Agenda item

(Director of Resources) to consider the attached report.

John Bell, Senior Accountant, introduced the report on the Council’s Provisional Capital Outturn for 2016/17. The report set out the Council’s capital programme for 2016/17, in terms of expenditure and financing, and compared the provisional outturn figures with the revised estimates. The revised estimates, which were based on the Capital Programme, represent those adopted by the Council on 21 February 2017.

The Council’s total investment on capital schemes and capital funded schemes in 2016/17 was £36,957,000 compared to a revised estimate of £43,077,000, representing an underspend of 14%.  With regard to the General Fund projects, there was an overall underspend of £1,675,000 or 9%.

It was noted that the construction of the new depot at Oakwood Hill was completed last summer and has been operational since September 2016. However, there had been a number of snagging disputes, as well as an ongoing issue in relation to the off-site monitoring of the alarm system. In addition, a further fire alarm system had to be installed to comply with DDA safety requirements and there was some outstanding highways works. This had resulted in an overspend of £206,000 as at 31 March 2017 for which retrospective approval had been requested. A report will be submitted to Cabinet once the final account has been agreed and all costs have been finalised. Councillor Mohindra added that he had called in the security problems to be looked at by the Cabinet.

A large underspend related to the surrender of a lease to Glyn Hopkin Limited in respect of a motor car dealership located on the corner of Brooker Road and Cartersfield Road in Waltham Abbey. Approval was given for the Council to make a payment of £990,000 in consideration of this and immediately following completion,a new 25-year lease was entered into, delivering significant annual revenue benefit. Councillor Mohindra noted that they had doubled the rental income of the back of this deal.

Within the Resources Directorate, the largest underspend was on the planned maintenance programme as many of the schemes planned at the civic offices had been delayed awaiting the outcome of the Accommodation Review. Work had been restricted to essential improvements; this included new control panels which control the heating system, lead valley guttering, fire alarm system upgrade works and the installation of the LED lighting. Planned maintenance works on other buildings had been progressed; included the resurfacing of the rear access yard at the Limes Avenue shops in Chigwell andthe installation of an electrical bypass panel at the Hillhouse shops in Waltham Abbey. However, the works planned at Town Mead Depot had not progressed to date. It was recommended that the full underspend of £318,000 was carried forward pending an assessment of requirements in the light of the Accommodation Review. Councillor Mohindra noted that officers always had to justify any carry forwards, they were not just agreed and had to have valid reasons.

Under the Housing Revenue Account there was an underspend on the Council’s house-building programme which had requested a carry forward.

The second largest underspend of £769,000 was experienced on the heating, rewiring and water tank works on existing properties. Within this sum, there were savings of £27,000 on mechanical ventilation and heat recovery installations, as the milder winter temperatures generated fewer condensation issues, and there were further savings of £43,000 on water tank replacements.  The majority of the underspend, however, related to slippage on the gas boiler replacement programme, primarily in the sheltered units, for which a carry forward of £741,000 was sought to complete these works. Councillor Mohindra asked if the problems with the gas boilers would increase the costs. Mr Bell did not know but would ask Teresa Brown to get back to him on this. Councillor Bedford asked if the new boilers would be the new type Combi boilers. He was told that would be a question for the Communities Directorate.

At Langston Road’s new shopping park, the Section 278 road improvement works, had been subject to delays from the outset and still represented the largest risk to the project. The revised budget and actual costs of the construction works and fees associated with the highways work is shown separately as they were classified as revenue costs financed from capital under statute. The figures showed an underspend of £1,060,000, which had resulted from delays primarily due to changing requirements from the Highways Authority. The Highways Authority had asked for a carry forward for this underspend. Councillor Bedford wondered if we could recover this from ECC and was told that it was being looked into.

Councillor Kane asked about the overspend of £8,000 on the cash kiosks. He was told that officers did not appreciate the amount of software development needed for the complete integration into the general ledger system. Councillor Mohindra said he was very pleased with the new kiosks and no complaints or issues have arisen with them.

RESOLVED:

(1)          That the provisional capital outturn report for 2016/17 and the retrospective approval for the over and underspends in 2016/17 on certain capital schemes as identified in the report be noted;

(2)          That approval for the carry forward of unspent capital estimates into 2017/18 relating to schemes on which slippage has occurred was noted; and

(3)          That approval of the funding proposals outlined in this report in respect of the capital programme in 2016/17 be noted.