Agenda item

Report by Dafydd L. Edwards, Host Authority Statutory Finance Officer.

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.

 

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.