Agenda item

(Cabinet Member with Special Responsibility Councillor Hanson)

Report of Assistant Chief Executive

(Cabinet Member with Special Responsibility Councillor Hanson)

Cabinet received a report from the Assistant Chief Executive to update Members on the design phase of the proposed River Lune flood defence scheme and to consider the current scheme costs and status of all secured and potential match-funding contributions from external sources. The report considers the council's funding position on the basis that there are currently insufficient external resources available to fund the estimated construction cost. On the information presented on scheme costs and funding, Members are asked whether to fund the projected balance of scheme costs and whether to proceed towards a construction contract and project implementation. 

The options, options analysis, including risk assessment and officer preferred option, were set out in the report as follows:

Officer Preferred Option (and comments)

In Option 1 Members accept there is insufficient funding to enable the project to proceed,it should be noted that major businesses have for some time been encouraged to consider the major benefits of investing in the scheme and Members have previously noted that there may be insufficient funding to enable the project to proceed.  However, the private sector response means the funding gap cannot be bridged. Even with additional business contributions there would still be a shortfall, and, if the scheme is to proceed the only realistic option is for the city council to provide funding.    

If Members wish to proceed the critical question is the affordability and scale of the council’s contribution.  The preferred option is Option 2: Members agree:  a contribution of £847K towards the capital costs of the scheme; to accept an offer of ERDF funding and for officers to formally secure the anticipated business contributions; officers complete the design/target cost package and agree a contract for Stage 2 capital works with VBA Joint Venture Limited (subject to the approval of enough funding to meet scheme costs).  

Option 2 will result in an additional cost of £17K per annum to the council’s challenging budgetprofile but allows officers to progress the construction contract details, bring more certainty to funders/deliverability and ensures the challenging contracting deadlines have the best prospect of being achieved.  It provides an incentive to secure private sector contributions – which are still “at risk” and challenging to secure - and savings can be driven through the construction period. There is also a “back-stop” of February Cabinet should any issues arise prior to contract that require Member input.

Should Members consider a contribution of this scale unaffordable Option 3 Members agree: a lower council contribution and ask officers to secure additional private contributions and/or cost savings to meet the balance of scheme costs can be considered.  However, this imposes additional pressure on timescales and would also mean that the “tree-felling” window was missed increasing costs as no substantive work could be done over summer. Officers would report back to February Cabinet.

Under Stage 1 officers, with EA approval, have to date spent £550K (comprising £200K FDGiA and £350K North West Regional Flood and Coastal Committee (RFCC)) on design development.  A further £133K FDGiA funds will be required to take the scheme to the full details for Stage 2 construction contract.  These funds have been approved (refer to Financial Implications).   

Councillor Hanson proposed, seconded by Councillor Clifford:-

“That the revised recommendations, as set out below, be approved:-

(1)             That Members note that spend to date on Stage 1 is £550K (comprising £200K FDGiA and £350K North West Regional Flood and Coastal Committee funds) and that a further £133K FDGiA funds will be expended to develop the detail required for the Stage 2 construction contract.

(2)             That Cabinet agree a contribution of up to £847K towards the capital costs of the scheme, and growth of £17K per annum revenue costs of this capital investment should the scheme proceed to contract;

(3)             That in order to ensure major construction work can proceed over the spring/summer period and avoid the need for contractual stand-still to account for nesting birds, a sum of £92K of the council’s approved capital funding is used to undertake tree felling, site-clearance and other preparatory works in anticipation of the main contract being agreed.

(4)             That on receipt of a formal letter the council accepts an offer of up to £3.85M ERDF funds for the scheme, formal acceptance of the offer being delegated to the Section 151 Officer.

(5)             That Officers move to formally secure the anticipated business contributions via contract deed;

(6)             That Officers complete the design/target cost package and a contract is agreed for Stage 2 capital works with VBA Joint Venture Limited (subject to securing the funding to meet scheme costs as set out in the table in paragraph 2.17 of this report and acceptance of this by Section 151 Officer) 

(7)             That delegated authority be given to the Section 151 Officer to update the General Fund Revenue Budget and Capital Programme to reflect the decisions as set out in the above recommendations.”

Councillors then voted:-

Resolved unanimously:

(1)          That Members note that spend to date on Stage 1 is £550K (comprising £200K FDGiA and £350K North West Regional Flood and Coastal Committee funds) and that a further £133K FDGiA funds will be expended to develop the detail required for the Stage 2 construction contract.

(2)          That Cabinet agree a contribution of up to £847K towards the capital costs of the scheme, and growth of £17K per annum revenue costs of this capital investment should the scheme proceed to contract;

(3)          That in order to ensure major construction work can proceed over the spring/summer period and avoid the need for contractual stand-still to account for nesting birds, a sum of £92K of the council’s approved capital funding is used to undertake tree felling, site-clearance and other preparatory works in anticipation of the main contract being agreed.

(4)          That on receipt of a formal letter the council accepts an offer of up to £3.85M ERDF funds for the scheme, formal acceptance of the offer being delegated to the Section 151 Officer.

(5)          That Officers move to formally secure the anticipated business contributions via contract deed;

(6)          That Officers complete the design/target cost package and a contract is agreed for Stage 2 capital works with VBA Joint Venture Limited (subject to securing the funding to meet scheme costs as set out in the table in paragraph 2.17 of this report and acceptance of this by Section 151 Officer) 

(7)          That delegated authority be given to the Section 151 Officer to update the General Fund Revenue Budget and Capital Programme to reflect the decisions as set out in the above recommendations.

Officers responsible for effecting the decision:

Assistant Chief Executive

Interim Financial Services Manager

Reasons for making the decision:

The proposals provide a comprehensive solution to fluvial/pluvial flood risk and will provide a range of economic, investment and environmental benefits, setting out a clear council commitment to businesses/asset holders in the area and incentive for private contributions to be secured. There remains an acute need to promote this scheme to help secure its delivery and the proposed course of action represents the most appropriate route towards achieving a positive outcome, both meeting the council’s regeneration objectives and having wider social, economic and environmental impacts.