4.0 CAPITAL FIVE YEAR SPENDING PLAN

4.1 OVERVIEW

4.1.1 The Capital Plan sets out the Council’s longer term capital investment plans. These plans support the Council’s strategic and service objectives by maximising the assets and infrastructure necessary to support service delivery whilst minimising the impact on the revenue budget. Sitting behind the Plan is the Council’s Capital Strategy which provides a high-level overview of how capital expenditure, capital financing and treasury management contribute to this end.

4.1.2 As reported in the Capital Expenditure Outturn and Financing 2024/25 report (27 May 2025), the focus in 2025/26 is on establishing the Council’s future capital investment needs and priorities and so provide a more realistic reflection of the capital investment programme.

4.1.3 At Q1, a review of those budgets that were subject to general consent in May 2022, and which were still evident in the MTFS Capital Plan (January 2025), was undertaken and those which were either complete, no longer viable or had no formal approval were removed. This resulted in the release of reserve and capital receipt funding totalling £10.1m for reinvestment in the Council’s future investment needs whilst the removal of £5.1m of borrowing approvals will reduce anticipated future borrowing costs. Work continues to monitor the remaining legacy budgets within the Capital Plan as those schemes conclude.

4.1.4 Key issues to note at Q2 include:

· The introduction of financial year 2028/29 to return to a five year Capital Plan

4.2 REFRESHING THE CAPITAL PLAN

4.2.1 The schemes and programmes within the Capital Plan are reviewed regularly to track whether they are being delivered to both schedule and budget. Refreshed on a quarterly basis, this report details the Capital Plan for Q2 2025/26, 1 July to 30 September 2025, and reflects the additions and adjustments, including the reprofiling of budgets, since the last version was approved. This quarter, financial year 2028/29 has been introduced to return to a five year Plan.

4.2.2 The Council is currently planning to invest £294.8m on capital schemes across the County in 2025/26 (a reduction of £39.5m on Q1 due, mainly, to reprofiling of budget to reflect delivery timescales) and £778.1m, in total, over the capital plan period (+£8.6m on Q1).

4.2.3 The latest Capital Plan is set out, by capital board, at Appendices A-D. A summary of gross expenditure, by board, is summarised in the following table:

Additions to the Capital Plan this Quarter

4.2.4 Only individual additions to the Capital Plan that are of a value in excess of £250k are detailed in this report.

4.2.5 The following table highlights updates referred to in earlier reports and new additions that have been added to the Capital Plan this quarter:

Capital Board	Scheme	Detail	£k
Corporate Property & Other	Brierley Homes Loan Facility Agreements (2)	Addition of the 2 loan approvals since Q1: £1.4m relating to affordable housing developments and £2.0m increase to original loan facility (now £27.0m)	£3,400.0
Corporate Property & Other	Richmond Swimming Pool	Executive approved funding to address works essential to accommodate reopening (Oct 2025)	£1,200.0
Highways & Infrastructure	Consolidated Active Travel Fund	Addition of 2025/26 DfT grant	£873.0
Corporate Property & Other	Leisure Centre Solar Panel Installations	Mayoral Renewal Fund grant of £311.3k supported by £207.6k Property revenue contribution to install solar panels at Whitby Sports Village, Thirsk and Ripon centres with a view to generating revenue savings.	£518.9

4.3 CAPITAL BOARD UPDATES

4.3.1 Every effort is made to identify, assess and minimise the level of risk associated with a scheme or programme within the Capital Plan. Larger schemes and programmes are subject to assessment and monitoring under the Council’s Risk Management Strategy.

4.3.2 Supply chain, inflationary and other cost pressures are currently the most common risk factors across the Capital Plan, and some significant issues are being experienced across a number of areas. Tender prices and construction costs are carefully monitored to assess the potential for any negative impact on the delivery of individual projects, particularly those large in scale, and the programme as a whole. The Corporate Director Resources has been granted delegated authority to draw upon the Capital Supply Chain Reserve which has been established to manage these risks.

4.3.3 Organisational change and wider transformation bring with them the risk of capacity to deliver, resulting in the continuous review of delivery timescales and reprofiling of budgets across the 5-year Capital Plan period.

4.3.4 Updates from each capital board follows, highlighting by exception those schemes and programmes deemed higher risk by nature of their complexity of delivery and funding.

4.4 GROWTH & REGENERATION

4.4.1 Harrogate Convention Centre - Studio 2 Redevelopment The tender document has now been issued with responses due back mid-November. At that point, submissions will be evaluated, and the project cost provided by the successful bidder will inform the final business case for approval to go ahead and the funding source to be determined.

4.4.2 UK / Rural England Shared Prosperity Fund The SPF funds are being managed by the York & North Yorkshire Combined Authority with NYC delivering an approved programme worth £4.1m which will be reported through the Economic Development Capital Plan. The application of the grant funding within this delivery programme is time limited to the 2025/26 financial year.

4.4.3 Catterick Garrison Levelling Up Fund Construction is progressing well with Wilmott Dixon now established on site. Piles are complete, and foundation pits are currently under construction. High value Compensation Events relating to ground risk have not materialised. The Land Transfer Notice is in progress with DIO/MOD with an anticipated completion date of the end of October 2025. Planned completion is set for December 2026 but two issues have been identified that could potentially cause delay relating to utilities and street lighting, but mitigations are in place to reduce any impact/risk.

4.4.4 Towns Fund Projects

· The Station Gateway Project, Scarborough: The draft stage 3 report is under review by the project team in consultation with Network Rail and station operators. The cost of the scheme is predicted to be well within the funding bracket. Planning permission will be submitted this year with construction currently programmed to start in 2026/2027.

4.5 HIGHWAYS & INFRASTRUCTURE

4.5.1 Kex GillThe original contingency budget (£6.4m) has now been fully utilised. Executive agreed additional budget in May 2025 to cover known, existing compensation events (CEs) and to provide some additional contingency. To date, £2.8m of this additional budget has been utilised but further CEs and claims for additional costs have been submitted by the contractor. A significant proportion of these are disputed by NYC and are being challenged. At present the total revised budget is forecast to be sufficient, but the situation is still subject to potentially significant change. The contractor initiated adjudication proceedings on CE-1, claiming £3.1m was due to them rather than the settled amount of £2.3m, an increase of £834k. However, the adjudicator found fully in favour of the Council, so no additional payment is required.

4.5.2 Transforming Cities Fund The Skipton scheme has been on the ground since March and is progressing well and within budget, with completion scheduled for December 2025. The contract for the Selby scheme has recently been signed with the contractor and works, which are currently within budget, are in the early stages of commencement on site. The legal challenge in respect of the Harrogate scheme was unsuccessful but has resulted in a delay to a report being presented to Executive seeking approval to enter into contract. This is now scheduled for consideration in November.

At the meeting of 4 February 2025, Executive noted that, if the final costs of the Selby scheme remained over budget after value engineering, up to £2m of additional funding would be required. It was suggested that this be met from Council reserves. However, the report did not stipulate which reserve this should be committed against. This report proposes that £2m should be committed against the Strategic Capacity Reserve and that any approval to draw upon this £2m be delegated to the Corporate Director - Resources in consultation with the Executive Member for Highways and Transportation and the Executive Member for Finance. Requests are to be made via an update report to the Corporate Director – Resources, and any approval given to draw upon the commitment will be reflected in the Capital Plan at the next opportunity.

4.5.3 Harbours

Eskside Wharf Pile Replacement: work is underway to review design and costs, before a capital investment requirement can be presented in the coming months.

Whitby Maritime Hub: work is progressing well with no cost increases due to compensation events to date. The project is currently on budget and scheduled to complete on time in April 2026, with opportunities for grant funding to pay for interior fit-out and solar panels being pursued.

Scarborough West Pier Redevelopment: Projected costs are above the currently approved budget by approximately £2.6m. The professional services contract is due to be awarded at the beginning of November. A two-phase approach to planning and construction is being pursued and works are currently forecast to be complete ahead of the 31 March 2028 deadline for spending of Towns Fund grant.

Scarborough West Pier Pile Repairs: £1.8m budget approved by Executive in July 2025 to fund repairs that would extend the life of the piles by 10 years. The decision was subject to call but, following the completion of the call in process, works are now underway.

4.6 HOUSING

HRA

4.6.1 Decent Homes expenditure to date is 15% below the expected profile of spend, which appears to be mainly driven by activity, rather than cost. This is expected to be back on track by the end of the financial year based on the current pipeline of works, with an estimated value of £10.1m for EPC A-C properties, and £4.4m for EPC D-G. Works to 250 void properties are to be commissioned through framework agreements, which will help to drive up activity in the coming months. A proposed virement is recommended of £1.6m from Compliance to Decent Homes to support the growing pipeline of activity.

4.6.2 Within the Housing Delivery Programme, average costs of projects and pipeline to date remain below assumptions made within the business plan (£209k v £222k) and good grant/s106 intervention rates provide flexibilities in the remaining programme. Taking into account Right to Buy disposals, 179 further properties are required in the plan to achieve 500 additionality.

4.6.3 The Social Housing Decarbonisation Wave 2 programme of works has been reviewed to ensure scheme costs remain within cost caps allowable within the programme funding; this means increasing the number of properties which require lower cost measures. This should result in a further 42 properties being included within the programme, increasing the total from 150 to 192.

GENERAL FUND NON-HRA HOUSING

4.6.4 The Home Upgrade Grant 2 (HUG2) scheme has successfully completed with project costs and funding reconciled.

4.6.5 The Temporary Accommodation programme is to be reviewed to ensure delivery targets are still expected to meet service demands and are deliverable to support planned savings. The estimated programme was expected to have 35 units within stock and tenanted by 25/26; this is currently on track to deliver 28 by the end of the financial year.

4.7 CORPORATE PROPERTY / OTHER

4.7.1 Following an update on the procurement of replacement vehicles and the relatively long lead-in time for delivery of specific vehicles, the Vehicle Replacement budget has been reprofiled moving £4.3m from 2025/26 to 2026/27.

4.7.2 As flagged at Q1, the spend has been reprofiled for the Care and Support Hubs moving £4.5m from 2025/26 to 2026/27. This is in line with programme delivery milestones.

4.7.3 Fire Safety Compliance Work completed with £220k released back to revenue reserves.

4.8 CAPITAL GOVERNANCE

4.8.1 The intention is to ensure that there is a methodical approach to developing proposals for new capital schemes to be added to the Capital Plan and, in particular, the process for securing funding.

4.8.2 The Capital Forward Plan and procedures for (i) proposing new schemes for capital investment and for (ii) seeking approval to apply for and accept external funding are currently under review. In the short term, proposals for investment are being considered as they emerge.

4.8.3 The Council’s approach to capital prioritisation and longer-term planning will be considered as part of the next Medium Term Financial Strategy.

4.8.4 In addition, a number of actions to improve capital project governance have been included in the 2024/25 Annual Governance Statement.

4.9 FINANCING THE REFRESHED CAPITAL PLAN

4.9.1 The financing of the Capital Plan is realised, primarily, through the receipt of Government grants. In addition, the Council can utilise revenue contributions, reserves, capital receipts from the sale of assets such as surplus land and buildings, and, as a last resort, it can borrow from either the Public Works Loan Board or money markets.

4.9.2 The main grants received and included in the Capital Plan relate to Highways, Housing and Schools and, as such, the Council’s Capital Plan can be heavily influenced by Government department priorities. Grants, in total, fund 70% of the total 2025/26 Capital programme. Where confirmed, grants have been added to the Capital Plan in the years to which they are due to be received.

4.9.3 Revenue contributions to capital budgets are also reflected in the associated revenue budgets.

4.9.4 The following table shows the updated financing position:

4.10 CAPITAL RECEIPTS AND FUTURE AVAILABILITY OF CAPITAL RESOURCES

4.10.1 The Council's policy on capital receipts is such that all receipts received in year from the sale of land and property assets be credited to the Capital Receipts Unapplied Reserve at the end of the financial year. This reserve is to be used to support future new capital investment which will be the subject of reports to Executive and/or reduce capital borrowing, the latter leading to savings in the cost of debt financing in the Revenue Budget/MTFS.

4.10.2 The current Capital Receipts Unapplied position, after earmarked receipts have been applied to the financing of capital expenditure and before any decisions have been taken as to recommendations in this report, is as follows:

4.10.3 The monitoring of realised capital receipts combined with the forecasting of potential future receipts supports future financing decisions. The timing of future receipts and the amounts realised against forecast remain fluid which brings with it a risk of those forecast receipts not being realised. As a result, this is monitored on a regular basis throughout the year.

4.10.4 Looking ahead, the capital investment requirements of the Council are expected to be considerable although further work is needed to refine and prioritise spending in line with the Council Plan and emerging risks. Creating financial capacity whilst balancing the need for a sustainable revenue budget will be an on-going challenge, as the medium-term financial strategy is developed and planned savings are delivered.

4.11 RECOMMENDATIONS

The Executive is recommended to:

a) Approve the refreshed Capital Plan summarised at paragraph 4.2.3; and

b) Approve the proposed committing of £2m of Strategic Capacity reserve to fund any overspend relating to the Selby Transforming Cities scheme and the delegation of the approval to draw upon that £2m to the Corporate Director - Resources in consultation with the Executive Member for Highways and Transportation and the Executive Member for Finance as summarised at paragraph 4.5.2.

Appendices – Latest Capital Board Programme Summaries

A - Growth & Regen

B - Highways and Infrastructure

C - Housing

D - Corporate Property and Other