Agenda item

-        Strategic Director of Environment and Development Services to report.

Councillor Stone, The Leader, introduced a report by the Strategic Director of Environment and Development Services, which outlined the current position relating to the Waverley Link Road Major  Highway Scheme, which was currently in the Department for Transport’s (DfT) ‘development pool’ of schemes that were required to submit a ‘best and final funding bid’ by the 9th September, 2011

The report also outlined developments since late October, 2010, following the Comprehensive Spending Review, and set out amendments to the scheme previously submitted to the Department for Transport, the revised costs and associated quantified risks contained within the estimate. It also outlined the further public consultation that was undertaken on the scheme, which was one of the issues that the Department for Transport have sought particular clarification on. Members’ support was, therefore, sought for a ‘best and final funding bid’ to be submitted to the Department for Transport for an amended scheme that had significant benefits at a lower cost than previously proposed, whilst acknowledging the risks associated with the submission.

The details showing the total estimated cost of the proposed scheme and the funding contributions were set out in detail as part of the report.

There was a risk that the Department for Transport would consider that the amended scheme did not reduce their contribution enough and/or did not provide sufficient third party contributions, which may result in the amended scheme failing to receive Programme Entry. However, it was considered that further reductions to the cost estimate were not viable.

All the risk of any overspend in the delivery of the scheme would lie with the Council, as did the risk of any Part 1 (Land Compensation Act 1973) claims subsequent to the scheme being completed, however this was now normal practice associated with the procurement of major highway schemes. Included in the estimate was a quantified risk assessment (QRA) figure of approximately £1.165m – effectively a contingency against increased cost

The estimated cost also included an inflation element, even though market conditions for the construction industry were perceived to be very competitive and likely to continue to be so. Ultimately, however, the scheme was a major civil engineering project, and risks remained. However, it was anticipated that with sound risk management procedures and the QRA figure, that these could be contained within the available budget.

Company searches have also been undertaken in respect of the third party Section 106 agreements that were a part of the DfT funding requirements. Whilst the total scheme expenditure assumed that there would be a 10% contribution from third parties, the risk of business failure had been assessed as “high”, on account of a combination of an unfavourable audit opinion and a negative assessment of the health of the ultimate parent, UK Coal plc. However, in August, 2011, UK Coal plc published their unaudited six monthly results which showed some improved performance in the group’s results. It was a Department for Transport requirement of the bidding process that the Council have to agree to underwrite any contributions that did not materialise. Therefore, should the company cease to trade the Council would have to attempt to recover this money as a result of insolvency proceedings, or alternatively fund this shortfall itself when the potential for recovery of monies had been exhausted.

The implementation of the scheme was also subject to securing the required planning permission and confirmation of Compulsory Purchase Orders for land and property that the Council could not acquire through negotiation and any Side Roads Order that may be required. Should objections to the CPO/SRO be received a Public Inquiry would be required.

Cabinet Members suggested that consideration be given to moderate adjustments to the link road to address concerns raised as part of the consultation.

Resolved:-  (1)  That, subject to the consideration of the results of the consultation, the ‘best and final funding bid’ (BAFFB) to the Department for Transport be approved for the implementation of an amended scheme, with the bid to seek £6.961m from the Department for Transport, with a £0.751m contribution from the Council’s Local Transport Plan Integrated Transport (LTP IT) allocation, and developer contributions of £0.857m.

(2)  That as part of the detailed design, officers consider the potential to make further changes to the alignment of the road to reduce the impact of the scheme on the Recreation Ground, to address concerns raised as part of the consultation exercise.

(The Mayor agreed to the exemption from call-in on 7th September, 2011 in order to enable the bid to be received by the Department for Transport by 12 Noon on 9th September, 2011, as failure to submit the bid would mean that the Department for Transport would not consider the scheme further)