Dewi A Morgan, Host Authority Statutory Finance Officer and Sian Pugh, Host Authority Group Accountant to provide the North Wales Economic Ambition Board (NWEAB) with details of the actual revenue expenditure and income up to the end of August 2022, as well as projected full year out-turn against its annual budget.
To note and accept the NWEAB’s revenue end of August 2022 review which includes claiming a reduced amount from the North Wales Growth Deal grant in order to leave a neutral position for the year.
To note and accept the NWEAB’s reserves update.
To agree the NWEAB’s revised capital expenditure profile and project delivery plan
The report was presented by Sian Pugh (Group Accountant - Host Authority).
To note and accept the Ambition Board's
revenue end of August 2022 review which includes claiming a reduced amount from
the North Wales Growth Deal grant in order to leave a neutral position for the
The Ambition Board's reserves update was noted and accepted.
It was agreed on the Ambition Board's revised capital expenditure profile and project delivery plan.
REASONS FOR THE DECISION
It was noted that an underspend of £189,048 was forecast against the revenue budget in 2022/23. Any underspend at the end of the financial year may be transferred to reduce the amount claimed from the North Wales Growth Deal Grant.
A slippage on the capital programme across the whole portfolio was noted, with a lower number of business cases approved than was originally anticipated at this point.
The report was submitted noting that an end of August 2022 review was being submitted. It was explained that the report noted the actual revenue position until the end of August 2022 and estimated the position until the end of the financial year. It was stated that the finance department estimated an underspend of £38k on the Programme Management Office, highlighting that this was mainly due to an underspend of £11k on employee expenditure, an underspend of £18k on the Regional Engagement Team contribution and £10k underspend on the ESF evaluation report heading. Attention was drawn to the overspend under the Support Services heading of £5k and it was explained that this was due to an overspend on a legal budget.
A net underspend of £10k was estimated on the Joint Committee heading, which included an underspend of £18k on External Legal Support, a £5k underspend on External Financial Fees and an overspend of £13k on the External Audit Fees. It was noted that audit fees were based on the Audit Wales’ Audit Plan that had been submitted to the Board in July, but it included a fee for the performance audit work that had not been included in the budget. It was stated that the projects heading showed an underspend of £161k, highlighting that this was due to slippage in the capital programme
In terms of income sources for 2022/23, it was noted that they included partner contributions, ESF Grant, North Wales Growth Deal Grant and other specific grants. It was explained that this would then leave an estimated position of an underspend of £189k for 2022/23. As a result, rather than claiming the full amount of £750k from the Growth Deal Grant, it was suggested that a reduced amount of £563k was claimed, which would leave a neutral position for the Board for this year.
It was stated that the estimated general reserve balance at 31 March 2023 was £552k and it was added that the Board had already approved the use of this reserve to fund the Portfolio Management Office staff until March 2024. It was expected to use £100k from the projects fund in 2022/23, which would give an estimated end of year balance of £95k. It was noted that partner interest contributions of £265k for 2022/23 would be added to the interest fund and give an estimated balance of £964k at the end of March 2023. In addition, it was noted that interest on this reserve balance as well as interest on the capital grant would be added at the end of the financial year, and due to the capital grant balance of approximately £34m as well as the increase in interest rates over recent months, this was likely to be in the region of £500k to £600k for this year.
In terms of the capital review, it was noted that the budget had been approved in March 2022, and it was expected to run until 2028/29, but it was stated that the revised profile showed that one of the projects would be running until 2032/33. Although the Digital Signal centre project was continuing, it was explained that further expenditure was predicted in 2022/23, and there had been a slippage in the capital programme across the whole portfolio with a lower number of business cases approved than had been originally anticipated. It was noted there had been a slippage of £1.86m in 2021/22, and an anticipated slippage of £26.55m in 2022/23 and £32.46m in 2023/24. It was explained that the North Wales Growth Deal grant was used to fund the Capital Programme for the first three years, and that no external borrowing would be needed until 2024/25.
Observations arising from the discussion
<![if !supportLists]>¾ <![endif]>Gratitude was expressed for the report and an enquiry was made about overspend in the legal field. It was noted that the department had not managed to fill a post to support the Ambition Board and had now recruited an experienced locum to undertake the work since August. It was explained that the position would be reviewed early next year and that expenditure needed to be kept under review. It was added that funding was available to employ specialist lawyers who were needed as a result of contract sizes.
<![if !supportLists]>¾ <![endif]>A question was asked about the Interest Reserve - as there had been a slippage in projects, was there a need to charge the money now or was it better to revisit this as a result of interest costs? It was explained that the finance department had revisited the matter as part of drawing up the budget last year and they would revisit again as they established next year's budget. It was stated that a discussion would be needed with an external company in terms of interest rates as the department was unaware of what could happen in future.
<![if !supportLists]>¾ <![endif]>In terms of the budget, it was noted that the table noted that the Growth Deal was £240m and that only £156m of it was funded by the Growth Deal Grant, while the further expenditure was funded through loans. It was emphasised that all schemes were funded by the grant but the grant would not be available annually when schemes were implemented and, therefore, the loans were for cash flow, which would be repaid through a grant.