Devon County Council has reported £105m of “slippage” in its capital programme for the last financial year, with the majority of the underspend being in climate and transport projects.
A report presented to Devon’s Cabinet yesterday (9 May) outlined the progress of the authority’s capital programme in the 2023/24 financial year, including commitments brought forward from 2022/23.
Of the approved £263.6m capital programme, only £158.6m was spent, resulting in an underspend of £105m, the report revealed.
The majority of the underspend was in the climate change, environment and transport elements of the programme, at £79m.
Devon stated that whilst “slippage” in this directorate is “not unusual” considering the size of the capital programme in this area at £225m, the underspend in 2023/24 was “larger than in recent years”.
The report explained that 57% of the slippage in the climate change and transport directorate relates to two projects, the North Devon Link Road and the South-West Exeter Housing Infrastructure Fund.
For the North Devon Link Road project, the report outlined multiple factors for the lack of progress including resourcing issues and extreme weather. Delays to the South-West Exeter Housing Infrastructure Fund were due to planning permission “challenges”, the report stated.
This comes as Exeter City Council also reported “challenges” across its “entire” capital programme last month, as the authority only spent £8.6m out of an allocated £70m in 2023/24.
Exeter explained that the council’s lack of progress in its capital programme was due to “previous resourcing limitations”.
Alongside this, at Room151’s Latif North conference in March, 70% of delegates reported “substantial” slippage in their capital programmes, with 30% seeing “a little” slippage.
Delegates explained that in the context of the last couple of years, the Covid-19 pandemic, ongoing global tensions and inflationary pressures have all caused supply chain issues and labour shortages, which have ultimately impacted councils’ capital programmes.
LOBO loan repayment
Devon County Council’s report also highlighted that the authority chose to repay its Lender Option Borrower Option (LOBO) loan of £46.5m during the previous financial year following the lender giving notice that it was going to increase interest rates.
Whilst some short-term borrowing was needed to repay the loan, the overall reduction in interest costs in 2023/24 was £690,000, the report explained.
Following this repayment, Devon County Council no longer holds any LOBO loans, with its total external borrowing valued at £474.4m, a reduction of £33.5m since 2022/23.
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