Item: 6 Page: 107

Business Services & Infrastructure Services

REPORT TO COUNCIL – 27 JUNE 2019

NON-HRA CAPITAL BUDGET 2018/19 FINAL OUTTURN REPORT

1. Recommendations

1.1 The Council is recommended to approve:-

1 The unaudited outturn position for 2018/19 referred to at paragraph 2.1, giving new totals for expenditure and income of £84,999,000 and £34,017,000 respectively; and

2 The proposed changes to the capital budget for 2019/20 as referred to at paragraph 2.6.

2. Overall Capital Expenditure and Outturn

2.1 In 2018/19 the Council’s revised budgeted capital expenditure forecast amounted to £96,587,000. Actual expenditure was £84,999,000, or £11,588,000 (11.99%) lower than anticipated. Analysis of this position is detailed in appendices 1 and 2.

2.2 The variance between budgeted and forecast expenditure can be analysed as follows:

Delays to planned expenditure £ (24,717,000) Accelerations to projects £ 2,382,000 New expenditure £ 884,000 Grant Funded expenditure £ 4,044,000 Capital from Current Revenue (CFCR) £ 390,000 Revenue Funded from Borrowing £ 5,429,000 Total Variance £( 11,588,000)

2.3 Variations are detailed in Appendices 1 and 2. Appendix 1 summarises the position by Service and Appendix 2 shows, in the column headed “Variance 2018/19”, the position for individual projects. Where there is a significant variation of £100,000 or greater, details are provided in a note in Appendix 3.

2.4 In 2018/19, capital expenditure of £84,999,000 was financed by a combination of borrowing, capital receipts, use of reserves including previously unapplied receipts, and supplemented by direct revenue financing, also known as Capital From Current Revenue (C.F.C.R). CFCR amounting to £2,623,000 is reported. In addition, expenditure identified in service revenue budgets that met the capital definition amounted to £11,519,000 and was financed from cash and borrowing instead of revenue taking into consideration the Council’s Medium-Term Finance Strategy. Further details are included in Appendix 4.

2.5 Details of the position for each Strategic Priority are given in Appendix 2 to this report.

Item: 6 Page: 108

2.6 The effect of the proposed changes on 2019/20 is to increase budgeted expenditure by £21,067,000 and to increase financing by £2,689,000. Use of Cash and Prudential Borrowing in 2019/20 will increase by £18,378,000.

2.7 All Services have been consulted via the capital budget monitoring process and their comments and adjustments have been incorporated into this report including the relevant appendices and supporting papers.

2.8 The Monitoring Officer within Business Services has been consulted and is in agreement with the report.

3. Scheme of Governance

3.1 The Council is able to consider and take a decision on this item in terms of the general powers conferred by Section A of the List of Committee Powers in Part 2A of the Scheme of Governance. This report relates to revising the annual estimates of the Capital budget agreed under Section A.8.1 of Part 2A.

4. Implications and Risk

4.1 An Equalities Impact Assessment and a Town Centre Impact Assessment are not required for this report as the report deals with the monitoring of expenditure against budgets which have been approved previously, and the reprofiling of some expenditure.

4.2 The revenue budgets for financing costs in 2019/20, 2020/21, 2021/22, 2022/23 and 2023/24 are £30,340,000, £34,706,000, £34,800,000, £35,459,000 and £35,459,000 respectively.

4.3 The charges against these budgets will come from the financing costs associated with debt outstanding at 31 March 2019 plus the debt associated with capital spending in 2018/19 onwards.

4.4 There are no staffing implications arising directly from this report.

4.5 The following Risk has been identified as relevant to this matter on a Strategic Level: Balancing the Books (Directorate Risk Registers).

Ritchie Johnson Stephen Archer Director of Business Services Director of Infrastructure Services Report prepared by Chris Smith and John Lovie 11 June 2019 Item: 6 Page: 109

NON-HRA CAPITAL 2018/19 FINAL OUTTURN APPENDIX 1

Original Budget Revised Final Changes Full Council 8/2/18 Budget Outturn Variance to Future 2018/19 2018/19 2018/19 2018/19 Years Note £000 £000 £000 £000 £000 TOTAL EXPENDITURE Strategic Priorities 96,244 91,637 81,159 (10,478) 19,957 Grants to Outside Bodies 2,087 2,500 1,643 (857) 857 City Region Deal 4,560 2,450 2,197 (253) 253 Optimism Bias (2,729) 0 0 0 0 Total Financing 100,162 96,587 84,999 (11,588) 21,067

FINANCING Scottish Government - General Capital Grant 37,135 18,721 18,721 0 0 - Specific Grant - Cycling and Walking 357 357 357 0 0 - SFT Funding - Community Campus 10,803 0 0 0 0 - Early Learning Childcare (1140 Hours Projects) Capital Funding 0 900 550 (350) 350 1 Other Grants 1,457 5,982 9,054 3,072 1,771 2 - Kintore Station - Nestrans Contribution 0 110 110 0 0 Internal Financing - Capital From Current Revenue 2,278 2,233 2,623 390 0 3 - Reserves and Medium Term Financial Strategy (City Region Deal) 3,917 0 0 0 0 Sales 4,722 3,170 2,602 (568) 568 4 60,669 31,473 34,017 2,544 2,689

Cash & Prudential Borrowing 39,493 65,114 50,982 (14,132) 18,378 5

Total Financing 100,162 96,587 84,999 (11,588) 21,067 Item: 6 Page: 110

Original Budget Revised Final Changes APPENDIX 2 Full Council 8/2/18 Budget Outturn Variance to Future 2018/19 2018/19 2018/19 2018/19 Years EXPENDITURE £000 £000 £000 £000 £000

BUSINESS SERVICES Development of Industrial Portfolio & Factory Units 5,341 2,000 2,133 133 14 6 Cleaning (previously named Public Toilets) 115 90 86 (4) 4 Information Communications Technology 1,450 1,557 1,763 206 (206) 7 Legal and Governance System Software 0 72 0 (72) 72 House - Police Office Extension 467 50 94 44 (44) Depots 5,352 4,201 4,361 160 (160) 8 Health and Safety - Council Wide Objectives 500 500 525 25 (25) New Council Office (Previously on Plan as Workspace - Inverurie) 312 400 408 8 (8) Planned Maintenance - Council Wide Objectives 2,500 2,000 3,332 1,332 (1,204) 9 Workspace 2,702 994 843 (151) 151 10 Workspace - Saltoun Square 0 600 614 14 (14) Carbon Reduction - Council Wide Objectives 800 996 565 (431) 431 11 Business Services Total 19,539 13,460 14,724 1,264 (989)

COMMUNITIES Adult Social Work Learning Disabilities - Adaptation Centres 70 132 7 (125) 125 12 Blythewood Care Home (aka View) 0 0 2 2 0 New Care Home (North) 250 20 0 (20) 20 Social Work - Minor Works 73 183 44 (139) 139 13 Housing Disabled/Elderly Housing Adaptations (Private Sector Housing Grant) 915 900 718 (182) 182 14 Sport & Leisure Management Banff & Macduff Sporting Facilities 0 0 15 15 0 Sports Village (Community Sports Facility, Hill of Banchory) 6,024 7,939 6,886 (1,053) 1,053 15 Communities Total 7,332 9,174 7,672 (1,502) 1,519 Item: 6 Page: 111

Original Budget Revised Final Changes APPENDIX 2 Full Council 8/2/18 Budget Outturn Variance to Future 2018/19 2018/19 2018/19 2018/19 Years EXPENDITURE £000 £000 £000 £000 £000 EDUCATION & CHILDREN'S SERVICES Westfield Community Hub 0 30 25 (5) 5 /Hillside PS Causeymounth Road Upgrading Works 100 243 92 (151) 151 16 Early Learning Childcare (1140 Hours Projects) 0 150 550 400 (400) 17 Early Learning Childcare (Children & Young Peoples Bill) 805 2,000 2,064 64 43 ECS Enhancements 4,406 4,218 3,534 (684) 684 18 Ellon Academy 0 0 86 86 0 Improved Disabled Access ( Education) 400 711 525 (186) 215 19 Inverurie Community Campus 23,036 353 314 (39) 39 Kinellar Primary School 2,825 2,455 2,216 (239) 239 20 Kintore Primary School 0 447 39 (408) 408 21 Markethill PS Replacement 0 302 132 (170) 170 22 Mearns Academy 0 0 69 69 0 MUGA Dales Park 0 0 3 3 0 PFI Lifecycle Replacement (CFCR) 2,233 2,233 2,239 6 0 School Meals P1-P3 0 28 53 25 28 Uryside Primary School 0 500 110 (390) 390 23 Capital Funded from Current Revenue (CFCR) 0 0 42 42 0 Scalloway Park Children's Home 0 0 24 24 0 Support for Learners 150 161 235 74 (40) Education & Children's Services Total 33,955 13,831 12,352 (1,479) 1,932 Item: 6 Page: 112

Original Budget Revised Final Changes APPENDIX 2 Full Council 8/2/18 Budget Outturn Variance to Future 2018/19 2018/19 2018/19 2018/19 Years EXPENDITURE £000 £000 £000 £000 £000 INFRASTRUCTURE SERVICES Planning Access/Environment Projects 50 185 87 (98) 134 Capital From Current Revenue (CFCR) 0 0 609 609 0 24 Museum of Banff & Silversmithing Project 0 0 14 14 0 Uryside Meadows Paths 0 0 143 143 0 25 Roads, Landscape Services, and Waste Management Harbours, Coast & Flooding 5,118 2,147 1,619 (528) 528 26 Flooding Scheme 0 1,738 1,225 (513) 513 27 Western Peripheral Route 0 18,673 4,770 (13,903) 13,903 28 Aberdeen Western Peripheral Route (Funded from Nestrans) 0 46 0 (46) 46 Bridges & Structures 2,635 2,950 2,622 (328) 347 29 Cycling and Walking 673 1,906 1,137 (769) 604 30 Drainage 0 1,000 793 (207) 207 31 Energy From Waste 0 0 622 622 (622) 32 Nestrans Contribution 1,172 1,600 925 (675) 675 33 Quarries 260 0 0 0 0 Roads Resurfacing/Reconstruction 8,750 8,841 9,698 857 6 34 Safety Initiatives 644 927 734 (193) 193 35 Storm Frank Works Funded By Grant - Bridges and Flooding 0 434 262 (172) 172 36 Street Lighting 1,400 1,854 1,678 (176) 176 37 Landfill, HWRC 1,000 1,268 2,858 1,590 222 38 Parks & Open Spaces 600 1,018 952 (66) 400 Transportation Public Transport 3,916 597 401 (196) 38 39 Kintore Station 0 110 110 0 0 Vehicles 4,179 4,922 5,111 189 (189) 40 Travellers Sites Greenbanks Travellers Site 0 358 2 (356) 356 41 Gypsy/Traveller's Transit Site 0 0 65 65 0 Burial Grounds Burial Grounds 751 741 98 (643) 643 42 Infrastructure Services Total 31,148 51,315 36,535 (14,780) 18,352 Item: 6 Page: 113

APPENDIX 2 Original Budget Revised Final Changes Full Council 8/2/18 Budget Outturn Variance to Future 2018/19 2018/19 2018/19 2018/19 Years EXPENDITURE £000 £000 £000 £000 £000 CITY REGION DEAL Aberdeen Harbour Expansion (City Region Deal) 2,000 2,000 2,000 0 0 Strategic Transport Appraisal (City Region Deal) 60 50 142 92 (92) Digital Infrastructure (City Region Deal) 2,500 400 55 (345) 345 43 City Region Deal Total 4,560 2,450 2,197 (253) 253

Capital Expenditure Accounted for in Revenue and Funded from Cash & Prudential Borrowing 6,357 6,357 11,519 5,162 0 44

TOTAL EXPENDITURE 102,891 96,587 84,999 (11,588) 21,067 Item: 6 APPENDIX 3 Page: 114

NON-HRA CAPITAL BUDGET 2018/19 FINAL OUTTURN

Significant Variance Analysis Variance Final Outturn 2018/19 Note Budget £'000 Narrative

1 Early Learning Childcare (1140 Hours Projects) Capital Funding (350) Capital funding adjusted in 2018/19 to reflect final outturn position per Note 17. 2 Other Grants 3,072 Additional grants accounted for in 2018/19 for various projects. 3 Capital From Current Revenue 390 Appendix 4 provides details of the projects funded via CFCR. 4 Sales (568) Anticipated sales were lower than anticipated. 5 Cash & Prudential Borrowing (14,132) Reflects the effect on borrowing of the net movements detailed in the report. 6 Development of Industrial Portfolio & Factory Units 133 Works were undertaken earlier than planned on the Kessock project in Fraserburgh in 2018/19. The overall project remains within budget. 7 Information Communications Technology 206 Orders for replacement network hardware were delivered earlier than anticipated leading to spend forecast in 2019/20 being accelerated to 2018/19. 8 Depots 160 Progress on the redevelopment project at Alford Roads Depot has been better than planned and has resulted in spend planned for in 2019/20 taking place in 2018/19. 9 Planned Maintenance - Council Wide Objectives 1,332 Essential replacement of failed plant (e.g. boilers, lighting installations, swimming pool filtration, etc.) together with additional unexpected costs during the construction phase on a number of projects which occurred after commitment of other works on the programme has resulted in the variance. 10 Workspace (151) Delay in progression with the project at Buchan House, Peterhead (Aberdeenshire element) and on key projects associated with the New Office Project has resulted in the variance. 11 Carbon Reduction - Council Wide Objectives (431) Variance has arisen due to a delay in fitting panels on Banchory Community Sports facility together with a delay in obtaining final structural options on 3 of the 8 schools where solar photovoltaic systems were to be fitted. 12 Learning Disabilities - Adaptation Centres (125) Delays in finalising the requirements for the Robertson Road Day Centre project has resulted in the underspend. Funding for project also comes from the Minor Works budget. 13 Social Work - Minor Works (139) Delays in finalising the requirements for the Robertson Road Day Centre project has resulted in the variance. Funding for project also comes from the Adaptation Centres budget. 14 Disabled/Elderly Housing Adaptations (Private Sector Housing Grant) (182) Underspend has arisen due to ability to utilise a one off revenue underspend on minor adaptations. 15 Banchory Sports Village (Community Sports Facility, Hill of Banchory) (1,053) Delays in concluding legal terms at the commencement of the contract were planned to be reduced through reprogramming but that was not entirely possible resulting in a reduction in expenditure planned in 2018/19.

16 Portlethen/Hillside PS Causeymounth Road Upgrading Works (151) Programme delays by energy provider on the diversion of a high voltage overhead cable delayed commencement of the roadworks project. 17 Early Learning Childcare (1140 Hours Projects) 400 Acceleration in pre-tender design work to align with the terms of the Scottish Government grant has resulted in the higher than forecast expenditure. 18 ECS Enhancements (684) This budget covers 25 individual projects some of which, following detailed investigation require to be phased and carried out to suit the schools operational requirements. This re-phasing has contributed to the expenditure variance in 2018/19. 19 Improved Disabled Access ( Education) (186) A number of identified projects required to be carried out during school holiday periods, and the re-profiling resulted in lower than forecast expenditure in 2018/19. 20 Kinellar Primary School (239) Protracted discussions with the main contractor on the final account for the project has meant that the final settlement was not concluded in 2018/19. 21 Kintore Primary School (408) Additional work out with the site requested by Scottish Water has not progressed due to legal issues, together with ongoing negotiations with the main contractor on the final account has resulted in the variance in 2018/19. 22 Markethill PS Replacement (170) Protracted discussions with the main contractor on the final account for the project has meant that the final settlement was not concluded in 2018/19. 23 Uryside Primary School (390) Protracted discussions with the main contractor on the final account for the project has meant that the final settlement was not concluded in 2018/19. 24 IS - Capital From Current Revenue (CFCR) 609 Equipment for vehicles and a contribution for an Ice Plant at Macduff Harbour along with building work contributions at Crow's Nest, Banchory and Saltoun Square, Fraserburgh were funded from revenue in 2018/19. 25 Uryside Meadows Paths 143 Completion of Phase 2 of the construction of paths which have been met entirely from grant contributions. Item: 6 Page: 115

26 Harbours, Coast & Flooding (528) Several savings were achieved as works progressed at landslip works at and Crovie. Several delays have been encountered with ongoing flood protection study commissions which meant additional requirements for stakeholder and public engagement. The studies are still on target to meet the Scottish Government deadline of December 2019. 27 Stonehaven Flooding Scheme (513) The Stonehaven Flood Protection Scheme capital spend projection lower than anticipated due to the contractors not mobilising as quickly as expected at the commencement of the project. 28 Aberdeen Western Peripheral Route (13,903) The final section of the AWPR successfully opened to traffic on 19 February 2019. The Council has still not expended its share of the preparatory works budget, largely due to continued position with landowners formally submitting claims for financial settlement of compulsory purchase orders. 29 Bridges & Structures (328) Resources were diverted to deal with works at Abbeyton Bridge which resulted in the deferral of planned works at Oatyhill. 30 Cycling and Walking (769) There were postponements on a number of schemes due to land acquisition issues and also as a result of a request for consultation with locals from Members. Construction of the Sauchen / Cluny Footpath was deferred as a result of delays incurred with the procurement of land. A reduction in budget carried forward is necessary as a result of Sustrans grant being available for one year only and not, therefore, transferable.

31 Drainage (207) Remeasurements of completed jobs resulted in an in expenditure being lower than originally planned. 32 Energy from Waste 622 Initial costs for project approved by Council on 7 March 2019. 33 Nestrans Contribution (675) Combined spend on City/Shire projects were lower than forecast which meant that the contribution was lower than forecast for 2018/19. 34 Roads Resurfacing/Reconstruction 857 Works amounting to £863,000 were funded from a grant contribution from the Scottish Government's Strategic Transport Scheme. Overall the programme of works were on target reporting a small variance of £6,000 carried forward to 2019/20. 35 Safety Initiatives (193) Land previously thought to be required to complete embankment work is no longer required and land acquisition for a carriageway widening scheme was unsuccessful. Works associated with B9170 Carriageway Widening have been deferred as negotiations continue regarding land linked with Interchange Hub. Remedial Works identified for A947 Route Improvement Strategy have also been deferred as the works are being looked at in a wider capacity following the outcome of discussions at the A947 MOWG.

36 Storm Frank Works Funded By Grant - Bridges and Flooding (172) Works due to be completed on Cambus O’ May scheme required to be re-profiled and will be completed in 2019/20 and 2020/21. 37 Street Lighting (176) Delays associated with procurement of land in Oldmeldrum have resulted in a project not progressing as anticipated and will be undertaken in 2019/20. Problems associated with the negotiation of a leasing agreement with NTS regarding Crathes project has slowed progress. Difficulties with the procurement of a replacement E-Scheduling System, which was to be funded via Nestrans. 38 Landfill, HWRC 1,590 The majority of the variance is attributable to works reimbursed by a third party. A number of equipment purchases and works planned for 2018/19 will take place in 2019/20. 39 Public Transport (196) Delays associated with the procurement of land in Oldmeldrum have resulted in the scheme not progressing as anticipated and this will be carried over into 2019/20. Delays associated with the negotiation of a leasing agreement with NTS regarding Crathes have delayed progress. Delays have also been encountered with the procurement of a replacement E-Scheduling System, which was to be funded via Nestrans. £158,000 of Nestrans funding is not eligible to be carried forward to 2019/20.

40 Vehicles 189 Replacement of vehicles was accelerated to mitigate maintenance costs. 41 Greenbanks Travellers Site (356) Due to the extent of works required, and the contract period, the original proposal was to carry out the works in two phases with a break between each phase while the park is open and operational. This was reviewed to carry out the project in one phase commencing when the site closes. Proposed start date 7 October 2019 with completion on 28 February 2020. 42 Burial Grounds (643) Lead in times for land requirements can vary, and delays have been experienced in Ellon, , , Boyndie and Inverallochy. Issues have also arisen with the planning application at Cross Poles War Memorial which will result in the scheme being deferred to 2019/20. 43 Digital Infrastructure (City Region Deal) (345) Business case submissions for the Duct Network and Full Fibre Network projects took longer to receive approvals from UK/Scottish Governments than anticipated. These projects will be advanced in 2019/20.

44 Capital Expenditure Accounted for in Revenue and Funded from Cash & Prudential 5,162 Expenditure that meets the capital definition identified in the service revenue accounts was higher than Borrowing anticipated. It was determined that funding of these costs should be considered under the Council's Medium Term Financial Strategy. Item: 6 Page: 116

ABERDEENSHIRE COUNCIL - 27 JUNE 2019 APPENDIX 4 NON-HRA CAPITAL - FINAL OUTTURN 2018-19

Revenue Funded from Cash & Prudential Borrowing

Business Services £000 Intangible (IT Systems) 254 Equipment 78 Building Upgrades 187 Sub Total 519

Education & Children's Services Building Upgrades 496 Car Park Resurfacing 45 Equipment 1,317 Sub Total 1,858

Health & Social Care Equipment 45 Intangibles (IT Systems) 46 Sub Total 91

Infrastructure Services Equipment 281 Resurfacing/Maintenance 8,490 Path Upgrades, Footbridge Installations & Stabalisation 280 Sub Total 9,051

Grand Total 11,519

Associated Income £000 Business Services (3) Education & Children's Services (36) Infrastructure Services (129) Health & Social Care (13) (178)

Net Total - Revenue Funded from Cash & Prudential Borrowing 11,341

Summary of 2018/19 - Capital Funded from Current Revenue

Education £000 Building Upgrades 42 PFI Lifecycle Maintenance 2,239 2,281

Infrastructure Services £000 Equipment 489 Building Upgrades 120 609

Associated Income £000 Infrastructure Services (267) (267)

Total - Capital Funded from Current Revenue 2,623

11,725