provision’ had slipped into the current financial year.

·         It was noted that the diagram in paragraph 4.1 of the report needed to be more reader friendly in terms of the different colours used and a tidying of the text.

·         The average interest rate on the Council’s borrowing was 4%. The borrowing costs were detailed within the Revenue report.

·         The increased funding requirement for the Social Care Case Management System was a result of needing to procure additional technical consultancy support to deliver additional requirements of the project. External support was a necessity if this was not held in-house.

Actions:

·         The following additional information would be provided at the Executive on 3 July 2025:

o   An itemised list of projects costing up to or below £250k.

o   Why the project ‘Special Education Mental Health and Autism Spectrum Disorder Resourced Provision’ had slipped into the current financial year.

RESOLVED that the report be noted.