Northumberland finance chief admits council's capital programme needs to be more 'realistic'

Local authorities have a capital budget to spend on buying, constructing or improving assets such as buildings and land.

At a meeting of the council’s corporate services and economic growth scrutiny committee, Jan Willis told members that there had been a number of factors that had impacted the council’s capital programme. This included sky-rocketing prices in the construction industry.

The council’s capital programme for 2023-24 until 2026-27 was agreed at a budget meeting in February. The total budget stood at £651.72m.

Coun Nick Oliver noted a projected overspend in the council’s financial results for the first quarter of the financial year. He accepted that this was not unusual and was generally turned into an underspend by the end of the year thanks to savings and so-called capital re-profiling.

This is where expenditure is moved from one year to the next in order to ease pressure on the budget. For example, last year the council re-profiled £95.547m from 2022-23 to 23-24 in the face of spiralling inflation.

A report presented to members of the scrutiny committee said £15.9m of the capital programme would be re-profiled from 2023-24 to 2024-25 ‘to reflect estimated expenditure levels in the current financial year’.

Ms Willis explained that the issues with the capital programme were not budget related.

She said: “The size of the capital programme versus our capacity to deliver is out of kilter. We will be bringing forward some proposals to deal with that.

“We’re doing a detailed piece of work to bring the capital programme onto a more realistic footing.”

However, Ms Willis also explained that there were other reasons that projects would be re-profiled into different years.

She continued: “A significant chunk of the capital programme relies on external funding projects and programmes and that in itself often brings delays. We have also been grappling with a huge impact of construction cost inflation.

“That means we’re going to have to go back and look at business cases. It has also resulted in some delays in delivering the capital programme.

“It’s combination of factors – some within our control and some not.”