Report by Dafydd
L. Edwards, Host Authority Statutory Finance Officer.
Decision:
1. Approve the 2021/22 Revenue Budget as
presented in Appendix 1 to the report.
This includes the one-off virements of £415,000 in the revenue budget to
be funded from the
earmarked reserve.
2. Approve the Capital Budget for 2021/22 to 2025/26
as presented in Appendix 2.
3. Fund the Gateway Reviews (Assurance) for the
NWEAB and Project Sponsor led projects.
4. Formally request all six local
authorities to cooperate in using their funding flexibility
to release revenue funding for the NWEAB. This will mean exchanging the funding
designated to the Growth Deal against other capital projects within their
capital programmes and ensuring the equivalent value revenue funding is
available for the Growth Deal to fund their revenue-type items.
5. Request the Portfolio Management Office to
review the project costs during the year as more information becomes available,
further to unforeseen costs now identified in the revenue budget. This review
to consider the option of funding part of this expenditure from the individual
project’s capital budget.
Minutes:
The report was
submitted by Dafydd L. Edwards (Statutory Finance Officer - Host Authority) and
Sian Pugh (Group Accountant - Corporate and Projects).
RESOLVED
(1) Approve
the 2021/22 Revenue Budget as presented in Appendix 1 to the report. This includes the one-off virements of
£415,000 in the revenue budget to be funded from the
earmarked reserve.
(2) Approve
the Capital Budget for 2021/22 to 2025/26 as presented in Appendix 2.
(3) Fund
the Gateway Reviews (Assurance) for the NWEAB and Project Sponsor led projects.
(4) Formally
request all six local authorities to cooperate in using their funding
flexibility
to release revenue funding for the NWEAB.
This will mean exchanging the funding designated to the Growth Deal
against other capital projects within their capital programmes and ensuring the
equivalent value revenue funding is available for the Growth Deal to fund their
revenue-type items.
(5) Request
the Portfolio Management Office to review the project costs during the year as
more information becomes available, further to unforeseen costs now identified
in the revenue budget. This review to
consider the option of funding part of this expenditure from the individual
project’s capital budget.
REASONS FOR THE DECISION
(1) To set out the proposed budget per
expenditure heading and the corresponding funding streams for the year.
(2) To set out the proposed budget per
expenditure heading and the corresponding funding streams for 2021/22 until
2025/26.
(3) In order to operate effectively within the
funding available, the NWEAB requires an annual budget to be approved.
(4) To authorise the Portfolio Director to incur
expenditure in accordance with the approved budget.
DISCUSSION
The report was
submitted, which proposed the 2021/22 Revenue and Capital Budget for the NWEAB.
Details were
provided about the background and relevant considerations and the consultations
held.
The Statutory
Finance Officer of the Host Authority provided details of the changes and the
unexpected situations which had arisen since the Board last discussed the
budget, and which had driven the majority of the use of reserve funds, namely:-
·
The unexpected substantial one-off costs in relation
to developing business cases.
·
The costs of the legal support to those business
cases.
He explained:-
·
That there was sufficient money in the reserve funds
to implement this, but that the intention was to try to build the reserve fund
rather than using it at the beginning.
·
That the Portfolio Director, the Operations Manager
and the Monitoring Officer of the Host Authority had been challenged on the
figures, and that the additional one-off costs were rough estimates at present.
He further noted:-
·
As the first instalment of the £16m Growth Deal grant
had been received on 12 March 2021, that the partners' contributions were on
the low side of the range submitted to the Board in October 2020.
·
Following the UK Government's announcement in the
Chancellor's Budget in relation to reducing the funding contribution from 15
years to 10 years, that the entire financial position would need to be
revisited. The Chancellor's announcement had been unexpected for Welsh
Government also, and it was not yet clear whether Welsh Government would also
reduce the funding contribution period to align with the UK Government's
timing, or what the implications would be for the relevant tax yield.
·
That the capital expenditure profile had slipped
somewhat also, and all these matters would need to be assessed for the future.
·
That the budget for the current year was a balanced
budget. By the time the 2022/23 budget would be brought before the Board in a
year's time, there may be further changes, and all costs and grants would have
to be looked at again in their entirety during the year. It was intended to
address this over the summer, and give adequate notice to all partners of their
contributions again by next year.
During the
discussion, the following matters were raised:-
·
In response to a question, it was explained that,
should a project not go ahead, both Governments would have to be approached to
ensure that any new project coming before the Board would still respond to the
Governments' requirements for the investments.
·
Attention was drawn to the fact that the overheads
were starting to go over 10% of the annual expenditure, and the need to monitor
the situation was stressed.
·
In response to a question, it was confirmed that,
despite the changes to the expenditure profile etc., partners were still
required to pay the contributions set out in the budget for the current
year.
·
In response to a comment that everything seemed to be
based on assumptions, and that the financial projections were not credible, it
was explained that the best had to be made of the information to hand at
present. It was possible to cope for the current year within the resources
available, but that the situation would have to be re-assessed for next year.
·
It was noted that the Board needed to show its
willingness to be flexible, in light of decisions made that were outside of
their control by both Governments.
· The statutory finance officers of the six local authorities were thanked for agreeing in principle to an agreement on exchanging the capital / revenue budget over the entire period of the Growth Deal, in order to be able to use the capital grant of the NWEAB as revenue funding.
Supporting documents: