Agenda item

Purpose: The capital financing performance provided to members reports on the underspends or overspends within the Council’s approved capital programme and associated capital financing implications. This report presents the provisional outturn position for financial year 2025/26 as forecast at Quarter 1 against the approved capital programme and summarises the financing implications for financial year 2026/27.

The Committee considered the report (Agenda Item 8) which presented the provisional outturn position for the 2025/26 financial year, as forecast at Quarter One, against the approved Capital Programme and summarised the financial implications for the 2026/27 financial year.

Councillor Jeff Brooks, Leader of the Council, presented the report on behalf of the Portfolio Holder for Finance and Resources. He explained that approximately £73m of the current year’s Capital Programme was expected to be delivered.

The aim was to achieve 70-75% in year delivery of the Programme but it seemed unlikely that this would be achieved for 2025/26. Councillor Brooks advised that a complicating factor in achieving this percentage was the reprofiling of projects from the previous year. It was also the case that some projects could roll forward from year to year due to a number of factors, and improvements at Theale Railway Station was given as an example of this.

Councillor Brooks also highlighted the financial support that needed to be given to the growing pressure of the High Needs Block (HNB) within Education. This was expected to have a negative impact on what could be funded from the Capital Programme in the coming years.

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

·       It was felt to be the case that providers on a project could be the cause of delays. A delayed project would likely see an increase in costs due to inflation, which was a reason for seeking delivery of projects in year.

·       It was clarified that the sum of money identified for a project was not held in an account, funding for a project was brought forward at the appropriate time from, for example, the Community Infrastructure Levy (CIL) or from money received from Government grants.

·       Appendix A to the report (reprofiling requests) only listed major projects whereas the figure in paragraph 2.1(a) of the report gave the full figure. Shannon Coleman-Slaughter (Service Director for Finance, Property and Procurement) agreed that a full list could be provided.

·       The projects identified for reprofiling generally became clearer during the course of the year as progress with a project became clearer. Councillor Brooks clarified that while every attempt was made to take a project forward, slippage could occur. This could be for factors outside of the Council’s control. However, the intention would remain to deliver the project and in some cases delivery could take place over a number of years.

·       It was acknowledged that there was a risk of some grant funding being lost if the project in question was reprofiled. Energy projects carried a particular risk. However, it was clarified that the majority of annually reoccurring grants were awarded for a particular purpose and not a specific project.

·       £16m was the original budget for the solar farm, but slippage in the project had led to this figure growing to £19m. Councillor Brooks assured Members that a strong business case remained for this project and he agreed for this to be circulated to the Committee.

·       Clare Lawrence (Executive Director for Place) explained that unfortunately, it had not been possible to appoint a contractor to develop the solar farm. Procurement had therefore been restarted, via a matrix arrangement, and progress so far had been positive.

·       Councillor Brooks supported the statement made in paragraph 5.6 of the report which included the point that the Council invested heavily to ensure that West Berkshire remained an affluent and prosperous area.

·       It was noted that as at 31 March 2025, the Council’s total level of long term borrowing to fund capital spend was £202.7m, with short term borrowing at £65m.

·       The authorised limit for external debt was set at £402.9m for 2025/26. The Council was someway distant from that limit, but it was acknowledged that the level of debt would grow, again recognising pressures with the HNB.

·       As per the Investment and Borrowing Strategy, alternative methods of borrowing and sources of funding were considered. This could include the issuing of bonds.

·       A concern was raised that the Liability Benchmark was showing an increase from £241m in 2024 to £372m in 2028 (the latter figure getting close to the limit for external debt). Shannon Coleman-Slaughter explained that this was the current projection which was revised year on year with a number of factors considered. Higher borrowing would impact on repayments from the Revenue Budget.

·       It was noted that the proportion of total borrowing that would mature within 12 months was around £71m and it was explained that, where necessary, debts would be refinanced in line with the Investment and Borrowing Strategy.

·       Paragraph 5.14 of the report outlined that the 2025/26 Capital Programme was expected to inflate the Council’s Capital Financing Requirement (CFR) to £346m. The figure from 2024/25 would be confirmed.

Actions:

·       A full list of reprofiling requests would be provided in future reports.

·       The business case for the solar farm would be circulated to the Committee.

·       The CFR from 2024/25 would be confirmed.

RESOLVED that the report be noted.