Composite Capital Budget 2024/30 and Housing Investment Programme 2024/29 – Monitoring Report No.3
Perth and Kinross Council · 5 February 2025
Back to Finance and Resources Committee — 5 February 2025 and its agenda
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Perth and Kinross Council Finance and Resources Committee 5 February 2025 Composite Capital Budget 2024/30 and Housing Investment Programme 2024/29 – Monitoring Report No.3 Report by Chief Finance Officer (Report No. 25/25) 1. Purpose 1.1 This report provides a summary position to date for the 6-year Composite Capital Budget for 2024/25 to 2029/30 and the 5-year Housing Investment Programme for 2024/25 to 2028/29 and seeks approval for adjustments to the programmes. 2. Recommendations 2.1 It is recommended that the Committee: (i) notes the contents of the report. (ii) approves the proposed adjustments to the six-year Composite Capital Budget 2024/25 to 2029/30 set out in Sections 5 and 6 of the report and summarised in Appendices I and II. (iii) approves the proposed adjustments to the Housing Investment Programme Budget 2024/25 to 2028/29 set out in Section 7 of the report and summarised in Appendix III. (iv) notes progress with the delivery of major Capital projects as summarised in Appendix IV. 3. Structure 3.1 The report is structured over the following sections: • Section 4: Background / Main Issues • Section 5: Composite Capital Programme – Gross Capital Resources • Section 6: Composite Capital Programme – Expenditure • Section 7: Housing Investment Programme • Section 8: Summary 4. Background / Main Issues 4.1 The Finance and Resources Committee approved an updated six-year gross Composite Capital Budget for 2024/25 to 2029/30 totalling £619.672 million and a five-year gross Housing Investment Programme for 2024/25 to 2028/29 totalling £96.917 million at its meeting on 20 November 2024 (report 24/319 refers). A separate report at that meeting (report 24/321) approved a further £3 million in 2025/26 in respect of the demolition and regeneration of the
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Drummond Arms in Crieff, which has now been included in the budget at Appendix II. This therefore took the Composite Capital Programme to a revised total of £622.672 million. 4.2 This report advises on expenditure to 30 November 2024, and the latest estimate of the projected outturn for each of the years to 2029/30 for the Composite Programme and 2028/29 for the Housing Investment Programme. 5. Composite Capital Programme – Gross Capital Resources 5.1 As a result of the latest monitoring exercise, further adjustments to the budget are proposed. The current estimated total gross capital resources (which includes movements in Capital Receipts, Capital Grants, Contributions and borrowing) available over the six years 2024/25 to 2029/30 amount to £623.577 million. 5.2 Movements from the revised Composite Capital Budget approved on 20 November 2024 for the six years are summarised in the table below, and the constituent elements for each year are shown in Appendix I. Total Gross Composite Capital Resources Approved 20 Nov 2024 Current Estimate Movement £m £m £m 2024/25 170.283 164.313 (5.970) 2025/26 117.177 128.011 10.834 2026/27 136.685 133.388 (3.297) 2027/28 84.962 86.793 1.831 2028/29 65.787 64.549 (1.238) 2029/30 47.778 46.523 (1.255) Total 622.672 623.577 0.905 5.3 The above movements can be summarised as follows: Total £m Increase in Scottish Government Grant (Section 5.4) 0.383 Increase in Ring Fenced Capital Receipts (Section 5.5) 0.148 Increase in Third Party Contributions (Section 5.6) 0.301 Increase in Revenue Contributions (Section 5.6) 0.036 Increase in Borrowing Requirement (Section 5.7 and 5.8) 0.037 Increase in Gross Capital Resources (Section 5.2) 0.905 5.4 The Scottish Government allocated a Capital Grant of £383,000 in 2024/25 under the Road Safety Fund Initiative (Section 6.2.2). The only other movement in Capital Grants across the 6-year programme is the deferral of the Nature Restoration Fund grant of £175,000 in 2024/25 to 2025/26, as part of the Scottish Government’s support for the 2024/25 pay award.
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5.5 Ring Fenced Capital Receipts for vehicle disposals have been revised as part of the review of the Fleet Replacement programme, with an overall increase of £148,000 across the 6-year programme (Section 6.2.8). 5.6 There is an increase of £301,000 in Third Party Contributions, with additional contributions towards Active Travel (£77,000, Section 6.2.2) and Structural Maintenance (£262,000, Section 6.2.3), offset by a reduction on the Letham Community Wellbeing Hub (£38,000, Section 6.4.5), in line with estimated expenditure remaining on the project. There is also an increase in Revenue Contributions on the Property Energy Efficiency programme, with a proposed drawdown of £36,000 from the Salix Reserve (Section 6.4.4). 5.7 The projected borrowing requirement in 2024/25, which is effectively the balancing item for resources, is £129.037 million. This is £6.478 million lower than the borrowing requirement approved by this Committee on 20 November 2024. 5.8 The total borrowing requirement in the subsequent years 2025/26 to 2029/30 has increased by £6.515 million to £357.027 million, resulting in an overall increase of £0.037 million in the total level of borrowing across the whole 6- year programme. This increase in borrowing is summarised as follows: 2024/25 2025/26 2026/27 Later Years Total £m £m £m £m £m Increase in Vehicle Replacement Programme Prudential Borrowing (net of receipts) – Environment and Infrastructure (Section 6.2.8) (3.739) 2.751 0.200 0.880 0.092 Reduction in Street Lighting Renewals Prudential Borrowing – Environment and Infrastructure (Section 6.2.8) (0.055) 0.000 0.000 0.000 (0.055) Movements arising from re- phasing of expenditure and receipts (Appendix II) (2.684) 7.682 (3.439) (1.559) 0.000 Increase/(Reduction) in Borrowing Requirement (6.478) 10.433 (3.239) (0.679) 0.037 5.9 The chart below shows the Capital Resources required to fund the 2024/25 Composite Capital Programme following the proposed budget adjustments detailed in this report.
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6. Composite Capital Programme – Expenditure 6.1 Total Expenditure and Proposed Budget Adjustments to the Current Programme 6.1.1 Total expenditure (net of grants and contributions) to 30 November 2024 on the Composite Capital Programme is detailed in Appendix II and summarised as follows: Projected Outturn (£m) Net Expenditure to 30 Nov 2024 (£m) % of Projected Outturn Environment and Infrastructure 30.810 15.666 51% Housing and Communities 1.829 0.577 32% Economy, Development and Planning 50.868 22.825 45% Property Services 68.812 40.834 59% Customer and Digital Services 8.347 2.614 31% Health and Social Care 1.062 0.573 54% Unallocated 0.052 0.000 0% Total Net Capital Expenditure 161.780 83.089 51% 6.1.2 Appendix IV includes updates on the progress of delivering the Council’s major Capital projects. 6.1.3 At present the accepted practice is that any budget savings identified on specific projects are generally reallocated by the Service to other budgets within their own programme. However, it is proposed that any such savings arising are now “returned” to the programme and held as “Unallocated” pending future consideration of how these savings should be applied. This 78.5% 16.4% 0.0% 2.3% 1.2% 1.6% 5.1% Projected Capital Resources 2024/25 (December 2024) Borrowing (£129.037M) Grants (£27.026M) Tay City Deal (-£0.069M) Developer Contributions (£3.707M) Third Party & Revenue Contributions (£1.952M) Receipts (£2.660M) £Million
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approach would ensure any savings identified through budget monitoring are redirected to the highest priorities. Savings identified within rolling programmes will be subject to further consideration, given the nature of the work undertaken. 6.2 Environment and Infrastructure 6.2.1 The Strategic Lead has reviewed the programme for Environment and Infrastructure and proposed various budget adjustments, the most significant of which are described below. 6.2.2 Within Traffic and Road Safety, a Capital Grant of £383,000 has been allocated from the Scottish Government Road Safety Initiative Fund towards crash barriers near Meikleour with the Road Safety Initiative budget being increased accordingly. Also within Traffic and Road Safety, a Third-party Contribution of £77,000 has been provided by Perth and Kinross Countryside Trust towards works on Jeanfield Swift Footpath with a corresponding increase in the Active Travel Grant expenditure budget. 6.2.3 Within Asset Management – Roads and Lighting, Third Party Contributions of £262,000 have been received towards Structural Maintenance in the current year, with £181,000 received from Scottish Water and £81,000 from various other sources. In addition, within Roads and Lighting the following rephasings are proposed: Project 2024/25 £m 2025/26 £m Later Years £m Description Structural Maintenance 2.174 (0.335) (1.839) There is an acceleration of funding proposed into the current year to undertake emergency works. Budgets in later years have been broadly equalised as part of this acceleration. Footways 0.207 (0.022) (0.185) There is an acceleration of funding proposed into the current year to undertake rephased works on Tay Street. Budgets in later years have been broadly equalised as part of this acceleration. 6.2.4 Within Asset Management – Bridges, Bridge Refurbishment Programme, in line with the works ongoing over the remainder of the year it is proposed £50,000 is accelerated to the current year from 2025/26. In addition, it is proposed £5,000 is vired to Culteuchar Culvert for the final expenditure. Finally within Asset Management – Bridges, it was reported to the previous Committee in November that the Garry Viaduct project required rephasing with adjustments to later year budgets. In line with the staff resources available for this project in the current year, it is further proposed that £326,000 of the budget this year is moved to 2025/26 (£66,000) and 2026/27 (£260,000).
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6.2.5 Within Flood Protection Schemes, the works on the Comrie Flood Protection Scheme have commenced on the ground with site clearance undertaken to create a works compound for the duration of the project as well as clearance of the construction areas. The majority of construction for the scheme will take place during 2025/26 and a revised expenditure profile has been received from the contractor. It is therefore proposed that £4.282 million of the budget from the current year, and £1.779 million of the budget in 2026/27 are moved to 2025/26, totalling £6.061 million. 6.2.6 In addition, within Flood Protection Schemes the following rephasings are proposed: Project 2024/25 £m 2025/26 £m Later Years £m Description Milnathort Flood Protection Scheme (0.184) 0.184 - Re-engagement is required for the design of the scheme to be progressed with this work now due to take place next year. South Kinross Flood Protection Scheme (0.179) 0.179 - The scheme design received objections which need to be addressed prior to proceeding. The rephasing allows for time to rectify these design concerns. Coastal Change Adaptation (0.052) 0.052 - Rephasing to align with the work to be completed on this project for the remainder of the year. 6.2.7 Within Waste Strategy, following completion of the Recycling Improvement Fund project and in order to align the budget with the final spend, it is proposed £104,000 is transferred to Prudential Borrowing Wheeled Bin Replacement Programme. 6.2.8 In addition within the Prudential Borrowing programme, the Vehicle Replacement Programme has been reviewed. To better reflect the deliveries planned in advance of the financial year end, and with a corresponding adjustment to vehicles due to be disposed of, the adjustments in the below table are proposed. Further to this, there is an underspend on the Street Lighting Renewal – LED and Column Replacement works in the current year of £55,000 which results in a reduction in Prudential Borrowing. Together, the above movements result in a net increase in Prudential Borrowing over the 6- year programme of £37,000. 2024/25 £m 2025/26 £m Future Years £m Movement £m Vehicle Replacement Programme (3.776) 2.977 1.039 0.240 Capital Receipts – Vehicle Disposals 0.037 (0.226) 0.041 (0.148) 6.2.9 All the above proposed adjustments, together with other small movements, have been reflected in Appendices I and II.
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6.3 Economy, Development and Planning 6.3.1 The Strategic Lead has reviewed the programme for Economy, Development and Planning and proposed various budget adjustments, the most significant of which are described below. 6.3.2 Within the Perth and Kinross Lighting Action Plan, it is proposed that £844,000 is moved from the current year to next year following a review of the works which are anticipated to be completed prior to the financial year end. 6.3.3 Within Other Planning Projects, the project to develop the Creative Exchange has formally been completed with a remaining budget of £52,000. In line with the proposal outlined at Section 6.1.3 above, it is proposed this is transferred to Unallocated Resources for future consideration. 6.3.4 All the above proposed adjustments, together with other small movements, have been reflected in Appendices I and II. 6.4 Property Services 6.4.1 Within Project Support, the programme of works at Perth Academy are progressing at an increased pace with the fourth phase of works on the science block underway. It is therefore proposed that £1.351 million is accelerated from 2026/27 into the current year. 6.4.2 Within Property Service Management, the scope of works on projects due for completion in the current year within the DDA and Alteration Works Programme has been reduced slightly resulting in lower costs. It is therefore proposed that £100,000 is moved from the current year to 2025/26. 6.4.3 Following the cessation of trading of the contractor on the Pitlochry High School Upgrade Programme, works on site has been halted and only ongoing design works are anticipated for the remainder of the year. On site works will recommence when a replacement contractor has been appointed and it is anticipated this will occur around Easter 2025. It is therefore proposed that £60,000 of the budget is moved to next year. 6.4.4 Energy Efficiency Works within various properties are ongoing for the remainder of the financial year. It is proposed that £36,000 is allocated for these works in the current year and funded from the Salix Earmarked Reserve. 6.4.5 Lastly within Property Service Management, the Letham Community Wellbeing Hub project has been completed. The contribution of £38,000 from Letham4All is therefore no longer required and both the income and expenditure budgets are reduced by this amount. 6.4.6 Within Prudential Borrowing Projects, Decarbonisation Works at various properties have not commenced as early as previously anticipated. Works are currently still in the design phase and therefore unlikely to be commenced in
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the current financial year. It is therefore proposed that £600,000 is moved to next year in line with updated expenditure estimates. 6.4.7 All the above proposed adjustments, together with other small movements, have been reflected in Appendices I and II. 6.5 Health and Social Care 6.5.1 Within Occupational Therapy Equipment, with an aging population there is increased demand for equipment, combined with an increased cost , resulting in higher than previously budgeted costs in the current year. It is therefore proposed that £100,000 is accelerated to the current year from 2029/30. In addition, the rollout of the digital replacement for Technology Enabled Telecare has concluded for the current phase this year, and with a lower than anticipated refresh of the Digital Equipment installed. Consequently, it is proposed that the underspend of £250,000 is transferred to Occupational Therapy Equipment to supplement the increased demand and costs on the budget. 6.5.2 These proposed adjustments have been reflected in Appendices I and II. 7. Housing Investment Programme 7.1 The total current estimated expenditure, net of contributions, for the Housing Investment Programme over the 5 years 2024/25 to 2028/29 remains unchanged at £96.917 million. Movements across years from the previous estimates are summarised in the table below and detailed in Appendix III. Approved 20 Nov 2024 Current Estimate Movement £m £m £m 2024/25 28.161 31.513 3.352 2025/26 20.256 22.826 2.570 2026/27 15.633 15.633 0.000 2027/28 19.502 14.869 (4.633) 2028/29 13.365 12.076 (1.289) Total 96.917 96.917 0.000 Total Expenditure to 30 November 2024 (Housing Investment Programme) 7.2 Net expenditure for 2024/25 to 30 November 2024 amounts to £15.975 million and receipts amount to £112,000. Therefore, the borrowing requirement for the year to date is £15.863 million. 7.3 The Strategic Leads for Housing and Communities and Property Services have reviewed the Housing Investment Programme and proposed the budget adjustments outlined below. 7.4 It is proposed to draw down various amounts from the Future Developments New Build Programme in 2024/25, 2027/28 and 2028/29 to be applied as follows:
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• Kinloch Gardens, Rattray. Estimated expenditure for new house building for this project is £3.633 million, with Scottish Government grant of £1.944 million and £400,000 to be applied form the Second Home Council Tax Reserve, thus leaving £1.289 million to be funded from the Future Developments budget. • National Trust Scotland, Dunkeld. Total estimated expenditure for the new purchase of 20 properties in 2024/25 and 2025/26 is £5.448 million, with Scottish Government grant of £1.947 million and £700,000 from the Second Home Council Tax Reserve, thus leaving £2.801 million to be funded from the Future Developments budget. • Weavers Gait, Kinross. Estimated expenditure for new house building for this project is £1.348 million, with £120,000 to be applied form the Second Home Council Tax Reserve and £0.55 million of Commuted Sums, thus leaving £0.678 million to be funded from the Future Developments budget • Council House Buy-Backs. It is proposed to increase the budget by £3.890 million in 2024/25 to meet the ongoing purchase programme. It is anticipated that further increases in the Buy-Back budget will be required as the year progresses, with 90 property purchases completed by the end of December 2024 and further purchases currently being progressed. • Balhousie, Perth. It is proposed to transfer £37,000 in relation to fees in the current year to further develop proposals for this site. 7.5 It is also proposed to allocate part of the SHQS Future Developments Budget in 2027/28 to current schemes in 2024/25, as follows: • Adaptations (OT) - £500,000 in 2024/25 for works approved under the new OT Adaptations Referrals Policy approved by the Strategic Lead for Housing and Communities in September 2024. • Environmental Improvements - £41,000 for the removal of lead pipe work at various locations. 7.6 It is also proposed to move £500,000 for Rewiring, Infrastructure and Property Refurbishments and £1.531 million for Multi-Storey Flats from the current year to 2025/26. These movements reflect the level of anticipated works to be completed in the current year. 7.7 There has been an increase in Capital Receipts in the current year of £28,000. Therefore, the borrowing requirement over the five-year programme has reduced by this amount. 8. BUDGET OVERVIEW 8.1 The projected net expenditure outturn in 2024/25 for the Composite Capital Budget is £161.728 million and represents 82% of the original 2024/25 budget approved on 24 April 2024 (£198.184 million). The revised budget is based on the latest projections of expenditure and all budget adjustments outlined within this report. 8.2 Net expenditure to 30 November 2024 on the Composite Capital Budget is £83.089 million and represents 51% of the proposed revised budget for 2024/25 of £161.728 million.
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8.3 The projected net expenditure outturn in 2024/25 for the Housing Investment Programme is £31.513 million and represents 146% of the original 2024/25 budget approved on 26 April 2024 (£21.536 million). This increase reflects the allocation of future years block budgets to specific projects in 2024/25 and the increase in the Council House Buy-Back programme. 8.4 Net expenditure to 30 November 2024 on the Housing Investment Programme is £15.975 million which represents 51% of the proposed revised budget for 2024/25 of £31.513 million. 8.5 The Council’s total Borrowing Requirement to 30 November 2024, based on the Composite and Housing Investment Programmes, is £76.427 million. The estimated overall Council Borrowing Requirement for 2024/25 as a whole has reduced by £3.154 million to £158.605 million as a result of the monitoring adjustments reflected within this report. This reflects a reduction in estimated borrowing in the current year on the Composite Programme of £6.478 million, and an increase on the Housing Investment Programme of £3.324 million. 8.6 In the context of the Capital Budget, the borrowing above refers specifically to the funding of capital expenditure and therefore the need to borrow. The actual amounts and timing of the borrowing is undertaken as part of the Council’s Treasury Management operations and reported within the Treasury Activity and Compliance reports throughout the year. Author(s) Name Designation Contact Details John Jennings Senior Accountant CHXFinance@pkc.gov.uk Approved Name Designation Date Scott Walker Chief Finance Officer 21 January 2025
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ANNEX 1. Implications, Assessments, Consultation and Communication Strategic Implications Yes / None Community Plan / Single Outcome Agreement None Corporate Plan Yes Resource Implications Financial Yes Workforce Yes Asset Management (land, property, IST) Yes Assessments Equality Impact Assessment Yes Strategic Environmental Assessment Yes Sustainability (community, economic, environmental) Yes Legal and Governance None Risk None Consultation Internal Yes External None Communication Communications Plan None 1. Strategic Implications Corporate Plan 1.1 The Council’s Corporate Plan 2022 – 2027 lays out seven outcome focussed strategic objectives which provide clear strategic direction, inform decisions at a corporate and service level and shape resources allocation. They are as follows: • Tackling Poverty • Tackling climate change and supporting sustainable places • Growing a sustainable and inclusive local economy • Enabling our children and young people to achieve their full potential • Protecting and caring for our most vulnerable people • Supporting and promoting physical and mental wellbeing • Placing communities at the heart of how we work 1.2 This report relates to all of these objectives. 2. Resource Implications Financial 2.1 There are no direct financial implications arising from this report other than those reported within the body of the main report.
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Workforce 2.2 There are no direct workforce implications arising from this report other than those reported within the body of the main report. Asset Management (land, property, IT) 2.3 There are no direct asset management implications arising from this report other than those reported within the body of the main report. 3. Assessments Equality Impact Assessment 3.1 Under the Equality Act 2010, the Council is required to eliminate discrimination, advance equality of opportunity, and foster good relations between equality groups. Carrying out Equality Impact Assessments for plans and policies allows the Council to demonstrate that it is meeting these duties. 3.2 The information contained within this report has been considered under the Corporate Equalities Impact Assessment process (EqIA) and has been assessed as not relevant for the purposes of EqIA. Strategic Environmental Assessment 3.3 The Environmental Assessment (Scotland) Act 2005 places a duty on the Council to identify and assess the environmental consequences of its proposals. 3.4 The information contained within this report has been considered under the Act. However, no action is required as the Act does not apply to the matters presented in this report. Sustainability 3.5 Under the provisions of the Local Government in Scotland Act 2003 the Council has to discharge its duties in a way which contributes to the achievement of sustainable development. In terms of the Climate Change Act, the Council has a general duty to demonstrate its commitment to sustainability and the community, environmental and economic impacts of its actions. 3.6 The information contained within this report has been considered under the Act. However, no action is required as the Act does not apply to the matters presented in this report. 4. Consultation Internal 4.1 The Executive Leadership Team and the Strategic Leadership Team have been consulted in the preparation of this report.
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2. Background Papers No background papers, as defined by Section 50D of the Local Government (Scotland) Act 1973 (other than any containing confidential or exempt information) were relied on to any material extent in preparing the above report. 3. Appendices Appendix I – Composite Capital Programme - Estimated Capital Resources 2024/25 to 2029/30 Appendix II – Composite Capital Programme - Summary of Capital Resources and Expenditure 2024/25 to 2029/30 Appendix III – HRA Capital Investment Programme – Summary of Capital Resources and Expenditure 2024/25 to 2028/29 Appendix IV – Significant Capital Projects Progress Update