CAPITAL INVESTMENT STRATEGY 2021/22

Members of the Council’s Finance, Procurement and Transformation (FPT) committee has today (21 June) received a report on the financial progress of the capital programme for the current financial year.

Key recommendations are:

• Note the overall Capital programme outturn position for 2021/22 is £23.646 Million spend against a budget of £33.0 Million, which reflects the utilisation of 72% of the agreed funding.
• Note that net Capital Receipts of £0.514 Million were generated in 2021/22.
• Note the development fund costs incurred.
• AGREE that, given the extent to which funding is already committed and also to recognise the impact of inflationary pressures on the costs of projects, the £9.647 Million funding remaining available at the end of 2021/22 is carried forward within the respective projects/asset classes to support.

The 2021/22 final outturn position shows spend of £23.646 Million against a budget of £33.047 Million, representing 72% utilisation. This outturn position reflects a particularly challenging year for the Council with Lead Officers highlighting difficulties in terms of supply chain issues and resourcing of projects (both internal and external).

The impact of Covid 19 restrictions and the subsequent supply chain issues has contributed significantly to delays in the delivery of capital projects over the past 2 financial years. Feedback from the Lead Officers/Project Leads has indicated that the vast majority of the slippage incurred in 2021/22 is fully committed but projects have not been able to be progressed as timeously as initially anticipated due to this. In addition, inflationary pressures are having an increasingly significant impact on the cost of capital projects. A review is currently underway to determine inflationary pressures, resourcing challenges and supply chain issues.

For all recent priority projects added to the Capital Investment Strategy an Optimism Bias allowance has been added to estimated project costs. This allowance is designed to protect against inflation and any unexpected issues that arise as the project progresses. However, the adequacy of these allowances is now being further reviewed given the current inflationary pressures and project delays.

Given the extent to which the funding being carried forward is already committed to agreed projects, and also to recognise the impact of inflationary pressures on the cost of these projects, it is recommended that Members agree to the carry forward of the unused funding of £9.647 Million against the relevant Priority Projects and Asset Classes to support the progression of projects over the upcoming period.

Chair of FPT Committee, Carolyne Wilson said: “In a difficult financial climate and amidst ongoing budget cuts the Council continues to invest in a wide range of projects across the region.With investment in priority projects, which includes some large infrastructure projects across the region, we are very positive on the impact the Capital Investment Strategy has on Dumfries and Galloway and our approach to working with communities to deliver capital investment has proven to work.“

Vice Chair, Dougie Campbell said: “The COVID pandemic has affected us all in different ways, and it has had an impact on our Council budgets. But through shrewd investment we are committed to investing in our region to grow our local economy and support our communities though our Capital investments in roads, schools and local parks and reshaping and revitalising our towns.”