PARKSIDE OBC SUPPORTING INFORMATION
1. Site Location Plan
2. Value for Money Report
3. Traffic Modelling Report
4. Detailed Programme
5. Route Options Drawing
6. Letters of Support
7. AECOM - Parkside Logistics & RFI Study
8. St. Helens Comprehensive Equality Policy
9. St. Helens Procurement Policy
10. Cost Plan/Estimates
11. Sector 151 Letter
12. St. Helens Council Statement of Accounts 2015
13. Organogram
Parkside Logistics and Rail Freight Interchange Study August 2016
AECOM 1
January 2016
Project number 60479791
AECOM
This study has been conducted by AECOM and Cushman & Wakefield on behalf of St. Helens Council to investigate the feasibility of delivery options for a road and rail-linked logistics development on land at the former Parkside colliery site. The study will help to inform and advise the preparation of the St. Helens Local
Plan 2018-2033.
AECOM Parkside Logistics and Rail Freight Interchange Study
Quality information Document name Ref Prepared for Prepared by Date Reviewed by
Parkside Logistics and Rail First draft St Helens Council James Mayes 27/05/2016 Geoff Clarke Freight Interchange Study
Parkside Logistics and Rail Revised St Helens Council James Mayes 08/06/2016 Michael Whittaker Freight Interchange Study First draft
Parkside Logistics and Rail Final draft St Helens Council James Mayes 05/07/2016 Geoff Clarke Freight Interchange Study
Parkside Logistics and Rail Final St Helens Council James Mayes 01/08/2016 Geoff Clarke Freight Interchange Study
Parkside Logistics and Rail Final St Helens Council Michael Whittaker 01/09/2016 Geoff Clarke Freight Interchange Study
This document has been prepared by AECOM Limited for the sole use of our client (the “Client”) and in accordance with generally accepted consultancy principles, the budget for fees and the terms of reference agreed between AECOM Limited and the Client. Any information provided by third parties and referred to herein has not been checked or verified by AECOM Limited, unless otherwise expressly stated in the document. No third party may rely upon this document without the prior and express written agreement of AECOM Limited.
AECOM Parkside Logistics and Rail Freight Interchange Study
Contents Glossary ...... 2 Executive Summary ...... 4 1. Introduction ...... 14 1.1 Aim of the Study ...... 14 1.2 ATLANTIS Programme ...... 14 1.3 Site Location and History ...... 14 1.4 Previous Planning Policy Evidence Base Work Conducted ...... 16 1.5 Employment Land Evidence Base Work ...... 16 1.6 Stakeholder Engagement ...... 18 1.6.1 Workshop ...... 18 1.6.2 Online Survey ...... 19 1.6.3 One-to-One Discussions ...... 20 1.7 Competing sites ...... 20 2. Transport and Planning Policy Assessment ...... 23 2.1 Introduction ...... 23 2.2 European Policy ...... 23 2.2.1 White Paper 2011: Roadmap to a Single Transport Area – Towards a competitive and resource efficient transport system ...... 23 2.3 National Policy ...... 23 2.3.1 National Policy Statement for National Networks (2015) ...... 23 2.3.2 National Planning Policy Framework (2012) ...... 27 2.4 Regional ...... 28 2.4.1 Transport for the North Freight and Logistics Strategy ...... 28 2.4.2 Liverpool City Region (LCR) Growth Deal (2014) ...... 29 2.4.3 A Transport Plan for Growth ...... 30 2.4.4 Liverpool SUPERPORT Market Analysis Land and Property Report (2014) ...... 32 2.4.5 Liverpool City Region Long Term Rail Strategy (2014) ...... 32 2.5 Local Policy ...... 32 2.6 Green Belt Implications ...... 35 2.7 Emerging Local Plan ...... 35 2.8 Key Research Papers ...... 36 2.8.1 Mode Shift Benefit Values – Technical Report and Refresh...... 36 2.8.2 Double-Deck Trailers: A Cost-Benefit Model Estimating Environmental And Financial Savings ...... 36 3. Market Demand and Supply Assessment ...... 38 3.1 Introduction ...... 38 3.2 National and Regional Market Overview ...... 38 3.3 Drivers of Demand ...... 39 3.4 Document Review – Land Demand Indicators ...... 40 3.5 Market View of the Parkside Site ...... 40 3.6 The Demand for Rail-Linked Property ...... 42 3.7 Stakeholder Views on the Parkside Site...... 44 3.8 Existing and Planned (S)RFI’s ...... 46 3.8.1 Catchment Area / Wider Catchment Area ...... 46 3.8.2 Nationally ...... 46
AECOM Parkside Logistics and Rail Freight Interchange Study
3.8.3 Comparison of Alternative Sites ...... 48 3.9 Summary ...... 51 4. Operational Requirements ...... 53 4.1 Introduction ...... 53 4.2 Major Infrastructure Components ...... 53 4.2.1 Rail Support Infrastructure ...... 53 4.2.2 Cargo Transfer Infrastructure ...... 54 4.2.3 Road Support Infrastructure ...... 55 4.3 Terminal Equipment ...... 56 4.4 Ancillary Services ...... 59 4.5 Specification and Functionality of Potential Parkside Logistics and Rail Freight Interchange ...... 60 4.5.1 Specification ...... 60 4.5.2 Functionality ...... 60 5. Rail Access ...... 62 5.1 Introduction ...... 62 5.2 Existing Rail Infrastructure ...... 62 5.3 Current services (2016) ...... 63 5.3.1 Chat Moss ...... 63 5.3.2 West Coast Mainline ...... 64 5.4 Future (2017-2018) services ...... 64 5.4.1 Chat Moss ...... 64 5.4.2 West Coast Mainline ...... 65 5.5 Post-HS2 (2026-33) ...... 66 5.6 Rail freight forecasts ...... 66 5.7 Committed / Planned Infrastructure Upgrades ...... 69 5.7.1 Northern Hub ...... 69 5.7.2 Strategic Freight Network ...... 69 5.8 Potential Origin/Destinations ...... 69 5.8.1 Chat Moss Line (East-West Route) ...... 69 5.8.2 West Coast Main Line ...... 70 5.8.3 Stakeholder Views ...... 70 5.9 Potential Site Access ...... 72 5.9.1 Potential Access Routes ...... 73 6. Road Access ...... 77 6.1 Introduction ...... 77 6.2 Potential Site Access Options ...... 77 6.3 Summary of Site Access Options ...... 80 6.4 Local Highway Network ...... 80 6.5 Strategic Road Network ...... 81 6.6 Current and Forecast HGV Traffic Flows ...... 83 6.6.1 Impact of Rail Movements on HGV Traffic Flows ...... 84 6.7 Summary of Highway Access Issues ...... 85 7. Public Transport and Active Travel ...... 88 7.1 Introduction ...... 88
AECOM Parkside Logistics and Rail Freight Interchange Study
7.2 Public Transport Services ...... 88 7.2.1 Bus Network and Services ...... 88 7.2.2 Rail Network and Services ...... 89 7.2.3 Gap Analysis – Challenges and Opportunities ...... 91 7.2.4 Identification of Options ...... 91 7.3 Active Travel Routes ...... 92 7.3.1 Cycle Network ...... 92 7.3.2 Walkable Routes ...... 92 7.3.3 Gap Analysis – Challenges and Opportunities ...... 93 7.3.4 Identification of Options ...... 94 7.4 Travel Times ...... 94 7.5 Summary ...... 94 8. Options Development ...... 96 8.1 Introduction ...... 96 8.1.1 Economic Modelling ...... 96
8.1.2 CO2e Emissions Assessment ...... 97 8.1.3 Mode Shift Benefit Assessment (Sensitive Lorry Miles) ...... 97 8.2 Option 1...... 99 8.2.1 Indicative layout ...... 99 8.2.2 Rail access ...... 99 8.2.3 Broad traffic generation ...... 100 8.2.4 Road access ...... 100
8.2.5 CO2e Savings and Mode Shift Benefit...... 101 8.2.6 Economic viability assessment ...... 101 8.3 Option 2...... 103 8.3.1 Indicative layout ...... 103 8.3.2 Rail access ...... 103 8.3.3 Broad traffic generation ...... 103 8.3.4 Road access ...... 104
8.3.5 CO2e Savings and Mode Shift Benefit...... 104 8.3.6 Economic viability assessment ...... 105 8.4 Option 3...... 106 8.4.1 Indicative layout ...... 106 8.4.2 Rail access ...... 106 8.4.3 Broad traffic generation ...... 107 8.4.4 Road access ...... 107
8.4.5 CO2e Savings and Mode Shift Benefit...... 107 8.4.6 Economic viability assessment ...... 108 8.5 Option 4...... 109 8.5.1 Indicative layout ...... 109 8.5.2 Rail access ...... 110 8.5.3 Broad traffic generation ...... 110 8.5.4 Road access ...... 110
8.5.5 CO2e Savings and Mode Shift Benefit...... 111
AECOM Parkside Logistics and Rail Freight Interchange Study
8.5.6 Economic viability assessment ...... 112 8.6 Potential Environmental Impact ...... 113 8.7 Policy compliance ...... 116 8.8 Pros and Cons of the Rail Terminal being on the West or East of the M6 ...... 117 8.9 What has Changed Since the Last Planning Application? ...... 119 9. Conclusions and Recommendations ...... 121 9.1 Transport and Planning Policy Assessment ...... 121 9.2 Market Demand and Supply Assessment ...... 121 9.3 Rail Access ...... 122 9.4 Road Access ...... 122 9.5 Green Belt Implications ...... 123 9.6 Core Strategy Policy CAS 3.2 Amendments ...... 123 9.7 Summary ...... 125
AECOM
Parkside Logistics and Rail Freight Interchange Study
Glossary
AECOM 1 Parkside Logistics and Rail Freight Interchange Study
Glossary
Term Definition Strategic Rail Freight A large multi-purpose rail freight interchange and distribution centre linked into both the Interchange (SRFI) rail and trunk road system. (See Section 2.2.1 for SRFI qualifying criteria as per the National Planning Statement). SMART Motorway A section of motorway, which uses active traffic management techniques such as variable speed limits and hard shoulder running at busy times to increase capacity. Strategic Road Nationally significant roads used for the distribution of goods and services, and a Network (SRN) network for the travelling public. Highways England manages the SRN. W8 Gauge Rating The minimum rail loading gauge which allows for the transportation of high cube containers. SRFIs must be connected to a railway line with at least W8 gauge rating. Primary movements Truck movement from Regional Distribution Centre to Regional Distribution Centre. Primary – local “Last leg” road movements where the containers are unloaded from a train and then movements taken locally to Regional Distribution Centres. Secondary Truck movement from Regional Distribution Centre to other local warehouses or direct movements to stores. Small Rail Freight Rail freight terminal facilitating 1-3 trains per day Terminal Medium Rail Freight Rail freight terminal facilitating 4-8 trains per day Interchange Large Rail Freight Rail freight terminal facilitating 9+ trains per day Interchange
CO2e All greenhouse gas emissions eg Methane, Ozone, Nitrous Oxide converted to their
CO2 equivalent according to their global warming potential e.g. 1Kg of methane is
equivalent to 4kg of CO2 therefore 1kg Methane is 4kg CO2e Active travel An approach to travel and transport, which focuses on physical activity (e.g. walking and cycling); as opposed to carbon-dependent means. Loading gauge The height and width profile of a rail route. Rail siding A low-speed track section, which is distinct from the main line, branch line or spurs. Sidings may connect to through track or to other sidings at either end. Tri-modal terminal A freight terminal which is connected to three transport ways for example road, rail and inland waterway. Intermodal transport Transportation using two or more transport modes with goods transported in intermodal loading units (ILUs) such as containers to avoid the handling of goods during transit. Pad tracks The section of track at an intermodal rail terminal which is accessible to trucks for loading and unloading. Pantograph A device that collects electric current from overhead lines for electric trains. Locomotive A powered railway vehicle for pulling trains. Staging areas An area for temporary container storage based on a calculated percentage of containers handled and the average dwell time in the terminal. Lifting equipment Mechanical handling equipment used in intermodal terminals for the transfer of containers. Examples include rail-mounted gantry cranes, and reach stackers. Shunting Refers to movements made on private land e.g. the movement of equipment or containers at a transport depot or terminal. Rail loop A place on a single line railway where trains travelling in opposite directions can pass each other. Headways A measurement of the minimum possible distance or time between trains, without a reduction in speed. Semi fast service A direct service between two stations, which makes no stops in between. Stopping service A passenger rail service, which stops at all intermediary stations on its route.
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Parkside Logistics and Rail Freight Interchange Study
Executive Summary
01
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Executive Summary
Introduction This study has been conducted by AECOM and Cushman & Wakefield on behalf of St. Helens Council to investigate the feasibility of delivery options for a road and rail-linked logistics development on land at the former Parkside colliery site. The study will help to inform and advise the preparation of the St. Helens Local Plan 2018-2033 and has therefore been conducted in compliance with the National Planning Policy Framework (NPPF) and the Planning Practice Guidance (PPG).
Since the colliery was decommissioned in 1993, there has been interest in bringing the site forward for development, with planning applications submitted for a Strategic Rail Freight Interchange (SRFI). In 2010 background papers were prepared by consultants Scott Wilson (now AECOM) to support the identification of the site as a strategic location for a SRFI in the St. Helens Core Strategy (2012).
Transport and Planning Policy Assessment As is shown in the analysis presented in Chapter 2 the development of new rail-linked logistics is strongly supported at both a national and regional policy level. The Parkside site itself is also named specifically in the Transport for the North Freight Strategy (2016) as a site suitable for consideration of rail freight interchange viability and is identified in the Liverpool City Region Growth Plan and Strategic Economic Plan (2014) as one of the key projects in delivering SUPERPORT.
Market Demand and Supply Assessment As a site adjacent to the M6 and with the benefit of significant scale, the Parkside site best lends itself to logistics and distribution uses.
It is clear from the market demand and supply assessment and stakeholder engagement that there is sufficient demand for a SRFI in the North West. Nationally the demand for both warehouses and rail freight interchanges is along the M6/M1 corridor between Manchester and London.
Stakeholders are also very positive about the site’s feasibility as a SFRI. This is mainly due to its unrivalled ability to serve both North-South intermodal flows on the West Coast Mainline and East-West intermodal flows on the Chat Moss line. The site can also receive trains from all directions (north, south, east and west) which provides maximum operational flexibility and resilience to allow changes in market trends to be catered for. Road access is also good with the M6 and M62 in close proximity to the site.
In comparison to other current and potential SRFI sites, the Parkside site scores well on investment criteria metrics. No other sites in the catchment area have the potential to receive trains from all directions, with some only able to receive trains from one direction. For example Garston can only receive trains from the South. Additionally the Parkside site’s access to both the M6 and M62 is highly advantageous meaning that Parkside has the potential to be an 'all points' operation, offering as much in terms of intermodal activities as it might in terms of being a destination and general logistical base in its own right. The market feels that there is room for both Port of Salford and Parkside due to growth in the market demand for intermodal terminals in the North West, as stated in the Transport for the North Freight and Logistics Strategy (2016).
It is therefore felt that the site is of national importance as well as regional significance in relation to the market demand and need for the delivery of new and improved SRFIs, and in supporting economic and employment growth objectives in St Helens and the Liverpool City Region.
Operational Requirements It is critical to match the specification and functionality of a rail freight terminal at Parkside with the freight market in the surrounding area. Therefore as part of this study, the broad operational requirements for varying sizes of rail freight interchanges has been provided with the demand (number of trains per day) then used to match the required specification and functionality of the site.
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The following important aspects of developing the specification and functionality of a rail freight interchange have been considered:
Major infrastructure components: o Rail support infrastructure; o Road support infrastructure; o Cargo transfer infrastructure; Terminal equipment; and Ancillary services
Typically intermodal terminals need to have a balance between these three components to avoid mismatched investment in any one terminal area. In order to determine this balance, each component has been measured in terms of their throughput capacity.
Table E1 outlines the specification requirements that have been utilised to consider the potential scale of rail facility that could be delivered at the Parkside site.
Table E1 – Specification of the potential rail freight terminal Terminal size Small Medium Large
Indicative number of trains per day 1-3 4-8 9+
Terminal track length >750m >750m >750m
Number of handling tracks 2 4 6+
Reach stackers Handling equipment Rail Mounted Gantry
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Table E2 outlines the functionality requirements of the potential site.
Table E2 – Functionality of the potential rail freight terminal Terminal size Small Medium Large
Indicative number of trains per day 1-3 4-8 9+
Road to rail Rail to road Core services Rail to rail Warehousing Container storage Reefer / Dangerous Goods services Ancillary services Customs facility Equipment repair area Terminal trucking services
Rail Access Parkside is well situated for potential rail access, being adjacent to both the West Coast Mainline (to the west of the site boundary) and the Chat Moss line (running along the northern edge). A series of junctions and chords connect both routes, allowing trains to arrive and leave the area in all four directions.
To the north and south of the site, the West Coast Mainline is a mostly four track, fully electrified railway running between Scotland and London via the North West and West Midlands. It is a key freight and passenger artery. The Chat Moss site runs east to west linking Liverpool to Manchester, Yorkshire and east coast ports, and is a two track partly electrified route.
There are currently four passenger trains per hour off-peak utilising the Chat Moss route adjacent to the Parkside site with Transpennine Express, Northern and Arriva Trains Wales all operating services. There are also a number of freight services utilising the route (such as Drax-Liverpool biomass). However, these tend to operate outside of peak hours and are very limited in number (3-4 trains daily). At the December 2017 timetable change, it is forecast that six trains per hour (off peak) will be utilising the Chat Moss line past the Parkside site.
On the West Coast Mainline Virgin (West Coast) operates two trains per hour off-peak. Both originate at London Euston and terminate in Scotland (one fast via the Trent Valley and one via the West Midlands). As of April 2016, there are a considerable number of freight services that utilise the route (carrying between 5-10 million tonnes per annum1). In a standard off-peak hour, there is an average of around 1 timetabled path per hour. However actual utilisation of these paths differs on a day to day basis due to actual market demand. It is not expected that there will be any major uplift in Long Distance High Speed passenger provision on the West Coast Mainline by Virgin West Coast in the near future.
Post-2018 Alliance Rail Holdings have secured paths to operate six return services each day between Blackpool and London. There will therefore be up to three express passenger trains per hour utilising the West Coast Mainline past the Parkside site off-peak. There is also predicted to be an increase to 1.5-2 freight paths per hour on this section of route by 2023. In the longer term the construction of HS2 is likely to offer additional paths on the legacy West Coast Mainline so it is not envisaged that obtaining train paths should be an unsurmountable problem.
1 Network Rail Freight Market Study, 2013
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Road Access To achieve access to the west of the site, reinstating the former access road from the A49 (Figure 6.1, no.1) is considered to be the most feasible option. This access requires minimal investment due to the junction and former road still being in place. The alternative access route via the access lane to Newton Park Farm (Figure 6.1, no.2) has been discounted as it is unsuitable for HGVs.
In order to facilitate a larger-scale development at Parkside, it is likely that a direct access onto M6 Junction 22 will also be required to minimise the amount of traffic on the local network. The preferred option to provide access to the west of the M6 from the eastside of the M6, from a technical, cost and deliverability point of view would be a box type tunnel structure under the M6 but away from the Chat Moss railway line (Figure 6.1, no.4). This option is preferable because the construction of the structure can take place under the live running motorway and whilst not without risk and complexity, from a high level assessment point of view it represents a better option than an alignment adjacent to the Chat Moss railway line (Figure 6.1, no. 3). The option to build a bridge over the M6 (Figure 6.1, no.5) has been discounted mainly due to several operational challenges related to gradients and large infrastructure cost required to bridge over a SMART motorway.
On the east side of the M6, a new road would also be required. This could potentially run parallel with the M6 to connect directly to the Junction 22 roundabout, or could utilise the former road known as Barrow Lane, which connects to the A579 approximately 500 metres north east of Junction 22.
For a medium and large scheme with the intermodal terminal located on the east of the M6 ,it is felt that the main site entrance would ideally be off the A579 around 0.5km to the north east of Junction 22 on the M6 (Figure 6.4, no.6). Having the main site entrance located here would minimise the distance trucks had to travel on the local network before joining the Strategic Road Network (SRN) at Junction 22 of the M6 and additionally, it would mean the site entrance is within the St. Helens boundary. The volume of traffic expected to be accessing the site necessitate a new junction to be constructed. This is likely to be a demand responsive signalized junction however further detailed assessment is required to understand the exact specification of the junction.
The road access to the site at present is constrained by the reliance on a single access junction, which connects to a single-carriageway road, the A49, which also serves a number of residential properties and local services and facilities. Despite the presence of the M6 immediately adjacent to the site, the driving route to access the motorway network from the existing access junction is approximately 3 km to both the north and the south.
Although both of the M6 junctions (J22 and J23) are scheduled to be upgraded as part of the Smart Motorway scheme, there are a number of proposed large developments adjacent to both junctions that would increase the pressure on the SRN at these locations as and when they are brought forward. Likewise, there is potential for future junction improvement works to come forward at M6 Junction 23, as a result of a number of proposed developments in Haydock. As with M62 Junction 9, however, any spare capacity is likely to be taken up by background growth and committed development trips.
Finally, the proximity of Croft Interchange, M6 Junction 22, and M62 Junction 9 means that there can be issues with weaving traffic between these junctions.
An initial estimate of the likely trip distribution from Parkside would indicate that around 85% of trips would travel south along the A49, to access the SRN at M62 Junction 9. This route passes through three junctions in Winwick – A49 / Hollins Lane, A49 / Golbourne Road, and A49 / Winwick Link Road, which all presently experience congestion at peak periods. It is likely that junction improvement works would be required at all these junctions to accommodate any additional traffic from Parkside. It should be noted that all three junctions are within Warrington Borough Council’s administrative boundaries.
Public Transport There are three existing bus services (No. 22, No. 34 and No. 360) in operation in the vicinity of the site. The No. 34 operates every 20 minutes, the No. 360 operates every 30 minutes and the No. 22 operates hourly. At present there are bus stops located along the A49 to the west of the site and along the A572 to the north of the site.
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It can be seen that Newton-le-Willows Station is located approximately 1 mile to the north west of the site, a reasonable walking distance for commuting. Newton-le-Willows station is situated on the Liverpool to Manchester Line and adjacent to the West Coast Main Line, and has two platforms. The station benefits from relatively high frequency services with hourly services offered by both Northern and Arriva Trains Wales. Earlestown Station offers an additional service that is operated by Northern Rail between Liverpool and Warrington (hourly Monday-Saturday).
The site is relatively well served by public transport; however peripheral times that are required to enable workers to arrive in time for the early shift (6am-2pm) and leave after the late shift (2pm-10pm) are not well catered for.
With regards to cycle routes it can be seen that whilst there is one continuous long distance route (the Sankey Valley Trail) within the vicinity of the local area, there is little opportunity to access the site via this route due to severance caused by the West Coast Mainline. There are just two points to access the route within the immediate area surrounding the site, via the Sankey Trail through Alder Lane or Old Alder Lane. There are a few other local routes within relative proximity to the site which are traffic free; however these are not part of the National Cycle Network and are fragmented, i.e. there is a lack of an integrated network of routes. The identified walkable routes consist of public rights of way (PRoW), shared-use paths, green spaces, parks and waterways. Minor roads have also been included as these tend to be quieter routes which increase the propensity to walking.
There are issues and opportunities presented by the development of the Parkside site on the local network of services and routes. It is clear that there does need to be investment made in local transport provision to enable employees to access the site at the forecast time periods to allow a logistics development at Parkside to function. Improvements made to the local network would also benefit the local community in the vicinity of the site in terms of reducing severance, improving accessibility and providing a network more conducive to active travel. The Meresytravel Bus Alliance and St Helens Bus Review process will during its regular review, provide an opportunity to enable bus improvements and better access to Parkside to be achieved.
Options Development This section outlines options for small (3 trains per day), medium (8 trains per day) and large (10-12 trains per day) logistics and rail freight interchanges. The following options have been developed: 1 x Small 1 x Medium 2 x Large
Table E3 provides a summary assessment of the 4 options developed.
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Table E3 – Summary of options assessment Floor CO e saved Year of Trains Cost of Rail Main Site Cost of Road 2 Option Size space (sq. Rail Access annually Economic per day Terminal (£) Access Access (£) ft.) (tonnes) Payback
£12,162,636 - 1 Small 3 750,000 South and west A49 £2,121,000 6,458 N/A 15,101,036
North, south, east, 2 Medium 8 1,000,000 £24,994,084 A573 £9,501,324. 12,515 2046 west
North, south, east, 2057 3 Large 10 1,250,000 £35,642,306 A573 £9,930,000 14,820 west
North, south, east, 4 Large 12 4,500,000 £38,899,641 A579 £29,579,122 16,200 2044 west
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Conclusions and Recommendations
There is clear policy justification for the development of Parkside into a Logistics and Rail Freight Interchange as part of a network of intermodal terminals.
As far as national, sub-regional and local policy is concerned, major policy developments since the adoption of the Core Strategy such as the publication of the National Policy Statement for National Networks (NPSNN) (2015) have strengthened the policy justification for a rail-linked development at the Parkside site, and help support the exceptional circumstances case required to meet the national Green Belt planning policy tests. The Parkside site itself is named specifically in the Transport for the North Freight Strategy (2016) as a site suitable for consideration as a rail freight interchange and is identified in the Liverpool City Region Growth Plan and Strategic Economic Plan (2014) as a key project in delivering SUPERPORT and the wider Liverpool City Region Freight and Logistics Hub.
The development of the site to accommodate a development of up to 1 million square feet, 8 trains per day (Medium Option) could be accommodated within the existing motorway network taking into account proposed infrastructure developments as part of RIS 1, notwithstanding highways and environmental constraints related to a sole vehicular access via the A.49. To assist in the build-out and viability of the development, up to 750,000 sq. ft. could be supported (subject to detailed analysis) with access solely via the A49 providing: o Three main sets of mitigation measures are made on the A49. o Land is safeguarded for rail to ensure that later phases are not constrained. o Road access is provided under the M6 to the eastern side and through to the A579 to service all development following the first phase, and at second phase and beyond, to re-route HGV traffic via the eastern part of the site. Domestic (cars) traffic serving the west side would continue to access via the A.49. o Environmental and heritage concerns are addressed and appropriate mitigation measures are introduced to ameliorate any adverse impacts on the site and neighbouring communities. o Masterplanning proves deliverability of the whole site (east – west combined development).
The site could support a larger scale development (12 trains a day) by utilisation of the eastern side of the site. The eastern side could be used for the core rail freight terminal or additional intermodal sidings. It could also be used for other traffics such as automotive or express parcels. In addition to mitigation work on the A49, once traffic levels reach an agreed level, HGV access for land both west and east of the M6 must only be permitted via the east and a new link road to the M6 J22 via a new junction on the A579.
It is fundamental to the delivery of a viable SRFI, that land on the west and east sides of the M6 is included for future development, including the associated road access to the A579.
Because of this east-west connectivity we suggest that consideration is given to the modification of Core Strategy CAS 3.2 to achieve a development which aligns with our conclusion that a medium scale or larger facility is appropriate for this area. Both the east and west sides of the M6 at the Parkside Site will be required for this scale of development. We envisage a scenario where as a first phase the development, is expected to commence on the western side accessed by road off the A49. This would assist in supporting the financial case for the development (required in order to make the development viable). Subsequent phases must have rail access. HGV road access for latter phases will be exclusively provided from the eastern side of the site to junction 22 of the M6 via the A579. This creates a requirement for both west and east sides of the M6 to be released from the Green Belt.
As part of this, the required land (to east and west of the M6) would need to be allocated for the intermodal terminal along with land required for the associated rail infrastructure. The provision of road access arrangements under the M6 to link the west side to the east side and access to the M6 is fundamental to the development of this site as access for LGVs and HGVs via the A49 should be prohibited as traffic levels grow.
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Parkside Logistics and Rail Freight Interchange Study
This development should only take place in the context of an agreement to safeguard land for the necessary rail and road infrastructure on the western and eastern sides, to ensure that the build-out of early phases does not constrain future development and especially should consider the need for sustainable transport. Any masterplan for the whole site (east and west) would have to allow for the land safeguarded for the rail and road infrastructure. This masterplan should consider Highways and Traffic Management implications including a Traffic Management Plan and wider environmental issues which have not been covered in this brief.
With regard to release of Green Belt land under exceptional circumstances, it is crucial for the delivery of a viable SRFI, that land on the west and east sides of the M6 is included for future development, including the associated road access to the A579. Without the required release, the market attractiveness, operational efficiency and financial viability of a SRFI will be adversely affected.
It is recommended that St. Helens, Wigan and Warrington Councils work together to meet the range of national and sub-regional sustainable freight policy requirements. There is currently no rail freight terminal in any of the three areas capable of serving the needs of the local population and industry. It is believed that one “purpose-built” rail terminal at the Parkside site could serve the three Councils and the wider city regions, and help to reduce the long distance road trunking movements on busy routes such as the M6 and M62. As well as reducing congestion and improving journey time reliability, it would result in reductions in carbon dioxide and other pollutants as rail freight is 76% less polluting than road freight.
Through cross border collaboration between the local authorities, the development of the required case for an area wide mitigation package of infrastructure improvements could be brought forward in conjunction with Highways England to support the development of Parkside and the wider economic and employment aspirations of Wigan and Warrington Councils.
From industry consultation it is clear that there is more than enough demand to support a SRFI in the North West, with Parkside regarded as the best placed site to satisfy this need. This narrative is evidenced through the positive findings from the workshop, online survey and one-to-one discussions presented throughout this report. Indeed we have consulted with at least two companies who would be seriously interested in running the intermodal terminal at this site. The opportunities for rail access from the site are second to none in the North West and also nationally with access to the West Coast Mainline and Chat Moss line easily achievable. This allows train movements to/from the north, south, east and west to be catered for at the site provided the required internal rail layout is implemented. Based on current evidence it is likely that 8 trains can be feasibly serviced by Parkside in the medium term. We would also recommend early formal engagement with Network Rail and Rail North to establish the viability of paths to the forecast destinations in a pre and post HS2 environment within the current and future passenger franchises. Our transport analysis has confirmed that road access is potentially good with the site in relatively close proximity to the M6 (J22) and M62 (J9) allowing access to the Strategic Road Network at around 2 miles from Parkside. However there are junction capacity issues to be overcome at three junctions on the A49 at Winwick leading to J9 of the M62. From our engagement with Highways England, the development of the site to accommodate a development of up to 1 million square feet, 8 trains per day (Medium Option) could be accommodated within the existing motorway network taking into account proposed infrastructure developments as part of RIS 1. It has been concluded that the western part of the Parkside site is capable of supporting a small development on its own. The site could support a larger scale development (12 trains a day) by utilising of the eastern side of the site. The eastern side could be used for the core rail freight terminal or additional intermodal sidings. The study has established that from an operational and financial perspective a small terminal is not viable and that only a terminal that is at least a medium would be operationally and financially viable and thus ultimately deliverable as a sustainable development. It is important to note that unlike a purely road based development there are particular operational requirements for intermodal freight terminals that are crucial to include at the design stage to meet current and forecast future requirements and to minimise terminal operational costs for the operator and user.
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Table E4 summarises the key reccomendations in relation to developing a logistics and rail freight interchange at Parkside.
Table E4 – Key recommendations
Rail Access Based on current evidence it is likely that 8 trains can be feasibly serviced by Parkside in the medium term. Early formal engagement with Network Rail and Rail North is required to establish the viability of paths to the forecast destinations in a pre and post HS2 environment within the current and future passenger franchises.
Road Access The development of the site to accommodate a development of up to 1 million square feet, 8 trains per day Medium Option could be accommodated within the existing motorway network taking into account proposed infrastructure developments as part of RIS 1, notwithstanding highways and environmental constraints related to a sole vehicular access via the A49. To assist in the build-out and viability of the development, up to 750,000 sq. ft. could be supported (subject to detailed analysis) with access solely via the A49 providing: o Three main sets of mitigation measures are made on the A49. o Land is safeguarded for rail to ensure that later phases are not constrained. o Road access is provided under the M6 to the Eastern Side and through to the A579 to service all development following the first phase, and at second phase and beyond, to re-route HGV traffic via the eastern part of the site. Domestic (cars) traffic serving the west side would continue to access via the A49. o Environmental and heritage concerns are addressed and appropriate mitigation measures are introduced to ameliorate any adverse impacts on the site and neighbouring communities. o Masterplanning proves deliverability of the whole site (east – west combined development).
Green Belt Implications It is fundamentally crucial that land on the west side of the M6 and to the east is included for future development including the associated road access to the A579. . As part of the development, an initial rail connection allowing access from the west (and ideally also to the east) should be provided on the alignment for the intermodal rail terminal.
Core Strategy Policy CAS 3.2 Amendments Consideration should be given to the modification of CAS 3.2 to provide a more flexible policy position to support a viable and deliverable SRFI scheme to come forward. Green Belt boundaries to the east of the M6 will be affected by these proposals, amendments to Green Belt boundaries would be justified by the arguments presented in this report. This requires a review of Green Belt policy to ensure consistency between land requirements of a SRFI development and Green Belt boundary. The Planning policy framework should be guided by the new Transport for the North, Freight and Logistics Strategy. Mitigation measures addressing the growth in local traffic should be included. Land should be allocated for rail access and suitable terminal facilities. New road access should be brought forward via an underpass under the M6 and a new link road to the A579. This is a unique opportunity to re-connect a formerly rail served site in an excellent geographical location into a modern SRFI that will meet the needs of modern logistics in the region.
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Introduction
01
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1. Introduction
1.1 Aim of the Study
This study has been conducted by AECOM and Cushman & Wakefield on behalf of St. Helens Council to investigate the feasibility of delivery options for a road and rail-linked logistics development on land at the former Parkside colliery site. The study will help to inform the preparation of the St. Helens Local Plan 2018- 2033 and has therefore been conducted in compliance with the National Planning Policy Framework (NPPF) and the Planning Practice Guidance (PPG).
It is also important to note that this study has been prepared independently of the Joint Venture between St Helens Council and Langtree to bring forward development at the site.
1.2 ATLANTIS Programme
The study will also be used to inform and support the ATLANTIS Programme. This is a European transnational project that is seeking support under the EU’s new Motorways of the Sea.
1.3 Site Location and History
Parkside refers to the 600 acre plot of land which was the former location of Parkside Colliery. The colliery which employed roughly 2,000 people until its closure in 1993 forms part of the Lancashire Coal Field. The site is located to the east of Newton-le-Willows, a market town of over 22,0002 in the Metropolitan Borough of St. Helens. The site is abutted by Lowton (Metropolitan Borough of Wigan) and Winwick (Borough of Warrington).
In terms of road infrastructure, the site is dissected by the M6 motorway, the M62 and A580 are also in close proximity. The site is also crossed by both the West Coast Mainline and the Liverpool to Manchester (Chat Moss) lines. The location of the site and surrounding transport infrastructure can be seen in Figure 1.1.
Figure 1.1 - Location of Parkside Site There is a longstanding history of organisations wishing to bring forward the former colliery site for development. The previous owners of the site, Astral Developments/Prologis originally submitted a planning
2 2011 Census AECOM 14 Parkside Logistics and Rail Freight Interchange Study application to St. Helens and Warrington Borough Councils in 2006 to develop a SRFI with over 700,000 square meters of rail served warehousing, train assembly area, container depot, cargo exchange, secure multi-modal access terminal and waste recycling centre at the former colliery site.
Astral/Prologis withdrew their planning application in July 2010, ultimately blaming the economic climate and market conditions. This withdrawal followed a lengthy period of pre-application discussions, planning applications and amendments between the developer, Prologis and St. Helens Council, the Highways Agency (now Highways England) and Warrington Borough Council, which began in 20043.
Figure 1.2 is an extract from the Astral Developments planning application and shows the full provisions of their previous SRFI application.
Figure 1.2 - Extract from Parkside SRFI Volume 1 Planning, Design & Access Statement4
In 2014, approximately 230 acres of the former colliery site was purchased in a joint venture between St. Helens Council and Newton-le-Willows based developer Langtree from the previous owners5. It is understood
3 http://www.sthelens.gov.uk/media/158581/ex024.pdf 4 http://www.sthelens.gov.uk/media/253586/ex031.pdf 5 http://www.langtreepp.co.uk/development/parkside-colliery AECOM 15 Parkside Logistics and Rail Freight Interchange Study that Parkside Regeneration LLP are preparing development proposals to bring forward logistics development on the site.
1.4 Previous Planning Policy Evidence Base Work Conducted
The St. Helens Core Strategy (2012) identified Parkside as a strategic location for a SFRI in Policy CAS 3.2. Background papers were prepared by Scott Wilson (now AECOM) to support the identification of the site as a strategic location in the Core Strategy. The Core Strategy identified the potential to provide an SRFI of between 85 and 155 hectares in size. The Parkside site was not counted within the Core Strategy supply of suitable sites for general market employment land, as it was considered that if a SRFI was developed, it would be strategic in nature and therefore should not be counted as meeting general market employment land needs.
The Council is currently in the process of preparing a new Local Plan which will contain all policies and allocations and will replace the Core Strategy and Saved Unitary Development Plan Policies (2014). As part of the preparation of the Local Plan, the Council is currently undertaking a Green Belt review to find land to accommodate housing and employment uses. The Parkside site has elements of brownfield and greenfield land and lies within the Green Belt, therefore in accordance with National Planning Policy exceptional circumstances will be required to allocate the site for development in the new Local Plan.
1.5 Employment Land Evidence Base Work
Since the adoption of the Core Strategy in 2012, there have been two new evidence based studies prepared relating to employment land provision in St. Helens.
In 2015, AECOM in partnership with Cushman & Wakefield developed the St. Helens Allocations Local Plan – Economic Evidence Base Paper. The purpose of this Paper was to provide an update on the economic development situation since the adoption of the St. Helens Core Strategy in 2012. It also provides a refresh of the employment land market evidence supporting the Core Strategy. Where required, the paper provides recommendations for change through the remaining elements of the St. Helens Local Plan, chiefly the Allocations Local Plan.
The Paper indicates that large scale logistics is the most active market in the region and a particular opportunity for St. Helens. There is however, zero provision of suitable land for large scale logistics and distribution uses within the Borough’s identified employment land supply at present. Therefore, the Paper concludes that there is currently an imbalance between demand and supply for large scale distribution and manufacturing sites in the Borough.
The Paper recommends that as part of the preparation of the Local Plan, a search is carried out to identify new employment sites that could meet the demands of a large scale logistics and distribution site. The Paper states that the Parkside site remains crucial in meeting overall economic development aspirations for the Borough.
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In 2015 BE Group were commissioned by St. Helens Council to undertake an Employment Land Needs Study (ELNS) to provide robust evidence of objectively assessed need (OAN) for employment floorspace in the Borough. The ELNS found that St Helens’ key location on the M6 and M62 motorways means that it is ideally positioned in the North West to provide a critical role in the large-scale logistics sector. The ELNS identified an employment land OAN baseline of 174ha for St. Helens from 2012 up to 2037. The ELNS also sought to consider the potential of SuperPort and a SRFI at the former Parkside Colliery increasing demand for employment land in St Helens through multiplier effects, particularly in the large-scale logistics sector. Accounting for the potential uplift in employment land demand due to these potential major projects, the ELNS concludes that St. Helens has an overall employment land objectively assessed need of 214ha from 2012 up to 2037 (the 214ha does not include the actual land needed to deliver a SRFI at Parkside), this compares to an employment land requirement of 37ha up to 2027 in the Core Strategy.
In summary, a considerable amount of previous work has been conducted in relation to the Parkside site and employment land needs in the Borough. This study aims to build on this work.
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1.6 Stakeholder Engagement
A key part of the study has been engaging with stakeholders on the potential for a Logistics and Rail Freight Interchange at Parkside. Due to the important strategic nature of the study the project team have sought to engage with as wider range of stakeholders as possible. This has been achieved through the following engagement activities:
A Workshop; An Online Survey; and One-to-one discussions.
1.6.1 Workshop The stakeholder workshop was held on the 18th May at St. Helens Town Hall. The session aimed to discuss the deliverability and viability of road and rail-linked logistics at the site and further develop the options proposed by the project team for development at the Parkside site. Specifically, discussion was focussed on the following:
Planning policy context Market supply and demand Rail access issues and layout Road access issues and layout Public transport / active travel
The workshop was attended by a total of 27 stakeholders. This included public sector representatives from St. Helens, Warrington and Wigan Councils, Highway England, Liverpool Local Economic Partnership and Mersey Travel. A wide range of private sector stakeholders were also in attendance including logistics companies, independent consultants, CILT representatives and six attendees from the project team (AECOM and Cushman & Wakefield). Table 1.1 provides a full list of the workshop attendees. The workshop findings, including direct quotes from stakeholders are presented throughout this report.
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Table 1.1 – Workshop attendees Attendee Organisation Jan Lourens St. Helens Council Lyndsey Darwin St. Helens Council Melanie Hale St. Helens Council Mark Osborne St. Helens Council Fiona Soutar St. Helens Council Alan Kilroe St. Helens Council David Scrivens Wigan Council Kevin Hargreaves Wigan Council Richard Flood Warrington Borough Council Shaun Reynolds Highways England Darren Kirkman Mersey Travel John Whaling Liverpool Local Economic Partnership Alan Heaton Eddie Stobart Simon Ives DB Schenker Julian Worth CILT Rail Freight Group Andrew Hemmings CILT Rail Freight Group Jonathan Moser Railfreight Solutions Tom Bateson Tarmac Rupert Dyer Rail Expertise Ltd Simon Small Arup David Rolinson Spawforths Geoff Clarke AECOM Michael Whittaker AECOM Alan Houghton AECOM Heather Standidge Cushman & Wakefield Duncan Carter AECOM James Mayes AECOM
1.6.2 Online Survey An online survey was developed using an online software package called SNAP. The survey was distributed to approximately 150 stakeholders via email between 29th April & 11th May to organisations in the North West of England who are directly involved with rail freight or are involved in developing rail freight interchanges. The survey had a total of 16 respondents which equates to a response rate of around 10%. Online surveys of this nature achieve a response rate of around 5% on average. The project team managed to achieve a 10% response rate by ensuring that the stakeholder list was targeted to relevant industry contacts and by sending reminders for the survey to be completed.
Figure 1.3 illustrates the split of survey respondents. 25% of respondents are freight users, while 13% are transport operators. Developers and rail freight operating companies (FOC) accounted for 6% respectively. Additionally 50% of respondents indicated that they operate in other business activities and these included:
- Rail freight consultant - Commercial Real Estate/Property agent - Independent rail freight consultant - Transport planner - Professional Institute - Industrial Agent
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Developer 6%
Freight User Other 25% 50%
Transport Operator 13% Rail Freight Operating Company (FOC) 6%
Figure 1.3 – Survey respondents
1.6.3 One-to-One Discussions To further support the study one-to-one discussions were conducted with key stakeholders. This enabled detailed views to be gained in relation to the feasibility of Parkside as a logistics and rail freight interchange.
Table 1.2 outlines the stakeholders we have consulted with. Findings from the discussions are presented throughout the report.
Table 1.2 – One-to-one discussions completed Rail Freight Operators Other Stakeholders DB Schenker Russells Group GB Rail Freight DHL Europorte Tarmac Rail Freight Group Kilbride Rail Freightliner Peel Ports
1.7 Competing sites
There are a number of competing rail freight interchange sites. It is important these are considered when assessing the feasibility of a rail-linked logistics development at the Parkside. As such a comparison of the sites that could compete with Parkside will be conducted. Table 1.3 outlines identified sites in the wider catchment area for comparison.
Table 1.3 – Other sites (existing, proposed, under construction) in the wider catchment area County Name and Site Status Region Ditton Existing Cheshire, North West Knowsley Being refurbished Merseyside, North West Seaforth Proposed Merseyside Port Warrington Proposed Cheshire Port Cheshire (EP) Proposed Cheshire Four Ashes Proposed Staffordshire Port Salford Under construction Greater Manchester Garston Existing Merseyside Trafford Park Existing Greater Manchester
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These sites will be compared to Parkside on aspects such as road connectivity and rail connectivity in Section 3.8.3. This will allow an understanding of the main competitors to the potential development of an SRFI at Parkside in terms of freight movements and warehouse tenants. Figure 1.4 shows the locations of the competing sites in relation to the Parkside site.
Rail Terminal Location Parkside Garston Ditton Trafford Park Port Salford Port Warrington Knowsley Seaforth Port Cheshire Four Ashes
Figure 1.4 – Competing Rail Freight Terminal Locations
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Transport and Planning Policy Assessment
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2. Transport and Planning Policy Assessment
2.1 Introduction
This section provides an assessment of relevant planning policy at a European, national, regional and local level. This assessment aims to inform St. Helens Council’s emerging Local Plan with regards to the potential allocation of a logistics and rail freight interchange at the Parkside site.
Key research papers that are relevant to the study have also been included in this section. Additionally due to the relevance of rail freight to the study a definition of a Rail Freight Interchange compared with a SRFI is outlined (see Section 2.1.1 for definitions).
2.2 European Policy
The White Paper 2011: “Roadmap to a Single Transport Area – Towards a competitive and resource efficient transport system”, provides the European policy context.
This document sets out the vision for transport in Europe over the next 40 years. The Commission sets out the following key goals to be achieved by 2050. Halve the use of ‘conventionally-fuelled’ vehicles in urban transport by 2030; phase them out in cities by 2050. Achieve essentially CO2-free city logistics in major urban centres by 2030. 30% of road freight over 300 km should shift to other modes such as rail or waterborne transport by 2030, increasing to more than 50% by 2050. This should be facilitated by efficient and green freight corridors and appropriate infrastructure developments. Ensure that all core seaports are sufficiently connected to rail freight and, where possible, inland waterway systems. Achieve a 60% overall reduction of transport emissions by the middle of the twenty first century.
Whilst not all related directly to rail freight, there is a clear focus on rail freight as a key contributor to progress towards sustainable freight transport in Europe.
During the development of this report the referendum was held with the decision to leave the EU. It is much too early to factor in any possible changes in policy. But it is likely that any UK Government will continue to work towards more sustainable transport, so the sentiment of this White Paper is still relevant.
2.3 National Policy
At a national level the main policy documents of relevance are the National Policy Statement for National Networks (2015) and the National Policy Framework (2012).
2.3.1 National Policy Statement for National Networks (2015) The National Policy Statement for National Networks (NPS) sets out Government policies for nationally significant rail and road infrastructure projects for England. It also provides planning guidance for promoters of nationally significant infrastructure projects on the road and rail networks, and the basis for the examination by the Examining Authority and decisions by the Secretary of State.
The NPS recognizes that railways are a vital part of the UK’s transport infrastructure. Specific to freight and in the context of the Government's vision for the transport system as a driver of economic growth and social development, it states the railway network must:
“provide for the transport of freight across the country, and to and from ports, in order to help meet environmental goals and improve quality of life”
Strategic Rail Freight Interchanges are strongly supported with the following stated as the main drivers of demand:
The changing needs of the logistics sector; AECOM 23 Parkside Logistics and Rail Freight Interchange Study
Rail freight growth; Environmental; and UK economy, national and local benefits – jobs and growth.
The NPS strongly supports the need for an expanded network of SRFIs in the UK. It also recognises the importance that SRFIs are located near the business markets they will serve such as major urban centres, or groups of centres and are linked to key supply chain routes. The NPS suggests that SRFI capacity needs to be provided at a wide range of locations, in order to provide the flexibility needed to match the changing demands of the market.
Nationally Significant Infrastructure Project / Strategic Rail Freight Interchange Definitions
This section outlines the definition of a Nationally Significant Infrastructure Project / Strategic Rail Freight Interchange.
The National Planning Statement (NPS) for National Networks outlines that the following criteria should be met for a prospective site to be deemed ‘Nationally Significant’:
Be at least 60ha in area; Be capable of handling goods from more than one consignor and to more than one consignee; Be capable of handling at least four goods trains per day; and Include warehouses to which goods can be delivered from the railway network either directly or by means of another form of transport.
A Strategic Rail Freight Interchange is a Rail Freight Interchange that is considered to be strategic due to the level of its operation. In order for a Rail Freight Interchange to qualify as ‘strategic’ it needs to meet certain criteria.
The criteria taken from the National Planning Statement (NPS) for National Networks are as follows: Can handle four or more trains per day Can handle 775m trains without splitting Substantial element of buildings on site to be rail connected / rail accessible with a substantial element connected from the outset Is connected to a railway line with at least W8 gauge rating Appropriately located relative to markets that they will serve and to road / rail networks and access to strategic Rail Freight Network Where possible be able to accommodate an increased number of trains
An independent body known as the Evidencing Authority is responsible for conducting an assessment of NSIP planning applications against the necessary requirements outlined in the National Policy Statement for National Networks (2015).
The Evidencing Authority, an independent Inspector or panel of Inspectors based on the evidence presented in the planning application makes a decision as to whether they feel planning permission should be granted or denied. It is then up to the Secretary of State to consider the assessment put forward by the Evidencing Authority and makes a final decision on the application.
Therefore if a development does not directly meet the Nationally Significant Infrastructure Project (NSIP) criteria, but is considered to be nationally significant, there is a power in the Planning Act for the Secretary of State, on application, to direct that a development should be treated as a nationally significant infrastructure project. The Secretary of State used this power in its decision to approve planning consent for the East Midlands Gateway Rail Freight Interchange (EMGRFI). The next section explores this decision in more detail outlining the lessons that can be learnt.
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The East Midlands Gateway Rail Freight Interchange (EMGRFI) Planning Application
The East Midlands Gateway Rail Freight Interchange (EMGRFI) site is located north of East Midlands Airport in Leicestershire with good accessibility to the road (M1) and rail networks. The site is being promoted and developed by Roxhill (Kegworth) Limited.
The Examining Authority recommended that development consent should not be granted on grounds of non- compliance with the NPSNN. However consent for the development was provided on the 12th January 2016 against the recommendation of the Examining Authority. Patrick McLoughlin (Secretary of State) was not personally involved in the decision because of his potential interest, since his constituency is near the EMGRFI site. The Minister of State for Transport, Robert Goodwill was responsible for the decision instead.
The main reasons for non-compliance stated by the Examining Authority and the Secretary of State’s reason for overruling the decision are outlined in Table 2.1.
Table 2.1 – Summary of key points from the EMGRFI Secretary of State’s decision letter # Examining Authority’s reasoning for non- Secretary of State’s reasoning for overruling compliance 1 The SRFI would not be able to accommodate rail Appreciates that the construction of warehousing and activities “from the outset” (paragraph 4.83 of the the construction of a new railway will involve different NPSNN) or be capable of providing “for a number timescales and considers it entirely reasonable that a of rail connected or rail accessible buildings for commercial undertaking should seek to generate initial take up” (paragraph 4.88 of the NPSNN). income from the warehousing facilities before the railway becomes operational. The Secretary of State These requirements were considered not to be considers that the interpretation of these NPSNN met because a number of warehousing units requirements must allow for the realities of would be constructed at the outset of the constructing and funding major projects such as this. development programme, but would not be rail accessible until the rail link was constructed, which would take 3 years 2 No warehouses will be directly connected to the Felt this was a narrow interpretation of the railway. NSPCC guidance states that “it is not requirement and was happy that the warehouses were essential for all buildings on the site to be rail “rail accessible” or “rail served” using road tractors. connected from the outset, but a significant element should be”.
Because none of the proposed warehousing would be directly rail-connected the proposal failed to meet this requirement, both at the outset and when the development was fully completed 3 The proposals should include “rail infrastructure to Felt that the capacity is large enough to allow allow more extensive rail connection within the sufficient rail freight volumes to and from the site site in the longer term”. without the need for expansion (up to 1800 road movements per day). This is considered to be a Application does not consider extension of rail significant worthwhile contribution to modal transfer connections above that authorised by the order which is a key objective of the NSPNN policies for SRFIs.
4 Proposal does not meet the requirement of The Secretary of State recognises that on a narrow paragraph 4.88 of the NPSNN that “the initial interpretation of the phrase “the initial stages of stages of the development must provide an development” this part of paragraph 4.88 of the operational rail network connection and areas for NPSNN would not be satisfied. intermodal handling and container storage”. However, for the same reasons given in #1 it is felt that the rail network connection, the area for intermodal handling and the container storage would be provided as early as reasonably practicable in the carrying out of this development
5 Feels there is a risk that a significant part of the Feels that the requirement for the rail freight terminal development could remain road-based as the to be operational before the occupation of more than proposal permits the occupation of nearly 47% of 260,000m2 of rail served warehousing gives sufficient the proposed total volume of warehousing before assurance that the rail facilities will be delivered as the rail connection was operational. soon as is reasonably practicable in the programme for this development.
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It is recognised that there is no certainty that the rail facilities will be used to their fullest extent. However the Secretary of State is reassured that the strong and growing demand for rail freight facilities means that there are reasonable prospects that as this SRFI is developed it will fulfil its potential for contributing to modal transfer in the freight sector, which is the clear purpose of this application.
The implications of the decision to overrule the Evidencing Authority (as outlined in Table 2.1) are important to consider when developing the options for a Logistics and Rail Freight Interchange at Parkside. However upon consultation with industry stakeholders at a workshop the decision was not seen as negative.
“The decision to overturn the evidencing authority’s decision is not a negative one – There was such a strong need for an SRFI in the area that the Secretary of State was prepared to give slack to the developer” CILT Rail Freight Group Representative
The EMGRFI will not be able to accommodate rail activities “from the outset” however the Secretary of State overlooked this requirement. Whilst this represents an opportunity for the developer to generate revenue to finance the rail connection in a latter phase, the risks of not installing the rail connection outweigh the opportunities of this approach.
If rail is not installed from the outset then companies will be required to develop road based logistics solutions to meet their needs. Trying to influence them to switch to rail freight at a later date is challenging due to their financial investment in the road based solution. Additionally, tenants that aren’t interested in using rail freight may take up prime warehouse space that could be used by tenants that would like to take advantage of a rail connection.
“There is an overwhelming logic to start with “Constructing a rail connection during the last what you are to end up with. Therefore a rail stage of the development is the worst time to connection should go in from the outset” do it. This is because tenants have had to develop a road based solution and convincing Private Sector Rail Freight Expert them to change and use rail freight is difficult.” Private Sector Rail Freight Expert
Initially the options should aim to meet all the NSIP requirements. However the leniency shown by the Secretary of State means that if the viability of a rail interchange at the site is threatened by the requirements or some requirements and these cannot be met, then NSIP status could still be achievable due to the strategic need for rail freight interchanges across the UK.
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2.3.2 National Planning Policy Framework (2012)
Chapter 4 (Promoting sustainable development) of the National Planning Policy Framework recognises that developments with sustainable credentials in relation to reductions in greenhouses gases and congestion should be encouraged:
“Encouragement should be given to solutions which support reductions in greenhouse gas emissions and reduce congestion. In preparing Local Plans, local planning authorities should therefore support a pattern of development which, where reasonable to do so, facilitates the use of sustainable modes of transport.” Chapter 4 also specifically supports the development of rail freight terminals to help achieve sustainable development:
“Local authorities should work with neighbouring authorities and transport providers to develop strategies for the provision of viable infrastructure necessary to support sustainable development, including large scale facilities such as rail freight interchanges, roadside facilities for motorists or transport investment necessary to support strategies for the growth of ports, airports or other major generators of travel demand in their areas.”
It does however recognise that developments generating a significant amount of traffic movements should be supported by a Transport Statement or Transport Assessment taking account of whether:
The opportunities for sustainable transport modes have been taken up depending on the nature and location of the site, to reduce the need for major transport infrastructure; Safe and suitable access to the site can be achieved for all people; and Improvements can be undertaken within the transport network that cost effectively limits the significant impacts of the development.
Additionally any future Local Plan policy relating to the Parkside site must pass the test of soundness outlined in the National Planning Policy Framework. In order to be considered ‘sound’ under examination from an independent inspector the Plan should be:
Positively prepared – the plan should be prepared based on a strategy which seeks to meet objectively assessed development and infrastructure requirements, including unmet requirements from neighbouring authorities where it is reasonable to do so and consistent with achieving sustainable development; Justified – the plan should be the most appropriate strategy, when considered against the reasonable alternatives, based on proportionate evidence; Effective – the plan should be deliverable over its period and based on effective joint working on cross-boundary strategic priorities; and
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Consistent with national policy – the plan should enable the delivery of sustainable development in accordance with the policies in the Framework.
2.4 Regional
This section provides a more focused policy review at a sub-regional level focusing primarily on the Liverpool City Region.
2.4.1 Transport for the North - Northern Freight and Logistics Strategy Report – September 2016 The strategy has been designed to:
Reduce the cost of freight transport to both users and non-users (for example, reducing the environmental impacts of freight and logistics movements); Expand market share in the logistics sector; and Attract inward private sector investment to the Northern Powerhouse.
The strategy has a strong focus on the increased use of rail freight through improved availability of train paths and development of rail freight interchanges to help achieve the goals of the strategy. The core of the strategy is as follows:
The development of 50 hectares of rail and/or water connected Multimodal Distribution Parks (MDPs) per year, to be located at the edge of urban centres Rail network upgrades to allow 20% longer freight trains to operate on a six day week basis, which will reduce unit costs through improved asset productivity. The promotion of short-sea shipping (particularly for unitised freight) to bring cargo directly to Northern ports Complementary land-side access improvements to ports to reduce local road congestion, most importantly along the route of the M62/M60 north of Manchester and into Hull and Liverpool. Raising the quality of the environment to further promote the Northern economy
The strategy recognises that the lack of capacity on the existing rail network in the North is threat to growth in rail freight traffic in the region. Additional capacity is therefore required along both north-south and east-west routes to help achieve the rail/port centric distribution outlined in the strategy.
The strategy states that incremental expansion in capacity will be required more or less immediately to provide the private sector with the confidence to invest in additional equipment and terminals so that forecast growth can be reached in a progressive and sustainable manner.
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With regard to potential rail freight interchanges in the North West, Parkside is specifically recognised by the strategy along with 9 other sites. See Table 2.2 for a full list of the potential sites in the North West.
Table 2.2- Potential UK Multimodal Distribution Parks Site County Name Status (spring 2016) Ditton (3MG) Cheshire Existing* Kingsway Greater Manchester Not yet rail-linked Knowsley Merseyside Being re-developed Parkside Merseyside Not yet consented Port Cheshire (EP) Cheshire Potential to expand Port of Salford Greater Manchester Being developed Port of Warrington Cheshire Not yet rail-linked Risley Cheshire Not yet developed Seaforth Merseyside Land being assembled Wigan Greater Manchester Not yet developed * Potential to expand
2.4.2 Liverpool City Region (LCR) Growth Deal (2014)
The Liverpool City Region Growth Deal was announced on July 7th 2014 and allocated over £232m of resources to the area - with £35m of new funding confirmed for 2015/16 and £153.2m from 2016/17 to 2021. The Growth Deal focusses on transport and skills projects which will support the city region’s ambitions to create a freight and logistics hub serving an expanded Port of Liverpool.
The Liverpool City Region Growth Deal focuses on four priority areas:
Creating a Liverpool City Region Freight and Logistics Hub Liverpool City Centre Low Carbon Liverpool City Region Skills and business support to enable growth
Based on evidence and in the context of the City Region’s considerable asset base, the Growth Deal identifies five transformational strategic projects:
Liverpool City Centre as a global brand, visitor and business destination, a centre for commercial and business growth and a location for a growing cluster of knowledge assets The Liverpool City Region Freight and Logistics Hub that builds on our natural assets and the changing nature of the international and national logistics industry LCR2Energy which will facilitate the transition of the City Region’s energy requirements to a more low carbon supply
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Access to the Port of Liverpool A City Region Capital Investment Fund, to act as an intermediary mechanism between the Local Growth Fund nationally and investments at the local level
The programme of projects aimed at creating a Liverpool City Region Freight and Logistics Hub builds on the investment in Liverpool2 and the £600m investment in the Mersey Gateway. Both these projects complement the Atlantic Gateway initiative and the aspirations of the Cheshire and Warrington, and Greater Manchester LEPs for job creation resulting from expanding freight capacity.
2.4.3 A Transport Plan for Growth A Transport Plan for Growth was developed by Liverpool City Region Combined Authority and was released in 2015. It outlines five strategic projects. One of the five strategic projects at the heart of the Transport Plan for Growth is to create a freight and logistics hub. This project aims to put the City Region in the best place to respond to changes in the UK and international logistics market.
Three priorities are identified as part of the plan:
Growth Low carbon Access to opportunity
Wider strategic priorities are also outlined with Freight and Logistics considered the most important. The other wider strategic priorities are:
Housing and Land-use Planning Economic Development and Regeneration Employment and Skills Health and Wellbeing Carbon Reduction and Air Quality Connecting Communities Visitor Economy
A Transport Plan for Growth aligns our transport priorities with these wider strategic priorities, facilitating effective cross-sector collaboration and shared investment (Figure 2.1).
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Figure 2.1 – Alignment of transport priorities with the wider strategic priorities
The plan recognises that improving connectivity and capacity for freight on our road and rail networks opens up access to the Port from across the whole of the UK, and is therefore fundamental to supporting the economic prosperity of the Region. There is also a strong emphasis on logistics and freight as a means of supporting and enhancing the economic output of the region.
Delivering the SUPERPORT Freight and Logistics Hub (developments, sites and premises) is designated as a shared priority. The Parkside site along with Knowsley Industrial Park and 3MG in Halton are recognised as key to achieving the SUPERPORT Hub.
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2.4.4 Liverpool SUPERPORT Market Analysis Land and Property Report (2014) The market analysis for land and property in relation to the Liverpool SUPERPORT outlines a minimum land supply of 634 hectares over the next 20 years, split across logistics (418ha) and manufacturing use (216ha). Factoring in a 25% headroom in supply, to allow for client choice etc. to enable the market to function properly this would inflate the totals required to 793 hectares for logistics (522ha) and manufacturing use (271ha) overall.
As part of the market analysis for land and property a number of current and potential sites have been identified that are capable of addressing the specific need for logistics facilities in the Liverpool City Region.A SRFI at the Parkside site is identified as a key project if the SUPERPORT is to be successfully delivered.
2.4.5 Liverpool City Region Long Term Rail Strategy (2014)
Developed by Merseytravel in collaboration with Network Rail, the LCR Long Term Rail Strategy is a vital and timely vision of the role that an expanded rail offer can play in facilitating the proposed accelerated economic growth of the LCR.
Improving National Passenger and Freight Connections (CP5 – CP7)
In terms of freight, the aspirations of the SuperPort masterplan to more than double the rail freight handling capacity of the city region is a vital scheme for the economic future of the area, but is likely to result in conflict with increased passenger services.
2.5 Local Policy
The St. Helens Local Plan Core Strategy (2012) and the St.Helens Unitary Development Plan Saved Polices (2014 version) are Development Plan Documents for St. Helens. Together with the Merseyside and Halton Joint Waste Local Plan (2013) they form the Development Plan for St.Helens, which sets out the spatial planning policy framework for the Borough of St.Helens.
The St. Helens Local Plan Core Strategy was published in October 2012 and was the culmination of various consultations and background papers spanning 7 years from 2005 - 2012. It takes account of, and will support a number of local strategies. However the St.Helens Plan 2011-2014 and City Growth Strategy 2008-2018 are overarching.
The Core Strategy provides a strategic level plan for how the Borough will develop to 2027. The document outlines the current situation in St. Helens (as it was at adoption in 2012) and identifies the key issues, problems and challenges. The Strategy then outlines the Vision for St. Helens by 2027, and identifies what detailed objectives need to be met to achieve the overall Vision.
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The Parkside site and immediately adjacent land is identified as a strategic location with potential to facilitate the development of an SRFI. It is stated that the Council believe a deliverable and viable SRFI can be developed on the western side of the M6 with an operational area of approximately 85 hectares. Therefore the Council will support the development of the site identified to the west of the M6 as a SRFI, provided that it meets national Green Belt planning policy tests, including the demonstration of very special circumstances along with a set of additional criteria such as:
Direct access to the rail network is achieved and conforms with rail industry strategies and capacity utilization; The ability of the local road network to accommodate traffic generated by the development without unacceptable impact on residential amenity and traffic flows; and All uses within the site should have the primary purpose of facilitating the movement of freight by rail. Any ancillary uses to this main use must be directly related to the movement of freight by rail and must demonstrate clearly why they need to be located on the site.
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Parkside Policy CAS3.26
The site of the former Parkside Colliery and immediately adjacent land is identified as a strategic location which has the potential to facilitate the transfer of freight between road and rail. The Council supports in principle the delivery of a SRFI in this location. The Council believes a deliverable and viable SRFI can be developed on the western side of the M6 with an operational area of approximately 85 hectares.
The Council will support the development of the site identified to the west of the M6 as a SRFI, provided that each of the following criteria are met:
1. It meets national Green Belt planning policy tests, including the demonstration of very special circumstances; 66 St.Helens Local Development Framework; St.Helens Local Plan Core Strategy
2. Direct access to the site from the M6 for HGVs can be obtained avoiding use of Traffic Sensitive Routes identified in the Network Management Plan. Adverse impacts on the Strategic Road Network will be mitigated;
3. Direct access to the rail network is achieved and conforms with rail industry strategies and capacity utilisation;
4. The ability of the local road network to accommodate traffic generated by the development without unacceptable impact on residential amenity and traffic flows;
5. Measures are incorporated which encourage travel to/from the site using sustainable transport modes, including access by public transport, cycle and foot, in accordance with Policy CP 2. A travel plan will be essential;
6. That the character and amenity of the Newton High Street and Willow Park Conservation Areas are preserved or enhanced;
7. Significant adverse impacts from the development itself or associated road and rail access routes should be avoided and, wherever possible, alternative options which reduce or eliminate such impacts should be pursued. Where adverse impacts are unavoidable, measures to mitigate the impact should be adopted. Where adequate mitigation measures are not possible, compensatory measures should be considered and adopted if appropriate. The aim should be to minimise any adverse impact. In applying this policy, a developer should address the following land use impacts as a minimum: environment; biodiversity/ecology; heritage; archaeology; agricultural land; community; quality of life; health; air quality; light; noise; visual intrusion; buffer zones; contributions to sustainable development; waste management; energy generation by renewable means; energy efficiency; water conservation and sustainable drainage; reuse of materials; traffic and sustainable transport; and remediation of land affected by contamination or surface hazards caused by past mining activity;
8. All uses within the site should have the primary purpose of facilitating the movement of freight by rail. Any ancillary uses to this main use must be directly related to the movement of freight by rail and must demonstrate clearly why they need to be located on the site; 9. Impact on Green Belt and landscape character is mitigated by significant landscape and green infrastructure enhancement, including tree planting;
10. Provision for the positive management of existing and new environmental assets;
11. Special regard should be had to the desirability of preserving the Listed Buildings at Newton Park Farm, their setting or any features of special architectural or historical interest which they possess. Should a suitable SRFI scheme require the removal of the Listed Buildings then substantial public benefits will be required including the relocation of the listed structures in a rural setting within the vicinity of Newton-le-Willows and preferably within the St.Helens local authority area;
12. Training schemes will be put in place to increase the opportunity for the local population to obtain employment at the complex; and
13. All other material issues are satisfied.
It is understood, however, that for operational, viability and commercial reasons a larger area of land extending to the east of the M6 motorway may also be required to accommodate an enlarged SRFI. It is considered that any expansion to the east would cover approximately 70 hectares of additional operational land.
The Council will also support the development of land to the east of the M6 provided the above criteria are met, plus the following additional criteria:
14. That the area of land to the western side of the M6 is developed first; and
15. That the SRFI is proven to be not deliverable without the additional eastern land area. Planning permission will not be granted for any other use of the land which would prejudice its use as a rail freight interchange. Subject to a SRFI being fully developed on site, that meets the requirements listed above, the Council will consider favourably a revision to the Green Belt boundary in the Allocations DPD and Proposals Map, or subsequent revision.
6 St. Helens Local Plan Core Strategy, 2012 AECOM 34 Parkside Logistics and Rail Freight Interchange Study
The purpose of the policy is as follows;
i. To facilitate the transfer of freight between road and rail by making best use of Parkside’s unique locational advantages in terms of road and rail infrastructure;
ii. The national, regional and local need for a SRFI in this location; iii. To identify an appropriate scale of development; iv. To outline an appropriate phased release of land; v. To outline the criteria that a SRFI proposal will need to satisfy to be considered acceptable; vi. To identify a trigger for the consideration of changes to the Green Belt boundary in this location.
2.6 Green Belt Implications
The Parkside Rail Freight Interchange Core Strategy evidence base Background Paper of 2010 reflects on the case for Parkside having exceptional circumstances as follows:
“The exceptional circumstances which support the release of Green Belt land in (and around) Parkside comprise the need to provide a SRFI in the North West to meet anticipated medium/long term market demand and to meet the Government’s objective of developing a more sustainable distribution industry, combined with the significant benefits the development would have in terms of generating significant employment opportunities in the Borough and the wider positive impacts on the sub-regional and regional economy.
The development of Parkside as a SRFI is also supported by the RSS. The Secretary of State and the Inspector have in the past refused development for two schemes, Newton Park Farm and a Motorway Service Area at Parkside, in order to safeguard the site for an intermodal freight terminal. 12.5.3 The Government’s commitment to tackling climate change, and especially reducing CO2 emissions, is unequivocal. The modal shift of freight movement from road to rail is a clear and urgent policy objective, the removal of Parkside west from the Green Belt in order to enable the development of a SRFI as a whole would result in a clear balance of advantage, notwithstanding some adverse effects in the immediate locality. The development of a SRFI at Parkside would bring about numerous positive benefits and provides a key opportunity to meet national and regional transport, environmental and economic aspirations whist delivering both short and long term benefits to St. Helens and the wider sub-region. Parkside has locational advantages in terms of access to the main rail network and the strategic road network and would be ideally placed to become an important logistics hub serving the North West region to meet forecast demand from distributors serving an active economic region. The harm to the Green Belt by reason of inappropriateness and any other harm is outweighed by other considerations and accordingly exceptional circumstances can be demonstrated to release Green Belt land at Parkside.”
This study has reviewed the case in support of an SRFI proposal at Parkside. In doing so, the strength of our findings provides the ongoing case for Exceptional Circumstances with regard to the site, and with minor amendments we believe these circumstances still apply.
2.7 Emerging Local Plan
As is shown in the analysis presented in this Chapter the development of new rail-linked logistics development is strongly supported at both a national, regional and sub-regional policy level. The Parkside site itself is also named specifically in the Transport for the North Freight Strategy and Liverpool SUPERPORT Market Analysis, Land and Property Report (2014) as a site suitable for consideration of a logistics and rail freight interchange.
Additionally as part of the Liverpool City Region ‘A Transport Plan for Growth’ delivering the SUPERPORT Freight and Logistics Hub (developments, sites and premises) is designated as a shared priority. The Parkside site along with Knowsley Industrial Park and 3MG in Halton are recognised as key to achieving the SUPERPORT Hub.
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2.8 Key Research Papers
2.8.1 Mode Shift Benefit Values – Technical Report7 and Refresh8
In deciding whether to send freight by road an operator will compare the additional costs he expects to incur with the additional benefits he expects to obtain. The additional costs faced by the operator, or ‘marginal private costs’, will include wage costs, fuel costs, oil, tyres and any other mileage related repair costs, including any taxes (such as fuel duty) incurred.
However the operator will also impose costs on other groups in society, which it will not factor into its decision to transport freight by road. These are referred to as 'marginal external costs'. In this review the same categories of external cost that were considered as part of the previous review of the values, reported in SRA (2003) have been used:
Congestion costs Accidents costs Noise costs Climate change costs Air pollution costs Infrastructure costs Other costs
In summary, the net social benefit of transferring freight from road to rail or water is made up of the net benefit of reducing the amount of freight traffic on road and the net cost of increasing the amount of freight traffic on other modes. This assessment has been used to assess the net benefits of having a rail connection for each option.
2.8.2 Double-Deck Trailers: A Cost-Benefit Model Estimating Environmental And Financial Savings9
Double-deck trailers could be a key contributor towards the UK’s commitment to reducing CO2 emissions towards 2020. A double-deck trailer greatly increases carrying capacity with current vehicle size and weight limits. Double-deck trailers are particularly well suited to retail distribution. This paper introduces a model that calculates the financial and environmental impact of deploying double-deck trailers on a specific set of routes. This paper is of particular relevance to rail freight as double-deck trailers are a strong competitor to rail freight due to the additional carrying capacity of these vehicles.
7 Department for Transport, 2009 - Mode Shift Benefit Values 8 Department for Transport, 2015 - Mode Shift Benefit Values: Refresh 9 Double-Deck Trailers: A Cost-Benefit Model Estimating Environmental And Financial Savings - Logistics Research Centre, Heriot-Watt University AECOM 36
Parkside Logistics and Rail Freight Interchange Study
Market Demand and Supply Assessment
03
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3. Market Demand and Supply Assessment
3.1 Introduction
As a site adjacent to the M6 and with the benefit of significant scale, the Parkside site clearly lends itself to larger scale logistics and distribution uses. This section of the Market Demand and Supply Assessment considers the likely potential and scale of demand for such uses at the Parkside site, including the attractiveness of rail facilitated property, relative to broader market trends and competing locations. It has been informed by Cushman & Wakefield‘s substantial industrial market research and through consultations with both our in-house and other external North West industrial market agents together with AECOM’s extensive knowledge of the rail freight sector.
3.2 National and Regional Market Overview
Global and domestic economic concerns including weak export numbers and the uncertainty surrounding the EU referendum impacted upon the national industrial sector in 2015. As a result, Cushman & Wakefield’s market research indicates that industrial enquiries plateaued as a result of occupier caution in 2015 (5,806 enquiries across the year) and take up eased to 29.7m sq. ft., 15% lower than the 2014 figures. These economic factors are anticipated to continue to have a dampening effect on take up in the first half of 2016, and there is uncertainty relating to the potential for improvement in the second half of the year due to the result of the EU referendum.
The growth of online spending has led to e-commerce becoming the most influential sector on the UK big box industrial and logistics market, with retail accounting for 38% of total take up in 2015, the highest level since 2010. The UK has the most mature online retail market in Europe with 16% of total retail spend anticipated to be spent online by 2019. As online consumers have become increasingly demanding, logistics operators have had to streamline and optimize their supply chains to ensure next day deliveries and ‘click and collect’ deliveries can be made. This increasing need to move vast volumes of stock at a fast pace has resulted in requirements for progressively larger distribution centers built to high specifications in most suitable locations near to consumers, including increased interest in multi-modal facilities such as DIRFT (Daventry International Rail Freight Terminal) enabling heavier goods to be transported over longer distances.
These advances have driven a key trend within the large scale industrial and logistics market – a ‘flight to quality’ for occupiers in terms of both premises and location, resulting in the highest Grade A take-up on record in 2015 (47% of the total).
A lack of Grade A logistics space in prime locations had led to the ‘big box’ occupiers favouring build-to-suit solutions, although the volume of Grade A floorspace taken up via such deals fell to around half in the second half of 2015 (from c. 76% in H1) as more speculative development entered the market.
Cushman & Wakefield currently estimate there to be in the order of 10.3m sq. ft. of speculative industrial floorspace over 50,000 sq. ft. under construction in the UK and a further 3.1m sq. ft. proposed. Developers are targeting the highly sought after mid-size market, with 100,000 to 250,000 sq. ft. schemes accounting for 49% of developments completed, under construction or proposed. Whilst much of this development remains centered on the highly accessible M1/M6/M25/M62 motorway corridors (for example, Omega in Warrington), speculative logistics development is now starting to spread along other major trunk routes as illustrated in Figure 3.1.
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Figure 3.1- Speculative Development Since Q1 2014 (Million sq. ft.) Source: Cushman & Wakefield Research, ERSI
The UK industrial market is currently the most expensive in Europe, however until recently the dearth of new development and competition over available space has meant that prime rents have increased by 12% since 2011. Cushman & Wakefield forecast that despite an increase in speculative development, a lack of available land in good locations will continue to fuel rent rises of c.10% over the next five years across all key centres.
Within the North West regional market, industrial take up totaled over 5 million sq. ft. in 2015, similar to the previous year but falling significantly in the second half of 2015. As per the national picture, Grade availability in the North West increased by 80% on the previous year to 783,000 sq. ft. at the end of 2015. Speculative development started off at a slower rate than in other regions, and the resulting low availability coupled with a highly active market led to some of the strongest prime rental growth in the UK. However, this also contributed to the slow rate of take-up in the second half of 2015 as occupiers become reluctant to pay such rental levels. Despite this, take up is expected to increase in response to the Liverpool 2 port forecast to open in H2 2016 and consequently rents are expected to continue to rise across the region.
3.3 Drivers of Demand
Regardless of economic trends, the demand for industrial and warehousing floorspace continues to be driven by a series of multiple generic and business specific factors. The primary generic drivers for almost all occupiers are as follows:
. Location - there is a need to be in the broad location that best suits business requirements, in terms of access to customers (internal and external), supply chain and employees. In a higher value added economy, evidenced through the emergence of advanced manufacturing (for example), access to higher skills is an increasingly important driver but workers anticipate greater travel to work distances as a consequence of higher pay levels. However, businesses requiring a low skill base will locate where there is a plentiful supply of cheap labour. Therefore, choice of location will be driven by accessibility which, depending on the nature of the business, could be either excellent strategic highways connections or high level public transport access, or a combination of the two. . Availability of space - ultimately most occupiers are opportunistic and will go where the right space is available at the right time and at an acceptable cost. An occupier’s first choice is often within their existing location and then places nearby or with similar attributes which satisfy staff need. Decisions tend to be short term e.g. responding to a new contract, and as such there is a need for a supply of ‘oven ready’ sites and premises of a variety of types and locations to enable areas to serve the needs of both existing and incoming businesses.
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. Financial incentives and public sector intervention - in the past, occupiers have been driven to particular locations by the public sector, both through the planning system and, more frequently, through the availability of grants and incentives. However, public sector spending cuts mean that this is very unlikely to be such a significant driver moving forward, and the public sector’s role will be more of an enabler, in particular through the planning system. . Sustainability - In terms of occupier requirements going forward, increasing importance will also be placed upon build standards and environmental performance as companies seek to reduce running costs and meet corporate and social responsibilities. 3.4 Document Review – Land Demand Indicators
A number of key documents consider the future demand requirement for employment land associated with the rail and sea freight sectors. These have particular relevance to Parkside and could help inform the implications for the demand for property at the site:
. SUPERPORT Land and Property Market Analysis Report (2014) - The demand requirement for land in the manufacturing, distribution and transport sectors in the Liverpool City Region is estimated at 800 hectares. At the time of the report in 2014, the supply of high quality, large scale sites such as at 3MG and Omega South were identified as sufficient in the short term, however up to a 20 year period an additional 400 hectares (minimum) of large high quality sites suitable for logistics clusters would be required to maximise the opportunity created by Superport and prevent demand from going elsewhere. Just two years on from this report and Omega is now almost at capacity suggesting the additional requirement for large scale good quality sites may need to be facilitated in the shorter rather than longer term. . Transport for the North: Freight & Logistics Strategy: Concludes that the development of 50 hectares per annum of rail and/or water connected Multimodal Distribution Parks (MDPs) will be required to 2033 (equating to a total of 850 hectares over this period) in order to reduce the cost of freight transport, expand market share in the logistics sector and attract private inward investment to the Northern Powerhouse. Development of MDPs will be focused at the edge of urban centres and along east-west corridors to maximise transport efficiencies. In the North the most obvious opportunities are from the Mersey along the Manchester Ship Canal at sites such as Port Warrington, Port Salford and Runcorn.
. St Helens Employment Land Needs Study – Identifies an overall borough-wide employment land requirement of 177-214 hectares to 2037. Opportunities for larger operations, particularly large scale logistics businesses, were found to be very limited despite an anticipated strong shift to B8 warehousing requirements to 2037. As such, the need for Storage and Distribution (B8) employment types accounts for 100-130 hectares of the total employment land requirement, with the next largest need being 50-65 hectares for General industrial (B2) uses. The locations of the additional land should build upon the existing employment nodes in St Helens exploiting its key location advantage.
Each of these documents indicates an anticipated demand for additional employment land across St Helens and the wider sub-region for larger scale industrial and distribution development associated with improvements and growth to the rail, sea and road freight sectors. The Parkside site is well placed to respond to this anticipated growth in demand.
3.5 Market View of the Parkside Site
Consultations with Cushman & Wakefield’s in-house agency team, together with other external Industrial Market Agents active within the North West regional market has revealed the following key messages in respect of the local market and potential of the Parkside site for distribution use generally:
. Improving market sentiment – There is an improving narrative behind the North West and its regional economy. Positive news stories around the Northern Powerhouse, Liverpool2, Jaguar Land Rover and Manchester Airport have all served to enhance wider market perceptions of the region, particularly around Manchester and Liverpool. . Short term speculative supply – A total of 3.6 million sq. ft. of speculative development has come forward in the North West since 2014, with more announcements expected in 2016. For example, development is currently happening on the ground at: AECOM 40 Parkside Logistics and Rail Freight Interchange Study
- Omega, Warrington – Limited availability with just the last couple of plots remaining. London Metric are currently speculatively building a 350,000 sq. ft. cross-dock facility. The Parkside SRFI site is currently not considered to be as attractive a location as Omega owing to visibility and immediate motorway access. - Logistics North, Bolton – Strategic location on the M61 near Bolton with land available. Speculative development is currently underway on three units of 175,000, 275,000 and 350,000 sq. ft. Parkside is currently not considered to be as good a site, but could be of equal attractiveness if road linkages could be improved. - Kingsway, Rochdale – 250,000 sq. ft. speculative shed is currently under construction. Parkside’s strategic location adjacent to the M6 makes it a more attractive market location than Kingsway near the M62. - Haydock Industrial Estate, St Helens – Established industrial location situated at the junction of the East Lancs Road with the M6 at Junction 23. The estate is performing well and counts Sainsbury’s (350,000 sq. ft.) and Cost-Co as occupiers. The Haydock Cross site has just been purchased and is considered to be of equal attractiveness to the Parkside site. - South Lancashire Industrial Estate, Ashton-in-Makerfield, Wigan – 3 large sheds of 100,000 to 350,000 sq. ft. are under speculative construction. - 3MG, Mersey Multi-modal Gateway – Situated in Ditton, Widnes with access to the West Coast Main Line. The site is predominantly owned by Stobart Group and has outline planning consent for 2.7 million sq. ft. of new buildings, but development is not progressing. - Port Salford – Peel owned site with planning permission for 1.6 million sq. ft. of distribution warehousing - Port Bridgewater, Ellesmere Port – Proposals for 1 million sq. ft.
. Constrained future supply – Several of the key distribution locations identified above such as Omega, Warrington; Trafford Park, Manchester and Logistics North, Bolton are beginning to reach critical mass and there is now a recognised shortage of large scale employment sites in single ownership within the North West with the ability to be delivered within the medium to long term (post 3-5 years). Within St. Helens, the UDP Proposals Map indicates that there is no additional allocated employment land available for development along the M62 and therefore the focus is on the M6. In response, the Employment Land Study recommends that the Parkside site, land at Junction 23 of the M6, and Junction 7 of the M62 should be the key sites to secure for logistics purposes. The Parkside site is in single ownership and is capable of delivering large footprint premises on an edge of motorway location. This limited supply of truly strategic sites in the pipeline is considered to be one of the key advantages to the Parkside site. . Attractive local labour market – The Parkside site is situated within the Borough of St. Helens, but close to the border with Wigan and Warrington. Each of these local authorities is considered to have a labour market that is attractive to the industrial and distribution industry and is bourne out of the area’s strategic location at the crossing points of major road and rail infrastructure. 7.7% of St Helen’s working age population is engaged in transport and storage sector compared to 4.5% regionally and nationally. In Warrington the rate is 6.2% and Wigan 4.9% (Source: ONS BRES 2014). These figures indicate a strong pool of appropriately skilled labour. Further, full time earnings in St Helens average £480 per week, lower than the £492 regional average, indicating an affordable location in terms of labour. . Requirement to improve road access – The Parkside site is situated in a good location adjacent to the M6 corridor and between Warrington and Haydock. Further, St Helens is deemed to have an attractive labour market. However, road access to the site is currently undermining its market attractiveness. Whilst only a 5 minute drive to the M6 or M62 motorway junctions, congestion is considered to be an issue on the A49/M6 link locally. In order to be the next ‘Strategic Site’ in the North West and to compete effectively with the likes of Omega and Logistics North, the site really requires its own direct access to the M6 or significantly improved access via the A49. However, there are significant costs to developing such significant new infrastructure. . Rental levels - Prime industrial rental values in the North West are currently in the order of £6.50 per sq. ft. at Omega, Trafford Park, Warrington and in South Manchester. Discussions with market
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agents have suggested potential values in the order of £5 per sq. ft. at Parkside based on current accessibility, increasing to £6 to £6.50 per sq. ft. with improved road access. The rail link will drive additional value but the scale of this is largely untested and therefore unknown. . Scale of development - The estimated 74 acres of developable industrial land at the Parkside site is considered by the market to have the ability to deliver up to 1.5 million sq. ft. of industrial and/or logistics space. There is considered to be good demand for big box logistics, although most of the large scale retailer and parcel delivery requirements which had been driving the market on the North West have now been met. Demand will therefore likely be from other distribution users and possibly manufacturers. The St. Helens Employment Land Needs Study supports this market sentiment indicating that B8 employment land growth is expected to be led by the large scale operators (greater than 200,000 sq. ft.). Unit sizes of 100,000 to 200,000 sq. ft. could possibly be delivered speculatively dependent upon timing of delivery, or up to 500,000 sq. ft. with a pre-let. 100,000 to 350,000 sq. ft. units are considered to be most appropriate and market facing. Smaller units of 5,000 to 20,000 sq. ft. could also be provided for local occupiers. . The challenge of deliverability – The market considers the key challenge to developing a SRFI at Parkside to be deliverability. Pro-logis specialize in large scale distribution locations and delivered over 7.8 million sq. ft. of rail connected space at DIRFT in Daventry, and yet were unable to bring forward the Parkside scheme. Langtree specialise in traditional industrial developments and may well face similar challenges to delivery at Parkside. 3.6 The Demand for Rail-Linked Property
In considering the market potential for rail linked property at Parkside, the following points are key considerations: . Interest in rail and sea - Distribution by rail and sea is high on the agenda at the moment as businesses seek to explore more cost efficient means of transportation than road, particularly for those requiring large scale or volume movements such as Jaguar Land Rover and Vauxhall. There is also increased awareness and business interest in improving environmental credentials and reducing carbon footprint to support Corporate Social Responsibility. The findings of the Liverpool City Region Stage 1 Freight Study support this trend, anticipating a modal shift towards water and rail freight transport across the City Region to 2020. It is anticipated that this will drive a demand for large warehousing (100,000 sq. ft. or more) across Merseyside with a focus towards large water and rail connected distribution parks largely around Seaforth, Widnes, Knowsley and at sites along the Manchester Ship Canal. . Growth of rail distribution – The use of rail freight nationally has grown 14% from 18.5 billion tonnes/km in 2002 to 21.1 billion tonnes/km in 2012. The ability to deliver a rail freight interchange at Parkside could be a real game changer being better than most competing sites given connections to two rail lines – north-south via the West Coast Main Line and east-west via the Chat Moss Line. Despite this, there is an industry view that Parkside could work without the rail link as rail is rarely the main driver of an occupier deal. . Impact of Liverpool2 - The impending opening of the Liverpool2 port is understood to have led to speculative development along the west end of the M62, with schemes in Speke, Ashton-in- Makerfield and Warrington now under construction or proposed. Liverpool2 could be a real driver for the Parkside scheme, however the introduction of post-Panamax vessels into Liverpool is a largely untested market and the impacts are not yet known. The findings of the Liverpool SUPERPORT Land and Property Market Analysis Report (2014) supports this indicating that port located distribution centres enable businesses to bring cargo close to the end market and reduce carbon emissions by up to 60% by storing stock at the point of import. As a result, it anticipates increased demand for warehousing at ports as shippers increasingly implement the process of slow steaming (operating at less than their maximum speed) to reduce costs and adjust their environmental impact.
. Site scale and inter-connectivity - The characteristics of a site which can meet financially and operationally the needs of customers, developers and operators must be of a scale that can defray the required investment to deliver a SRFI specification. The required critical scale for train operators must also match the on-site and local demand for services to Ports, and other supply / demand locations which are rail located. Having the option to secure warehousing space at a site such as
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Parkside will enable connectivity between road distribution and rail distribution to be made at the lowest possible cost as enabling access from the site to long distance rail transport for the trunk haul.
. An established distribution location - The co-location of other warehouses on the site and in the immediate area of Parkside (Omega, Haydock, Logistics North for example) will enable the scale of supply and demand to permit the development of intermodal train services to be offered from the site both to a range of different markets and locations, mainly for Deep-sea Ports (for Sea imports – Southampton, Felixstowe, but also Teesport, Immingham) Domestic Intermodal (Scottish Central Belt, West Midlands (Daventry)), and European Intermodal Services via the Channel Tunnel.
. Opportunity for additional supply chain benefits - Features such as internal private road status enable red diesel, road tugs, higher vehicle weight limits and linked warehousing all allow for a more cost effective end to end supply chain cost and for nearby warehouses a competitive cost and time offer – which is particularly helpful to a freight sector which is typically low margin (circa 4-8 %).
It has already been noted that the future supply of large scale B8 warehousing space with good strategic accessibility and in single ownership is becoming increasingly constrained in the North West. The Parkside site as an intermodal terminal and logistics park of c.100ha would provide a significant contribution towards the 50ha per year of rail and water connected multi-modal distribution space requirement recommended in the Transport for the North – Freight and Logistics Strategy.
Further, there is an increasing interest from users and buyers of warehousing and distribution services to integrate rail freight into their transport operations owing to the potential cost and environmental savings with rail freight options sometimes being specified in procurement contracts.
As such there is a good indication that matching on site and local demand with a rail network which can serve four directions and a population of over 1 million people within a 20km radius makes the Parkside site unrivalled in the North West. However as previously noted, the scale of the additional rental (and subsequently land) value generated by the provision of rail linked facilities is largely untested in the North West. The ability to facilitate a rail connection offering W10 gauge connectivity in all four directions will help to future proof against future shifts in the rail and distribution market.
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3.7 Stakeholder Views on the Parkside Site
This section outlines findings from the workshop held on 18/05/2016 and the online survey with regards to view of stakeholders on the potential Parkside Logistics and Rail Freight Interchange.
Respondents were asked via the online survey whether they thought Parkside was one of the most suitable locations for a SRFI in the North-West. The majority (69%) agreed with a small percentage (31%) of respondents disagreeing (Figure 3.2).
Respondents stated that the main advantage for Parkside is its geographical position; Parkside’s location is ideal as it has good road access (close proximity to the M6, M56 and M62) and rail links (West Coast Mainline and Chat Moss Line). The site was felt to have a sufficient amount of land and the potential to become a rail connected development.
No 31%
Yes 69%
Figure 3.2 – Is Parkside one of the most suitable locations for a Strategic Rail Freight Interchange (SRFI) in the North-West?
“Parkside is probably the optimum location for a new SRFI in North West England given its proximity to main markets and the motorways. It should form part of a network of similar facilities up the West Coast Main Line.” UK Rail Freight Operator
“There is a need for rail linked sites to serve the North West, given the lack of capacity now, and the general increase in freight and logistics activity in the region. Parkside has always been a good location by all the usual metrics and if the funding and infrastructure issues can be overcome it will be as good a location as any” Chief executive, Rail Freight Forum
“The Parkside site would be good as in intermediate stop off between London and Scotland. The site is a convenient location that minimises diversionary mileage and time.” Multi Modal Logistics Interchange Operator
It was widely regarded by stakeholders that the market could comfortably serve three trains per day from the outset. The site could then build towards 8 over the next 5 to 10 years. The consensus is that Parkside would primarily be served by the deep sea ports in the south (e.g. Felixstowe, London Gateway and Southampton) but it is also thought that the location could support services on an east-west axis to Teesside and the Humber ports, in addition to a service to Scotland and potentially a direct service through the Channel Tunnel. These links would increase the sites importance on both a national and international level with the possibility to align with global supply chain that utilise deep sea movements into these ports. This would also help to fight off competition from other proposed SRFI sites in the UK.
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There were some technical issues cited by stakeholders in relation to rail access to the site. These centre around issues such as the positioning of items of infrastructure following the electrification of the Chat Moss railway line and constraints relating to line capacity. The line capacity issues are caused by the multiple crossovers required to enter the site (primarily an issue from the South and West) meaning achieving train paths could be challenging. However direct engagement with Network Rail and other key stakeholders including those at the workshop felt these issues are not insurmountable.
Evidence from stakeholder engagement also highlights the move from operators to base themselves further north away from the traditional ‘Golden Triangle’. This is due to increases in rental prices and a lack of labour supply in parts of the Midlands. A tenant at DIRFT had to cancel expansion plans as they could not get enough workers. Parkside provides an opportunity to overcome these issues and would therefore be attractive to potential tenants.
However without an operator for the site, regardless of the strength of stakeholder support, the site is unlikely to become operational as a SRFI. However there has been good interest for operating the site shown by two separate organisations, a rail freight operator and a logistics company.
“Parkside has the potential to deal with 20 train in and out per day. If this was achieved then it would be beneficial to move operations to the site”. UK Rail Freight Operator
“The Parkside location for a terminal is a good one as it is right on the West Coast Mainline and potentially would be good for trains from London to Scotland to call into for delivery and collection with minimum time loss. It is a terminal site that we might be interested in operating.” Logistics company
This is very positive and shows that there is clear market demand for the site as these organisations are closest to the rail freight ‘big players’ and therefore have the best understanding of their future rail freight strategies.
Another positive to come from the consultation is the possibility to utilise a rail freight connection for the construction of the Parkside site.
“A rail connection from start can help reduce road movements during construction phase, leave a legacy and assist with the funding case going forward.” Construction company
This would help to mitigate the road movements involved in the construction phase of the development and subsequently make expanding the rail infrastructure so it is capable of handling intermodal freight movements much easier as the connection the network is already there (large investment). The reduction in road movements associated with construction would also help to get planning permission for the site and additionally would provide for safeguarding of land for the additional rail freight infrastructure. There is also scope for the site to be used for bulk rail freight movements, this was cited by stakeholders as beneficial for the Parkside site as it would enable the site to be flexible with regard to market trends. A possible bulk movement could be to/from one of the ports in the north. Although the distances are relatively short the volumes achievable from a Port may make this type of movement viable. Similar movements that have proved to be economically viable were outlined by stakeholders.
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“We currently operate a rail freight route of 20-25 miles and it has proved to be very efficient and very cost effective.” Construction company
3.8 Existing and Planned (S)RFI’s
This section outlines the existing and planned capacity of rail freight in the Parkside catchment area, wider catchment area and nationally.
3.8.1 Catchment Area / Wider Catchment Area
There are several competitor sites to Parkside including several intermodal sites that are already open such as Trafford Park and 3MG at Ditton.
3MG already has an operational intermodal terminal, operated by the Stobart Group next to Tesco’s North Western Regional Distribution Centre. This terminal is currently served by 5-6 daily trains, handling containers for major shipping lines e.g. Maersk. This equates to over 120,000 containers per year. The terminal is already capable of handling trains up to 24 wagons in length (approximately 500m trailing length). Freight trains serving 3MG are currently stabled and sectioned at the existing Network Rail freight sidings at Ditton. However, planned investment at Ditton will see the development of three new 775m length reception sidings. These new sidings will increase the rail capacity of 3MG, allowing the site to handle up to 16 trains per day per direction. This is the equivalent of approximately 400,000 HGV movements per annum. The 775m siding length will also allow 3MG to handle full length trains via the Channel Tunnel.
In the future Knowsley which is currently being refurbished and Peel’s new Port Salford site are likely to be competing with Parkside for intermodal trade.
The Potter Group based at Knowsley is refurbishing their rail terminal to handle Merseyside trade. They are also planning a development to potentially offer an improved rail freight solution to allow the facilitation of intermodal movements. However at the time of writing the Knowsley terminal is not handling any regular freight trains. Part of the problem has been that the infrastructure has been unsuitable for modern train operation. As part of the upgrade work, the loading gauge on the Kirkby to Wigan line is being upgraded to W9 loading gauge which allows temperature controlled containers to move by rail as well as the standard ambient boxes. The upgrade will also result in extending rail sidings so that the terminal can handle 750m long freight trains.
Peel Holdings is developing the Port of Salford inland tri-modal terminal near the M60 on the A57. The development features a new 1.27km rail link to the Chat Moss Line and four 775m reception sidings. Phase 1 will have the capacity to handle 300,000 container units in its inter-modal terminal and 3.7 million pallets per annum through its distribution buildings. It is intended to attract up to 16 freight trains per day and lead to the substantial net transfer of 21 million HGV kilometres from the strategic road network. The Port of Salford and Parkside are likely to be in competition with each other for Port intermodal traffic. Traffic from Liverpool is unlikely to go to Parkside as Peel have are developing their own facility at Salford. Nevertheless it is thought there is plenty of additional traffic from south or east coast ports and potentially some domestic intermodal flows.
3.8.2 Nationally
On a national scale there is a wide range of SFRIs being proposed, some of which have received approval from the Secretary of State (Radlett, East Midlands Gateway, Port Salford). The proposed SRFI’s are predominately located in a line connecting the North West (Parkside) with the London and the South East. This can be seen clearly in Figure 3.3. This fits with the speculative developments since Q1 2014 shown in Figure 3.1.
The expansion plans at DIRFT, known as DIRFT III are of particular note. ProLogis plans to replace the existing DIRFT1 Railport with a much larger facility which will cater for 775m length trains and include warehousing and storage facilities. The aspiration is to operate a significant increase in traffic in the future.
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Figure 3.3 – Strategic Rail Freight Terminals (existing, approved and proposed)
“Strategic Rail Freight Interchanges are desperately needed along the line of the M6 between Manchester and London. This would allow the main population areas in the UK to be served within 30 miles.” UK Rail Freight Operator
“Availability of land and labour is an issue – This means that companies are moving further north away from the traditional ‘golden triangle’ in the midlands.” UK Rail Freight Operator
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3.8.3 Comparison of Alternative Sites
As part of the study a comparison of the sites within the wider Parkside catchment area has been conducted. Table 3.1 provides this comparison based on road and rail access.
Table 3.1 – Comparison of access for other sites (existing and planned) in the wider catchment area County Site Status Name and Road Access Rail Access Other comments Region Strategic access via M6 Previous access to the Formerly rail connected in its (north and south) and site via Chat Moss line to past use as a colliery with M62 (east and west) the north of the site disused tracks still in place Merseyside, Strategically located Suitable to be a SRFI Parkside Proposed North West allowing for movements from/to the north, south, east and west
A562 dual carriageway Access from Crewe to Expansion of the existing close to site of new Liverpool line, west of facilities at Ditton (Mersey Mersey crossing Widnes Multimodal Gateway Logistics M62 run to the north of Park) Cheshire, the site – Accessed via Could result in 16 Intermodal Ditton Existing North West A5300 or A557 trains a day to and from the major ports as well as domestic traffic Intention is to receive trains up to 775m in length at this site. Access via A5207 to Access from Liverpool to Small facility aimed at catering Being Merseyside, M57 Wigan line east of Kirby for waste trains to Teeside but Knowsley refurbished North West Access via A5280 to (diesel only) capable of handling 1 or 2 A580 intermodal trains per day Access via A5036 or Bootle branch line serving New facility at the Port of Seaforth Proposed Merseyside A565 in Bootle the port Liverpool to serve the growth of Liverpool 2 Access via minor road Connected to West Coast Small rail freight facility to serve Port on to A56 and then M56 Main Line through 1 or 2 companies Proposed Cheshire Warrington Warrington freight yard and Walton Old Junction Port Access via local road Connected to Helsby to Small rail freight facility to serve Cheshire Proposed Cheshire on to M53 Hooton line (diesel only) 1 or 2 companies (EP) Access via A5 to M6 Connected to West Planned to be a SRFI Four Ashes Proposed Staffordshire junction 12 Coast Mainline Would serve a different catchment area to Parkside
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County Site Status Name and Road Access Rail Access Other comments Region (North Midlands) main Access via M60 / M62 Connected to the It will be the inland water served Under Greater Manchester to Liverpool distribution park using the Port Salford construction Manchester route (Chat Moss route), Manchester Ship Canal Potential to be a large rail facility A561 - Speke – Access off Crewe – Existing terminal that is already Garston Existing Merseyside Liverpool Liverpool line serving approximately 4 trains per day Access via urban roads Access to the terminal is 3 existing terminals Trafford Greater achieved through central Existing Located inside the M60 Fairly constrained Park Manchester Manchester and Piccadilly
Table 3.2 provides a comparison of the current train movements and the potential maximum for each site. This allows the potential additional train movements in the catchment area to be assessed and Parkside’s role in achieving that to be examined.
TfN’s Freight and Logistics Strategy sets out that demand for GB Freight Train kilometres in the North is set to double between 2014 (10.8 million km) and the 2033 central case forecast of 19.2 million km. In connection with supporting this increase in train operations additional intermodal train handling capacity will be required in the form of terminal handling slots. In the North only Parkside and Port Salford offer fully open access services. The Long Term Planning Process – Freight Market Study (2013) is forecasting a near doubling of total intermodal traffic (tonne Km). With Port Salford offering a potential 10 trains a day and Parkside offering under the medium scenario 8 trains a day (Table 3.2), there is a requirement for the supply of additional intermodal train handling slots (over the current 25 trains per day) to support the TfN Freight and Logistics Strategy recommendation of 50ha per year target of multi-modal distribution parks in the North of England.
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Table 3.2 – Comparison of current / potential maximum capacity (number of trains) at other sites (existing and planned) in the catchment area Number of trains Potential Site Status County Name and Region Current Potential Additional Maximum 3 (small) /8 Parkside Proposed Merseyside, North West 0 12 (medium) /12 (large) Ditton Existing Cheshire, North West 6 16 10 Knowsley Being refurbished Merseyside, North West 0 2 2 (*) Seaforth Proposed Merseyside 0 15 15 (*) Port Warrington Proposed Cheshire 0 2 2 (*) Port Cheshire (EP) Proposed Cheshire 0 2 2 (*) Four Ashes Proposed Staffordshire N/A – Not in catchment area 5 (*) Port Salford Under construction Greater Manchester 0 10 5 Garston Existing Merseyside 4 4 0 Trafford Park Existing Greater Manchester 15 15 0 (*) – Trains associated with specific port and single customers so are not open access
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3.9 Summary
It is clear from the market demand and supply assessment and stakeholder engagement that there is sufficient demand for a SRFI in the North West. Nationally the demand for both warehouses and rail freight interchanges is along the M6 corridor between Manchester and London as shown in Figure 3.1 and 3.3.
Stakeholders are very positive about the site’s feasibility as a SFRI. This is mainly due to its unrivalled ability to serve both North-South intermodal flows on the West Coast Mainline and east-west intermodal flows on the Chat Moss line. The site can also receive trains from all directions (north, south, east and west) which provide maximum operational flexibility and resilience to allow changes in market trends to be catered for. Road access is also very good with the M6 and M62 in close proximity to the site.
In comparison to other current and potential sites the Parkside site scores highly on all the attractiveness metrics. No other sites in the catchment area have the potential to receive trains from all directions with some only able to receive trains from one direction. For example Garston can only receive trains from the South. Additionally the Parkside site’s access to both the M6 and M62 is highly advantageous meaning that the Parkside site has the potential to be an 'all points' operation, offering as much in terms of intermodal activities as it might in terms of being a destination and general logistical base in its own right. The site is also felt to be complimentary to Port of Salford and any competition is likely to stimulate the market rather than suppress it. This is due to growth in the market demand for intermodal terminals in the North West as stated in the Transport for the North Freight and Logistics Strategy (2016).
It is therefore felt that the site is of national importance as well as regional significance in relation to the market demand and need for the delivery of new and improved SFRIs, and in supporting the economic and employment growth objective in St. Helens and the Liverpool City Region.
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Operational Requirements
04
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4. Operational Requirements
4.1 Introduction
It is critical to match the specification and functionality of a rail freight terminal at Parkside with the freight market in the surrounding area. Therefore, in this section the broad operational requirements for varying sizes of rail freight interchange will be provided. This will allow the demand (number of trains per day) to be matched with required specification and functionality of the site.
The different aspects of specification and functionality will be outlined under the following headings:
Major infrastructure components o Rail support infrastructure o Road support infrastructure o Cargo transfer infrastructure;
Terminal equipment; and Ancillary services
The specification and functionality required for a small, medium and large rail freight terminal at Parkside will be outlined in this section. General aspects of rail terminal specification and functionality are outlined initially as context.
4.2 Major Infrastructure Components
The design capacity of a domestic (non-port) intermodal terminal needs to be measured for three basic areas:
Rail (arrival and departure trains) Road (arrival and departure of trucks) Cargo transfer area (transfer containers from rail to/from trucks)
Typically intermodal terminals need to have a balance between these three components in order to avoid mismatched investment in any one terminal area. In order to determine this balance, each component can be measured in terms of their throughput capacity.
4.2.1 Rail Support Infrastructure This relates to the amount of track in the terminal required to effectively and efficiently handle the volume of trains serving the terminal. This will require estimating the peak rail demand and then creating sufficient track capacity in terms of length and number, to support the rail operations based on track occupancy and usage.
Arrival/Departure Tracks These tracks keep the terminal fluid and prevent the mainline from becoming congested with traffic. This means tracks should be long enough to hold entire train lengths as defined by EU standards (750m + locomotive) or 775m. The number of tracks will directly relate to how many trains may be arriving/departing within the same time period based on train schedule.
Ideally the number of arrival/departure tracks would be zero with all trains arriving/departing directly from the load/unload area (Pad Tracks). However the conflict between pad tracks, which cannot have overhead electric wires for safety reasons due to the need of overhead cranes to top pick the containers lifting them on and off wagons, versus the mainline locomotives that require overhead catenary system means that such locomotives cannot bring the containers directly into the pad tracks.
Therefore mainline trains will need to arrive on catenary fed tracks and the use of a diesel or battery operated electric shunter locomotive will be required to shunt the wagons into and out of the pad tracks which will not have catenary. Alternatives to this could include having a “last mile” dual energy mode locomotive that could
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be an electro-diesel or have a battery pack. Or using the “coasting” method where the train lowers its pantograph and coasts into position.
Furthermore, variances in train schedules may require that arriving trains are held temporarily in the arrival/departing tracks terminal (sometimes called reception siding) while the actual pad tracks are used to finish serving other trains. Therefore these tracks serve as a type of buffer between mainline schedules and the actual cargo transfer taking place on the pad tracks.
Storage Tracks In addition to the main operational tracks there is a need for sidings for surplus wagons as necessary to support the train service. These tracks could be shorter than 750m to provide for ability to easily shunt wagons using shorter strings. It is also dependent upon how balanced the rail service is.
Ideally all the wagons arriving are unloaded and should depart loaded with another container without any shunting. The ability to fill every wagon with a container involves the ability to balance cargo movements. In reality, there may be imbalances in service that require additional wagons to be held for a period of time for different train services.
Repair Tracks These tracks enable wagons to be repaired within the terminal without having to move them to remote repair facilities. This requires sufficient track length to hold the longest wagons and capacity to repair wagons at a rate in keeping with the normal peak requirements.
4.2.2 Cargo Transfer Infrastructure This is the heart of the terminal operation where Rail (trains) meets Road (trucks). The optimum shape and size of this area will be dictated by the forecasted volumes to be handled taking into account the type of container or bulk traffic:
1. Dry 2. Reefer (refrigerated/heated) 3. Bulk/Liquid 4. Dangerous Goods
Rail Pad Track This should be of sufficient total length to provide access to cranes for transfer as required by the train service requirements. Ideally there is sufficient track to hold any train requiring unloading or loading at any given time. Furthermore trains should be able to arrive/depart directly to/from the pad tracks.
In general practice concerning asset use, a turnover of the Pad Tracks twice every 24 hours is considered a good use of rail asset for a domestic terminal. Port terminals on the other hand may have a much higher turnover based on limited track space typically found in ports, which in turn requires far more rail shunting costs for handling trains arriving and departing.
Based on AECOM terminal design experience, a good benchmark to use is the ratio between the lengths of Rail Support track versus lengths of Rail Pad track. Efficient domestic terminals generally run with a 1:1 ratio respectively. An inefficient terminal about 2:1.
Pad Area This is the area accessed by outside trucks to drop off containers or pick up containers near or at the pad tracks. Historically trucks were restricted to remote parking areas to pick-up containers already preloaded on chassis that were shunted there by terminal shunt truck operators. However best practice today is to permit outside trucks direct access to pad track “roadway” areas to minimise the distance containers are moved and number of times they are handled by terminal staff.
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Staging Area Ideally the truck arrives just in time to drop off the container for the train, which is directly loaded to the rail in one move by the crane. Similarly the truck picks up the container that has just arrived by train again with one crane move from the train to the truck. If this could be coordinated terminals could be extremely efficient. The staging area design could be very narrow (along pad tracks) and the cranes would thus make a one to one move for every container throughput.
However the reality is that the direct transfer of containers from wagon to truck or wagon to wagon, while preferable, will not always be possible due to timing of service requirements such as shipper loading constraints at their locations, or consignee appointment time restrictions at their locations, or customs holds being placed on a container for inspection, or late trains, or late trucks, etc., all of which are beyond the control of the terminal.
Therefore cargo transfer areas also include container staging areas (temporary storage buffers) based on a calculated percentage of containers handled with the average dwell time in the terminal.
4.2.3 Road Support Infrastructure Similar to rail support, this is primarily defined by the road access to and egress from, the terminal for trucks. Very simply, the gate activity then requires a certain number of traffic lanes as well as a minimal queue length to ensure that arriving truck traffic is not backed up onto local roads or highways and departing trucks do not congest the terminal exits. The number will be based on peak demand against best practices (see below) to determine the physical gate requirements. This gate calculation includes cars belonging to administration building staff, other employee parking and temporary parking area for trucks requiring assistance on arrival or departure.
The ability of the terminal to handle trucks efficiently as they arrive and depart is part of the “in-gate” and “out- gate” functions.
Ingate This functions as the primary contact for the truck. For best practice, all of the information transactions for the truck to carry out their work within the terminal including both the dropping off and collecting the container in the terminal, should be processed at the Ingate.
The ability of the terminal to get advance data on which truck, which driver, and which container is arriving is key to keeping the gate flowing and the physical size of the gate infrastructure to a minimum. For liability reasons containers need to be scanned for external damage as they enter and damages noted since they will be receiving and responsible for the container once dropped off.
Ideally the Ingate is one lane wide and only one truck queue that never has to stop a single truck, that is scanned as it moves and identity confirmed and authorized by a wifi system that provides security checks, and sends data directly to the driver for this authority to enter along with their drop off location in the terminal and their authorization to pick up an outbound container with its location and status. The reality is there is a stop required at the Ingate with current technology.
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Outgate This requires a simple scan of the truck and container with authorisation to depart to ensure the correct container is taken by the correct party.
Ideally this should not require any stopping. However at this point with current technology there is a stop required typically for signatures for receipt of container and confirmation of the truck driver ID.
4.3 Terminal Equipment
The service requirements, whether staging or other handling requirements as well as the overall container volumes generally dictate the type of equipment chosen which also affects the overall shape and size of the layouts.
The type of cranes/equipment chosen will dictate the actual shape and size of the transfer areas. The unload/load tracks (Pad Tracks) will be designed by investigating optimum operating impact based on best practices. This typically involves moving containers the least distance per handling, as well as the fewest overall handlings.
Lifting Equipment Lifting equipment can be either manual or automated depending on the type of equipment used; typically rail- mounted gantry (RMG) cranes are used for an automated environment. Transport equipment is typically manually operated due to the difficulty in separating automated vehicles from street truck activity.
The types of lifting equipment used in an intermodal rail terminal environment are typically either an overhead crane such as an RMG or a rubber-tyre gantry (RTG), or a front-end loader such as a reachstacker (RS) or top-pick.
Rail mounted gantry (RMG) cranes are the most common type worldwide and have a number of advantages over other types of lifting equipment. Figure 4.1 shows RMG cranes being used during night time operations at Birmingham International Freight Terminal (BIFT). The design of this type of lifting equipment allows for easy attachment of the required lighting equipment.
Rail Mounted Gantry cranes are fully customisable to the end customers’ requirements. In the UK, it is typical to go to a maximum of a stack of five containers (5*2.9m – 14.5m total). An additional allowance for the RMG ‘Spreader’ of approximately 4.5m gives a working height in the region of approximately 20m (14.5m + 4.5m). If a lower height of 18m is required then the stack height on containers will be reduced to a maximum of four high. This would result in an increase in the amount of floor space required for the same number of containers (five high to four high).
Figure 4.1- Birmingham International Freight Terminal (BIFT)
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RMG’s when operated over a large number of tracks can be used to avoid the need for block loading by destination. Instead the RMG’s can load trains as the trucks arrive no matter the destination. This is similar to the DHL forwarding operation that flies all parcels to a single sort plant in Leipzig (no matter the destination) and then sorts all parcels by outgoing destination plane loads. While this is not the function of Parkside directly, it does show the strength of a network tied to a single sort terminal with a large number of tracks under the cranes.
RMGs have many appealing features. They are custom designed and can be very wide enabling many tracks to be covered. RMGs are electrically powered and are highly automatable (if required). They can also be operated remotely, with operators sitting in an office building as opposed to on the crane. RMGs can also spin containers which can be very valuable for terminal operations if the containers are not all aligned in a uniform direction.
The primary downside of RMGs is the cost, with a single crane costing £6 million. The other main downside is lack of operational flexibility. RMGs must stay on their rails, and cannot be used for work elsewhere in a terminal. It is also often infeasible to move them between terminals. For this reason RMGs are more appealing for medium to large size terminals with reliable volume. RMGs are especially appealing in areas with high land cost because they are the most land efficient style of operation.
Front loaders, either top-picks or more commonly, reachstackers (RS), are very popular for rail handling worldwide. They are very flexible machines that can work both trains and buffer, and they are off the shelf equipment costing less than £700,000 each to buy. For these reasons front loaders are very popular in small terminals where the budget for capital equipment is low.
Figure 4.2- shows an example of a Reachstacker in operation at Hams Hall UK, rail freight terminal
Figure 4.2- Example Reachstacker Operation – Hams Hall Rail Freight Terminal
The disadvantage of front loaders is the fact that they need at least 20m of clear space perpendicular to the rail tracks between each pair of tracks in order to operate. They also require a very heavy duty pavement surface in order to support the very high wheel loads involved. Front loaders are typically diesel powered but hybrids are now available and tend to have relatively high maintenance costs both for the equipment and the underlying surface pavement.
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Table 4.1- Summarises highlights of each likely system to be used for terminals of different sizes.
Table 4.1- Summary if Mode Options vs. Terminal Size Terminal Size or Small Medium: Large: Throughput target Rail lifts done by: Front loader (Top- Any, depending on Rail Mounted Gantry pick or Reach shape, labour and land (RMG) stacker) cost. Internal Transport Tractor or front Tractors Tractors, or RMG buffer by: loader Buffer Grounded or Grounded or wheeled As much as possible wheeled depending on land cost under the RMG Comments Typically using front Nearly any type of RMGs are expensive loaders for both rail operation can be machines so they should and buffer moves to effective for mid-sized be used as much as save on cost. Front terminals. Site specifics possible (i.e. buffer+rail loaders are also will drive the decisions movements) to reduce effective on non- on mode choice their unit cost of rectangular shapes operation. Savings on tractors is very important in high labour cost areas.
Reach Stackers could be used in any of the three terminal sizes in Table 4.1, but are most cost effective for small terminals without significant land area and labour cost constraints. Rubber tyred gantry (RTG) cranes become more cost effective for medium size terminals of perhaps 100,000 or more annual rail lifts, depending on local labour conditions, terminal configuration etc.
RMGs are more cost effective for larger terminals due to very high fixed infrastructure costs including electrical infrastructure, fixed crane rails, and the cost of cranes themselves. Most RMG-based intermodal terminals worldwide are designed with a minimum of four working tracks under the frame of each RMG, if not more, in order to keep them productively engaged.
Table 4.2 summarises cost and operating characters of the three primary types of intermodal terminal lifting equipment.
Table 4.2 - Comparison of Features and Costs of Main Types of Lifting Equipment Reachstacker (RS) Rail Mounted Gantry (RMG) Machine life (operating hours) 40,000 120,000 Typical productivity (mv/hr/machine) 15 20 Fuel type Diesel Electric Working tracks accessed per machine 1 or 2 4 to 8 Ability to store containers in trackside buffers N Y Ability to automate None High Relative infrastructure cost Low High Relative operating cost High Low Relative emissions High Low
Reach stackers are a fairly “off-the-shelf” machine that does not vary much from location to location. Another option is to use a larger specialized RTG to allow storage, rail tracks, and a truck lane under the frame of the same machine. While these machines are more expensive, they may save money overall due to reduced operating cost, since a buffer stack under the frame of the RTG eliminated the need for many terminal tractor moves.
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RMGs are typically used for medium to large terminal applications in high labour cost and land constrained environments. RMGs allow for very dense operations, as all terminal activity (tracks, truck lanes, and container storage) can take place under the frame of a single large machine.
4.4 Ancillary Services
There are other terminal services which may be provided at the terminal. These will depend upon the logistics involved and each are a potential source of terminal revenue.
Customs Facility The basic requirement for Customs is to be able to hold a container at their request in a secure compound and then if necessary provide a dock and suitable facility where the contents can be unloaded, inspected and reloaded as necessary. Typically they can request the container be moved to an existing customs site (probably at the port) where they have staff available. However they may be willing to use suitable facilities within the terminal provided they are secure and built to their needs, and they are willing to move staff to the facility to carry out inspections. This will likely depend upon the volume of the intermodal terminal’s inspections which is yet to be determined.
Having on-site facilities is advantageous to the terminal in that it saves customers the cost of trucking the container to another site as well as expediting the process. In addition the terminal can charge for this in- terminal service.
Container Storage Should the dwell time of staging loaded containers become excessive, the terminal may employ demurrage charges. These charges are more to encourage the flow of containers from the terminal to avoid congestion, but they can, depending upon the capacity and situation at the terminal, generate revenue for the terminal.
In some cases it makes sense to bring the empty containers back to the terminal for storage after being unloaded at a customer site while they wait for a new load locally. The owners of the containers typically need them inspected and cleaned, and repaired if necessary after use and prior to being used for a new load. The terminal may provide the best opportunity to do this work provided it has the capacity in the layout and it is not too far from either the unloading or loading point of the next customer. This can also save costs from a trucking point of view if the empty container needs to be taken to the terminal while another container waits at the terminal to be picked up, which provides a double move for the truck (to and from the terminal). In the case of the logistic hub tenants, the empty container storage can be part of a very cost effective solution in the disposition of empty containers.
Equipment Repair Areas The Lift and Shunt equipment will also require repair areas. If the cranes are rail mounted they will be serviced in position, which would require tools and supplies to be brought by service trucks to the cranes. Otherwise a garage area suitable for the repair of shunt trucks and work area for mobile cranes will be situated in the appropriate area within the terminal. Typically this is along the periphery where they will not interfere with future expansion requirements of the terminal, but central enough to provide good access the staging area of the terminal.
Terminal Trucking Services The pickup and delivery of containers to customers could provide a significant source of revenue to the terminal. Typically this service would be contracted by the forwarders or shipping lines as part of their overall charges. Since there might be a garage within the facility, there could be the opportunity to have a fleet of road vehicles stationed at the terminal. Whether owned or just maintained on site would need to be determined from the commercial study, but it may be an additional source of revenue for the terminal.
There are several software packages which provide support in this area. This type of Freight ITS application corresponds to advanced systems aimed at simplifying and automating freight and fleet management operations. Once the fleet is equipped and linked to the dispatchers’ computers and company’s data processing and storage infrastructure, a huge quantity of data becomes available for immediate decisions, as well as for background analysis and planning activities.
These systems aim to process this information and integrate it to the current transportation plan to achieve a more timely operation, efficient allocation and utilization of fleet, and satisfaction of customer requests. AECOM 59 Parkside Logistics and Rail Freight Interchange Study
These systems can operate in a demand-responsive mode where the demand for services is not known beforehand and the fleet has to be deployed and managed in real-time to handle them as effectively as possible. This is particularly relevant to rail freight terminals where many “local” pick up and drop operations are performed through the day.
4.5 Specification and Functionality of Potential Parkside Logistics and Rail Freight Interchange
4.5.1 Specification
Table 4.3 outlines the specification requirements of the potential site.
Table 4.3 – Specification of the potential rail freight terminal
Terminal size Small Medium Large
Indicative number of trains per day 1-3 4-8 9+
Terminal track length >750m >750m >750m
Number of handling tracks 2 4 6+
Reach stackers Handling equipment RMG
4.5.2 Functionality
Table 4.4 outlines the functionality requirements of the potential site.
Table 4.4 – Functionality of the potential rail freight terminal
Terminal size Small Medium Large
Indicative number of trains per day 1-3 4-8 9+
Road to rail Rail to road Core services Rail to rail Warehousing Container storage Reefer / Dangerous Goods services Ancillary services Customs facility Equipment repair area Terminal trucking services
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5. Rail Access
5.1 Introduction
This section outlines the rail access issues in relation to the Parkside site. This includes: Existing and future rail infrastructure Current and future rail capacity ( West Coast Mainline and Chat Moss Line) Rail freight forecasts Potential origins and destination for the Parkside site Potential site access
Network Rail (David Hunter, Freight Route Manager, North West and London) have been consulted with through a one-to-one meeting held on the 29/04/2016. The findings from this consultation have been used during the development of this section. Additionally rail freight operators (FOCs) including DB Schenker, GB Rail Freight and Freightliner have been consulted (see Table 1.2).
5.2 Existing Rail Infrastructure
Parkside is well situated for potential rail access, being adjacent to both the West Coast Mainline (to the west of the site boundary) and the Chat Moss line (running along the northern edge). A series of junctions and chords connect both routes, allowing trains to arrive and leave the area in all four directions.
To the north and south of the site, the West Coast Mainline is a mostly four track, fully electrified railway running between Scotland and London via the North West and West Midlands. It is a key freight and passenger artery. The Chat Moss site runs east to west linking Manchester to Liverpool and is a two track electrified route.
There are remnants of both the rail connection to the former Parkside Colliery (accessed via a loop on the Liverpool bound Chat Moss line) and the ex-Motorail Terminal (on the northern side of the Chat Moss line by Newton-le-Willows station) close to the site.
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Figure 5.1- Local Area Rail Network
Standard headways on the Chat Moss route are 3 minutes (4 when following freight services), with those on the West Coast mainline being 4 minutes. On the triangular junctions, minimum headways are generally 4 minutes (where values provided).
5.3 Current services (2016)
5.3.1 Chat Moss There are currently four passenger trains per hour off-peak utilising the Chat Moss route adjacent to the Parkside site. Transpennine Express operates an hourly Liverpool to Newcastle service along the route, non- stop between Liverpool Lime Street and Manchester Victoria. Other Transpennine Express services (generally one per hour) between Manchester and Scotland leave the Chat Moss route to the east of the scheme area at Parkside Junction.
Northern operate both an hourly semi-fast service between Liverpool Lime Street and Manchester Airport, and an hourly stopping service between Liverpool and Manchester Victoria. A (generally hourly) service between Warrington Bank Quay and Liverpool joins the Chat Moss to the west of the Parkside site at Earlestown.
Arriva Trains Wales operate an hourly service between North Wales (predominantly Llandudno) and Manchester via Earlestown with a number of services since the May 2016 timetable change being extended to Manchester Airport. There is also an additional peak hour service to (AM) and from (PM) Manchester that passes Parkside.
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There are also a number of freight services utilising the route (such as Drax-Liverpool biomass). However these tend to operate outside of peak hours and are very limited in number (3-4 trains daily).
Outside of these regular passenger services, there are a number of empty coaching stock (ECS) movements, and miscellaneous services such as Railhead treatment trains. It is trains of these types (two timetabled daily, although liable to alteration at short notice) that are the only users of the west to north chord (Newton le Willows Junction to Lowton Junction).
5.3.2 West Coast Mainline Virgin (West Coast) operates two trains per hour off-peak along the West Coast Mainline along the western edge of Parkside. Both originate at London Euston and terminate in Scotland (one fast via the Trent Valley and one via the West Midlands). There are additional peak time services on the route to/from destinations in the North West.
As of April 2016, there are a considerable number of freight services that utilise the route (carrying between 5- 10 million tonnes per annum10). In a standard off-peak hour, there is an average of around 1 timetabled path per hour. However actual utilisation of these paths differs on a day to day basis due to actual market demand.
Figure 5.2 - Current Standard Hour Off-Peak Services (Hourly)
5.4 Future (2017-2018) services
5.4.1 Chat Moss At the December 2017 timetable change, it is forecast that six trains per hour (off peak) will be utilising the Chat Moss line past the Parkside site. Transpennine Express is to divert the existing Liverpool Lime Street to Scarborough service to the Chat Moss route. This will result in two TPE trains per hour passing the site.
Northern will operate an hourly stopper service between Liverpool Lime Street and Manchester Airport. The hourly Warrington Bank Quay – Liverpool Lime Street service will continue to operate via Earlestown. Two new hourly “Northern Connect” services will operate between Liverpool/Chester and Leeds via Manchester and the Calder Valley.
The current hourly Transpennine Express service operating via the east to north Parkside-Lowton curve to the east of the site will be replaced by an hourly Northern Connect service between Manchester and Cumbria.
10 Network Rail Freight Markey Study, 2013 AECOM 64 Parkside Logistics and Rail Freight Interchange Study
Arriva Trains Wales will continue to operate their hourly North Wales-Chester-Manchester service, with peak hour additional services.
Whilst there will also be additional rail ECS and other non-passenger services, it is not foreseen that these will deviate in the main from the existing principal axis of movement (i.e. there will be no major change in the usage of the Newton le Willows-Lowton Junction chord).
One freight related issue that may arise around this time would be the rail connection to, and development of, Peel Holdings “Port Salford” scheme. This distribution and transhipment hub is situated adjacent to the M60 and Manchester Ship Canal, with the eventual aim of supplementing current facilities at Trafford Park. Key to the development is the inclusion of a rail link to the West Coast mainline via a new chord and the Chat Moss route. Whilst the intention was for the chord to be in place by 2017, development appears to have slipped in terms of completion dates. In addition, the eventual quantum of development (and how much distribution will be by rail, rather than ship or road based) remains unknown. Given that the current (much larger) combined Trafford Park intermodal terminals generate less than one inbound or outbound rail movement per hour between 0800 and 2000, it is unlikely that Port Salford would significantly increase the number of trains utilising the Chat Moss adjacent to Parkside.
Other potential freight impacts include developments at the Port of Liverpool (including the post-Panamax terminal at Liverpool 2). Rail access between the docks and hinterland is limited to two routes, either via Liverpool South Parkway or via the Chat Moss. Again, any changes in demand for paths as a result of developments at the Port of Liverpool are dependent upon scale, most appropriate mode, and origin/destination of particular flows.
5.4.2 West Coast Mainline It is not expected that there will be any major uplift in Long Distance High Speed passenger provision on the West Coast Mainline by Virgin West Coast in the near future. However Alliance Rail Holdings have secured paths post-2018 to operate six return services each day between Blackpool and London. There will therefore be up to three express passenger trains per hour utilising the West Coast Mainline past the Parkside site off- peak.
The most recent Network Rail Freight Market Study (2013) predicted an increase to 1.5-2 freight paths per hour on this section of route by 2023. Therefore whilst it is to be expected that there will be a slight increase in required freight capacity by 2017-18, it will not be of a substantial nature.
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Figure 5.3- Future Standard Hour Off-Peak Services (Hourly)
5.5 Post-HS2 (2026-33)
Whilst only indicative planning assumptions (based on The Economic Case For HS2, PFM v4.3: Assumptions report11) are currently available regarding service levels post HS2 Phase 1 and 2, they give a reasonable basis to assess pathing demands on the local rail network. Phase 1 is expected to be completed as far as the Trent Valley by 2026, allowing two “classic compatible” services each hour to operate via the West Coast Mainline adjacent to Parkside towards Preston and Scotland. In addition, an hourly long distance conventional service will continue to operate between Birmingham and Scotland, therefore totaling three trains per hour on the north-south axis. Beyond 2033 when the high speed route as far as Golborne (north of Parkside) is completed, planned passing services will reduce to one HS2 service to Preston, and a regional Birmingham to Preston service each hour.
There are likely to be knock-on impacts upon the Chat Moss route resulting from both HS2 and the emerging rail transport strategy for the North of England. It is however too early to draw any definitive conclusions regarding impacts upon service patterns and capacity utilisation at this stage.
5.6 Rail freight forecasts
This section provides an overview of the rail freight forecast in the UK up to 2043. Traditionally the UK rail freight market has been dominated by coal, however with the closure of coal power stations and the movement to more renewable sources of energy’ coal movements are predicted to reduce drastically from 5.76 billion tonne/km in 2011 to 1.57 billion tonne/km by 2023 and 0.58 billion by 2043 (Figure 5.4). This is a decrease of 89%.
The rail freight industry in the UK is therefore currently in a transitionary phase providing opportunities for other commodities to replace the previously dominant coal movements.
As shown in Figure 5.4 biomass is predicted to replace some of these movements increasing by 1460% from 0.15 billion tonne/km in 2010 to 2.34 tonnes/km in 2043.
11 HS2 Ltd, October 2013 AECOM 66 Parkside Logistics and Rail Freight Interchange Study
Figure 5.4 – ESI Coal and biomass forecasts: tonne kilometres moved (with 2011 actual data)12
Figure 5.5 – Biomass movement running to Drax Power Station
However it is the intermodal sector that is predicted to have the largest growth and is predicted to surpass current levels of coal movements. Figure 5.6 shows the predicted growth in intermodal traffic across ports, domestic and channel tunnel intermodal movements (tonne kilometres moved). It shows that total intermodal traffic is predicted to increase by 570% from 6.4 billion tonne/kms in 2011 to 42.9 billion tonne/km travelled in 2043. The majority of this comes from domestic and ports intermodal movements, with channel tunnel intermodal traffic predicted to stay fairly constant.
12 Network Rail (2013), Long Term Planning Process: Freight Market Study AECOM 67 Parkside Logistics and Rail Freight Interchange Study
13 Figure 5.6 – Intermodal forecasts: tonne kilometres moved (with 2011 actual data)
Figure 5.7 shows the overall picture for forecasts across the commodities. It highlights that intermodal is going to be the dominant commodity for rail freight in the UK going forward with construction materials the next most prominent commodity, however with vastly lower tonne/km forecasts.
Figure 5.7 – Forecasts by sector: tonne kilometres moved (with 2004 and 2011 actual data) 14
Even if projected forecasts are optimistic there is clearly still expected to be growth in the domestic and deep sea intermodal markets. There is requirement for additional rail freight terminal in the north to facilitate this anticipated growth. Therefore our conclusion is that Parkside is a suitable site to handle intermodal traffic to meet this potential demand.
13 Network Rail (2013), Long Term Planning Process: Freight Market Study 14 Network Rail (2013), Long Term Planning Process: Freight Market Study AECOM 68 Parkside Logistics and Rail Freight Interchange Study
5.7 Committed / Planned Infrastructure Upgrades
This section outlines some of the committed and planned rail infrastructure upgrades that may have an impact on the potential site at Parkside.
5.7.1 Northern Hub
As part of the Northern Hub, infrastructure improvements are planned to enhance the capability of the rail network across the North of England. The majority of the infrastructure improvements are in relation to improved capacity and faster, more frequent services for passenger services. However the infrastructure improvements also aim to cater for the required freight capacity up to 2030.
The project is currently in the process of identifying recommended options for each of the proposed infrastructure interventions. The work is split into two phases of work based upon delivery of increased network capability by December 2016 (Phase 1) and December 2018 (Phase 2)15.
As part of Phase 2, capacity on the Chat Moss line is to be improved allowing reduced headways between Liverpool and Manchester (via Newton-le-Willows).
16 5.7.2 Strategic Freight Network
Capacity Requirements on West Coast Mainline North of Preston: There is a workstream looking at capacity requirements for movements north of Preston on the West Coast Mainline. The work will assess what options may be appropriate to cater for the forecast increase in freight and passenger traffic between Preston and Mossend, in the periods up to 2019, and between 2019 and 2030. Options will not be restricted to infrastructure enhancements, but may include timetabling solutions and routing options. The current position is that the Strategic Freight Network Steering Group have prioritised the loops at Tebay and Beattock for lengthening, subject to further development work.
Capacity Requirements – Southampton to West Coast Mainline Feasibility work is being undertaken along this corridor to assess the options for increasing freight capacity. Investigations are focusing on areas where signaling headways can be reduced and junctions remodelled to create extra capacity.
Capacity requirements – Port of Felixstowe to Midlands and North There are currently 31 intermodal rail paths for the Port of Felixstowe and enhancements to the Felixstowe branch line are expected to allow 40 trains a day within the next 2 years. There are longer term plans to increase this to 48 trains per day and it is considered that as Felixstowe currently handles approximately 50% of the UK deep sea container traffic that at least 1 of the additional services could serve a Parkside site.
5.8 Potential Origin/Destinations
It is important to understand where the freight trains are likely to come from and hence the routes they are likely to use. The Parkside site is strategically located with access to both the Chat Moss line (east-west route) and West Coast Mainline (North-South route) in theory easy to achieve.
Therefore it is probable that there will be a mix of services using the Chat Moss line and West Coast Mainline servicing the potential Parkside.
5.8.1 Chat Moss Line (East-West Route) Currently substantial freight flows link the container ports at Felixstowe, Tilbury and Southampton with the intermodal terminals at Manchester Trafford Park, Ditton and Garston.
15 Network Rail, Network Specification - London North Western (2015) 16 Network Rail, Route Plan London North Western (2015) AECOM 69 Parkside Logistics and Rail Freight Interchange Study
The Liverpool Docks, Peak District quarries and Manchester waste terminals generate major traffic and there are also significant flows of coal using the West Coast Main Line and Settle – Carlisle route. The Cumbrian coast area caters for specialist rail services for the nuclear industry17.
5.8.2 West Coast Main Line The West Coast Mainline links London and South East England to the West Midlands, North West England and Scotland. Therefore it has an intense and wider range of services (passenger and freight). It is one of the busiest rail corridors in Europe and is designated as a priority Trans-European Networks (TENS) route.
As a major interCity route, it supports long-distance high-speed services from London to the West Midlands, North West, North Wales and Scotland. Long-distance services also operate from London Euston via the Trent Valley lines, which serve Nuneaton, Tamworth and Lichfield Trent Valley. Inter-urban services also operate on the route, supporting commuting into London (Euston) from Rugby, Northampton and Milton Keynes, in particular. In terms of freight the route provides a critical North – South spine route between the Channel Tunnel and the southern ports to terminals in the West Midlands, North West and Scotland18.
5.8.3 Stakeholder Views Online survey respondents were asked if they believed there was a market demand for north-south and east west intermodal freight flows. From the responses 75% of respondents indicated that there is a market demand for north-south freight flows, while 44% indicated there is a market demand for east-west freight flows. 6% indicated that there isn’t a market for north-south flows, and 19% indicated there isn’t a market for east-west flows. The key findings are shown in Figure 5.8.
North-South Freight Flows East-West Freight Flows
Don't know Yes Don't know No 19% 44% 6% 37%
Yes 75% No 19%
Figure 5.8 – Do you believe there is a market demand for north-south and east west intermodal freight flows?
Key comments relating to east-west freight flows are as follows:
- Improving economic strength of Liverpool and Manchester, plus anticipated growth of Port of Liverpool - See the success of nearby 3MG, which can really only handle trains from the South - The North West processes and offers customer opportunity for return loads - Attractive for inbound flows from Deep Sea ports and outbound to Scotland and SE/SW - We know that there is more traffic to be diverted from road if the price & service of rail can compare. - Deep Sea imports and exports, European imports through southern ports and domestic retail
17 Route Plan London North Western (2015) 18 Route Plan London North Western (2015) AECOM 70 Parkside Logistics and Rail Freight Interchange Study
Key comments relating to east-west freight flows are as follows:
- Increasing scope for moving containers by rail from National Distribution Centres to Regional Distribution Centres - Short sea goods ex Europe arriving at Hull/Teesport destined for both North West England (and Ireland) - Import containers from Tees and Humber would be good rail potential, avoiding M62 congestion
Respondents were also asked about the most likely origins and destinations for rail freight services serving Parkside (Figure 5.9).
14
12
10
8
6
4
2
Total number of responsesof numberTotal 0
Figure 5.9 - Where are the most likely origins/destinations for the potential Rail Freight Interchange at Parkside?
The top 3 cited locations were the Port of Felixstowe (13), Mainland Europe (via Channel Tunnel) (12) and Southampton Ports (9). Scotland (7) utilising the West Coast Mainline were also considered a potential origin / destination by 7 respondents.
“The focus is now on very large ships – these will predominantly continue to use Felixstowe and Southampton as it is more expensive to go to northern ports” “A lot of manufacturing is now being reshored to from the Far East to Europe – this provides a large opportunity for rail freight throughout Europe and east coast ports” UK Rail Freight Operator
“Virtually 100% of consumer goods from the Far East arrive at Felixstowe or Southampton and 70% go by truck” Private Sector Rail Freight Expert
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Despite the optimism of respondents with regard to freight movements to/from the south, current sites in the North West, especially Ditton (3MG), Garston and Trafford Park mainly handle traffic to/from South Eastern ports. This could therefore restrict potential volumes. However the unique selling point of Parkside remains that it could be an 'all points' operation, offering as much in terms of a container exchange as it might in terms of being a destination and general logistical base in its own right.
There was also some interest in East-West freight flows from Humber Ports (6), Tees/Port of Tyne (4), Port of Liverpool (3) and Yorkshire Terminals (2). While not a historically rail freight flow with the development of the 'Northern Powerhouse' there is now a far greater emphasis on East-West commerce making these movements more viable.
Additionally despite its relative proximity to the Port of Liverpool there is potential for the Parkside site to act as an inland container terminal for not only this port but also for certain east coast ports.
“The development of Liverpool as a deep-water container port could bring the potential for short distance rail shuttles from the West to the Parkside site” Private Sector Rail Freight Expert
5.9 Potential Site Access
When considering potential site access it is important to consider the loading gauge on the rail network serving the site. W9 loading gauge allows for temperature controlled swap bodies and W10 allows for 9 foot 6 inch high cube containers on standard flat wagons. It is useful if the gauge for the local railway caters for both of these sizes to provide maximum flexibility.
In terms of loading gauge the site has access from the north, south, east and west. The West Coast Mainline is W10 equipped with the Chat Moss line W10 equipped directly past the site entrance with a mixture of W9 and W10 along the entire route (Figure 5.10).
Figure 5.10 – Loading Gauge - LNW North – April 2015 The original rail access to the Colliery which occupied the Parkside site was via the Chat Moss route (between the M6 overbridge and Newton-le-Willows station). This had a number of advantages; it allowed (indirect) access to all routes (Chat Moss - east and west, and West Coast Mainline - north and south), as well as being at grade with the colliery site (rather than the West Coast Mainline which runs in a cutting at this point).
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However direct access to the West Coast Mainline does provide a number of benefits, namely more direct access to key intermodal rail flows (north-south) without having to navigate the congested junction at Earlestown to access the Chat Moss line.
This could be a problematic pathing constraint given the predicted increase in through movements along the route over the forthcoming years as outlined above. However given the site constraints, it is questionable whether both north and south facing direct connections could be made between the site and the West Coast Mainline without significant engineering interventions.
One possible solution would be a hybrid approach with a south facing single lead junction provided onto the West Coast Mainline close to the A49 Mill Lane overbridge. A chord would then follow the route of the West Coast Mainline north-east alongside the perimeter of the site before leading onto the eastbound/westbound Chat Moss route. Reception/transhipment sidings could be connected internally on-site to the chord, allowing maximum versatility and flexibility in marshalling or positioning trains without impinging upon main line operations.
Figure 5.11 - Possible Site Rail Access
5.9.1 Potential Access Routes
Access of the Chat Moss line is considered the dominant access point. However this is subject to engagement with Network Rail and Rail North through the GRIP process to confirm the validation of this rail access to the site. Therefore an assessment of the access routes has been conducted based on this site access (Figure 5.12).
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Parkside
Figure 5.12 – Potential site access
As set out in section 5.9 there are three access routes to the Parkside site (West / South) from Earlestown Station off the Chat Moss Line, from the North (West Coast Main Line) via Lowton Junction and Parkside Liverpool Junction and from the east (Chat Moss Line). A summary of each approach is set out below:
South / West
Expected to be the dominant traffic flow to / from Parkside from the South, the approach to the site will be from Warrington Bank Quay. Train regulation opportunities exist in the Warrington Bank Quay / Crewe areas prior to arrival at the Parkside site.
The main operating constraint is the section of track from Earlestown to the Parkside site which currently has 4 trains per hour (off – peak) increasing to 6 trains per hour in 2018. Another constraint is that a train from the south has to cross the West bound line of the Chat Moss Line in order to access the east bound line with limited opportunity to increase speed between this location and the entrance to the Parkside site where it has to cross the west bound line (for the 2nd time).
Alternative routes exist from the South for trains to go north towards Wigan and reverse using the route as described in ‘North’ or via Manchester Piccadilly during engineering possessions on the West Coast Main Line.
East
Access to the site from the east will be from just west of the Parkside Liverpool Junction into the sidings on the west side of the site, where the train will then reverse to access the intermodal terminal situated on the east of the site.
Similar capacity issues as for the South / West apply, with the exception that the impact on Chat Moss Line is lower as the on approach the train will be decelerating from a higher speed and accelerating to a higher speed on leaving the site. Additionally the train can enter directly into the site without having to cross over tracks. There are a number of regulation points including one just prior to Manchester Piccadilly.
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North
Access to and from the North is achieved off the West Coast Main Line at Golborne Junction prior to Lowton Junction and access into the site at a point just to the West of Parkside Liverpool Junction (same as access from the east). Trains can be regulated at a number of locations including to the North of Golborne Junction.
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Road Access
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6. Road Access
6.1 Introduction
This chapter considers the Parkside site in the context of the local highway network. The existing road access and local highway network in the vicinity of the site will be described, as well as the connections to the site from the Strategic Road Network (SRN).
Highways England have been consulted with during the development of this study, through one-to-one meetings with David Dickinson (Asset Manager, Merseyside), held on 04/05/2016, and Shaun Reynolds (Asset Manager, East (Greater Manchester)), held on 10/05/2016. Shaun Reynolds also attended the workshop held on 18/05/2016. There was also representation from both Wigan and Warrington Councils at the workshop. The findings from this consultation have been used during the development of this section.
6.2 Potential Site Access Options
Figure 6.1 outlines the six potential options for site access at the Parkside site. Initially access to and from the west of the Parkside site from the A49 is considered (potential access no. 1 and 2). However due to the size of the site and its potential capacity for a major logistics development it is envisaged that additional access will be required to and from the east of the site. This is likely to be achieved from the A573. Therefore potential access 3, 4, 5 and 6 are outlined below.
3 4/5
2
1
6
Figure 6.1 – Access options to the site (current land ownership) The primary site access for the former colliery site connects onto the A49 Winwick Road (Figure 6.1, no.1). This junction is still in place, and forms a priority T-junction, with the Parkside access road being the minor arm. The Transport Assessment for the previous ProLogis/Astral planning application noted that this access was no longer in use. However, since that time the junction has been reinstated but is a locked, gated entrance. The site access road is approximately 9 metres wide, and widens to approximately 13 metres at the mouth of the junction. The junction has acceleration and deceleration lanes, both approximately 35 metres in
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length, although there is no right-turn lane, meaning traffic turning right into the site would block northbound ahead movements on the A49. The A49 from M62 Junction 9 to the south of Newton-le-Willows and from M6 Junction 23 to the north is currently signed as an HGV access route for the Force 6 Distribution Park and Sankey Valley Industrial Estate in Earlestown. However there are junction capacity issues at Winwick (see Section 6.6). Therefore this access route may only be suitable up to a certain level of traffic unless mitigation work to address the capacity issue is conducted.
A second potential access into the Parkside site is available from the west via the access lane to Newton Park Farm (Figure 6.1, no.2), which is achieved from the A49 along Newton Park Drive. This access road crosses the West Coast Mainline via a narrow bridge (approximately 4 metres wide), and would be unsuitable for use by HGVs. Therefore this access has been discounted.
The following options assess the potential site access from the east. Potential access into the site from the east is available from the A573 via a railway maintenance access road (Figure 6.1, no.3), which passes underneath the M6 alongside the Chat Moss railway line. This access road is shown in Figure 6.2. However it is envisaged that to fully take advantage of this access the embankment underneath the M6 will need to be removed. See Figure 6.2.
Figure 6.2 – Potential access route no.3
However the use of this alignment is not recommended due to a number of challenges and conflicts. Firstly there is significant uncertainty over the abutment type and the foundations used on the bridge. There would also need to be significant evidence to support that works on a new retaining feature under the existing structure would not impact the structural integrity and undermine the foundations. There could also be major risks during the construction stage with possible limitations on the size of plant used and how this would affect the construction of large retaining features to support the ground conditions and bridge foundations. Additionally the interactions between both Highways England and Network Rail would be challenging to overcome due to the effects construction could have on their live infrastructure assets (e.g. closure of the M6 at certain times).
Additionally such a route would see HGVs coming within close proximity of a high frequency, high speed railway line. Any safety barrier that would be constructed to prevent vehicle ingress onto the track is likely to be ineffective because the collision angle would be between 60-90 degrees and barriers are typically designed for acute angle glancing blows. As a result of a collision at 90 degrees the barrier would not prevent vehicles getting on the track as the barrier would simply fold over (safety barrier is tested at a collision angle of 20 degrees). There are a number of issues that could contribute to a vehicle losing control in that area such AECOM 78 Parkside Logistics and Rail Freight Interchange Study
as diesel spillages and ice on the carriageway. For the reasons stated it is felt that locating a tunnel under the M6 adjacent to the Chat Moss Line is unfeasible and has therefore been discounted.
However there is potential to move the alignment of the tunnel south away from the Chat Moss railway line therefore mitigating many of the challenges. There is however a limit to the southerly location that the structure can be placed (around 150m away from the Chat Moss railway line) as motorway alignment moves from being on an embankment to a slight cutting. The precise location would be subject to the relevant surveys as part of the scheme design. However the location of the potential access is indicatively shown in Figure 6.1 (no.4). There is a possibility of constructing a box type structure with standard 5.3m headroom with the large embankment providing suitable cover over the substantial structure under the M6 and providing a smaller requirement in level drop.
The last potential access is a bridge over the M6 from the A573 (Figure 6.1, no.5). However this has been discounted on feasibility grounds for the following reasons. This section of the M6 is scheduled to be upgraded to a SMART motorway with the associated super span gantries (Figure 6.3). These gantries result in increases to the minimum height clearance required. To provide the required height for a new motorway bridge which has to have a clearance of at least 5.3m to accommodate double deck trailers the gradients of the access ramps will have to be unnecessarily steep. With the volume of HGVs using this route it will prove to be operationally unsatisfactory. Notwithstanding the large infrastructure cost involved with a bridge of this nature would not be economically viable.
Figure 6.3 – Super Span Gantry on the M6 near Birmingham
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In order to achieve maximum development capacity at the site it is felt that the main site entrance would ideally be off the A579 around 0.5km to the north east of Junction 22 on the M6 (Figure 6.4, no.6). Having the main site entrance located here would minimise the distance trucks had to travel on the local network before joining the SRN at Junction 22 of the M6. Additionally it would mean the entrance is within the St. Helens boundary. The volume of traffic expected to be accessing the site necessitate a new junction to be constructed. This is likely to be a demand responsive signalized junction however further detailed assessment is required to understand the exact specification of the junction.
6.3 Summary of Site Access Options
For a small development, access to the site from the west can be achieved by reinstating the former access road from the A49 (Figure 6.1, no.1). This is recommended because it would require minimal investment due to the junction and former road still being in place. The alternative access route via the access lane to Newton Park Farm (Figure 6.1, no.2) has been discounted as it is unsuitable for HGVs.
In order to facilitate a larger-scale development at Parkside, it is certain that a direct access onto M6 Junction 22 will be required. Discussions with Highways England indicate that Junction 22, taking into account the proposed improvement works as part of the Road Infrastructure Scheme and Smart Motorway schemes, could potentially accommodate HGVs generated by a Parkside development equivalent of up to 8 trains per day. However, any site larger than this, when taken in the wider context of proposed and committed developments in this area, would likely require a more strategic intervention, potentially requiring a redesign of Croft Interchange.
If access to the west of the site from the east of the site is required then from a technical, cost and deliverability point of view a box type tunnel structure under the M6 but away from the Chat Moss railway line (Figure 6.1, no.4) is recommended at the best option. This option is preferable because the construction of the structure can take place under the live running motorway and whilst not without risk and complexity, from a high level assessment point of view, it represents a better option than an alignment adjacent to the Chat Moss railway line (Figure 6.1, no. 3). The option to build a bridge over the M6 (Figure 6.1, no.5) has been discounted mainly due to the challenges and large infrastructure cost required to bridge over a SMART motorway.
On the east side of the M6, a new road would also be required. This could potentially run parallel with the M6 to connect directly to the Junction 22 roundabout, or could utilise the former haul road known as Barrow Lane, which connects to the A579 approximately 500 metres north east of Junction 22.
It should be noted that any new access connecting into Junction 22 would also reduce the distance that HGVs would have to travel to reach the A579. Although this is no longer a primary route, it is likely that a weight restriction would need to be implemented to the north of the Parkside access road to prevent site HGV traffic from using the A579 as a short-cut to the A580.
However access to the M6 Junction 22 is achievable on the section of the A579 that is within the St. Helens boundary therefore any weight restriction will not affect HGVs arriving or departing the site by this route. Consultation with Highways England revealed that they would not have a problem with utilising this site access. Highways England also recognise the importance of the traffic associated with the site joining the SRN as quickly as possible to alleviate local traffic issues. This access route uses minimal local roads and would therefore satisfy this criteria.
6.4 Local Highway Network
The Parkside site is bounded to the west by the A49 Winwick Road and to the east by the A573 Parkside Road.
The A49 Winwick Road runs in a north-south direction between Newton-le-Willows and M62 Junction 9. The road is a single carriageway primary distributor road, subject to a 40mph speed limit in the vicinity of the Parkside site. The speed limit increases to the national speed limit (60mph) approximately 450 metres south of the site. Winwick Road is predominantly residential in nature along the majority of its length in the vicinity of the development site, although the road also provides a through route connecting the M6 to the A580 East Lancashire Road. As such it experiences a high level of through traffic.
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Parkside Road (A573) runs in a north-south alignment to the east of the Parkside site. The A573 links the A49 with the A572 Newton Road to the east of Newton-le-Willows. In the vicinity of the development site the A573 is subject to a 30mph speed limit. Parkside Road is generally narrow (approximately 6 metres wide on average), and contains a number of tight bends which would restrict the movement of HGV traffic, particularly in the vicinity of Hermitage Green.
6.5 Strategic Road Network
The SRN in the vicinity of the Parkside site includes the M6 motorway, which runs north-south and passes adjacent to the eastern boundary of the former colliery site. The M62 motorway runs east-west approximately 3 km south of the site. The nearest motorway access from Parkside to the M6 is at Junction 22, although the route to this junction via the local road network is relatively indirect. There are a number of other motorway junctions in the vicinity of the site which can provide access from the SRN. The SRN in the vicinity of the Parkside site currently carries a high volume of freight traffic, and the junctions in this area experience significant peak time congestion which impacts on journey times. The following paragraphs describe each of these junctions in turn.
M62 Junction 8 is located approximately 4.5 km south-west of the Parkside site. The junction does not provide direct access to Parkside, but does provide the primary access into the OMEGA, Gemini and Lingley Mere Business Parks, and this has seen a large growth in freight traffic in the last 2 years.
M62 Junction 9 is located directly north of Warrington. The A49 runs north to south through junction 9, into Warrington Town Centre to the south and Newton-le-Willows north of the junction. Both the M62 and A49 in this area currently experience significant peak time congestion which impacts on journey times. The congestion is primarily focused in the southbound direction in the AM peak and the northbound direction in the PM, as a result of traffic commuting to and from Warrington. North of the junction, the A49 Winwick Link Road is a two-lane dual-carriageway which links Junction 9 with M6 Junction 22. As such, the junction is also used as a rat-run by traffic avoiding congestion on the M62.
The M62 Junction 10 / M6 Junction 21a (Croft Interchange) is the intersection between the M62 and the M6. As the primary interchange between the two motorways, Croft is subject to heavy congestion at peak periods. Croft Interchange is also located in close proximity to both M62 Junction 9 (approximately 2.8 km to the west), and M6 Junction 22 (approximately 2.4 km to the north). The distance between the entry slip-road at one junction and the exit slip-road at the next is considerably shorter than this, less than 1 km for the most part. This therefore creates problems with weaving traffic, which is exacerbated by the high volume of HGVs which pass through the junction.
As noted above, M6 Junction 22 is the closest motorway access to the Parkside site. However, there is currently no direct access into the site from this junction, and the local road access requires traffic to travel southbound on the A49 Winwick Link Road before returning northbound to the site via the A49 Winwick Road. As such, the preferred route for HGV traffic to the current primary site access is likely to be via M62 Junction 9. This route is approximately half a kilometre shorter than the route to the M6 Junction 22 but it may take a minute longer19 mainly due to having to negotiate additional traffic controlled signals. Table 6.1 shows a comparison of distance and journey time for each of the different SRN junctions closest to the site.
Table 6.1 – Journey time information From to Distance (km) Journey time Parkside site M62 Junction 9 3.5 6 minutes Parkside site M6 Junction 22 4 5 minutes Parkside site M6 Junction 23 3.5 7 minutes Parkside site M6 Junction 21 5.5 7 minutes Source: AA Route Planner, 2016
This would therefore potentially result in site traffic exacerbating the existing congestion and weaving issues at Croft Interchange. Junction 22 also provides access to the A579 Winwick Lane, which runs north east- south west between the M6 and the A580 East Lancashire Road. The A579 was part of the primary route network, and as such fairly heavily used by HGV traffic travelling between the M6 and the A580. However, due to complaints from residents in Lane Head, the road has recently been de-primed by Wigan Council. As a
19 AA Route Finder, 2016 AECOM 81 Parkside Logistics and Rail Freight Interchange Study
result, the primary HGV route is now via the M62 Junction 23. Wigan Council has proposed the introduction of a weight restriction to further enforce the restriction on HGV movement along the A579, although this would also require approval from Warrington Council, since the southern end of the road falls within Warrington Borough.
Junction 23 of the M6 is located approximately 3.5 km north of the Parkside site, and provides connections to the A580, as well as the A49. As such, this junction would provide the primary access to Parkside from the SRN for traffic arriving from the north, or from the east and west via the A580. Junction 23 also provides the primary motorway access for a number of other existing industrial sites at Haydock. In addition to this there are a number of other proposed developments for distribution and warehousing sites at this location, which would further increase the volume of HGVs and increase the pressure on Junction 23. Junction 23 is already at capacity according to Highways England. It is likely that a preferred solution is that traffic coming from the north to Parkside is encouraged to remain on the M6 exiting at Junction 22 rather than using Junction 23 and coming through Newton le Willows.
M6 – J23
M6 – J22
M62 J10 / M6 J21a (Croft Interchange)
M62 – J9
M62 – J8
Figure 6.4 – SRN junctions
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6.6 Current and Forecast HGV Traffic Flows
Existing traffic flows for the SRN in the vicinity of the Parkside site have been obtained from Highways England’s Traffic Information database (TRADS). This database contains traffic count data from Automatic Traffic Count (ATC) sites at various locations on the SRN.
The most recent data available for the SRN in the vicinity of Parkside is from 2014. The annual average weekday traffic (AAWT) and volume of HGVs during that year is summarized in Table 6.2.
Table 6.2 – Current AAWT data Location AAWT No. HGVs
M6 J22-23 NB 60,389 10,810
M6 J22-23 SB 58,163 10,179
M6 J21a-22 NB 59,162 11,182
M6 J21a-22 SB 58,324 12,481
M62 J9-10 WB 56,510 6,781
M62 J9-10 EB 56,934 9,053
M6 J23 SB Exit 8,184 777
M6 J22 SB Exit 7,046 726
M62 J9 WB Exit 9,198 631
An initial estimate for the potential volume of HGV traffic that might be generated by a SRFI site at Parkside has been calculated using the industry standard TRICS database v7.3.1. The trip rates have been determined based on the following criteria:
Vehicular trip rates for Commercial Warehousing sites; Sites in London, Republic of Ireland and Northern Ireland have been excluded; Sites smaller than 2,500 sqm Gross Floor Area have been excluded; Sites in Town Centre locations have been excluded; and Only weekday surveys have been used.
This selection resulted in average daily HGV trip rates as follows:
Arrivals: 0.261 HGVs per 100 sqm Departures: 0.485 HGVs per 100 sqm
The resultant average daily HGV trip generation for a 100% road-based commercial warehousing site of various sizes, based on these trip rates, is set out in Table 6.2 below.
However, it should be noted that the daily trip rates taken from TRICS could potentially under-estimate the actual trip generation that might be expected at Parkside. This is because the TRICS sample is limited to vehicle counts undertaken between 05:00-21:00. In contrast Parkside is likely to be operated 24 hours a day. Therefore to generate a more robust estimate of the likely trip generation, the higher of the two TRICS figures (departures) has been doubled (representing the fact that all vehicles departing during a 24-hour period must have also arrived and vice versa). This assumption has been used to calculate an estimate of the total number of daily HGV trips (see Table 6.2).
However an assumption has been made in order for a more cautious HGV trip estimate to be made. This is because the TRICS sample is limited to vehicle counts between 05:00-21:00 for some locations. Parkside is likely to be operated 24 hours a day so the assumption taken is that the higher of the two TRICS figures (arrival / departures) is doubled (all vehicles departing must have also arrived and vice versa). This figure has been used as the estimate for total daily HGV trips (see Table 6.3).
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Once the total daily trips for each site size had been calculated the trips were allocated between primary and secondary using an assumption of 40/60 split. A trip length assumption of 160km for primary movements and 20km for secondary movements has also been applied and used to calculate the CO2 implications for each option.
Table 6.3 – Estimated average daily HGV trip rates and trip generation for a 100% road-based commercial warehousing site
Daily HGV Trips Total (incl. Primary Secondary Site Size (sq. ft.) Arrivals Departures TRICS Total assumption)*
750,000 182 338 520 676 270 406 1,000,000 242 451 693 902 360 541 1,250,000 303 563 866 1126 451 676 1,500,000 364 676 1040 1352 541 811 1,750,000 424 789 1213 1577 631 946 2,000,000 485 901 1386 1802 721 1,081 2,250,000 546 1014 1559 2028 811 1217 2,500,000 606 1126 1733 2253 901 1352 2,750,000 667 1239 1906 2478 991 1487 3,000,000 727 1352 2079 2703 1081 1622 3,250,000 788 1464 2252 2929 1171 1757 3,500,000 849 1577 2426 3154 1262 1892 3,750,000 909 1690 2599 3379 1352 2028 4,000,000 970 1802 2772 3605 1442 2163 4,250,000 1031 1915 2946 3830 1532 2298 4,500,000 1091 2028 3119 4055 1622 2433
6.6.1 Impact of Rail Movements on HGV Traffic Flows
Once the total traffic movements for a road based site were finalised the impact of including rail movements into the site was assessed.
Our assumption is that one freight train saves 40 HGV primary “trunk” haul movements20. However none of the secondary movements, i.e. Regional Distribution Centre to other local warehouses or direct to stores would be achieved by rail, these would still need to be done by road. There is also a need for the “last leg” road movements. We have called these “primary local” movements. This is where some of the containers are unloaded from the train and then taken an average of 20kms to National/Regional Distribution Centres off the Parkside site.
An example where this methodology has been applied is shown in Table 6.4. The example is for a 750,000 square foot site that receives three trains a day.
Table 6.4 – Broad traffic generation – Option 1 Daily HGV Trips
Site Size Primary - Total (incl. Primary Secondary Local assumption)
Road based 270 0 406 676 750,000 sq. ft. Road and Rail 150 113 406 668 (3 trains a day)
20 Eurotunnel, 2016 AECOM 84 Parkside Logistics and Rail Freight Interchange Study
The key impact here is that compared to a road based solution, a road and rail based solution does not radically change HGV movements in the vicinity of the terminal, but does have a dramatic effect on long distance movements. The example in Table 6.3 removes 120 primary movements per day. This indicates that rail trunk haul services result in a saving of significant numbers of HGVs on the M6 and other parts of the Strategic Road Network.
The HGV movement comparisons for the road based and a road and rail based site options are presented in Chapter 8.
6.7 Summary of Highway Access Issues
The road access to the site at present is constrained by the reliance on a single access junction, which connects to a single-carriageway road, the A49, which also serves a number of residential properties. Despite the presence of the M6 immediately adjacent to the site, the driving route to access the motorway network is approximately 3 km to both the north and the south.
Figure 6.5 – Three junctions with capacity issues in Winwick
Although both of these junctions are scheduled to be upgraded as part of the Smart Motorway scheme, there are a number of proposed large developments adjacent to both junctions that would increase the pressure on the SRN at these locations as and when they are brought forward. Adjacent to Junction 9, M62 the Peel Hall proposed development will consist of around 1,400 new homes. Although there is potential for junction improvement works at Junction 9 to be developed as a result of this scheme, it would not necessarily create sufficient extra capacity to cater for additional HGV trips that might be generated by a 1,000,000+ sq. ft. Parkside development.
“There may be an issue of increasing traffic on the local network – however we need to think strategically. If Parkside doesn’t get built then all of this traffic will be on the road!” UK Rail Freight Operator
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Likewise, there is potential for future junction improvement works to come forward at M6 Junction 23, as a result of a number of proposed developments in Haydock. As with M62 Junction 9, however, any spare capacity is likely to be taken up by background growth and committed development trips.
Finally, as noted above, the proximity of Croft Interchange, M6 Junction 22, and M62 Junction 9 means that there can be issues with weaving traffic between these junctions.
An initial estimate of the likely trip distribution from Parkside would indicate that around 85% of trips would travel south along the A49, to access the SRN at M62 Junction 9. This route passes through three junctions in Winwick – A49 / Hollins Lane, A49 / Golbourne Road, and A49 / Winwick Link Road, which all presently experience congestion at peak periods.
It is likely that junction improvement works would be required at all these junctions to accommodate any additional traffic from Parkside. However, even with junction improvement works, a single access onto the A49 is unlikely to be able to support a site at the larger end of the options presented in Table 6.2 above, particularly if the access to the SRN is to be via M62 Junction 9 and M6 Junction 23. A reliance on these junctions to provide access to the SRN is likely to be a sub-optimal solution, not only due to the wider issues summarised above, but also because the volume of HGV traffic that would pass through the residential areas of Winwick and Newton-le-Willows in that scenario is likely to result in local objections.
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Parkside Logistics and Rail Freight Interchange Study
Public Transport and Active Travel
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7. Public Transport and Active Travel
7.1 Introduction
As part of this component of Stage 2, AECOM has undertaken an assessment of existing public transport services and active travel routes in the study area. From understanding this baseline situation, any gaps or opportunities in the network can be highlighted in anticipation of demand from the Parkside development. Where new or extended public transport services and improvements to the active travel network are considered outline costs are provided. AECOM has held initial discussions with Merseytravel and St. Helens Transport Policy Team as part of the consideration of options at a Workshop.
7.2 Public Transport Services
The existing bus and rail network in the local area and associated services are outlined within the sections below.
7.2.1 Bus Network and Services Figure 7.1 illustrates the existing bus services in operation in the vicinity of the proposed site. It can be seen that there are three key services operating within close proximity to Parkside (No. 22, No. 34 and No. 360). AECOM has reviewed the frequency of these services with Figure 1.1 illustrating thicker lines for higher frequency services. At present there are bus stops located along the A49 to the west of the site and along the A572 to the north of the site.
Figure 7.1 – Map of Existing Bus Network within vicinity of Parkside
Table 7.1 below provides further detail on the operation of the bus services within close proximity to the site. It can be seen that the site is relatively well served by bus Monday-Saturday; however, there is just one hourly service available on a Sunday and this is during core hours and only between Warrington and Earlestown.
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The Parkside site will be in operation 7 days a week and is likely understood to have core shift patterns of 6am-2pm, 2pm-10pm and some on a night shift 10pm-6am. It can be seen that the existing timings of bus services would not be able to accommodate employees starting at 6am and limited options are available for those staff finishing shifts at 10pm. So potentially earlier and later services could be considered.
Table 7.1 – Bus Services within close proximity to Parkside Bus Services within close proximity to the Site Service No. Route Operator Frequency First/Last Service No. 22/22E Warrington Network Warrington Hourly21 (Mon-Sun) Departing Interchange - Warrington 07:25 Vulcan, via Winwick until 22:10 (*to & Newton-le- Earlestown only, Willows (22E services to Vulcan Warrington – are within Earlestown) core/peak hours only) (Mon-Fri) 07:43 until 23:10 (*Sat) and 08:40 until 17:20 (Sun services to Earlestown only) No. 34 St. Helens to Leigh Arriva Bus Every 20 mins Departing St. via Parr, (Mon-Sat) Helens 06:25 until Earlestown and 23:25 (Mon-Fri) Newton-le-Willows 07:05 until 23:25 (Sat) No. 360 Warrington-Wigan Arriva Bus Every 30 mins Departing via Winwick, Mon-Sat) Warrington 05:56 Newton, Golborne until 18:51 (Mon- and Platt Bridge Fri) 08:17 until 18:27 (Sat)
Bus Network and Service Issues
- Only one hourly service on Sunday’s – site operation will be 7 days. - Some services only run the full timetable during core hours. - The existing services are not adequate to cover the anticipated shift patterns fully, i.e. services to meet 6am start times and 10pm finish times.
7.2.2 Rail Network and Services Figure 7.2 identifies the rail network, stations and associated services within close proximity to the proposed site. It can be seen that Newton-le-Willows Station is located approximately 1 mile to the north west of the site, a reasonable walking distance for commuting. Newton-le-Willows station is situated on the northern route of the Liverpool to Manchester Line and the North Wales Coast Line and as such has both a Manchester and Liverpool services platform. The station benefits from relatively high frequency services and these can be seen highlighted on Figure 7.2. The station benefits from cycle parking, a ticket office and ticket machines accepting cards or cash, however, there are limited passenger facilities i.e. a lack of toilets, waiting rooms or refreshments/shop. Earlestown Station is also identified on Figure 7.2, the only other additional service available at this station is the Northern Rail Liverpool-Warrington service (hourly Monday-Saturday).
21 In some cases there is more than an hour between services. AECOM 89 Parkside Logistics and Rail Freight Interchange Study
Figure 7.2 – Map of Rail Network within vicinity of Parkside
AECOM has reviewed further details of the rail services operating via Newton-le-Willows and these are shown in Table 7.2. It can be seen that there is a good frequency of direct services to Manchester and Liverpool seven days a week with slightly less frequent service to North Wales. Access to Chester is relatively good however; passengers must change here for services on a Sunday. In assessing the service options against the expected staff shift patterns whilst the journey is viable from Liverpool it is not possible to arrive at the site for a 6am start from Manchester by rail under the current timetabling. On Sundays the early shift additionally becomes an obstacle for those travelling from Liverpool to the site.
Table 7.2 – Rail services operating via Newton-le-Willows Station Rail Services via Newton-le-Willows Station Route Operator Frequency First/Last Service Liverpool Lime St – (Northern) Hourly (Mon-Sun) Departing Liverpool Manchester Victoria 05:20 until 23:19 (Mon- Sat) 09:01 until 20:12 (Sun)
Liverpool Lime St – (Northern) Hourly (Mon-Sun) Departing Liverpool Manchester Airport 03:38 until 17:50 (Mon- Fri and until 20:16 Sat22) and 08:12 until 23:15 (Sun) Manchester Piccadilly – (Arriva Trains Wales) Hourly (Mon-Sun) Departing Manchester Llandudno via Chester Sunday services 05:33 until 17:50 (last Manchester Piccadilly - service to Llandudno) Chester only, change at services run to Chester Chester for Llandudno until 23:14 (Mon-Sat) 07:28 until 23:25 (Sun)
22 Note that services run later to Manchester Oxford Road and Manchester Piccadilly. AECOM 90 Parkside Logistics and Rail Freight Interchange Study
Rail Network and Service Issues
- Limited facilities for passengers at Newton-le-Willows station. Inadequate for a higher level of demand forecast as part of the Parkside development. - Current timetabling does not allow for expected shift patterns to be met, i.e. limitations on certain services to reach/depart Parkside 7 days a week at expected shift times.
7.2.3 Gap Analysis – Challenges and Opportunities Committed improvements to existing rail services and recent electrification is expected to increase demand on the line through Newton-le-Willows Station. Additionally housing and economic growth in the Warrington area will apply additional pressure on the existing network and associated services. Key travel to work movements within the Parkside area are forecast to increase to/from Ashton-in-Makerfield, Wigan, Warrington, Manchester, Liverpool and St. Helens. The existing network in terms of provision of public transport services by bus and rail is unlikely to be adequate for this forecast increase in demand.
It is known that at the December 2017 timetable change, it is forecast that six trains per hour (off peak) will be utilising the Chat Moss line past the Parkside site. Transpennine Express is to divert the existing Liverpool Lime Street to Scarborough service to the Chat Moss route. This will result in two TPE trains per hour passing the site. Northern will operate an hourly stopper service between Liverpool Lime Street and Manchester Airport. The hourly Warrington Bank Quay – Liverpool Lime Street service will continue to operate via Earlestown. Two new hourly “Northern Connect” services will operate between Liverpool/Chester and Leeds via Manchester and the Calder Valley. The current hourly Transpennine Express service operating via the east to north Parkside-Lowton curve to the east of the site will be replaced by an hourly Northern Connect service between Manchester and Cumbria. Arriva Trains Wales will continue to operate their hourly North Wales-Chester-Manchester service, with peak hour additional services.
Whilst there will also be additional rail empty coach stock and other non-passenger services, it is not foreseen that these will deviate in the main from the existing principal axis of movement (i.e. there will be no major change in the usage of the Newton le Willows-Lowton Junction chord).
These committed improvements to rail services will assist in meeting forecast demand on the line for passenger services. The existing bus network however, needs modification to provide a viable option for travel to/from Parkside for commuters.
7.2.4 Identification of Options Newton Interchange One option for consideration to improve bus service provision would be an improved interchange facility at Newton-le-Willows station. Newton-le-Willows station is well placed and relatively well served by rail, however, the connecting bus services are poor. Rail services will be improved (journey times reduced) through the electrification programme of the Liverpool-Manchester lines and the committed increases in service provision outlined above, however, the ‘last mile’ leg of the journey could be currently off putting to many employers/employees.
As part of plans to improve Newton le Willows Station a new Interchange and Park & Ride facility is to be developed. A Park & Ride facility at Newton-le-Willows station would allow employees arriving by rail and road to interchange to bus for a short journey to the site itself. The service would act as a shuttle service, i.e. not stopping en-route and, with a timetable designed around shift patterns, this would be attractive and efficient for employers and employees.
Timetabling between bus and rail should be reviewed to ensure that interchange opportunities are available and are as efficient for the passenger as possible.
Station facilities e.g. new/improved ticket office and waiting areas with better access facilities and the introduction of step free access to and between platforms should be considered. These improvements will make the station environment more attractive to passengers and better cater for the forecast significant increase in demand using the station facilities.
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Enhanced cycle parking provision and a pick-up and drop-off point for taxis at the station would make the interchange more appealing for passenger use.
St. Helens will need to explore funding opportunities for these investments. There may be the potential to utilise developer funding for this infrastructure. However there is already local support for these recommendations shown in the Newton-le-Willows Interchange Full Business Case (2014)23 developed by Merseytravel. In summary, the scheme provides for:
A new subway Lifts and staircases to subway and platform level, to provide a Disability Discrimination Act (DDA)- compliant access throughout; A new ticket office provided on the south side of the railway line; A new bus interchange adjacent to the new ticket office; An expanded car park with space for up to 440 vehicles, with appropriate provision for blue badge holders; Enhanced cycle parking provision; Pick-up / drop-off point and facility for taxis within the car park area; and Enhanced waiting facilities on both platforms.
Bus Timetabling and Routing amendments Other options which could be considered relatively inexpensively are re-routing of existing bus services and extending the service timetables to meet forecast shift patterns. There could be consideration of existing bus services entering the site to provide an enhanced door-to-door service for employees. AECOM recommends discussion with the bus operators and consultation with the Public Transport Team to assess the appetite and test the market for these options.
7.3 Active Travel Routes
AECOM has reviewed the network of cycle routes and ‘walkable routes’ within the vicinity of the proposed site.
7.3.1 Cycle Network St. Helens Council has provided AECOM with a shapefile identifying the existing cycle network and committed new routes within the area; these can be seen illustrated on Figure 7.3. It can be seen that whilst there is one continuous long distance route (the Sankey Valley Trail) within the vicinity of the local area there is little opportunity to access the site via this route due to severance caused by the West Coast Mainline. There are just two points to access the immediate area to the site via the Sankey Trail through Alder Lane or Old Alder Lane. There are a few other local routes within relative proximity to the site which are traffic free; however these are not part of the National Cycle Network and are fragmented, i.e. there is a lack of an integrated network of routes.
7.3.2 Walkable Routes Routes which lend themselves to walking have also been plotted with the cycle network to establish the existing active travel route offer in the study area, see Figure 7.3. The identified walkable routes consist of public rights of way (PRoW), shared-use paths, green spaces, parks and waterways. Minor roads have also been highlighted as these tend to be quieter routes which increase propensity to walking. AECOM has additionally plotted two areas where it is known that 20mph zones are to be implemented in St Helen’s, broadly consisting of the Trees Estate Area and the Whites Estate Area. In limiting traffic speeds there is greater potential to encourage and support the uptake of walking and cycling in these areas.
23 Merseytravel, Newton-le-Willows Interchange Full Business Case, 2014 - https://www.sthelens.gov.uk/media/3602/cpo_newton_fullbusinesscase.pdf AECOM 92 Parkside Logistics and Rail Freight Interchange Study
Figure 7.3 – Active Travel Network within vicinity of Parkside
Serious or fatal collisions involving a pedestrian or cyclist have also been plotted on Figure 7.3. It can be seen that over the 9 year period analysed there have been relatively few collisions around the proposed site. The vast majority of collisions have been serious in their severity and have occurred at major junctions. Whilst there is a cluster of collisions in the Earlestown station area, the introduction of 20mph zones should assist in mitigating collision risk. A 2km buffer has been plotted around the proposed site as this represents a reasonable walking distance for commuting. It can be seen that this catchment incorporates the residential areas of Newton-le-Willows, Wargrave and Vulcan Village to the west of the site and Winwick to the south, however, residential developments are relatively sparse to the north and east of the site with the M6 providing severance.
Active Travel Issues
- Fragmented cycle network within vicinity of the proposed site. - Some severance for walking and cycling caused by the West Coast Mainline and the M6. - Limited residential areas within a reasonable walking distance to the site for commuting.
7.3.3 Gap Analysis – Challenges and Opportunities In plotting indices of multiple deprivation for health across the study area it can be seen that there are some areas within close proximity to the proposed site which fall within the top 10% most deprived in England. Providing an integrated active travel network across these areas could assist in improving the health of the local population. The provision of 20mph zones should assist in encouraging walking and cycling through reducing traffic speeds. An increase in the movement of HGVs in the area would be detrimental to encouraging walking and cycling, however, if certain routes are selected for these movements which utilise the main routes to the north and east of the site, this would avoid the residential areas to the west. However it is recognised that this is unlikely for other reasons.
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7.3.4 Identification of Options Potential funding pots for improvements to the active travel network include developer funding captured through Section 106 agreements, the Community Infrastructure Levy and DfT funding such as the upcoming Access Fund.
AECOM recommends discussion with teams within St Helens Council such as the Public Health Team, Road Safety Team and Development Control to explore potential funding pots for improvements to the active travel network.
7.4 Travel Times
AECOM has reviewed typical journey times from key population centres to/from Parkside. Table 7.3 illustrates that at present public transport journey times are largely unfavourable when compared to travel to Parkside by car. Whilst cycling presents a viable option for some it may not be suitable for significant numbers of employees due to the typical journey times and challenging nature of the existing network. Table 7.3 demonstrates that at present the site does not provide a reasonable choice of accessibility for those without access to a private car. Indeed should the site wish to encourage the use of a range of transport options to access the site due to parking availability restrictions or the aim to prevent local congestion at peak times/shift handovers the complete transport offer will need to be addressed.
Table 7.3 – Typical Journey Times by Mode Typical Travel Times To/From Parkside* to Key Destinations To/From Car Public Transport Cycle Liverpool 30 mins 38 mins (train) 1 hr 39 mins Manchester 29 mins 36 mins (train) 1 hr 32 mins St. Helens 15 mins 23 mins (train) 34 mins Warrington 13 mins 22 mins (1/2 buses) 26 mins Wigan 18 mins 43 mins (1/2 buses) 42 mins * 53°26'48.3"N 2°36'28.1"W
Note: Times taken from Google journey planner on 04/05/2016. Note that the car journey times are based on no congestion, public transport includes bus/rail and walking legs and the cycle time is based on the quickest, most direct route.
7.5 Summary
AECOM has reviewed the existing public transport and active travel network in the Parkside study area. There are issues and opportunities presented by the proposed Parkside development on the local network of services and routes. It is clear that there does need to be investment made in local transport provision to enable employees to access the site at the forecast time periods to allow the Parkside development to function. Improvements made to the local network would also benefit the local community in the vicinity of the proposed site in terms of reducing severance, improving accessibility and providing a network more conducive to active travel. The Meresytravel Bus Alliance and St Helens Bus Review process will during its regular review, provide an opportunity to enable bus improvements and better access to Parkside to be achieved.
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Options Development
08
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8. Options Development
8.1 Introduction
This section outlines options for small (1-3 trains per day), medium (4-8 trains per day) and large (9+ trains per day) logistics and rail freight interchanges. In total 5 options have been developed:
1 x Small 1 x Medium 2 x Large
Initially the methodology used for the economic modelling, CO2 emissions assessment and the modal shift benefit assessment that feeds into the options appraisal will be explained. Then each option is outlined and assessed individually. Finally a separate assessment of policy compliance relevant to each of the options is outlined.
8.1.1 Economic Modelling At this time only initial, indicative modelling has been undertaken in order to assess which options are economically viable. As such it should be noted that these figures will require refinement as the selected option is taken forward. In all cases the revenue and costs of the terminal to 2050 were assessed using 2014 prices. It is important to note further that all costs relating to the financing of the whole site’s capital and operating costs were not assessed at this stage.
Only the income and cost of the intermodal terminal itself was assessed as part of this process. Any additional income from warehouse rent or additional services was not included.
Capital Cost Generation
Using industry standard prices for infrastructure, an approximate price range for each option was developed. This included the creation of low and high estimates for trackwork, as accurate pricing would require (for example) better topographical studies to understand the nature of the earthworks required. Similarly, the nature of the site (being a former colliery) means that there is a need for extensive geotechnical work to ascertain the risks to any new built infrastructure on the site and how these, if necessary, can be mitigated. An average cost between the high and low prices was taken as the total capital cost of the terminal, and depreciation was then applied to this value over the lifetime of assets and the terminal.
Operating Cost Generation
Utilising costs from similar terminals across Europe, it is possible to develop an operational cost model for the terminal, covering:
Labour (including administration, gate staff and equipment operators) Equipment Maintenance Utilities & Fuel Use by the Terminal (such as road tractors and shunting locomotives) IT Costs
When combined with the depreciation costs of individual assets (such as the Rail Mounted Gantry Cranes) and the terminal’s civil infrastructure (hardstanding etc.) this produces an indicative assessment of the costs of the terminal over the modelled period.
Income Generation
The income of the terminal was derived from a standard charge of £25 per container lifted, in line with industry norms. A “ramp up” period was built into the modelling process, wherein during the 1st year of operation (assumed to be 2022), only 25% of the expected traffic was delivered, rising to 50% in the 2nd year, 75% in the 3rd year and then reaching 100% of forecast traffic. Conservative assumptions were placed on train utilisation; 60 TEUs were received per train (which were converted into the number of containers for moving in
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line with the industry distribution of 20’ and 40’ containers). In order to add further downward pressure on income to ensure robust conclusions, no increase in TEU numbers were forecast throughout the modelled period after the initial ramp up period. In reality, continued growth in line with population and GDP increases would be expected. As earlier stated, no rental income or additional value from terminal services (such as container storage) were considered at this initial modelling stage.
This means that the figures quoted in this section are erring on the cautious side, however this is prudent given the early stage of the project.
8.1.2 CO2e Emissions Assessment
To calculate the CO2e emissions for each option the following methodology has been used. Firstly the km saved for each option when rail movements are used has been calculated. This saving is based on the primary movements that are removed from the Strategic Road Network. A 160km journey length has been assumed for these primary movements. Once the saving has been calculated, a conversion factor of 0.91484kg (DEFRA, 2016) for every km travelled has been applied.
Once the road savings have been calculated the CO2e emissions associated with the rail movements were calculated using conversion factors (DEFRA, 2016) and netted off the road savings. This provides the CO2e emissions savings associated with each option.
The notation of CO2e is used becasuse locomotives and trucks (along with many other emitters) produce a number of green house gasses in addition to carbon dioxide. Each of these gases has a different ability to heat the atmosphere, known as its global warming potential, which assesses this ability in relation to CO2. For example, methane has a global warming potential of 4, meaning that its four times more powerful than CO2 in causing global warming. Therefore emitting 1kg of methane is, in global warming terms, is the same as emitting 4kg of CO2. As such, standard practice in assessing greenhouse gas emissions is to convert all GHG emissions into their CO2 equivalent and therefore allowing studies to present a standard value that accounts for the true impact of those emissions, rather than listing each gas separately.
8.1.3 Mode Shift Benefit Assessment (Sensitive Lorry Miles) To assess the benefits of a rail-linked logistics interchange over a road based logistics interchange at Parkside, mode shift benefit values have been used. This assessment uses a methodology developed by the Department for Transport that allows estimates of the benefit of removing a lorry mile from the road network in Great Britain to be calculated. This estimate provides a monetised value of the externalities associated with truck movements. The values cover the following externalities:
Congestion Accidents Noise Pollution Greenhouse Gases Infrastructure Other (roads) Taxation Rail
In order to do this, it has been necessary to apply assumptions and established methodologies. These are laid out below as part of the calculation process.
Values All calculations are conducted in line with the methodology of the Department for Transport Modal Shift Benefit Guide, as first determined in 200924 and updated for 2015 – 2020 in 2014.25 What this means in practice is that all calculations are using 2015 prices to measure the estimated values of externalities in 2020. As the business case progresses, these will be updated as necessary.
24 DfT, Freight Mode Shift Benefits Values Technical Report, (London, 2009) and DfT, Freight Mode Shift Benefits Values User Guide, (London, 2009) 25 DfT, Freight Mode Shift Benefit Values Technical Report: An Update, (London, 2014). AECOM 97 Parkside Logistics and Rail Freight Interchange Study
Absolute Vehicle Numbers Vehicle numbers for this analysis are based on the estimated primary, primary-local and secondary truck movements associated with each of the respective options (see Chapter 8). Primary local trips are the extra primary movements (assumed to be 20km in length) that are generated to transport containers on trunk movements to Parkside to a final destination not located on the Parkside site itself (e.g. Omega or Haydock).
Distance / Routing The following distance and routing assumptions have been made for primary and primary – local movements:
Table 8.1 – Distance and routing for mode shift benefit assessment Average Routing Average Journey Movement Highway (high Highway (low Distance (km) A Road Other congestion) congestion) Primary 16026 120 40 - - Primary – Local 20 - - 10 10
For primary movements an average journey of 160km has been assumed. This is the equivalent of a journey from a National Distribution Centre in the Midlands to Parkside where we expect some North West Regional Distribution Centres to be located. This is based on findings for double deck trailer average trip lengths from the Continuous Survey of Road Goods Transport (CSRGT) used as part of a cost-benefit model developed by the Logistics Research Centre at Heriot-Watt University27.
These routing has been broken down into component segments as per the methodology laid out in the Modal Shift Benefit Technical Note, and their consequent values determined, before being multiplied by the number of vehicles movements to calculate the total externalities associated with each option.
26 Double-Deck Trailers: A Cost-Benefit Model Estimating Environmental And Financial Savings - Logistics Research Centre, Heriot-Watt University 27 Double-Deck Trailers: A Cost-Benefit Model Estimating Environmental And Financial Savings - Logistics Research Centre, Heriot-Watt University AECOM 98 Parkside Logistics and Rail Freight Interchange Study
8.2 Option 1
8.2.1 Indicative layout Figure 8.1 below shows the indicative layout for the small terminal that is capable of handling 3 trains per day. The indicative floor space (square foot) of each warehouse is shown in Table 8.2.
Table 8.2 – Indicative floor space of each warehouse Square foot (to the Warehouse nearest 50,000 sq. ft.) 1 200,000 2 200,000 3 200,000 4 150,000 Total 750,000
1
3 2
4
Figure 8.1 – Indicative Layout – Option 1 (3 trains per day)
8.2.2 Rail access Access to the site from the rail network is achieved off the Chat Moss line. In order to keep infrastructure costs down only a one directional spur into the site is built, so under this layout trains can only be received entering the site from the west. This enables movements on routes from the west (i.e. Liverpool) to enter the site directly off the Chat Moss line and movements from the South (i.e. Felixstowe, Southampton, London etc.) to enter the site from the West Coast Mainline via the Earlestown Junction. This single directional entrance is likely to cater for the majority of traffic but limits the site’s flexibility.
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8.2.3 Broad traffic generation The total floorspace for this option (as outlined in Table 8.1) is 750,000 square foot. The broad traffic generation associated with this size of development is shown in Table 8.3.
Table 8.3 – Broad traffic generation – Option 1 Daily HGV Trips Site Size Operation Primary - Total (incl. Primary Secondary Local assumption) Road based 270 0 406 676 750,000 sq. ft. Road and Rail 150 113 406 668 (3 trains a day)
Overall it can be seen that there is a reduction in total daily trips of 8. While the overall decrease is small there is a reduction of 120 primary trips per day. This saving comes from our assumption, as outlined in section 6.6.1, that one freight train saves 40 HGV primary “trunk” haul movements. However it is also assumed that none of the secondary movements, i.e. Regional Distribution Centre to other local warehouses or direct to stores would be achieved by rail, these would therefore still need to be achieved by road. This indicates that rail trunk haul services result in a saving of significant numbers of HGVs on the M6 and other parts of the Strategic Road Network.
As well as still having around 150 road based trunk hauls movements there is also a need for the “last leg” road movements called “primary - local”. This is where the containers are unloaded from the train and then taken an average of around 20kms to local businesses off of the Parkside site. This could be to industrial parks such as Omega North and South which are situated only 4km from the Parkside site. Omega North provides 3.1 million sq. ft. of mixed offices and distribution. With Omega South providing a further 2.7 million sq. ft. of floorspace for logistics and manufacturing uses28.
8.2.4 Road access Under this option, it is felt that the A49 may be able to cope with the traffic generated by the site provided some minor junction improvements are done towards the M62. Therefore the previous main entrance to the Colliery would be reinstated. If the floorspace of the site was to be expanded, it is felt that the site access via the A49 entrance would not be feasible.
Indicative costs associated with design and construction of this road layout (not including the cost of land) are outlined in Table 8.4.
Table 8.4 - Indicative costs of road layout – Option 1 Indicative cost (£) Preliminaries & Design £ 353,500 Highway Construction £ 1,732,500 Temporary Traffic Management £ 35,000 Box Structure (Tunnel) £ 0 TOTAL £ 2,121,000
28 Miller Developments - http://www.millerdevelopments.co.uk/omega-north.aspx AECOM 100 Parkside Logistics and Rail Freight Interchange Study
8.2.5 CO2e Savings and Mode Shift Benefit Please see Section 8.6 for a full high level environmental assessment for each of the four development options.
The CO2e saved by this development due to the introduction of 3 train movements is outlined in Table 8.5.
Table 8.5 – CO2e saving – Option 1
CO2e saved (tonnes) Daily 22 Annually 6,458
The Modal Shift Benefit (£) associated with the reduction of 120 primary movement per day in the rail and road option in comparison to the road based option is outlined in Table 8.6.
Table 8.6 - Modal Shift Benefit (£) associated with the reduction in primary movement Modal Shift Benefit (£) Daily £ 8,370
Annually £ 2,511,000
If the 113 additional ‘Primary – Local’ trips are included then the Modal Shift Benefit (£) is reduced. Table 8.7 outlines these reduced values. However in reality a proportion of these ‘primary – local’ trips would be to companies based on the Parkside site, therefore these movements would not affect the local road network.
Table 8.7 - Modal Shift Benefit (£) associated with the reduction in primary movement Modal Shift Benefit (£) Daily £ 6,230
Annually £ 1,869,075
8.2.6 Economic viability assessment Option 1 does not offer promising economic viability. 3 trains per day does not provide enough container throughput to cover the operating costs of a rail mounted gantry crane-based terminal. As such, this option is unlikely to recoup its initial capital expense and would require an ongoing subsidy to ensure continued operation. However cheaper build costs could be considered by using refurbished sections of track etc.
While the operation of a reachstacker instead of a rail mounted gantry crane is advantageous in terms of initial capital cost, the operational costs are slightly higher than for a rail mounted gantry crane. Therefore the operation of a reachstacker does not help to make option 1 more economically viable. Table 8.8 outlines the costs associated with the option for both a rail mounted gantry crane and a reachstacker.
Table 8.8 – Summary economic viability – Option 1 (RMG and reachstacker) Annual Income (3 trains Handling Equipment Initial Capital Cost Annual Operating Costs per day) Rail mounted gantry £15,101,036 £2,119,633 £1,665,000 crane Reachstacker £12,162,636 £2,187,354 £1,665,000
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The high capital costs of the large amount of trackwork required (it composes the majority of the trackwork required for option 2) help to make this option economically unviable, and as such it is not developed further in this study. Selected snapshots of the terminal’s modelled cashflow when using an RMG for handling equipment are shown in Table 8.9.
Table 8.9 – Summary cashflow – Option 1 (RMG)
SMALL TERMINAL 25% 50% 75% 100% 100% 100% 100% 100% 2021 2022 2023 2024 2025 2030 2035 2040 2045 £ £ £ 1,665,000 Revenue £ 416,250 £ 832,500 1,248,750 1,665,000 £ 1,665,000 £ 1,665,000 £ 1,665,000 - -£ -£ -£ -£ Cost £15,101,036 -£ 1,299,530 1,584,824 1,890,490 2,119,633 -£ 2,119,633 -£ 2,119,633 -£ 2,119,633 2,119,633 Net -£ 883,280 -£ 752,324 -£ 641,740 -£ 454,633 -£ 454,633 -£ 454,633 -£ 454,633 -£ 454,633
-£ -£ -£ -£ -£ -£ -£ -£ Cumulative: 15,101,036 -£ 15,984,315 16,736,639 17,378,379 17,833,012 20,106,180 22,379,347 24,652,515 26,925,682 (Percentage figures apply to the ramp up of the use of the terminal as outlined under ‘Income Generation’)
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8.3 Option 2
8.3.1 Indicative layout Figure 8.2 below shows the indicative layout for a medium terminal that is capable of handling 8 trains per day. The indicative floor space (square foot) of each warehouse is shown in Table 8.10.
Table 8.10 – Indicative floor space of each warehouse – Option 2 Square foot (to the Warehouse nearest 50,000 sq. ft.) 1 250,000 2 200,000 3 300,000 4 100,000 5 150,000 Total 1,000,000
1
3 2
4 5
Figure 8.2 – Indicative Layout – Option 2 (8 trains per day)
8.3.2 Rail access Rail access is provided from the Chat Moss line and in this option rail access is available from both west and east facing junctions which effectively offers a four-directional approach network. This maximizes the flexibility of the site. There are two handling tracks and one runaround loop in the core intermodal terminal providing sufficient capacity to handle 8 trains per day.
8.3.3 Broad traffic generation The total floor space for this option (as outlined in Table 8.10) is 1,000,000 square foot. The broad traffic generation for a road based and road and rail based solution associated with this size of development is shown in Table 8.11. AECOM 103 Parkside Logistics and Rail Freight Interchange Study
Table 8.11 – Broad traffic generation – Option 2 Daily HGV Trips Site Size Operation Primary - Total (incl. Primary Secondary Local assumption) 361 0 541 902 1,000,000 sq Road based ft. Road and Rail 40 300 541 881 (8 trains a day)
Overall it can be seen that there is a decrease of 21 trips in total. In this option 320 primary movements are saved as a result of the 8 trains per day. An additional 300 ‘primary – local’ movements are required to serve the 8 trains per day.
8.3.4 Road access Due to the floorspace of the development, access via the A49 is not feasible for HGV’s. This access will however still be reinstated for private car, public transport and active travel. Access for HGV’s will be achieved from the A573 via a new access road under the M6.
Indicative costs associated with design and construction of this road layout are outlined in Table 8.12.
Table 8.12 - Indicative costs of road layout – Option 2 Indicative cost (£) Preliminaries & Design £ 1,778,000 Highway Construction £ 5,118,324 Temporary Traffic Management £ 105,000 Box Structure (Tunnel) £ 2,500,000 TOTAL £ 9,501,324
8.3.5 CO2e Savings and Mode Shift Benefit The CO2e saved by this development due to the introduction of 8 train movements is outlined in Table 8.13. Please see Section 8.6 for a full high level environmental assessment for each of the four options.
Table 8.13 – CO2e saving – Option 2
CO2e saved (tonnes) Daily 42 Annually* 12,515
The Modal Shift Benefit (£) associated with the reduction of 320 primary movement per day in the rail and road option in comparison to the road based option is outlined in Table 8.14.
Table 8.14 - Modal Shift Benefit (£) associated with the reduction in primary movement Modal Shift Benefit (£) Daily £ 22,320 Annually* £ 6,696,000
If the 300 additional ‘Primary – Local’ trips are included then the Modal Shift Benefit (£) is reduced. Table 8.15 outlines these reduced values. However in reality a proportion of these ‘primary – local’ trips would be to companies based on the Parkside site, therefore these movements would not affect the local road network.
Table 8.15 - Modal Shift Benefit (£) with ‘’Primary – Local’ movements included Modal Shift Benefit (£) Daily £ 16,614
Annually £ 4,984,200
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8.3.6 Economic viability assessment The medium terminal has only got marginally increased infrastructure costs over the small and as can be seen, its annual income with 8 trains per day exceeds the annual operating costs of the terminal, ensuring long-term viability.
Table 8.16 – Summary economic viability of rail terminal– Option 2 Initial Capital Cost Annual Operating Costs Annual Income (8 trains per day) 24,994,084 £3,323,799 £4,440,000
However, the high capital costs still mean that the terminal is cumulatively in the red for a number of years, although this is finally cleared by 2046. It is worth re-iterating however that this estimate is based upon a high estimate of initial capital outlay and a conservative income stream, and that this date may well be brought further forward in future assessments due to more detailed work being undertaken or in reality through growth in container throughput and increased utilisation of intermodal rail services. Selected snapshots of the modelled cashflow are shown in Table 8.17.
Table 8.17 – Summary cashflow – Option 2
Option 2 25% 50% 75% 100% 100% 100% 100% 100% 2021 2022 2023 2024 2025 2030 2035 2040 2045 £1,110,000 £2,220,000 £3,330,000 £4,440,000 £4,440,000 £4,440,000 £4,440,000 £4,440,000 Revenue - -£24,994,084 -£1,446,905 -£1,839,661 -£2,824,436 -£3,323,799 -£3,323,799 -£3,323,799 -£3,323,799 Cost £3,323,799 -£336,905 £380,339 £505,564 £1,116,201 £1,116,201 £1,116,201 £1,116,201 1,116,201 Net
-£ -£ -£ -£ -£ -£ -£ -£ 24,994,084 -£ 6,585,871 Cumulative: 25,330,989 24,950,650 24,445,086 23,328,885 17,747,881 12,166,876 1,004,867 (Percentage figures apply to the ramp up of the use of the terminal as outlined under ‘Income Generation’)
Given the assumptions used in generating this data, this is likely to be a conservative estimate which underplays the terminal’s plausible cashflow. It is therefore recommended for further, more detailed study.
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8.4 Option 3
8.4.1 Indicative layout Figure 8.2 shows the indicative layout for a large terminal that is capable of handling 10 trains per day. The indicative floor space (square foot) of each warehouse is shown in Table 8.18.
Table 8.18 – Indicative floor space of each warehouse – Option 3 Square foot (to the Warehouse nearest 50,000 sq. ft.) 1 250,000 2 200,000 3 300,000 4 250,000 5 250,000 Total 1,250,000
1
3
2
4 5
Figure 8.3 – Indicative Layout – Option 3 (10 trains per day) 8.4.2 Rail access Rail access is provided from the Chat Moss line and in this option rail access is available from both west and east facing junctions which effectively offers a four-directional approach network. This maximizes the flexibility of the site. Three handling tracks and run around loop are available in the core intermodal terminal to allow for the extra capacity required. An additional 500m handling track siding is also provided to the east of the M6. It is felt that an alternative sector such as the automotive industry may suit this handling area.
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8.4.3 Broad traffic generation The total floor space for this option (as outlined in Table 8.18) is 1,250,000 square foot. The broad traffic generation for a road based and road and rail based solution associated with this size of development is shown in Table 8.19.
Table 8.19 – Broad traffic generation – Option 3 Daily HGV Trips Site Size Operation Total (incl. Primary Local Secondary assumption) 676 1,250,000 sq. Road based 450 0 1,126 ft. Road and Rail (10 trains a day) 51 375 676 1,101
Overall it can be seen that there is a decrease in total daily trips of 25. Due to the operation of 10 trains per day there is a large saving of 400 primary movements which will be removed predominately from the M6. However there are 375 additional ‘primary – local’ movements that will affect the local network.
8.4.4 Road access Due to the floorspace of the development access via the A49 is not feasible for HGV’s. This access will however still be reinstated for private car, public transport and active travel. Access for HGV’s will be achieved from the A573 via the new access road under the M6.
Indicative costs associated with design and construction of this road layout are outlined in Table 8.20.
Table 8.20 - Indicative costs of road layout – Option 3 Indicative cost (£) Preliminaries & Design £ 1,655,000 Highway Construction £ 5,670,000 Temporary Traffic Management £ 105,000 Box Structure (Tunnel) £ 2,500,000 TOTAL £ 9,930,000
8.4.5 CO2e Savings and Mode Shift Benefit The CO2e saved by this development due to the introduction of 10 train movements is outlined in Table 8.21. Please see Section 8.6 for a full high level environmental assessment for each of the four development options.
Table 8.21 – CO2e saving – Option 3
CO2e saved (tonnes) Daily 49 Annually* 14,820
The Modal Shift Benefit (£) associated with the reduction of 400 primary movement per day in the rail and road option in comparison to the road based option is outlined in Table 8.22.
Table 8.22 - Modal Shift Benefit (£) associated with the reduction in primary movement Modal Shift Benefit (£) Daily £ 27,900 Annually* £ 8,370,000
If the 375 additional ‘Primary – Local’ trips are included then the Modal Shift Benefit (£) is reduced. Table 8.23 outlines these reduced values. However in reality a proportion of these ‘primary – local’ trips would be to companies based on the Parkside site, therefore these movements would not affect the local road network.
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Table 8.23 - Modal Shift Benefit (£) with ‘Primary – Local’ movements included Modal Shift Benefit (£) Daily £ 20,768
Annually £ 6,230,250
8.4.6 Economic viability assessment The large terminal is economically sound in terms of its operation however with the considerably higher initial capital costs it takes a long time to pay off. As such the terminal will not have paid off its capital costs entirely until 2057. This is 11 years later than option 2.
Table 8.24 – Summary economic viabilityof rail terminal– Option 3 Initial Capital Cost Annual Operating Costs Annual Income (10 trains per day) £35,642,306 £4,450,752 £5,550,000
However, this is built upon the assumption of revenue only being achieved through the movement of containers on and off a train. In reality other services can be offered to gain additional revenue allowing the initial capital cost to be recouped sooner. Selected snapshots of the terminal’s modelled cashflow are in Table 8.25.
Table 8.25 – Summary cashflow – Option 3
Option 3 25% 50% 75% 100% 100% 100% 100% 100% 2021 2022 2023 2024 2025 2030 2035 2040 2045
Revenue £ 1,387,500 £ 2,775,000 £ 4,162,500 £ 5,550,000 £ 5,550,000 £ 5,550,000 £ 5,550,000 £ 5,550,000 Cost -£ 35,642,306 -£ 1,584,378 -£ 2,514,173 -£ 3,773,926 -£ 4,450,752 -£ 4,450,752 -£ 4,450,752 -£ 4,450,752 -£4,450,753 Net -£ 196,878 £ 260,827 £ 388,574 £ 1,099,248 £ 1,099,248 £ 1,099,248 £ 1,099,248 £ 1,099,247
-£ -£ -£ -£ -£ -£ -£ - -£ 35,642,306 Cumulative: 35,839,184 35,578,357 35,189,782 34,090,535 28,594,297 23,098,060 17,601,822 £12,105,585 (Percentage figures apply to the ramp up of the use of the terminal as outlined under ‘Income Generation’)
As such this option is suitable for further study, should factors aside from economic viability support its implementation.
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8.5 Option 4
8.5.1 Indicative layout Figure 8.4 shows the indicative layout for a large terminal that is capable of handling 12 trains per day. The indicative floor space (square foot) of each warehouse is shown in Table 8.26. For this option it has been assumed that the land to the east of the M6 is constrained only by the Wigan boundary and the A579.
Table 8.26 – Indicative floor space of each warehouse –Option 4 Square foot (to the Warehouse nearest 50,000 sq. ft.) 1 350,000 2 200,000 3 300,000 4 350,000 5 300,000 6 200,000 7 250,000 8 350,000 9 500,000 10 300,000 11 200,000 12 200,000 13 150,000 14 300,000 15 500,000 16 300,000 Total 4,500,000
Figure 8.4 - Indicative Layout – Option 4 (12 trains per day)
10 9 8 1 11 12
13
2 7 3 14
15
4 5 6
16
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8.5.2 Rail access Rail access is provided from the Chat Moss line and in this option rail access is available from both west and east facing junctions which effectively offers a four-directional approach network. This maximizes the flexibility of the site. In this option the two receptions sidings directly before the core intermodal terminal (east of the M6) will be used to accept trains approaching from the south and west. These reception sidings are capable of holding a 775m train clear of the points accessing the site. The two reception siding to the west of the M6 will be used to accept trains approaching from the north and south and can also hold a 775m train clear of the points. However trains approaching from these directions will need to be manoeuvred into the core handling area by either running the locomotive around and pulling the train in, or reversing it.
This means that at no point is access to the site blocked enabling trains to arrive from the north and east while a train that has arrived from the south or the west is waiting to be accepted into the handling tracks (or vice versa).
In this option the core handling area is able to serve four full length 775m trains at one time with one of the handling tracks left clear to allow locomotives to run around where required. This provides an operational benefit and saves time as trains do not need to be split for handling.
8.5.3 Broad traffic generation The total floor space for this option (as outlined in Table 8.26) is 4,500,000 square foot. The broad traffic generation for a road based and road and rail based solution associated with this size of development is shown in Table 8.27.
Table 8.27 – Broad traffic generation – Option 4 Daily HGV Trips
Site Size Operation Total (incl. Local Secondary Primary assumption)
1,622 - 2,433 4,055 4,500,000 sq. Road based ft. Road and Rail 1,142 450 2,433 4,025 (12 trains a day)
Overall it can be seen that there is a reduction in total daily trips of 30. Due to the operation of 12 trains per day there is a large saving of 480 primary movements which will be removed predominately from the M6. However there are 450 additional ‘primary – local’ movements that will affect the local network.
8.5.4 Road access Due to the floorspace of the development (4,500,000 sq. ft.) access for HGVs via the A49 is not suitable due to the traffic volumes. However this access will still be reinstated for private car, public transport and active travel.
The main site entrance for HGVs will be off the A579 between warehouse 15 and 16 (Figure 8.4). A new demand responsive signalised junction will be required due to the high traffic numbers, however further work will be required to understand the exact specification of the junction. Access will also be provided from the north off the newly aligned A573. However like the access from the A49 this will be reserved for private car, public transport and active travel. Another new junction is also required to link the newly aligned A573 to the A579. However due to lower traffic volumes a roundabout may be more suitable. However further work will be required to understand the exact specification of the junction.
A tunnel under the M6 is required to link the site to the east and west of the M6 (Figure 8.4). This tunnel has been positioned away from the Chat Moss railway line to reduce the challenges and conflicts
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Indicative costs associated with design and construction of this road access are outlined in Table 8.28.
Table 8.28 - Indicative costs of road layout – Option 4 Indicative cost (£) Preliminaries & Design £4,929,854 Highway Construction £9,044,269 Temporary Traffic Management £105,000 Box Structure (Tunnel) £2,500,000 Roundabout (Linking A573 and A579) £3,000,000 Demand responsive signalised £5,000,000 junction (A579 and Parkside site) Duelling of A579 to M6 J22 £5,000,000 TOTAL £29,579,122
8.5.5 CO2e Savings and Mode Shift Benefit The CO2e saved by this development due to the introduction of 12 train movements is outlined in Table 8.29.
Table 8.29 – CO2e saving – Option 4
CO2e saved (tonnes) Daily 54 Annually* 16,200
The Modal Shift Benefit (£) associated with the reduction of 480 primary movement per day in the rail and road option in comparison to the road based option is outlined in Table 8.30.
Table 8.30 - Modal Shift Benefit (£) associated with the reduction in primary movement Modal Shift Benefit (£) Daily £ 33,480 Annually* £ 10,044,000
If the 450 additional ‘Primary – Local’ trips are included then the Modal Shift Benefit (£) is reduced. Table 8.31 outlines these reduced values. However in reality a proportion of these ‘primary – local’ trips would be to companies based on the Parkside site, therefore these movements would not affect the local road network.
Table 8.31 - Modal Shift Benefit (£) with ‘’Primary – Local’ movements included Modal Shift Benefit (£) Daily £ 24,921
Annually £ 7,476,300
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8.5.6 Economic viability assessment The large terminal is economically sound, with the higher throughput making better use of the terminal equipment. As such the terminal will have paid off its capital costs entirely by 2044, 2 years earlier than the option 2.
Table 8.32 – Summary economic viability of rail terminal– Option 4 Initial Capital Cost Annual Operating Costs Annual Income (12 trains per day)
£38,899,641 £ 4,766,869 £6,660,000
However, this is built upon the high assumption of 12 trains per day all offering 60 TEU consistently throughout the terminal’s lifespan, and this assumption would need to be better tested to ensure a robust context for the operational costs to be calculated from. Selected snapshots of the terminal’s modelled cashflow are in Table 8.33.
Table 8.33 – Summary cashflow – Option 4 Option 4 25% 50% 75% 100% 100% 100% 100% 100% 100% 2021 2022 2023 2024 2025 2030 2035 2040 2045 Revenue £ 1,665,000 £ 3,330,000 £ 4,995,000 £ 6,660,000 £ 6,660,000 £ 6,660,000 £ 6,660,000 £ 6,660,000 Cost -£ 39,118,444 -£ 1,697,394 -£ 2,706,219 -£ 4,045,001 -£ 4,766,869 -£ 4,766,869 -£ 4,766,869 -£ 4,766,869 -£ 4,766,869 Net -£ 32,394 £ 623,781 £ 949,999 £ 1,893,131 £ 1,893,131 £ 1,893,131 £ 1,893,131 £ 1,893,131
Cumulative: -£ 39,118,444 -£ 39,150,838 -£ 38,527,057 -£ 37,577,058 -£ 35,683,927 -£ 26,218,273 -£ 16,752,618 -£ 7,286,964 £ 2,178,690 (Percentage figures apply to the ramp up of the use of the terminal as outlined under ‘Income Generation’)
As such, this option is suitable for further study, should factors aside from economic viability support its implementation.
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8.6 Potential Environmental Impact
This section of the report identifies the broad environmental constraints and opportunities associated with interchange development at the Parkside location. The potential impacts identified are purposefully ‘high level’, and do not relate to any specific development scenario. However, we have made some assumptions about the potential impacts at different scales of growth when this could be an important factor in the generation of effects..
The following environmental factors are considered in the assessment with a summary of potential impacts outlined in Table 8.34:
Heritage Agricultural land Flood risk and water Landscape Biodiversity Air quality and transport Amenities Climate change
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Table 8.34 - Potential environmental impacts Factor Potential impacts including mitigation
Heritage There are several listed heritage assets within or adjacent to the site. This includes the following: St. Oswalds Well Scheduled Ancient Monument, Woodhouse Farmhouse (Grade II), Woodhouse Barn (Grade II) and Huskisson Memorial (Grade II). The extent of impacts upon these assets and their setting would be dependant upon the scale, location and design of development.
Potential impacts on the setting of these assets are unlikely to be avoidable, but mitigation ought to ensure that the impacts are managed. Vegetation screening, for example, may safeguard the heritage assets by reducing visual permeability to the warehousing and the rail line.
Expansion of development to the east of the M6 could potentially have a direct effect on the setting of Huckissons Memorial. This may be more difficult to mitigate.
Agricultural According to the St. Helens Local Plan Scoping Report the whole site is classified as Grade 3 land agricultural land. However, this map is high level. More precise information was gathered in the Environmental Statement 2006 (Table 9.1, page 252) which suggests that of the land classified as having agricultural potential, 19% is categorised as ALC Grade2, 29% as ALC Grade 3a, and 15% as ALC Grade 3b. However, 24% of the whole site is non-agricultural land29, and as such development on this area is unlikely to have negative effect. The majority of the north-west corner of the site, and a section of the south-west corner, fall within ALC Grade 2. There is ALC Grade 3a in the west and north and ALC Grade 3b along the eastern edge.
Expansion of warehousing units to the east of the M6 would also lead to permanent loss of agricultural land associated with three operational farms (Parkside Farm, Rough Farm and Highfield Farm).
The only way to minimise impacts would be to avoid higher quality agricultural land, and / or compensate for loss by contributing to agriclultural improvements elsewhere in the borough or supporting allotment creation. Flood risk/ The whole western part (of the M6) of the site area is located within Flood Zone 130 apart from the Water southern edge which borders a drainage ditch. This border is located within Flood Zone 2.
The increase in impermeable surfaces associated with development is likely to increase surface run off, however mitigation is likely to be effective in managing flood risk.
Flood risk is unlikely to be a major issue. SUDs could help to reduce surface water run-off.
Fluvial flood rist to the east of the M6 is negligible. However, there are tracts of land at risk of surface water flooding to the east of the A579.
Land to the east of the M6 is located within a Nitrate Vulnerable Zone. Change of land use from agricultural could therefore have positive effects in terms of reducing the likelihood of nitrates leaching into groundwater or surface water run off (provided that construction did not disturb nitrates already gathered in the soils). Though warehousing could generate pollution incidents, it is typically easier to remedy a point-specific source since its point of origin can be relatively easily identified. Landscape The site (to the west of the M6) comprises of grass, shrubbery and woodland of various typologies and densities31. There is a section of previously developed, brownfield land, and agricultural land which is currently being used in the north-east section of the site. The site can be considered as urban fringe. The whole site is located within Green Belt land. Effects on the landscape are probable, but coalescence unlikely to be a major issue with structural landscaping. Effects upon landscape character would depend upon the precise scale, location and design of development, with larger buildings more likely to intrude. The effects of development on coalescence are more likely as the scale of development increases, particularly if development included the east of the M6 (where effects on the rural character of the Town of Lowton and Lowton Heath would be more prominent).
29 Parkside Strategic Rail Freight Interchange, Volume 2 Environment Statement 2006, Table 9.1, Page 252. 30 Envrionment Agency- Whats in Your Backyard?, Available: http://apps.environment-agency.gov.uk/wiyby/ , Accessed: 17/06/16 31 Magic Map Application, Available: http://magic.defra.gov.uk/MagicMap.aspx, Accessed: 17/06/16, AECOM 114 Parkside Logistics and Rail Freight Interchange Study
Factor Potential impacts including mitigation
Biodiversity A significant number of protected species have been recorded on the site, with the potential for more to be expected32. Various habitat have also been recorded. Development is likely to result in the loss of open ground, including some bare areas, grasslands and farmland. These impacts will be experienced at the construction phase of the development, and will be permanent impacts. Mitigation such as structural woodland, the creation of drainage swales, and grassland improvement are likely to be effective. There is an SSSI (Highfield Moss)33 in the area. Development to the west of the M6 would not be anticipated to have a major impact upon the SSSI either during the construction or operational phase of development. It is likely that habitat enhancement and buffers could be applied to ensure potentially negative effects are minimal. Development to the east of the M6 would involve the loss of farmland (which is under stewardship and may therefore have some benefits for local species such as birds) adjacent to the Highfield Moss SSSI. A number of farmland birds and migrating birds have been recorded on the SSSI – disturbance to surrounding areas could have a knock on effect on birds feeding. The main threats to the moss are eutrophication, burning and drying out. Changing the land use from agricultural use could reduce the threat of eutrophication, but conversely, may create its own issues with regards to drainage and disturbance (e.g. noise during construction and operation of both warehouses and a rail line). There would certainly be a need to engage with Natural England if development was to involve these areas. Air quality / Under any scenario, construction of the interchange and warehousing is likely to temporarily transport increase dust emissions. Standard mitigation measures could be employed to reduce potential impacts though. The M6 AQMA34 intersects the site. Development could be located so as to ensure that site occupiers are segregated from the AQMA and buildings would need to be designed appropriately (therby reducing the possibility for exposure to poor air quality).
Under the Parkside Strategic Rail Freight Interchange Environmental Statement Vol 235 the predicted concentrations of nitrogen dioxide, PM10 particulates and sulphur dioxide for a worse case, ‘with development’ scenario result in only a slight increase of air pollutants which is not thought to require mitigation.
In the wider area, southbound traffic could potentially use the A49 to access the site, which would generate increased traffic thorugh Newton-le-Willows. This could have negative effects on air quality in this area, part of which (high street) is designated as an AQMA. These effects would be dependant upon access to the site. New points of access could help to reduce impacts on air quality further afield if routes through town and district centres are reduced (for example, a link road connecting the A579 with the site would give direct access to the site from Junction 22 both northbound and southbound. This could offset the amount of traffic using local roads). Amenity According to the Parkside Strategic Rail Freight Interchange Environmental Statement Vol 2, development on the site would result in noise levels exceeding the Noise Insulation Regulations (1975) by 2030 at the majority of receptors on the site36. There is potential for effects upon the amenity of existing residents. As well as direct effects from warehousing itself, an increase in traffic movements on the A49 and the A573 and additional rail links through the site are also likely to present the potential for adverse effects upon amenity. The precise effects of any development wil ultimately depend upon the scale, design and operation of the site. Noise pollution is likely during construction and operations, but mitigation measures could be secured. For example, resitrctions to the time of construction activities, limits on the use of lights and operations at certain times, the planting of noise screens such as woodland.
32 Parkside Strategic Rail Freight Interchange, Volume 2 Environment Statement 2006, Page 150. 33 Magic Map Application, Available: http://magic.defra.gov.uk/MagicMap.aspx, Accessed: 17/06/16 34 St Helens Council, Air Quality Management Areas, Available: https://www.sthelens.gov.uk/media/2843/air_quality_management_areas_-_booklet.pdf Accessed: 17/06/16 35 35 Parkside Strategic Rail Freight Interchange, Volume 2 Environment Statement 2006, Page 261. 36 Parkside Strategic Rail Freight Interchange, Volume 2 Environment Statement 2006, Page 311. AECOM 115 Parkside Logistics and Rail Freight Interchange Study
Factor Potential impacts including mitigation
Climate The development of a railway interchange and warehousing space is likely to contribute to an change increase in carbon emissions. In general, the larger the scale of development, the greater the increase in carbon emissions. However, emissions are likely to be offset by the use of rail instead of road transport of freight. The amount of carbon savings would correspond to the capacity and efficiency of the rail interchange, so it is not necessarily the case that a larger development would lead to the greatest net change in carbon emissions.
8.7 Policy compliance
Although UK Government policy now assigns a priority to SRFIs – there remains a shortage of terminal capacity, especially for intermodal traffic across key areas of the country. The recent Transport for the North Freight and Logistics Strategy (2016) referred to the recommendation to develop 50ha of rail and / or water connected Multimodal Distribution Parks (MDPs) per year in the North of England.
With respect to option 2-4, these configurations do qualify for inclusion as a SRFI Terminal as set out in section 2.3.1 of this report and as such would be subject to the planning process as set out for National Significant Infrastructure Projects.
Due to the capacity of option 1 in terms of the number of trains received (3 per day) it does not classify as a SRFI. However this does not mean to say that this does not comply with policy. There is a clear justification for increasing rail freight terminal capacity founded in policy at both a national and regional policy level.
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8.8 Pros and Cons of the Rail Terminal being on the West or East of the M6
As shown in options 1 – 4 it is technically feasible to develop the site on both the west and east of the M6. This section compares the pros and cons of locating the core rail freight terminal on the west or east of the M6. The comparison is outlined in Table 8.35.
Table 8.35 – Comparison of the pros and cons of locating the core rail freight terminal on the west or east of the M6
WEST (Pro) WEST (Con) EAST (Pro) EAST (Con) Can handle traffic from all four directions via use of west side reception loop.
Approach track from west / south & western Loop – can double up as reception siding – so Requires reception terminal footprint on sidings in terminal to east side can be accommodate trains smaller than west No direct north Can handle traffic from west / south side. connection without from all four access approach track use of western side Rail Access directions via use of is of insufficient length Reception sidings for reception loop, SSI west side reception to accommodate a north / east approach prevents possible siding loop. reception siding prior traffic for terminal on connection alignment. to terminal without east side can be blocking west eliminated as West reception loop siding. side reception sidings can fulfil this role and for south / east traffic approach track can act as reception siding and still allow west side reception sidings to function while train is paused prior to entry to terminal.
Broad Traffic N/A – Not related to spatial location of terminal. Generation –
Allows for A49 to be Requires box tunnel to used at start up – but connect east side and Allow for re-alignment Road Access Requires box tunnel requires a box tunnel west side to achieve of A573 and stopping (Dependent on to connect to west to be constructed for viable levels of up of A573 and Development side to achieve viable subsequent stages development and to avoidance of use of Phasing) levels of for site to reach mitigate traffic impact A49 for initial stage of development. volumes required for on local highway development. financial viability. network.
Allows for the majority of the rail activities to be away Lower requirement Higher requirement from residential areas Environment for amount of Green for amount of Green and for all HGV road Belt release. Belt release. access to be via A579 (M6 J22) from start up.
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Smaller amount of Allows higher amount development space as of development Warehouse requirement space as site foot Development Space for terminal site needs print on east side is to be accommodated larger. within site footprint. A financially viable terminal can be Infrastructure costs established on the higher than for west west side with the Site size and location side terminal and Economic Viability medium option and allows for a larger warehousing site and Assessment large option. However amount of on-site higher in early stages this does not include development space. of development. the potential cost of (Diversion and rerouting overhead stopping up of A573). power cables.
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8.9 What has Changed Since the Last Planning Application?
Since the withdrawal of the Prologis / Astral proposal in July 2010, which was in the main due to the onset of the financial crisis and the additional risk and uncertainty that this caused, there have been a number of significant developments which have occurred which are relevant to the deliverability of a SRFI at Parkside:
Policy guidance – Guidance has been developed including the National Networks National Policy Statement (2015), associated Development Consent Order process and the Strategic Rail Freight Interchange Guidance (2011) which support the development of such sites.
Liverpool City Region – The Liverpool City Region Growth Deal was announced on July 7th 2014 and allocated over £232m of resources to the area. The Growth Deal focuses on transport and skills projects which will support the city region’s ambitions to create a freight and logistics hub serving an expanded Port of Liverpool. A Transport Plan for Growth was developed by the Liverpool City Region Combined Authority and was released in 2015 which outlines five strategic projects. One of the five strategic projects at the heart of the Transport Plan for Growth is to create a freight and logistics hub.
Transport for the North (TfN) - The Sub Regional Transport Body Transport for the North (TfN) has been established and the TfN Freight and Logistics Strategy published. The strategy recommends that 50ha of Multimodal Distribution Parks are required and innovative financing methods should be introduced to assist the market in bringing forward rail connected logistics sites.
Network Rail – A new ‘virtual route’ for freight and national passenger operators will be introduced as Network Rail’s ninth operational route. The route is designed to help Network Rail implement the Shaw Report recommendations that it become more customer-focused and route-led.
Rail freight forecasts - Intermodal rail freight is forecasted to increase by 570% from 6.4 billion tonne/kms in 2011 to 42.9 billion tonne/kms in 2043. The establishment of Parkside as a rail freight interchange will help to support this forecast with some of the required capacity.
Corporate Social Responsibility (CSR) - has continued to increase especially among larger firms. This increases the attractiveness of the Parkside site with regards to its sustainable rail freight offer.
Infrastructure improvements - There have been associated improvements in area such as the investment in Newton – Le – Willows Station Interchange. Also the Chat Moss Line has been completely electrified.
However the main barrier to overcome in delivering a SRFI remains the substantial cost of the rail infrastructure and connection costs. In the case of the Parkside site the delivery of the required sustainable road access to support a sufficiently sized development site to provide a viable business case is also likely to be a significant cost. Deliverability is likely to remain challenging, as will be the requirement for innovative financing to bridge the financial gap between a road based development and a rail based development in the absence of a ‘rail premium’ which the market is prepared to pay.
It is recommended that as part of the development of the business case for the site that discussions are opened with Transport for the North and the Department for Transport for the Parkside site to act as a pilot project, in which to bring forward an innovative rail connection funding package, to reduce the risk to the developer and to flatten the required financial profile for this scheme. In so doing, it is this approach which will make the difference in improving the likelihood of this site being developed with the optimum rail / road connections that this strategic site offers for the support and development of the Liverpool City Region and North of England logistics sector.
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Conclusions and Recommendations
09
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9. Conclusions and Recommendations
9.1 Transport and Planning Policy Assessment
There is clear policy justification for the development of Parkside into a Logistics and Rail Freight Interchange as part of a network of international intermodal terminals. On a European level the EU Road Map to a Single European Transport Area (2011) sets out the vision for transport in Europe over the next 40 years. The overall goal is to achieve a 60% reduction of transport emissions by 2050. The Commission sets out some key goals to be achieved in relation to emissions reduction in the freight and logistics sector:
Achieve essentially CO2-free city logistics in major urban centres by 2030. 30% of road freight over 300 km should shift to other modes such as rail or waterborne transport by 2030, increasing to more than 50% by 2050. This should be facilitated by efficient and green freight corridors and appropriate infrastructure developments. Ensure that all core seaports are sufficiently connected to rail freight.
In order to achieve this it is necessary to have a network of efficiently and effectively designed inland terminals. During the development of this report the referendum was held with the decision to leave the EU. It is much too early to factor in any possible changes in policy as a result of this vote. But it is likely that any UK Government will continue to work towards more sustainable transport, so the sentiment of this White Paper is still relevant. Likewise, it is considered that there is still going to be strong transport and economic links to Europe even if the UK is no longer an EU member. As far as national and local policy is concerned, the Parkside site itself is named specifically in the Transport for the North Freight Strategy and Liverpool SUPERPORT as a site suitable for consideration as a rail freight interchange. In addition since the previous developer interest, major policy developments such as the NPSNN (2015) and Liverpool City Region Freight and Logistics Hub have all strengthened the policy justification for the development. It is recommended that St. Helens, Wigan and Warrington Councils discuss their ideas for meeting the range of sustainable freight policy requirements. There is currently no rail freight terminal in any of the three areas capable of serving the needs of the local population and industry. It is believed that one “purpose-built” rail terminal could serve the three councils and the wider city regions, and help to reduce the long distance road trunking movements on busy routes such as the M6 and M62. As well as reducing congestion and improving journey time reliability it would result in reductions in carbon dioxide and other pollutants as rail freight is 76% less polluting than road freight. Through cross border collaboration between the local authorities, the development of the required case for an area wide mitigation package of infrastructure improvements could be brought forward in conjunction with Highways England to support the development of Parkside and the wider development aspirations of Wigan and Warrington Councils. There is a population of over 1 million people within a 20 kilometre radius of the Parkside catchment area with no other intermodal terminal competing for this potential customer base. Although Port Salford will eventually have some overlap with the Parkside catchment area, the planned growth in jobs and population of parts of Greater Manchester and Warrington will more than compensate for this. 9.2 Market Demand and Supply Assessment
From industry consultation it is clear that there is more than enough demand to support a SRFI in the North West, with Parkside regarded as the best placed site to satisfy this need. This narrative is evidenced through the positive findings from the workshop, online survey and one-to-one discussions presented throughout this report. Indeed we have consulted with at least two companies who would be seriously interested in running the intermodal terminal at this site.
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9.3 Rail Access
The opportunities for rail access from the site are second to none in the North West and also nationally with access to the West Coast Mainline and Chat Moss line easily achievable. This allows train movements to/from the north, south, east and west to be catered for at the site provided the required internal rail layout is implemented. Despite the proximity of access to these lines there are potentially restrictions on the train paths available for freight. The West Coast Mainline is the premier rail freight artery in the country running from London to Glasgow and hence there is always strong demand for train paths on this route. The need for capacity should be investigated further once the implications of HS2 are clear as potentially extra capacity for freight should be available once many passenger trains are transferred to the new railway. Nevertheless based on current evidence it is likely that 8 trains can be feasibly serviced by Parkside in the medium term. We would also recommend early formal engagement with Network Rail and Rail North to establish the viability of paths to the forecast destinations in a pre and post HS2 environment within the current and future passenger franchises. The opportunity for early engagement with Rail North and Network Rail provides the potential for better planning and delivery of the required capacity for freight in the North of England.
Key recommendations: Based on current evidence it is likely that 8 trains can be feasibly serviced by Parkside in the medium term. Early formal engagement with Network Rail and Rail North is required to establish the viability of paths to the forecast destinations in a pre and post HS2 environment within the current and future passenger franchises.
9.4 Road Access
Our transport analysis has confirmed that road access is potentially good with the site in relatively close proximity to the M6 (J22) and M62 (J9) allowing access to the Strategic Road Network at around 2 miles from Parkside. However there are junction capacity issues to be overcome at three junctions on the A49 at Winwick leading to J9 of the M62. From our engagement with Highways England, the development of the site to accommodate a development of up to 1 million square feet, 8 trains per day (Medium Option) could be accommodated within the existing motorway network taking into account proposed infrastructure developments as part of RIS 1. It has been concluded that the western part of the Parkside site is capable of supporting a small development on its own but there is a significant rider to this as outlined below.
To assist in the build-out and viability of the development, up to 750,000 sq. ft. could be supported (subject to detailed analysis) with access via the A49, providing three main sets of mitigation measures are made on the A49, land is safeguarded for rail and a road access is provided under the M6 to the eastern side and through to the A579. This development should only take place in the context of an agreement to safeguard land for the necessary rail and road infrastructure on the western and potentially eastern sides, to ensure that the build- out does not stymie future development and especially should consider the need for sustainable transport. Any future masterplan for the site would have to allow for the land safeguarded for the rail and road infrastructure. This masterplan should consider Highways and Traffic Management implications including a Traffic Management Plan and wider environmental issues which have not been covered in this brief.
The site could support a larger scale development (12 trains a day) by utilisation of the eastern side of the site. The eastern side could be used for the core rail freight terminal or additional intermodal sidings. It could also be used for other traffics such as automotive or express parcels. In addition to mitigation work on the A49, once traffic levels reach an agreed level, HGV access for land both west and east of the M6 must only be permitted via the east and a new link road to the M6 J22 via a new junction on the A579.
With the commencement of RIS 2 planning process for the period 2020-2025, it is recommended that early engagement with Highways England is made concerning accommodating further growth including utilising the land to the east of the M6. However given capacity constraints along the A49, and as a result of other
AECOM 122 Parkside Logistics and Rail Freight Interchange Study
developments likely to come forward in the vicinity of M62 J9 and M6 J23, a development of a greater size than the small option would require a direct access to the M6 at J22. In this event based on discussions with Wigan and Warrington Councils, it is likely that a weight restriction would be required on the A579 north of J22 in order to prevent HGV movements northbound to the A580 through Lowton Village.
Key recommendations: The development of the site to accommodate a development of up to 1 million square feet, 8 trains per day Medium Option could be accommodated within the existing motorway network taking into account proposed infrastructure developments as part of RIS 1, notwithstanding highways and environmental constraints related to a sole vehicular access via the A49. To assist in the build-out and viability of the development, up to 750,000 sq. ft. could be supported (subject to detailed analysis) with access solely via the A49 providing: o Three main sets of mitigation measures are made on the A49. o Land is safeguarded for rail to ensure that later phases are not stymied. o Road access is provided under the M6 to the Eastern Side and through to the A579 to service all development following the first phase, and at second phase and beyond, to re- route HGV traffic via the eastern part of the site. Domestic (cars) traffic serving the west side would continue to access via the A49. o Environmental and heritage concerns are addressed and appropriate mitigation measures are introduced to ameliorate any adverse impacts on the site and neighbouring communities. o Masterplanning proves deliverability of the whole site (east – west combined development).
9.5 Green Belt Implications
With regards to putting forward evidence for the release of Green Belt land under exceptional circumstances, it is fundamentally crucial for the delivery of a viable SRFI, that land on the west and east sides of the M6 is included for future development, including the associated road access to the A579. Without the required release, the market attractiveness, operational efficiency and financial viability of a SRFI will be adversely affected.
We would also recommend that as part of the SRFI development, an initial rail connection to provide for access from the west (and ideally also to the east) is installed on the alignment for the intermodal rail terminal. This would provide a basic facility allowing construction materials to be transported to the site by rail thereby making a substantial mitigation in the number of HGV’s requiring access to the site during the construction phase of the initial and subsequent phases of the development. This would have environmental benefits and cost savings through the more efficient movement of bulk materials to the site and a legacy benefit in the provision of the live connections to support the future phases of the development including the construction and commissioning of the intermodal freight terminal.
Key Recommendations: It is fundamentally crucial that land on the west side of the M6 and to the east is included for future development including the associated road access to the A579. As part of the development, an initial rail connection allowing access from the west (and ideally also to the east) should be provided on the alignment for the intermodal rail terminal.
9.6 Core Strategy Policy CAS 3.2 Amendments
To support our conclusions we would suggest that the consideration is given to the modification of Core Strategy CAS 3.2 to align with the conclusions of this report, in order to provide a more flexible policy position to support a viable and deliverable SRFI scheme to come forward for this site. To achieve a medium or large facility which have both been found to be potentially viable and deliverable in this Study both sides of the M6 will be needed.
However as part of this, the required land would need to be allocated for the intermodal terminal along with land required for the associated rail infrastructure. The provision of road access arrangements under the M6
AECOM 123 Parkside Logistics and Rail Freight Interchange Study
to link the west side to the east side and access to the M6 is absolutely fundamental to the development of this site (with the closure or severe restriction on the A49 entrance to LGVs and HGVs as traffic levels grow with the build-out).
From a planning policy perspective the increased support for rail-linked development at both the national and sub-regional level since the Core Strategy was adopted, assist in the justification of a potential rail-linked logistics allocation in the emerging Local Plan and help support the exceptional circumstances case required to meet the national Green Belt planning policy tests.
In large part it is appropriate to roll forward Core Strategy Policy CAS 3.2 and the related Green Belt justification to provide the policy framework within the emerging Local Plan. The most significant proposed change is the extension of Green Belt removal, to reflect the connectivity between early phases to the west of the M6, and later phases to the east.Policy development should acknowledge the following principles:
Development in the west can be accessed by a proportion of HGVs via the A49 to a capacity of c.750,000 sq. ft. This should address Warrington Borough Council’s (WBC) concern that it would not support the development if it created a net increase in traffic on their road network. As this development is likely to generate up to 600 HGVs per day to reduce the impact there needs to be three sets of mitigation: o The first is prior to the development of the site works on the A49 in conjunction with Warrington Borough Council (WBC) would be required. Discussions with WBC have indicated that mitigation measures would be required at the A49 junctions with Hollins Lane, Golborne Road, and the Winwick Link Road. o Secondly a new road and access should be brought forward via an underpass under the M6 and a new link road to the A579. o Thirdly land on the west of the M6 should be safeguarded for future rail tracks, for train marshalling and handling. As such it is considered that Phase 1 could be just a road served development. But this is sub optimal, as it is a less environmentally friendly solution when compared to rail and does create more traffic on the local road network. A rail and road based development allowing more warehouses on the west of the M6 and a rail terminal should be accompanied by site access from the east. Future stages of development to the east of the M6, served totally in road terms by M6 J22 should be accompanied by a rail link to the eastern side of the M6.
Unlike road only based solutions it cannot be stressed highly enough that the technical and commercial requirements of the rail access are fundamental to the attractiveness and commercial viability of the site to terminal operators and end customers in the cost and performance base of commercial supply chains. In our analysis, the development of the west side is technically and operationally feasible for rail linked logistics development but one which will trigger the planning process which is linked to the development of a SRFI (based on the criteria). Design compromises once built are either impossible or not cost effective to implement at a later stage unlike a road only based solution. The use of innovative financing methods as outlined in the TfN Freight and Logistics Strategy will be of assistance to give greater certainty that the required supporting infrastructure will be brought forward earlier than otherwise would be the case and enable the site to be developed in the optimal way for the rare set of characteristics that this site possesses. It is recommended that early engagement with Transport for the North is undertaken in this regard.
AECOM 124 Parkside Logistics and Rail Freight Interchange Study
Key Recommendations: Consideration should be given to the modification of CAS 3.2 to provide a more flexible policy position to support a viable and deliverable SRFI scheme to come forward. Green Belt boundaries to the east of the M6 will be affected by these proposals, amendments to Green Belt boundaries would be justified by the arguments presented in this report. This requires a review of Green Belt policy to ensure consistency between land requirements of a SRFI development and Green Belt boundary. The Planning policy framework should be guided by the new Transport for the North, Freight and Logistics Strategy. Mitigation measures addressing the growth in local traffic should be included. Land should be allocated for rail access and suitable terminal facilities. New road access should be brought forward via an underpass under the M6 and a new link road to the A579. This is a unique opportunity to re-connect a formerly rail served site in an excellent geographical location into a modern SRFI that will meet the needs of modern logistics in the region.
9.7 Summary
This independent analysis has confirmed that the market attractiveness of this site for logistics activity remains as strong as and arguably stronger than in 2006 when the previous application for the site was put forward. One of the principle reasons for the site not coming forward, as mentioned on a number of occasions during the study, was the issue concerning achieving a sustainable access option to the site. The provision of the eastern access road to the A579 and the connection of the west and the east side of the development site, along with enabling rail connection work for the construction phase allows the development to take place. This could initially be with an A49 link but which commits to the development of the eastern access and implementation of the required rail connections and terminal in a later phase of development.
As the use of intermodal rail freight is growing substantially and there is insufficient capacity in other existing and planned terminals in the area, it is clear that the use of the site for rail based logistics is crucial to support the wider economy of the North West England for both the St. Helens Local Plan and Wider City Region / Northern Powerhouse objectives. There are very few sites in the North West England that come even close to the attractiveness of this site in terms of strategic location for rail and road access opportunities.
Developing Parkside as an SRFI is one of the best opportunities to offer a realistic rail based alternative to the many logistics supply chains that are currently very dependent on the M6, M56 and M62. Due to congestion, these routes do suffer from journey time variability. Railfreight is now more reliable than ever before with over 94% arriving on time. By encouraging modal switch from road to rail for primary trunking it not only reduces the number of lorries on the motorway network in Cheshire and Lancashire but it also reduces the amount of carbon dioxide emitted into the atmosphere.
The economic recovery in the economy since 2012 has further improved the potential viability of the site as set out in Chapter 3 – and subject to the required business cases companies are more likely to invest in rail. Such an investment is required to support the wider aspirations of the business community in the North of England, for example SUPERPORT Liverpool.
In conclusion, the study has established that from an operational and financial perspective a small terminal is not viable and that only a terminal that is at least a medium would be operationally and financially viable and thus ultimately deliverable as a sustainable development. It is important to note that unlike a purely road based development there are particular operational requirements for intermodal freight terminals that are crucial to include at the design stage to meet current and forecast future requirements and to minimise terminal operational costs for the operator and user.
AECOM 125
Parkside Logistics and Rail Freight Interchange Study
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AECOM 126 St.Helens Council Comprehensive Equality Policy
Eliminate discrimination, harassment and victimisation Advance equality of opportunity Foster good relations between people in a diverse community
St.Helens Council Comprehensive Equality Policy 2014-18
2 St.Helens Council Comprehensive Equality Policy 2014-18
Foreword
St.Helens Council’s work is guided by a clear set of objectives to eliminate unlawful discrimination, harassment and victimisation, advance equality of opportunity and foster good relations between people within a diverse community. We are determined to do everything we can to make sure that people are treated fairly, that everyone has access to good quality services and all can take part in shaping the Borough’s future.
Unlawful discrimination, harassment and victimisation in any aspect of the Council’s employment policies and practices or service delivery arrangements, will not be acceptable under any circumstances.
Of course, it is easier to say such things than to deliver on them and this is why we maintain a Comprehensive Equality Policy that clearly states our commitments and lays out practical actions aimed at achieving them.
The Council implements this document into its commissioning, procurement, employment and service delivery policies and plans. This is achieved through the use of equality impact assessments, equality monitoring, training and the procurement equality standard. The use of these tools ensure we have the evidence to demonstrate due regard has been given to the equality duties and that our equality objectives are being met.
This document replaces: St.Helens Council’s Comprehensive Equality Policy 2011-2014 Department of Origin: Chief Executive’s Section: Legal Services Author: Equalities Officer Post Holder (responsible for keeping Policy updated): Assistant Chief Executive (Legal and Administrative Services) Related policies: Date adopted by Council Cabinet: 14 th May 2014 Date first published: 21 st May 2014 Version: 5th edition Policy Review cycle: to be reviewed by May 2018 Date of last update: 8th October 2015
3 St.Helens Council Comprehensive Equality Policy 2014-18
Contents Page
Foreword 3
St.Helens Council’s Equality Policy Statement, Legal Duties and Objectives 5
Definition of the General Equality Duty 8
Policy Implementation Responsibilities 12
Age Equality Policy Statement 13
Carers’ Equality Policy Statement 14
Community Cohesion Policy Statement 15
Disability Equality Policy Statement 16
Fair Employment And Equal Pay Policy Statement 19
Gender Reassignment Equality Policy Statement 20
Hate Crime Policy Statement 22
Human Rights Policy Statement Policy Statement 23
Religion and Belief Equality Policy Statement 24
Sexual Orientation Equality Policy Statement 25
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St.Helens Council’s Equality Policy Statement, Scope Of Policy Legal Duties and Objectives This Policy covers all of St.Helens Council functions (commissioning, procurement, St.Helens Council Equality Policy Statement employment, service delivery, events, projects, processes and practices) and policies (policy St.Helens Council recognises that documents, strategies, plans, decisions, disadvantage and discrimination exist in society guidelines and rules). and that people may experience more than one form of discrimination. The Council is This Policy applies to Council employees and committed to striving to eliminate these candidates for employment, with the exception inequalities and aims to be fair, reasonable and of teaching staff, who are subject to the equality just in its responsibilities. St.Helens Council policies of their specific schools. values the diversity of its workforce and the people and communities both resident and The principles of this Policy apply to the visiting the Borough. The Council is working provision and use of all services. It also applies towards ensuring that service delivery and to those contractors and partners who provide employment practices are of the highest public services on behalf of the Council. possible equality standard. The Comprehensive Equality Policy provides a The Council commits itself to make its services, clear framework within which Council Members, facilities and resources accessible and employees, managers, partners, contract responsive to residents and visitors to providers and trade unions must work. St.Helens. The Council will work towards ensuring that individual human rights are The Policy is holistic: structured to be read, supported within its decisions, policies and understood and worked with as a whole. practices.
Under this Policy, the term St.Helens Council Legal duties will mean Council Members, staff, employees, agents and any organisation delivering goods, This document sets out St.Helens Council’s works, services or carrying out public functions policy in relation to the Carers (Equal on behalf of St.Helens Council. Opportunities) Act 2004, the Human Rights Act 1998, the Equality Act 2010 and the Public Partnerships Sector Equality Duties 2011.
St.Helens Council is involved in a number of The Carers (Equal Opportunities) Act 2004 and local, sub regional and regional partnerships the Human Rights Act 1998 have separate through which the needs of services users are policy statements on pages 14 and 21 identified and service delivery is planned. respectively. St.Helens Council is committed to using its leadership role in the community to promote equality through these partnerships, through Equality Act 2010 General Duty partnership agreements, commissioning, procurement and service level agreements. The General Public Sector Duty of the Equality Act 2010 requires public authorities, in the exercise of their functions and decisions, to The Diversity Strategy Board have due regard to the need to:
The Council’s Diversity Strategy Board is • Eliminate discrimination, harassment and responsible for overseeing the development, victimisation implementation and maintenance of the Comprehensive Equality Policy. • Advance equality of opportunity between persons who share a protected The Diversity Strategy Board includes characteristic and persons who do not representatives from local partners, community share it and voluntary groups and Council departments. • Foster good relations between persons who share a protected characteristic and persons who do not share it.
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Equality Act 2010, Accessibility for Disabled Equality Strands covered by this Policy Pupils The Equality Act 2010 identifies a list of nine Schedule 10 of the Equality Act 2010 requires characteristics that are subject to its general Local Authorities to prepare and maintain an duty. The scope of this Policy covers these Accessibility Strategy with the outcome over a nine “protected characteristics”. They are as prescribed period of: follows: age, disability, gender reassignment, marriage and civil partnership, pregnancy and a) Increasing the extent to which disabled maternity, race (ethnicity), religion, sex pupils can participate in the schools’ (gender) and sexual orientation. curriculums; In addition, this Policy also sets out St.Helens b) Improving the physical environment of the Council’s policy statements on carers, schools for the purpose of increasing the community cohesion, fair employment and extent to which disabled pupils are able to equal pay, hate crime, and human rights.
take advantage of education and benefits, There are also additional policy statements on facilities or services provided or offered by the following protected characteristics to clarify the schools; definitions and implications in relation to practice and procedure: age, disability, gender c) Improving the delivery to disabled pupils of reassignment, religion and sexual orientation. information which is readily accessible to pupils who are not disabled. Equality and diversity strands covered by the Comprehensive Equality Policy: The delivery of information must be: • Age • Carers Rights 1. within a reasonable time; • Community Cohesion 2. in ways which are determined after • Disability taking account of the pupils’ disabilities • Fair Employment and Equal Pay and any preferences expressed by • Gender Reassignment them or their parents. • Hate Crime • Human Rights In order to meet Schedule 10 of the Equality • Marriage and Civil Partnership Act 2010, St.Helens Council will produce and • Pregnancy and Maternity maintain an Accessibility Strategy for disabled • Race (ethnicity) pupils. • Religion • Sex (gender) • Sexual Orientation Equality Act 2010, Specific Duty 2011 Implementing the Comprehensive Equality The Specific Public Sector Equality Duty Policy requires public bodies to set measurable equality objectives and to publish information Since 2003, St.Helens Council has about their performance on equality, so that the demonstrated compliance with the general public can hold them to account. duties of equality legislation by using the following three mechanisms to implement its In order to meet the Specific Public Sector equality objectives within its business and Duty, St.Helens Council will management processes.
1. Equality Impact Assessments: must be • Publish sufficient information to used to demonstrate that St.Helens Council demonstrate compliance with the general has given “due regard” to the general equality duty across its functions annually equality duty within its decision-making, from the first date of publication. commissioning, employment, procurement and service delivery functions. • Prepare and publish equality objectives to demonstrate how the general equality duty 2. Equality Monitoring: equality profiles must will be met. be used appropriately within consultation, complaints and other monitoring process to demonstrate equality of opportunity in access, quality and outcome across service delivery and employment.
6 St.Helens Council Comprehensive Equality Policy 2014-18
3. Procurement Equality Standard: must be • To maintain a 90% achievement rate in used within the Council’s procurement service equality access targets for functions to ensure that contract bidders protected characteristics. demonstrate that they give “due regard” to the general equality duty within their • To publish information relating to employment practices. employees and customers who share protected characteristics. St.Helens Council uses training, published corporate standards and one to one support to The Council’s Diversity Strategy Board receives ensure that staff, management and elected regular monitoring reports on progress against members understand the Comprehensive equality performance targets. Equality Policy and their responsibilities. The Diversity Strategy Board uses information from engagement, impact assessment and Corporate Equality Objectives equality monitoring to identify equality priorities for the Council. The Corporate Equality Objectives of this Policy are based on the general duty of the Equality The outcomes of equality priorities, equality Act 2010: performance targets and improvements • Eliminate discrimination, harassment and identified through engagement, equality impact victimisation assessment and equality monitoring are • Advance equality of opportunity included in the Annual Equality Monitoring • Foster good relations between people Reports, which demonstrate how the Council is within a diverse community meeting its General and Public Sector Equality duties. Since 2003, St.Helens Council has worked to achieve Corporate Equality Objectives based on the general duties of equality legislation. Annual Equality Monitoring Reports
In this way, any actions that contribute to Since 2003 St.Helens Council has produced achieving Corporate Equality Objectives will annual Equality Monitoring Reports. These also provide evidence to demonstrate that the demonstrate the effect that the Council’s Council is meeting its General Equality Duty. policies and practices have had on different sections of the community through analysis of: St.Helens Council uses the challenges of Community Engagement and Equality Impact • Consultation, satisfaction and complaints Assessments to identify improvements to • Workforce equality profile monitoring policies and to make services fair and • Service access equality profile monitoring accessible. Service Equality Monitoring is used • Equality impact assessments of decisions to measure equality of access, quality and • Equality impact assessments of functions outcome for different equality groups. • Equality training
• Improvements and awards St.Helens Council sets equality performance targets for Annual Service and Workforce Equality • Completion of Equality Impact Monitoring Reports are made available on the Assessments in services delivery, Council’s website and shared with local procurement and decision-making voluntary and community group representing • The percentage of service access targets people with protected characteristics. that the Council meets for different protected characteristics Through this process, St.Helens Council • Workforce and employment profiles for demonstrates the progress that has been made different protected characteristics. towards meeting its Measurable Equality Objectives and the General Equality Duty. These performance targets are the council’s measureable equality objectives
• To ensure Equality Impact Assessments inform 100% of Delegated Executive Decisions and Key Decisions.
7 St.Helens Council Comprehensive Equality Policy 2014-18
Definitions of the General Equality Duty weeks beginning with the day on which she gave birth; or • She is breastfeeding, and the unfavourable Eliminating Discrimination treatment occurs within the period of 26 weeks beginning with the day on which she Discrimination in its simplest terms means gave birth. being subject to “less favourable treatment”. St.Helens Council will not racially discriminate There are four main forms of discrimination: by deliberately segregating employees or • Direct Discrimination services users by race or ethnicity. To be • Indirect Discrimination discriminatory, racial segregation must be a • Discrimination arising from a disability deliberate act or policy rather than a situation • Failure to make a reasonable adjustment that has occurred inadvertently.
St.Helens Council will not discriminate against Unlawful discrimination is unacceptable to a person because of their association with St.Helens Council and it is our policy to another person who possesses a protected eliminate it whether it occurs in relation to characteristic (associative discrimination). policy, service delivery or employment. Nor will St.Helens Council accept discrimination All discrimination is unlawful unless there is a against an individual because people think that justified reason for it; based on legal, moral or individual possesses a particular protected health and safety requirements; like a genuine characteristic (discrimination by perception). occupational requirement in employment. St.Helens Council acknowledges that the For example, it is justifiable to restrict characteristic of pregnancy and maternity is not applications for a Ladies Toilet Attendant’s job protected from associative discrimination or to women, on the grounds of decency, even discrimination by perception. though this directly discriminates against men.
Likewise, it is justifiable to add “proficient British Indirect Discrimination Sign Language Skills” to a job description for a member of staff who is likely to deal with deaf Indirect discrimination is unacceptable to customers, even though this prevents a larger St.Helens Council. proportion of people from applying. Indirect Discrimination occurs when a rule, provision, criterion, practice or condition that is Direct Discrimination applied equally to everyone • Puts or would put people who share a Direct discrimination occurs when a person protected characteristic at a particular treats another less favourably than they treat disadvantage when compared with people (or would treat) others, and this treatment is who do not have that characteristic because of a protected characteristic e.g. age, • Is or would be to the disadvantage of that disability, sex (gender), gender reassignment, group race (ethnicity), religion, sexual orientation, • Cannot be justified as a proportionate marriage and civil partnership or pregnancy means of achieving a legitimate aim. and maternity. Examples of legitimate aims include:
• Ensuring that services and benefits are Under the provisions of the Equality Act 2010, it targeted at those who most need them is not discrimination to treat a disabled person • The fair exercise of powers more favourably than a non-disabled person. • Ensuring the health and safety of those Under certain circumstances, St.Helens using the service provider’s service or Council may provide services on terms that are others, provided risks are clearly specified more favourable to a disabled person • Preventing fraud or other forms of abuse or compared to a non-disabled person. inappropriate use of services provided by
the service provider St.Helens Council, will not allow discrimination • Ensuring the wellbeing or dignity of those or treat a woman less favourably because: using the service • She is, or has been, pregnant;
• She has given birth, and the unfavourable An example of Indirect discrimination: a treatment occurs within a period of 26 blanket policy of requiring all job applicants to
8 St.Helens Council Comprehensive Equality Policy 2014-18
hold a full driving licence, even jobs where no • Ensure that any auxiliary aids provided are driving is required, will result in an indirect properly maintained. Where reasonable discrimination against disabled people. This is the Council will have made contingency because: arrangements in case of an unexpected 1. A considerably smaller proportion of failure of an auxiliary aid. disabled people hold driving licences • Seek written consent from the Landlord if compared to non disabled people, the duty requires it to make reasonable 2. It is to the disadvantage of disabled people adjustment to a buildings leased from a as they cannot apply for employment, and third party. 3. It cannot be justified if there is not a • Ensure it can provide translation and genuine occupational requirement to hold a interpretation on request in different driving licence for a particular job. formats for the purpose of promoting access to employment and services for disabled people Discrimination Arising From Disability However, in meeting the duty to make Discrimination arising from disability is reasonable adjustments St.Helens Council will unacceptable to St.Helens Council. not take any steps that • Are beyond its powers to take, or Discrimination arising from disability occurs • Would fundamentally alter the nature of a when: service or the nature of a job description • A disabled person is treated unfavourably; • That treatment is because of something arising in consequence of the disabled Harassment person’s disability; and • It cannot be shown that the treatment is a Harassment in its simplest terms means being proportionate means of achieving a subject to “unwanted behaviour”. legitimate aim unless the employer or service provider does Unlawful harassment is unacceptable to not know, and could not reasonably be St.Helens Council. It is our policy to eliminate it expected to know, that the person has the whether it occurs in policy, service delivery or disability. employment.
Harassment occurs when a person is subject to St.Helens Council will not deliberately treat unwanted conduct that is related to a relevant disabled employees or service users protected characteristic and which has the unfavourably because of something arising in purpose or the effect of: consequence of their disability. If St.Helens • Violating the person’s dignity; or Council knows that a service user or employee • Creating an intimidating, hostile, degrading, is disabled it will make reasonable adjustments humiliating or offensive environment for the to eliminate the risk of discrimination arising person. from a disability. Unwanted conduct covers a wide range of behaviour, including spoken or written words or Reasonable Adjustments abuse, imagery, graffiti, physical gestures, facial expressions, mimicry, jokes, pranks, acts To meet the duty to make reasonable affecting a person’s surroundings or other adjustments, St.Helens Council will take physical behaviour. reasonable steps to ensure disabled people can access employment or services where: The unwanted conduct does not have to be • A provision, criterion or practice; or directed at any particular person and a person • A physical feature; or does not have to share the protected • The lack of an auxiliary aid or service, or characteristic order to find the unwanted • The lack of accessible information on how conduct intimidating, hostile, degrading, to access Council employment or services humiliating or offensive. is shown to put disabled people at a substantial disadvantage compared with non-disabled ‘Unwanted’ does not mean that express people. objection must be made to the conduct before it is deemed unwanted. A serious one-off In meeting this duty the Council will: incident can amount to harassment.
9 St.Helens Council Comprehensive Equality Policy 2014-18
The following types of harassment are covered Victimisation under this Policy: • Harassment of staff by other staff Victimisation in the simplest terms means • Harassment of service users subjecting another person to detrimental • Sexual harassment treatment because they have made allegations or given evidence in relation to unlawful Age, religion and belief, sex (gender), race discrimination or harassment. (ethnicity), sexual orientation, disability and gender reassignment are relevant protected Victimisation also covers the situation where no characteristics and are protected from allegation or evidence has been given, but a harassment within employment. person is subject to detrimental treatment because it is believed they have done so or Sex (gender), race (ethnicity), disability and may do so in the future. gender reassignment are relevant protected characteristics and are protected from Marriage and civil partnership, sex (gender), harassment in relation to service delivery. race (ethnicity), disability and gender reassignment, sexual orientation and religion Marriage and civil partnership, pregnancy and and belief are protected from victimisation in maternity are not protected directly under the relation to service delivery and employment. harassment provisions. However, pregnancy and maternity harassment would amount to Pregnancy and maternity are not protected harassment related to sex. directly under the victimisation provisions. However, pregnancy and maternity victimisation would amount to victimisation Sexual Harassment related to sex.
Sexual harassment, where a person engages Under this Policy an individual need not have a in unwanted conduct that is of a sexual nature, particular protected characteristic in order to be which is related to sex (gender), or gender protected against victimisation. However, to be reassignment, and the unwanted conduct unlawful, victimisation must be linked to a creates intimidating, hostile, degrading, “protected act” as stated in the Equality Act humiliating or offensive environment, is 2010. unacceptable and will not be tolerated by St.Helens Council. A “protected act” is any of the following: • Bringing proceedings under the 2010 Conduct ‘of a sexual nature’ can cover verbal, Equality Act; non-verbal or physical conduct including • Giving evidence or information in unwelcome sexual advances, touching, forms connection with proceedings brought under of sexual assault, sexual jokes, displaying the 2010 Equality Act; pornographic photographs or drawings or • Doing anything which is related to the sending emails with material of a sexual nature. provisions of the 2010 Equality Act; • Making an allegation (whether or not Harassment of employees by other employees express) that another person has done will be dealt with under the Council’s Grievance something in breach of the 2010 Equality Procedure. Act.
Harassment of Service Users will be dealt with Victimisation of staff or service users is under the Council’s Complaints Policy. unacceptable to St.Helens Council.
Victimisation of employees by other employees Harassment of Staff will be dealt with under the Council’s Grievance
The Council will not tolerate harassment of staff Procedure. from someone outside of the Council e.g. service user, resident, or member of the public. Victimisation of staff by service users will be dealt with under the Assaults at Work Policy. St.Helens Council will consider taking action under the Assaults at Work Policy to ensure Victimisation of service users by staff will be harassment of its staff by people they do not dealt with under the Council’s Complaints employ is dealt with appropriately. This may Policy. include reporting the perpetrators to the Police.
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The Corporate Standard for Equality Monitoring Instructing, Aiding, Causing or Inducing sets out the guidance by which services Discrimination successfully and effectively integrate and use equality profiles to demonstrate equality of St.Helens Council will not tolerate any opportunity. circumstances where elected members, employees or service users instruct, aid or Equality of Opportunity does not necessarily help, induce or persuade a person or persons, mean that all individuals should or can be to discriminate, harass or victimise another treated the same. It may be necessary for because of a protected characteristic. Nor to some people to receive information or support instruct, aid or help induce or persuade a in a different way to others in order to achieve person to help another person to do an an equal level of service or employment unlawful act. Such an instruction would be opportunity. unlawful even if it were not acted on. Where there is evidence of under representation of a particular protected Preventing Discrimination, Harassment and characteristic, St.Helens Council may take Victimisation “positive action” to improve representation.
St.Helens Council will take all possible reasonable steps to prevent discrimination, Fostering Good Relations – The Cohesion harassment and victimisation from occurring. Objective
This includes informing staff and service users of the Council’s Bullying and Harassment Good relations exist in a community where Statement, Assaults at Work Policy, Grievance people from diverse and different backgrounds Procedure, Complaints Policy, Hate Crime have a sense of belonging, are valued and Policy and Comprehensive Equality Policy. appreciated and have similar life opportunities.
Discrimination, harassment and victimisation St.Helens Council works with its partners to may result in disciplinary proceedings, or promote cohesion by using Equality Impact St.Helens Council reporting the incident to the Assessments to identify opportunities for Police as a Hate Crime. people from different background to develop strong and positive relationships; be it in the workplace through a diverse workforce, through Advancing Equality of Opportunity inclusive education in schools and colleges or through neighbourhood partnerships. For a Since 2003, St.Helens Council has promoted definition of cohesion, see the Community equality of opportunity in service delivery and Cohesion Policy Statement on page 15. employment by using Equality Impact Assessments in its service functions and employment policies.
The Corporate Standard for Equality Impact Assessment sets out the Council’s process to: • Remove or minimise disadvantages suffered by people due to their protected characteristics • Meet the needs of people with protected characteristics, and • Encourage people with protected characteristics to participate in public life or in other activities where their participation is low.
St.Helens Council monitors equality of opportunity in access, quality and outcome through the collection and analysis of equality profiles within employment and service user monitoring processes.
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Policy Implementation Responsibilities within the Council’s Business and Planning processes.
ELECTED MEMBERS Directors, Assistant Chief Executives and Heads of Service The Council Leader Directors, Assistant Chief Executives and The Leader has the portfolio responsibility for Heads of Service are responsible and equality within St.Helens Council and will accountable for ensuring that all staff under ensure that resources and leadership challenge their control are able to work in an environment are available to implement the Comprehensive free from discrimination, harassment and Equality Policy. victimisation. They are expected to lead by example and follow St.Helens Council’s The Cabinet Comprehensive Equality Policy. Although The Cabinet Members will be responsible for Directors delegate specific duties to others, applying the Comprehensive Equality Policy to they will remain responsible for applying the the setting of strategic direction and decisions Comprehensive Equality Policy to the on funding prioritisation. Cabinet Members will identification of community needs, setting ensure that all proposed decisions, policies and strategic direction, funding prioritisations and strategies within their portfolio have undergone service commissioning processes. an adequate equality impact assessment. Equalities Officer Overview & Scrutiny Commission Members The Equalities Officer must develop and Overview & Scrutiny Commission Members will oversee the implementation of the Council’s ensure that items on their work programmes Comprehensive Equality Policy and ensure that and ‘called-in’ items conform to equality duties. it is compatible with the Council’s statutory Equality Duties. Chairs of Regulatory Committees Chairs of Regulatory Committees will ensure Departmental Equality Leads that all committee decisions are free from Departmental Equality Leads must attend the discrimination, harassment and victimisation. Diversity Strategy Board and assist the Equalities Officer in the implementation of the All Council Members Comprehensive Equality Policy objectives Council Members must deal with constituents’ within their departments enquiries and representations without discrimination. Council Members must comply Assistant Directors and Assistant with the Council’s Comprehensive Equality Treasurers Policy whilst acting on behalf of St.Helens Assistant Directors and Assistant Treasurers Council. Members must behave without must ensure that equality impact assessments discrimination, harassment or victimisation are carried out on all decisions, policies, towards fellow Members, staff or service users, service functions and commissioning and ensure they treat people fairly without undertaken by their division or sections. discrimination. All Members must attend appropriate equality training. Service Managers, Line Managers, Team Leaders and Officers in Charge STAFF Service Managers, Line Managers, Team Leaders and Officers in Charge will ensure that The Chief Executive a summary of the Council’s Comprehensive The Chief Executive has ultimate responsibility Equality Policy has been issued to all staff they for equal opportunities within St.Helens Council are responsible for and that staff have received and will ensure that adequate resources and appropriate equality training. leadership challenge are available to fully implement the Comprehensive Equality Policy. All Staff All staff must comply with the Council’s Assistant Chief Executive (Legal and Comprehensive Equality Policy whilst acting on Administrative Services) behalf of St.Helens Council. Staff must behave The Assistant Chief Executive (Legal and without discrimination, harassment or Administrative Services) has lead responsibility victimisation towards elected members, fellow for equal opportunities within St.Helens Council staff or service users and treat people fairly and will ensure that the objectives of the without discrimination. All staff must attend Comprehensive Equality Policy are integrated appropriate equality training.
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Age Equality Policy Statement Retirement
Retirement is a matter of employee choice, as Legislation St.Helens Council does not have a set retirement age. The implications for age in relation to the Equality Act 2010 are set out in the “Definitions of the General Equality Duty” section of this External Agencies and Suppliers Policy. Through its Procurement Policy, St.Helens Council ensures that any external agency or Employment supplier that it engages to provide services, goods or works complies with the requirements of age legislation. Recruitment and Selection
Age and date of birth details do not appear on Service Delivery the main application form but are included in the diversity monitoring form, which is retained St.Helens Council makes every effort to by the HR Section in line with data protection promote equality in service delivery for people duties. of all ages.
All job descriptions and specifications are St.Helens Council does restrict certain services reviewed to ensure that they do not include by age, however this is only where services are criteria that would discriminate against a legally designated for a particular group, such candidate on the grounds of age. as Children’s, Adults’ or Older People’s Social Care.
Pay and Benefits St.Helens Council includes children, young people and older people as specific groups In general, entitlement to benefit and annual within its Equality Impact Assessment process. leave are not based on service criteria that This means that it considers the needs of these extend beyond the 5-year continuous service groups within its policies, decisions and when criteria that are permissible under law. delivering its services.
Exemptions to this rule are allowed where it is St.Helens Council monitors service access, possible to show that the exemption fulfils a satisfaction and complaints by age and it reasonable business need, e.g. encouraging ensures appropriate age representation in all loyalty. consultations. Any identified age related issues are fed back into service planning processes, Under this exemption, St.Helens Council helping to improve services to meet the needs retains a Long Service Award open to any of people of all ages. employee who retires after completing 20 years continuous service.
Redundancy
Selection for redundancy in accordance with St.Helens Council’s Redundancy Policy is not based on age related criteria.
St.Helens Council’s redundancy payments are based on age and length of service criteria. This is not ‘unlawful’ as the criteria mirror the payments that are set out in the statutory scheme and are therefore exempt from age discrimination legislation.
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Carers’ Equality Policy Statement able to inform carers of their rights and signpost people to appropriate support.
Legislation St.Helens Council also recognises that children and young people can be left with the role of The Carers (Equal Opportunities) Act 2004 carer for family members and will act to ensure places the following duties upon local that young carers are identified so that their authorities in relation to the rights of carers families receive appropriate support. 1. To inform a carer of their right to a Carer Assessment 2. The Carer Assessment must include consideration of whether the Carer a. Works or wishes to work b. Is undertaking or wishes to undertake, education, training or any leisure activity 3. If a local authority requests any local authority, local education authority, housing authority, or health authority to assist in the planning of a carer’s service the authority must give due consideration to the request
Key benefits from the legislation • Increased employability of carers who wish to return to work • More carers being able to juggle work and care and remain in employment • More opportunities for carers to access learning and training opportunities • More opportunities for carers to lead a more fulfilled life
Employment
St.Helens Council employees who are carers are supported through the Council’s flexible working policies.
Service Delivery
St.Helens Council includes carers as a specific group within its Equality Impact Assessment process. This means that the Council considers the needs of carers • When developing or reviewing its policies • In every decision it takes, and • When assessing its service functions.
St.Helens Council promotes the needs of carers by: • Working with partner agencies to identify carers • Undertaking carer assessments • Producing information and holding events to raise awareness of carer rights • Ensuring that Council staff receive appropriate training and information to be
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Community Cohesion Policy Statement Employment
St.Helens Council supports community Legislation cohesion through the employment of a diverse workforce, which reflects the diversity of the The Equality Act 2010 places a general duty on community it provides services to. local authorities to foster good relations between persons who share a protected Working with a diverse range of colleagues characteristic and persons who do not share it. helps to challenge discriminatory values by giving staff and members the opportunity to The Education and Inspections Act 2006 places learn about different cultures, lifestyles, and a duty on governing bodies of schools in experiences whilst coming to recognise that England to promote community cohesion. each individual, although they belong to wider communities or group, is unique a person. St.Helens Council recognises that an integrated and cohesive community is one where: Training programmes are designed to be 1. There is a clearly defined and widely reflective of the diversity of the community and shared sense of the contribution of different seek to challenge stereotypical beliefs, individuals and different communities to a ignorance, prejudice and discriminatory future vision for a neighbourhood, city, attitudes by the use of non-discriminatory region or country language, images and information.
2. There is a strong sense of an individual’s Homophobia, disablism, sexism, transphobia, rights and responsibilities when living in a racism and religious bigotry may result in particular place – people know what disciplinary proceedings under this Policy. everyone expects of them and what they can expect in turn 3. Those from different backgrounds have Service Delivery similar life opportunities, access to services and treatment St.Helens Council works with partners to 4. There is a strong sense of trust in identify and address areas of tension in the institutions locally to act fairly in arbitrating community. between different interests and for their role and justifications to be subject to public The Council will promote cohesion, through its scrutiny departments and partnership, by identifying 5. There is a strong recognition of the opportunities to bring people from different contribution of both those who have newly backgrounds together to contribute to arrived and those who already have deep improvements in the social, economic and attachments to a particular place, with a natural environment, and thus promote focus on what they have in common inclusion and wellbeing.
6. There are strong and positive relationships The Council will support schools in meeting between people from different backgrounds their duty to promote Community Cohesion and in the workplace, in schools and other encourage schools to follow government institutions within neighbourhoods. guidelines and codes of practice.
St.Helens Council has set a specific Community Cohesion Objective within this Policy, to foster good relations between people in a diverse community.
St.Helens Council recognises that communities are not homogenous. Different communities and individuals in the communities have different needs. Needs should not be defined by stereotyping or presumptions.
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Disability Equality Policy Statement Education
St. Helens Council is committed to ensuring Disability Charter that both disabled children and adults have a right to a choice of mainstream educational and This Council is committed to the employment, other service provision. retention and advancement of disabled people within our workplace. The Council will provide mechanisms for resolving disputes over special education We undertake to work with Trade Union needs between parents and schools, which will Disability Champions and disabled employees, be set out in the “Local Offer”. in our workplaces to ensure that we maintain and maximise our commitment towards the two ticks principles. Definitions
We will actively involve our employees and The Equality Act 2010 defines a disabled their representatives in maintaining the goals of person as a person with “two ticks” disability employment commitment. 1. ‘a physical or mental impairment, 2. which has a substantial and long-term We will encourage our entire workforce, using adverse effect on his ability to carry out the appropriate training at all levels, to be normal day-to-day activities’ supportive of disabled people. In order to meet this statutory definition, the We will seek to use suppliers and services that impairment must satisfy the following: are also supportive of disabled people. • Be either physical or mental; • Have an adverse effect which is substantial • Have an adverse effect which is long-term; Legislation • Affect the ability to carry out normal day-to- day activities. The implications for disabled people in relation to the Equality Act 2010 are set out in the The Council is aware that the definition of “Definitions of the General Equality Duty” disability is an evolving concept. It takes into section of this Policy. account the widening definition within its decisions and functions, and gives due regard The Children and Families Act 2014 and the to the “Social Model” of disability. This model associated Special Educational Needs (SEN) recognises the barriers caused by the Code of Practice introduce changes to how environment and people’s attitudes to disability. children with SEN and their families are supported. Some of the key changes include: Impairment
• Replacing Statements of SEN and learning Whether a person is disabled for the purposes difficulty assessments with a new “birth to of the Act and this Policy will be determined by 25” Education, Health and Care Plan (EHC the effect that an impairment has on that Plan), extending rights and protections to person’s ability to carry out normal day-to-day young people in further education and activities. It is not the case that an impairment training, and offering families personal will affect diverse people in the same manner. budgets so that they have more control It is only when a condition or impairment has a over the support they need substantial and long-term adverse effect on a • Improving co-operation between all the person’s ability to carry out normal day-to-day services that support children and their activities, that a person will be regarded as a families, and particularly requiring local disabled person. authorities and health authorities to work together It is not possible to provide an exhaustive list of • Requiring local authorities to involve conditions that qualify as impairments. Any children, young people and parents in attempt to do so would inevitably become out of reviewing and developing provisions for date with advancements in medical knowledge. those with special educational needs and The following list gives an illustration of the publish a “Local Offer” of services and wide range of impairments and conditions from support. which a disability may arise:
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1. Sensory impairments, such as those of administration of medically prescribed affecting sight or hearing; drugs or other medical treatment.); 2. Impairments with fluctuating or recurring • Disfigurement that consists of a tattoo effects such as rheumatoid arthritis, (which has not been removed) or piercing myalgic encephalitis (ME)/chronic fatigue of the body for decorative purposes syndrome (CFS), fibromyalgia, depression including anything attached through the and epilepsy; piercing; 3. Progressive conditions, such as motor • The condition known as seasonal allergic neurone disease, muscular dystrophy, rhinitis (e.g. hayfever), except where it forms of dementia and lupus (SLE); aggravates the effect of another condition; 4. Organ specific, including respiratory • Tendency to set fires; conditions, such as asthma, and • Tendency to steal; cardiovascular diseases, including • Tendency to physical or sexual abuse of thrombosis, stroke and heart disease; other persons; 5. Developmental, such as autistic spectrum • Exhibitionism; disorders (ASD), dyslexia and dyspraxia; • Voyeurism. 6. Learning difficulties; 7. Severe disfigurement including, limb or Substantial postural deformation (including restricted bodily development), diseases of the skin, The requirement that an adverse effect on scars and birthmarks. normal day-to-day activities should be a 8. Mental health problems and mental substantial one reflects the general illnesses, such as depression, understanding of disability as a limitation going schizophrenia, eating disorders, bipolar beyond the normal differences in ability that affective disorders, obsessive compulsive may exist among people. A substantial effect is disorders, as well as personality disorders one that is greater than the effect that would be and some self-harming behaviour; produced by the sort of physical or mental 9. Produced by injury to the body or brain. conditions experienced by many people that have only ‘minor’ or ‘trivial’ effects. People who have had a disability in the past This Policy will also apply to any person that In assessing whether the effect of an had a disability in the past. For example, a impairment upon day to day activity is person who, in the past, experienced a mental substantial, the following factors should be health problem that had a substantial and long- considered: term adverse effect on her ability to carry out • The time taken to carry out an activity, normal day-to-day activities, but who has compared with the time it might take a experienced no recurrence of the condition. person who did not have the impairment to complete an activity; People automatically deemed to be disabled • The way in which an activity is carried out, People with the following impairments or compared with the way that the person conditions are automatically deemed as might be expected to carry out the activity if disabled people under this Policy: he or she did not have the impairment; • A person who has: • The cumulative affects of an impairment on - HIV, more than one day to day activity. - Cancer, or • The modification of behaviour that an - Multiple Sclerosis, individual might reasonably be expected to • A person certified by a consultant make to manage or reduce the effect their ophthalmologist as: impairment or condition. - blind, • Whether a person avoids doing things that - severely sight-impaired, cause pain, fatigue or substantial social - sight-impaired, or embarrassment. - partially sighted. • The impact of environmental factors such
as temperature, humidity, lighting, the time Exclusion of day or night. Certain conditions will not be regarded as impairments under the Act and this Policy. Effects of medical treatment These are: Where an impairment is subject to treatment or • Addiction to, or dependency on, alcohol, correction - for example by the use of a nicotine, or any other substance (other than prosthesis, such as an artificial limb or a heart an addiction which was originally the result valve; or controlled by medication, counselling,
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or diet - the impairment will be considered as Normal day-to-day activities do not include: having the effect that it would have had without • Work of any particular form the treatment or correction being in place. This • Activities that are normal only for a applies even if the treatment or correction particular person or a small group of results in the effects being completely under people. For example, the ability to play an control or not apparent. instrument to a very high standard or taking part in a particular game or hobby with very Whether or not the effect is substantial will be specific skills. assessed by reference to what the effects of the condition or impairment would have been if Activity it were not subject to the treatment or Under this Policy activity means the things correction. people do. In general, day-to-day activities are things people do on a regular or daily basis, for N.B. A visual impairment is not deemed to be example shopping, reading and writing, having substantial if it is correctable by the use of a conversation or using the telephone, spectacles or contact lenses watching television, getting washed and dressed, preparing and eating food, carrying Long Term out household tasks, walking and travelling by various forms of transport, and taking part in To be long-term, the effect of an impairment social activities. must satisfy one of the following conditions: • It has lasted at least 12 months; or Capacity • The total period for which it lasts, from the The Equality Act 2010 states that an time of the first onset, is likely to be at least impairment is to be taken to affect the ability of 12 months; or a person to carry out normal day-to-day • It is likely to last for the rest of the life of the activities only if it affects that person in respect person affected. of one or more of the following capacities: 1. Mobility; This includes impairments where the 2. Manual dexterity; substantial effect is not continuous, but likely to 3. Physical co-ordination; recur. For example a person with rheumatoid 4. Continence; arthritis may experience substantial adverse 5. Ability to lift, carry or otherwise move effects for a few weeks after the first everyday objects; occurrence and then have a period of 6. Speech, hearing or eyesight; remission. 7. Memory or ability to concentrate, learn or understand; or N.B. Conditions with effects that recur only 8. Perception of the risk of physical danger sporadically or for short periods of time, such as schizophrenia or bipolar affective disorder, It should be noted that the list of capacities set also qualify as impairments in respect of the out above is not a list of day-to-day activities. meaning of ‘long-term’. In general, the relationship between disability, impairment, capacity and activity can be Normal day-to-day activity defined thus: 1. A person must have an impairment or Under the definition of disability the substantial condition; long term effect of an impairment must be an 2. The impairment or condition must affect effect upon a normal day to day activity. that person’s ability to utilise a capacity; 3. However, it is only when this in turn has a Normal substantial and long term adverse effect on Under the Act and this Policy normal has an a person’s ability to carry out a normal day ordinary and everyday meaning. In deciding to day activity that the person is disabled. whether an activity is normal the following factors should be considered. How far the Therefore, the substantial long-term adverse activity is: affect must be related to a capacity, but is • Commonplace for a large number of determined by looking at the effect on a people, particular day-to-day activity, not the capacity. • Carried out on a daily or frequent and fairly regular basis.
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Fair Employment and Equal Pay Policy • Ensured appropriate inclusion of equality Statement issues within the staff appraisal system • Made all employment procedures consistent with legislation and employment Legislation Codes of Practice • Adopted Local Government Workforce The Equality Act 2010 places a duty on Strategies. employers to eliminate discrimination between women and men in the same employment in pay and other terms and conditions of their Flexible Working contracts of employment such as piecework, output and bonus payments, holidays and sick St.Helens Council understands that flexible leave. working arrangements can be essential in relation to equality of opportunity for disabled staff, parents and carers and can support staff Equal Pay in educational attainment and development or in keeping their religious observances. St.Helens Council is committed to equal pay across all departments through its free from St.Helens Council’s flexible working bias pay structure. arrangements are available to employees of all grades and include all recognised best practice St.Helens Council’s pay and grading structure types of flexible working solutions. follows the National Single Status Agreement negotiated between the National Joint Council Parental, carer and adoption arrangements are (NJC) for Local Government Services and free from sexual orientation bias. Local Government Trades Unions.
The Council uses Equality Impact Assessments Occupational Segregation within its decision making processes to ensure that all decisions on staffing issues are St.Helens Council acknowledges that some consistent with its pay and grading policy. occupations have been traditionally restricted along gender lines, leading to inequalities in employment opportunities based on gender. Fair Employment St.Helens Council will monitor its workforce by The Council is committed to fair employment gender, and take steps to address occupational and training policies, which promote equality of segregation through workforce planning, opportunity and do not discriminate against job training and education. applicants and employees in relation to protected characteristics. Pregnancy and Maternity Since 2003, St.Helens Council has • Ensured that publicity for vacancies does Unfavourable treatment of a woman because of not unfairly restrict the range of applicants her pregnancy or maternity leave during ‘the • Produced a standard range of application protected period’ is unlawful pregnancy and forms and job descriptions that are clear maternity discrimination. and explicit • Monitored employment process to promote The protected period starts when a woman equality of opportunity becomes pregnant and continues until the end • Engaged in employment equality of her maternity leave, or until she returns to assessment of the local labour market work if that is earlier. • Set employment equality targets for recruitment, staff retention and workforce Pregnancy and maternity is not protected profiles. directly under the harassment provisions. • Developed a programme of equality However, pregnancy and maternity harassment training to support the Corporate Equality would amount to harassment related to gender Objectives • Ensured that policies and procedures associated with equality are part of the staff handbook and are understood by staff
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Gender Reassignment Equality Policy rights on the grounds that the individual is a Statement transsexual or intersex person, whether or not they are intending to undergo, undergoing or having at sometime undergone gender Legislation reassignment.
All the Articles of the Human Rights Act 1998 are relevant, but in particular: Exceptions • Article 8, the right to respect for private and family life Discrimination in employment on grounds of • Article 12, the right to marry gender reassignment may occasionally be • Article 14, the prohibition of discrimination permitted where: • A particular gender is a requirement for a The implications for gender reassignment in job, e.g. women’s domestic violence worker relation to the Equality Act 2010 are set out in • The job involves conducting intimate the “Definitions of the General Equality Duty” searches section of this Policy. • The job involves working in someone’s home.
Scope of the Policy Statement Temporary exceptions may apply during the transition process where: This Policy statement covers people with • Individuals have to share accommodation gender dysphoria, transsexual people and • Personal care services are provided to intersex people. vulnerable individuals.
In relation to exceptions, St.Helens Council will Definitions assess each situation carefully and act reasonably in the circumstances, e.g. Gender dysphoria is a recognised medical considering alternatives such as reassigning condition where someone is profoundly duties. unhappy or uneasy about their own gender (masculinity or femininity) because it conflicts The Council acknowledges that religious with their biological sex. organisations have certain exemption from gender reassignment employment duties, even Transsexual people believe they are born in a where an individual has a gender recognition body of the wrong sex. certificate. The exemption only applies where there are genuine religious reasons to refuse to Intersex people may have both male and employ a transsexual or intersex person – for female sexual characteristics or intermediate example, in relation to the appointment of sexual characteristics. An intersex person may clergy in some denominations. suffer gender dysphoria if they feel the gender they were ascribed at birth conflicts with their true gender identity. Privacy Statement
Gender reassignment is the process, If someone has undergone gender assignment undertaken under medical supervision, of prior to joining the authority (or a new reassigning a person’s gender by changing department within the authority), St.Helens physical, social or other characteristics. Council will not disclose their transsexual history. Real life test refers to the transition period in gender reassignment during which the St.Helens Council understands that disclosure individual must live and work in the new could constitute a criminal offence in the case gender. of someone who has obtained a gender recognition certificate.
Employment In line with the Disclosure and Barring Service (DBS) Policies, people who have undergone a St.Helens Council will not discriminate against gender reassignment do not have to include a person for the purpose of recruitment or previous names on the CRB Disclosure employment, training, benefit and pension Application form.
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However, St.Helens Council expects applicants who have undergone a gender reassignment to send details of their previous identity in a separate letter directly to the ‘Sensitive Casework Manager’ within the DBS, who will then check the data sources held against both current and previous names.
St.Helens Council will ensure information on how and when to make contact with the sensitive casework manager at the DBS is readily available within its guidance on completing the DBS Disclosure Application form.
Support
St.Helens Council’s recognises gender dysphoria and will support an employee through their real life test and gender reassignment process. The Council’s Equalities Officer is the link officer for such guidance and advice.
Service Delivery
St.Helens Council will not discriminate through the delivery of its services against an individual who is a transsexual or intersex person, whether or not they are intending to undergo, undergoing or having at sometime undergone gender reassignment.
St.Helens Council will use consultation, equality impact assessment and staff training to ensure that services meet the needs of transsexual and intersex people and to ensure that the identity and human rights of transsexual and intersex service users are respected.
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Hate Crime Policy Statement Hate Incidents
Hate Crime Legislation A hate incident is any incident whereby the perpetrator’s prejudice against any identifiable The Crime and Disorder Act 1998 created a group of people is a factor in determining who number of racially and religiously aggravated is victimised. offences.
The Criminal Justice Act 2003 introduced Service Delivery tougher sentences for offences motivated by hatred of the victim’s sexual orientation. This St.Helens Council works with partners in the must now be taken into account by the Crime and Disorder Partnership to effectively sentencing court as an aggravating factor, in record, respond to and reduce the number of addition to race or religious hate motivation. hate crimes and hate incidents within the Borough. Section 146 of the Criminal Justice Act 2003, imposes a duty upon courts to increase the St.Helens Council will not tolerate hate crime or sentence for any offence (for example, assault hate incidents against its staff or service users or criminal damage) aggravated by hostility and will take appropriate action against all such based on the victim’s disability (or presumed incidents. disability).
The Racial and Religious Hatred Act 2006 Employment makes it a criminal offence to use threatening words or behaviour with the intention of stirring Homophobia, disablism, sexism, transphobia, up hatred against any group of people because racism and religious bigotry may result in of their race, religious beliefs or their lack of disciplinary proceedings under this Policy. religious beliefs. Any harassment, bullying, victimisation or The Protection of Freedoms Act 2012 identified discrimination by staff, which is perceived by new specific offences of racially and religiously the victim or another person to be motivated by aggravated stalking prejudice or hate against a person’s actual or perceived, race, colour, ethnic origin, nationality Hate Crime or national origins, religion, gender or gender identity, sexual orientation or disability is Any incident which constitutes a criminal unacceptable to St.Helens Council and will be offence, which is perceived by the victim or any investigated under the appropriate policy. other person as being motivated by prejudice or hate of a person’s actual or perceived. Hate incidents by Council Members will be • Race, colour, ethnic origin, nationality or dealt with under the Members’ Code Of national origins Conduct. • Religion • Gender Identity Hate Incidents by employees on fellow • Sexual orientation employees or service users will be dealt with • Disability under the Council’s Bullying and Harassment Policy and may result in disciplinary Hate crime can take many forms including: proceedings. • Physical attacks – such as physical assault, damage to property, offensive graffiti, Hate Incidents on our staff by people who are neighbour disputes and arson not our staff (including incidents of third party • Threat of attack – including offensive harassment that are perceived to be hate letters, abusive or obscene telephone calls, incidents), will be dealt with under the Council’s groups hanging around to intimidate and Assaults at Work Policy and may result in unfounded, malicious complaints criminal action. • Verbal abuse or insults - offensive leaflets and posters, abusive gestures, dumping of All hate incidents reported the Council will be rubbish outside homes or through reported to the Police. letterboxes, and bullying at school or in the workplace
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Human Rights Policy Statement Where the Council makes the justified decision to interfere with an individual’s human rights it Legislation will do so in proportion to the legitimate aims of the decision, for example the decision to The Human Rights Act 1998 makes it unlawful remove a child from its family will only be taken for a local authority to behave in a way that is if a full assessment of the circumstances show not compatible with the provisions of the this to be the legitimate course of action to European Convention on Human Rights. protect the child from an abusive or harmful situation. Human rights must be explicitly considered in policies and procedures, in decisions, in Even if a particular policy or action, which employment and in service delivery. interferes with an individual’s human rights, is aimed at achieving a legitimate aim (for Human Rights protected under law include: example the prevention of crime), this will not • Right to life (absolute) be justified if the means used to achieve the • No torture, inhuman or degrading treatment aim are excessive in the circumstances. (absolute) • No slavery or forced labour (absolute) St.Helens Council will consider human rights in • Liberty and security of the person all its policies and decisions. • Fair trial or hearing within a reasonable time (absolute) Human rights are included in the Council’s • No punishment without law and no Equality Impact Assessment process used to retrospective penalties (absolute) access the impact of decisions, policies and • Respect for family life, home and services upon the community. correspondence • Freedom of thought, religion and conscience • Freedom of expression • Freedom of assembly and association • Right to marry and start a family (absolute) • Prohibition on discrimination (absolute) • Restriction on political activity of aliens (absolute) • Prohibition of abuse of rights (absolute) • Limitation on the use of restrictions on rights • Protection of property • Right to education • Right to free elections (absolute)
Any interference with an individual’s rights must be proportionate to the intended aim and must not be arbitrary or unfair.
St.Helens Council will not interfere with those Human Rights that are “Absolute” rights.
Where the Council is faced with the necessity to limit or restrict an individual’s human rights the decision will only be taken if the interference can be justified in accordance with the law or is necessary in the interests of: • National security, • Public safety or the economic well-being of the country, • The prevention of disorder or crime, • The protection of health or morals, • The protection of the rights and freedoms of others.
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Religion Equality Policy Statement St.Helens Council will work towards enabling employees at all levels in the workforce to feel safe in being open about their faith, religion or Legislation belief systems.
Article 9 of the Human Rights Act 1998 - Religious discrimination is unacceptable and Freedom Of Thought, Conscience And Religion may result in disciplinary proceedings. states: St.Helens Council will take positive steps in Everyone has the right to freedom of thought, conditions of employment to respect and take conscience and religion; this right includes accounts of the rights of employees to follow freedom to change one’s religion or belief and the observances of their chosen faith, religion freedom, either alone or in community with or belief system. others and in public or private, to manifest one’s religion or belief, in worship, teaching, St.Helens Council will ensure that staff have practice and observance. access to appropriate training and guidance to support the delivery of services that respect the Freedom to manifest one's religion or beliefs cultural and religious diversity of the shall be subject only to such limitations as are community. prescribed by law and are necessary in a democratic society in the interests of public safety, for the protection of public order, health Service Delivery or morals, or for the protection of the rights and freedoms of others. St.Helens Council will ensure that all information, publicity and advertising over The implications for religion in relation to the which it has control or influence is not Equality Act 2010 are set out in the “Definitions prejudiced and uses positive images and of the General Equality Duty” section of this language to counteract the effects of religious Policy. discrimination.
St.Helens Council includes faith, religion and Definition of Religion belief within its Equality Impact Assessment process to ensure that people do not receive a Under this Policy, faith, religion and belief are different quality of service due to their faith, defined as any faith, religion, religious belief, or religion or belief as a result of the Council’s similar philosophical belief. This does not decisions, policy developments, service include political beliefs. planning or delivery.
St.Helens Council understands that individuals have the right to define their own faith. However, St.Helens Council will not support a individual or group who claim that their religious beliefs gives them the right to incite religious hatred or who claim that their religious beliefs gives them the right to interfere with the human rights of others unless that claim is justified by legislation.
The Council acknowledges that religious organisations, such as faith schools, have exemptions from certain equality duties.
Employment
St.Helens Council will not discriminate in recruitment, employment and training on the grounds of faith, religion or belief, or the lack of faith, religion or belief.
24 St.Helens Council Comprehensive Equality Policy 2014-18
Sexual Orientation Equality Policy Statement
Legislation Service Delivery
The implications for sexual orientation in St.Helens Council will ensure that all relation to the Equality Act 2010 are set out in information, publicity and advertising over the “Definitions of the General Equality Duty” which the Council has control or influence, uses section of this Policy. positive images and language to counteract the effects of homophobia and promote equality for lesbians, gay men and bisexual and Definition of Sexual Orientation heterosexual men and women.
Under this Policy, sexual orientation is defined St.Helens Council includes sexual orientation as: within its Equality Impact Assessment process • Orientation towards persons of the same to ensure that people do not receive a different sex (lesbians and gay men) quality of service due to their sexual orientation, • Orientation towards persons of the opposite as a result of the Council’s decisions, policy sex (heterosexual) developments, service planning or delivery. • Orientation towards persons of the same sex and the opposite sex (bisexual). The Council will ensure that the rights of civil partners are respected in all policies, decisions, service planning and delivery processes. Employment
St.Helens Council will not discriminate in recruitment, employment and training on the grounds of actual or perceived sexual orientation.
St.Helens Council will work towards enabling employees at all levels in the workforce to feel safe in being open about their sexual orientation.
The Council does not assume that its entire workforce is heterosexual and ensures that all employment benefits, pensions and flexible working arrangements are free from sexual orientation bias and support the rights of civil partners.
Homophobia and discrimination, harassment and victimisation on the grounds of sexual orientation, assumptions about a person’s sexual orientation or because a person associates with someone of a particular sexual orientation, including ‘outing’ for malicious reasons, are unacceptable and may result in disciplinary proceedings.
St.Helens Council will ensure that staff have access to appropriate training and guidance to support the delivery of services that respects diversity in sexual orientation.
The Council acknowledges that religious organisations, such as faith schools, have exemptions from certain sexual orientation equality duties.
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St.Helens Council
Corporate Procurement Strategy
April 2014
Version Control v8.1
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Corporate Procurement Strategy
St.Helens Council
1.0 Introduction
1.1 Overview
1.1.1 Procurement continues to play an increasing role in the operation of the Council, particularly with its growing and natural association with commissioning of services. In an increasing number of areas, the Council, and its partners, are reliant on external organisations to deliver key aspects of its vision for St Helens. In addition, the entire physical and technological infrastructure that supports all our services, from buildings to telephony, is entirely reliant on external suppliers, service providers and contractors.
1.1.2 Procurement decisions are central to the way in which the Council does business. As such, it is crucial that the objectives of the procurement function match those of the organisation, and also that the organisation’s key objectives are supported and established within all procurement activity.
1.1.3 The basis for all procurement decisions has to be value for money. The Council recognises this, but also recognises that value for money is not the same as lowest cost. It is crucial that procurement decisions are made with a longer and broader view than simply immediate cost. This document demonstrates the Council’s commitment to a ‘whole of life’ approach to procurement, and demonstrates how processes and procedures can be used to secure long term value for money and quality of provision.
1.1.4 The Council recognises the critical role it plays within the local supply chain. The Council is the largest purchaser of goods and services in the borough, and recognises that it needs to use this position responsibly. Where possible and within the bounds of the legislative framework, the Council will use its purchasing activities to stimulate the local economy and to provide opportunity for local employment and training. This is both a reflection and supportive of the Social Value legislation recently enacted by the current Government.
1.1.5 The Council also recognises the importance of the voluntary and third sector in service delivery. The Council is committed to working with such organisations in this sector to improve services for individuals, and in support of social enterprise.
1.1.6 In 2012-13 the Council spent upwards of £148 million on external supplies of goods, works and services. Of this, over £27 million was spent locally in both the commercial and community and voluntary sectors.
1.1.7 Procurement decisions also need to be mindful of wider ethical and socially responsible considerations. In particular, the procurement process will be used to ensure that external suppliers, service providers and contractors provide goods and services in an environmentally sustainable manner.
1.1.7 This document establishes the Procurement Strategy for the next three years. It is part of a wider procurement framework, which is underpinned by European competition law and the Council’s own Contract Procedure Rules. It also recognises the responsibility of the Council to ensure that external suppliers, service providers and contractors are acting in accordance with the Council’s legal responsibilities for ensuring equality and promoting diversity.
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1.1.8 Because of the key relationship between the Council’s procurement decisions and the local economy, it has been developed through engagement with St Helens Chamber and the Halton and St. Helens Voluntary Community Action (VCA).
1.2 Commissioning
1.2.1 There is often some confusion regarding the use of the terms ‘commissioning’ and ‘procurement’, and the terms are often used interchangeably. For the purpose of this strategy, it is important to distinguish between the meanings of both terms.
1.2.2 The Audit Commission defined commissioning as ’the process of specifying, securing and monitoring of services to meet individuals’ needs both in the short and long term’. Procurement is often part of the process of securing services, but this is not necessarily the case.
1.2.3 Commissioning decisions are taken before the procurement process begins. Procurement relates only to those services that are to be tested against the market, rather than provided directly, or in partnership with other public agencies.
1.2.4 A commissioning decision does not necessarily mean that a procurement process will follow, however some element of commissioning must take place before a procurement process can begin.
1.2.5 The procurement process relates to how those commissioning decisions are enacted, where a decision has been taken to look externally for the supply of goods or services.
1.2.6 The scope of the Council’s commissioning responsibilities, and potential subsequent procurement activity, has been broadened with the transfer of Public Health service responsibilities from the Health sector (NHS) to Local Authorities. This Strategy encompasses the impact of this transition.
1.3 Links to Council Key Objectives
1.3.1 The Council’s vision is to make St Helens a modern, distinctive, economically prosperous and vibrant borough.
1.3.2 As the introduction to this document states, the procurement process is central to the Council’s ability to achieve this vision. As such, it is necessary to begin the process of determining a strategy for procurement by examining the key objectives that underpin this vision.
1.3.3 The overriding objectives of the Council are those of the Local Strategic Partnership and the resulting St Helens Plan. The Plan covers the three years from 2013-2016 and the current version is themed on ‘People’ and ‘Place’ – the principal objectives are reproduced below :
“To make St. Helens a modern, distinctive, economically prosperous and vibrant Borough ”
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What we want to achieve :
Improving P eople’s Lives Creating a Better Place Delivering Effectively Together
We want people to be: We want St.Helens to be: We want all partners to:
• Healthy and Active • A Safer and Stronger Place Share the Same Principles and Values • Skilled and E ducated • A Cleaner, Greener and • Consult, Engage and Accessible Place Empower our Communities • Independent and Empowered • A Thriving, Vibrant and • Be Open, Accessible and Competitive Place Transparent • Be Successful
1.3.4 It is clear that commissioning and procurement decisions can and will lead to the direct engagement of external organisations in delivering these key objectives. In addition to this direct link, the process itself is a key part of the performance and governance framework that enables these objectives to be met.
1.4 Key Principles of the Corporate Procurement Strategy
1.4.1 The Corporate Procurement Strategy has been established with the vision and objectives of the Council and its partners in mind. It identifies six key principles, which will be applied to the procurement process throughout the Council, and will provide a framework for all procurement decisions.
1.4.2 Within each of these six principles, the Strategy identifies a number of key commitments, which the Council makes in order to improve the value added by the procurement function to the Council, its partners, residents and businesses. These commitments will be delivered through a series of detailed actions and targets within the Corporate Procurement Annual Service Plan. Where appropriate, these commitments will also be reflected in the Annual Service Plans of all services across the Council.
The Six Principles of Effective Procurement in St Helens.
Legality : To ensure that the Council acts in a lawful manner, in full compliance with relevant legal requirements in the purchase of goods, services and works from external parties.
Value for Money : To ensure that the Council receives full value for money through the procurement process.
Supporting the Local Economy : To use the procurement process to encourage local entrepreneurial activity, and to provide opportunities for employment and training within the borough, where possible.
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Making best use of the Voluntary Sector : To engage with the voluntary sector in St Helens to ensure that the Council makes best use of the service provided by the voluntary sector, and encourages the development of social enterprise within the borough.
Sustainable Procurement : To procure goods and services in a way that encourages sustainability of supply, and ethical sourcing of materials to minimise the negative impact of economic activity on the local environment.
Promoting Equalities : To ensure that the Council’s resources are not spent on practices that lead to unlawful discrimination, harassment or victimisation, and instead are used to support and encourage equal opportunities and good community relations.
1.4.3 The following sections of the Strategy Document considers each of these principles in detail, and identifies the actions and commitments necessary for the Council to adhere to these principles, and to derive best value from its procurement activities.
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2.0 The Statutory and Regulatory Framework
2.1 Introduction
2.1.2 At its most fundamental level, the primary responsibility of the Council is to ensure that its procurement practices are lawful.
2.1.3 The Council is bound by the statutory framework that surrounds public procurement throughout the European Community (EC). This framework of competition regulations arose from the establishment of the European Union with the Treaty of Rome in 1952, and is established in a series of European Directives that determine the parameters in which all public bodies must undertake procurement activities.
2.1.4 The Council’s constitutional arrangements in respect of procurement take account of these directives through the Council’s Financial Instructions , Scheme of Delegation and Contract Procedure Rules . The latter document is key to ensuring compliance with statutory requirements.
2.1.5 There are in addition constraints which apply equally to commissioning and to all local authority activities. They include:
• the growing pressures for sustainable development including social value considerations
• increasing budgetary pressures
• community strategies and community planning
• monitoring.
2.1.7 In addition to the statutory and constitutional framework, there is also a considerable regulatory framework that sets extremely high expectations for Council’s procurement functions, and the contribution that procurement processes make to the achievement of both efficiency and wider social goals.
2.1.8 Of particular importance within the three-year cycle of this strategy are the implications of the Public Services ( Social Value) Act 2012, and the accent on commissioners to consider its scope when determining service requirements and their impact.
2.2 Legal Restrictions on Procurement Activity
2.2.1 The statutory framework that places the most direct constraints on the Council’s procurement practices is imposed by the European Union by way of EU Directives. These Directives have the same status as Acts of Parliament.
2.2.2 The full requirements of these Directives can be complex as there are many exceptions and qualifications, however the most significant of these requirements currently are reproduced here in order to provide the legal context in which this Corporate Procurement Strategy must sit.
2.2.3 The principal Directive that applies to Local Authorities is the Public Contracts Directive. This directive determines the method of advertising, selection, evaluation and negotiation of tenders and its application is therefore fundamental to the Council’s procurement practices.
2.2.4 In determining whether this directive applies there are three questions.
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• is the body awarding the contract subject to the directives?
• does the object of the contract count as a service, works or a supply?
• does the estimated value of the intended procurement exceed specified thresholds?
2.2.5 In the Council’s case, the answer to the first question will always be ‘yes’. In reality, the answer to the second question will also be positive. As such, the thresholds determined by the EU Directives are of critical importance in determining the appropriate procurement route.
2.3 Thresholds and Qualifications
2.3.1 The thresholds within the European directives are expressed in Euro. They are usually reviewed every two years, with an appropriate exchange rate applied to the UK. The current relevant thresholds are :-
€ 207,000 for the supply of supplies and services
€ 5,186,000 for works
2.3.2 The sterling exchange rate is reviewed periodically by the EU, and currently expresses the thresholds as £172,514 and £4,332,012 respectively.
2.3.3 These thresholds determine whether a contract notice has to be placed in the Official Journal of the European Union (OJEU). The objective of this procedure is to prevent governments and public bodies from favouring domestic suppliers and contractors by ensuring that all similar interested parties throughout the EU have the opportunity to bid for significant contracts.
2.3.4 Placing a contract notice with OJEU clearly prolongs the procurement process, and it is important that officers make provision for this within project planning, and engage with Corporate Procurement at an early stage for guidance on this procedure.
2.3.5 It is important that the Council does not seek to avoid the bureaucracy associated with the placing of a notice in OJEU by splitting essentially the same contract into smaller pieces to avoid breaching the threshold. Such practices are deemed anti-competitive and there are penalties for breaching this. However changes in EU Directives, expected to become adopted under UK legislation in 2014, may impact on this and other current provisions.
Exceptions
2.3.6 There are exceptions to the OJEU requirements. First and foremost, they obviously do not apply below the determined thresholds (see above). In addition, the rules governing aggregation of similar contracts do not apply where the ‘single requirement’ is no more than €80,000 ( £66,672 ) for supplies and services and €1 M ( £833,400 ) for works and less than 20% of the total value of all aggregated requirements.
2.3.7 There are other significant exceptions that relate to the type of work to be let. The Directives currently distinguish between services that are classed as ‘Part A’ or ‘Part B’. Part A services are subject to the full requirements of the Directives, while Part B services have less onerous requirements. However as mentioned earlier, revisions by the EU to this demarcation are anticipated during the life of this strategy and the strategy will be flexible to allow for such amendments.
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2.3.8 Full details of these can be found in the procurement guidance on the Council’s website, however the most significant for the Local Authority are presented below.
Part A Services • Repair and Maintenance of Vehicles • Telecommunication • Financial and Banking Services • IT Services • Accountancy and Audit Services • Management Consultancy • Architectural and Engineering Services • Building Cleaning and Property Management • Advertising
Part B Services • Legal Services • Personnel Services • Education and Vocational Education Provision • Health and Social Care • Recreational, Cultural and Sporting Provision
• Hotel and Restaurant Provision
2.3.9 It should be stressed that this is a much-simplified overview of the regulations and should not be taken as definitive. Officers involved in procurement decisions that may be subject to European Directives must contact Corporate Procurement for advice and guidance at an early stage in the process to determine the most appropriate and compliant procurement route/model.
2.3.10 As referenced earlier the EU Directives relative to Procurement are expected to be reviewed and any resulting changes adopted within UK legislation within the period of the life of this Strategy – anticipated to be during 2014. The impact is that procurement processes will be reviewed to reflect these changes and in doing so this Strategy will observe and comply with the Directives throughout its life.
2.4 Contract Procedure Rules
2.4.1 The Council has in place its own Contract Procedure Rules which form part of the Council’s constitution. The objectives of these procedure rules are:
• To ensure that the Council acts lawfully when contracting for goods, services and works with external parties;
• To ensure that competitive processes are undertaken below the EU Thresholds
• To balance the need to achieve value for money through competition with the cost of the procurement process, so that the process is proportionate to the value of the contract and its inherent risk. 8
• To ensure that contracts entered into by the Council comply with its vision, priorities and values.
• To ensure the Council meets its obligations within the Government’s Transparency Agenda.
2.4.2 The requirements of Contract Procedure Rules are determined by the value of the contract over its defined duration (or four years when not defined). Contract values are distinguished between Low, Intermediate and High, and requirements differ for each.
Low Value
2.4.3 These are contracts where the total value is less than £10,000. For these contracts, officers must demonstrate that the same quality of goods or services could not have been achieved elsewhere at a significantly lower price.
2.4.4 Methods of demonstrating this include:
• reference to catalogues, brochures or other literature
• informal tender process involving a number of quotes from appropriate suppliers, primarily by using the North West CHEST
• benchmarking
Intermediate Value
2.4.5 These are contracts with a value above £10,000, but less than £50,000. In such instances, and where possible, a minimum of three separate written quotations need to be invited, primarily by using the North West CHEST.
2.4.6 For such contracts, a full tender exercise may also be deemed appropriate by a Chief Officer, depending on the level of complexity of the service and its associated risk.
High Value Contracts
2.4.7 High value contracts are contracts above £50,000 in value. In such instances, appropriate competition has to be demonstrated either through a formal invitation to tender from at least four suppliers, or through a publically visible tender opportunity – the North West CHEST being the default system/opportunities portal for these purposes.
2.4.8 High value contracts in excess of the EU thresholds must be advertised in accordance with the EU Directives for OJEU.
Exemptions from Contract Procedure Rules
2.4.9 Some undertakings are exempt from Contract Procedure Rules. These exemptions relate to employment, the disposal and acquisition of land and work that can only be carried out by statutory undertakers (Utilities).
2.4.10 In addition, purchases made using government purchasing organisations are also exempt – although usually qualified by Administrative Decision/Delegated Executive Decision as appropriate. This is covered in more detail within section 3.
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2.4.11 There are other qualified exemptions to Contract Procedure Rules. These exemptions need to be considered on a case by case basis, and also require approval by Administrative or Executive Decision (depending on value). The most common exemptions relate to:
• Proprietary goods or services that are only provided by one person or firm (for example additions to an existing IT system)
• Work of a highly specialised nature, where only a single contractor is able to undertake the work.
• Contracts where the price is fixed by government order
• Contracts that are extensions to existing contracts
• Work that is so urgent in nature that it precludes a competitive process from taking place.
2.4.12 It is particularly important to note that these exemptions have to be used appropriately, and not for the purposes of avoiding competition. The exception relating to urgent work, for example can only be applied in unforeseen circumstances and cannot be used where officers have simply failed to act in time and an existing contract has expired.
2.4.13 It is also important to note that these are exemptions from the Authority’s Contract Procedure Rules only and do not provide for exemptions from the EU Procurement Regulations.
2.5 The Regulatory Framework
2.5.1 Both the statutory framework, and the Council’s own Contract Procedure Rules place limits on the procurement practices of the Council. In addition to this, other government legislation imposes significant targets for procurement, and the value that procurement has within Local Authorities and the wider community.
2.5.2 The most significant of these is the Public Services (Social Value) Act 2012 which was implemented by law in the UK in January 2013 although this additional emphasis on procurement as a vehicle for community and social change has its roots in the Local Government White Paper of 2006, Building Strong and Prosperous Communities. Of particular significance in this context is the requirement for Councils to use their procurement power to support economic growth and regeneration.
2.5.3 The Public Service (Social Value) Act 2012 places a requirement on commissioners of services to consider the inclusion of social value outcomes when determining requirements in advance of any associated procurement process. Social Value consideration will be central to such planning as we aim to gain added value from procurement through securing employment, learning and skills outcomes as well as local supply chain engagement by our larger contractors.
2.5.4 The challenge for the Council is therefore to meet the high expectations associated with the wider social, economic and environmental impact of procurement decisions, within a structured legislative framework and against the need to achieve value for money.
2.5.5 Through the principles identified within the strategy, and the associated commitments, the Council will be able to meet this challenge.
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3. Value for Money
3.1 Introduction
3.1.1 In order to achieve the strategic objectives that the Council and its partners has identified on behalf of the community, it needs to make best use of its financial resources. With approximately £ 150 million per year spent externally, it is clear that procurement plays a key part in the Council’s ability to use its resources effectively.
3.1.2 Value for Money through procurement means deriving the maximum benefit to the Council, and where appropriate the recipient(s) of the service, at the least cost, while minimising associated risks.
3.1.3 It also means selecting the lawful procurement route that balances the cost of procurement (including time), with the benefits derived by particular contracts.
3.1.4 In order to achieve these targets, the Council also has to maintain effective and efficient procurement arrangements that add value to the organisation, via the provision of appropriate expertise throughout the procurement process.
3.2 Definition of Value for Money and the Whole of Life Approach
3.2.1 The Council defines value for money as the ability to secure the maximum benefit from a particular contract or transaction, for the least cost. Within this definition, there are a number of very important qualifications and principles.
3.2.2 The Council embraces the principle of ‘Whole of Life’ costs in all of its contractual arrangements, and explicitly rejects the notion that the lowest price necessarily offers the best value for money.
3.2.3 The Whole of Life approach evaluates the total benefits of a contract over its useful life, alongside its total associated costs. Importantly, the cost of a contract is not purely financial, but may also be expressed in terms of :
• The quality of the service,
• The cost of contract monitoring, and particularly demands on officer time,
• The compatibility of products or services with other services,
• The ability of a contractor to work with other partners, or contractors,
• the capacity of an organisation and its ability to quickly deliver,
• The ability of an organisation to manage legal and technical issues, such as TUPE - see Section 5 – 5.3.7 to 5.3.10
• the flexibility of a product or service, and its ability to adapt to changes in technology or business processes,
• ease of access by customers, where appropriate,
• quality of on-going support by the contractor
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3.2.4 Not all of these considerations will apply in every contract, and this is by no means a definitive list. For each contract, the approach will differ accordingly, however the principle of the whole of life approach must still apply.
3.2.5 The following section expands on this and demonstrates how this approach will be reflected for different contracts, and how this will be reflected in the procurement process and tender evaluation.
3.3 Risk
3.3.1 The key determinant of the relevant costs and likely benefits of each contract is risk. Although the risks associated with each procurement are many, they can each by split into two related categories:
• Strategic Risk – the impact of the contract on the Council’s ability to deliver its overall strategic objectives
• Financial Risk – the value of the contract over its total life
3.3.2 These risks will have been considered at the commissioning stage, prior to any decision to procure. Following this review, however there are many areas where, despite high financial and strategic risks, it is still desirable to contract out a service, rather than provide it directly. In these areas, using the correct procurement process is key to managing risks.
3.3.3 For contracts with a high degree of strategic and financial risk, it is likely that quality, rather than cost, will be the overriding factor in selecting an appropriate contractor. This is particularly the case where business continuity is a significant risk.
3.3.4 Similarly, there are many contracts that are of little direct financial risk to the Council, or similarly offer no direct risk to the Council’s ability to achieve its overall objectives.
3.3.5 The approach to such contracts needs to reflect this, but also needs to be mindful that in aggregate, such contracts account for significant values. For such contracts, it is likely that price will be the overriding factor in selecting an appropriate contractor.
3.3.6 The majority of contracts, however, fall somewhere in between these extremes, and the procurement process selected for each needs to reflect where each sit within this spectrum.
3.4 Risk and the Procurement Process
3.4.1 The procurement process is determined primarily by the parameters set by statute and through the Council’s Contract Procedure Rules. Within this, however there is considerable scope to tailor the process to best suit the type of contract that is being procured.
3.4.2 In determining the most appropriate procurement model, the matrix of value and risk needs to be applied.
Low Risk and Low Value
3.4.3 These are routine transactions, typically involving high volumes of goods, with low individual values, and which are often replenished. Typical examples would be office stationary, classroom equipment or screws and other mechanical fixings.
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3.4.4 For these transactions, it is necessary to demonstrate value for money, but also necessary to minimise the procurement cost of individual transactions. The approach to such transactions is to put in place arrangements to enable budget holders to quickly and conveniently access products and services with proven value for money.
3.4.5 The emphasis is on process efficiency and minimising the administration associated with procuring such goods. The Council has invested in an e-procurement system to minimise the procurement cost of such items. See 3.5 below
High Risk and Low Value
3.4.6 Products and services with relatively low individual value are often still associated with high risk to the Council. Examples include ICT Hardware (PCs, laptop computers and mobile phones); catering supplies; health and safety equipment and building maintenance.
3.4.7 These are typically products and services where the Council has its own internal standards (eg ICT), or where overriding health and standards of quality and method apply (electrical repairs).
3.4.8 For such products and services the emphasis needs to be on quality of service. Because of the associated risk, there will also need to be considerable contract monitoring associated with such contracts. As a result, the reliance that can be placed on a suppliers own quality assurance systems will also play a part.
High Value and Low Risk
3.4.9 High value but low risk contracts typically relate to products and services where there is a high degree of standardisation, and where there is a predictable and ongoing requirement or demand. Examples of this would be liquid fuel, electricity and other energy costs 2.
3.4.10 Given the degree of standardisation, there is less emphasis on quality and more on price, however unlike low value items, such transactions are of sufficient value to warrant considerable attention to the procurement process.
3.4.11 For such contracts, a leverage approach will be adopted. This seeks to use economies of scale to achieve favourable prices from suppliers. This can be done in isolation by the Council, however the best results will be obtained through partnership work with other Councils, or by using existing framework agreements (see below).
High Risk and High Value
3.4.12 These contracts are for goods and services of significant strategic value to the Council. These are the services that directly effect the Council’s ability to meet its overall strategic objectives. For such services, there will already have been a commissioning process that has determined that the most effective method of service delivery is external.
3.4.13 Examples of such contracts are large-scale construction and engineering projects, major ICT implementations and high-value contracts for Health and Social Care.
3.4.14 The procurement processes associated with such services will reflect their strategic importance and be both rigorous and intensive.
3.4.15 For all high risk activities, issues of business continuity must be considered. These are considered in more detail at 8.2
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3.5 Minimising Procurement Costs and E-Procurement
3.5.1 The Council is committed to achieving value for money in all its services. Within a procurement function, this goes further than obtaining value for money in competitive contracts, but extends to the costs of procurement.
3.5.2 We are committed to maintaining Corporate Procurement arrangements that are effective, efficient and flexible. What this means in practice, is that the Council will employ the procurement model that is most appropriate to the requirement that is being procured, based on the assessment of risk identified above.
3.5.3 In order to maintain this proportionality within the procurement process, a number of arrangements are in place, and can be accessed accordingly.
3.5.4 E-Procurement seeks to minimise the costs associated with procurement by providing an efficient, electronic route to market for budget-holders. The e-procurement system in operation at St Helens is a ‘purchase to payment’ solution that covers a wide range of both goods and services.
3.5.5 The Council will continue to explore the expansion of ‘e’ capabilities within it’s procurement activities to support the drive for further efficiencies.
Framework/Call-off Contracts
3.5.6 For high volume and repeat purchases or where there is difficulty in predicting demand for goods, services or works the Council maintains framework agreements with suppliers. These agreements cover terms and conditions of supply, quality expectations, environmental issues and review processes. These agreements will be subject to a tender process.
3.5.7 The Council will continue to extend existing activities including the use of ‘open’ framework agreements to enable use within the local or regional public sector community. There are significant benefits to be gained from participating with other bodies to access framework agreements.
3.5.8 The Council already benefits from contractual arrangements available through the Government Procurement Service and other local authorities, and there is a potential to increase usage. The Council also enjoys the benefits of framework agreements available through the YPO consortium and particularly it’s engagement with other consortia which has seen the establishment of Pro5, a collective of similar organisations – see also 3.9
Collaboration
3.5.9 In the public sector procurement environment it is often beneficial for authorities to work together in consortia or networks, as the overwhelming majority of goods and services will be common to all Local Authorities.
3.5.10 Collaboration between St Helens and other Councils and public bodies to combine buying power has direct benefit to the Council. Economies of scale mean that procurement costs are reduced, and the collaborative approach has more leverage with suppliers through aggregation opportunities.
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3.5.11 The Council is a member of such a collaborative group sub-regionally - the Merseyside Procurement Partnership ( MPP ) which includes the five Merseyside authorities in addition to Cheshire West & Chester, Halton BC, Merseyside Fire and Rescue and Merseytravel.
3.5.12 The Council is committed to collaborative working and this Strategy affirms this.
3.6 Tender Evaluation
3.6.1 Tender evaluation is obviously vital to the success of any procurement. It is important that the evaluation process is proportionate to the value and risk of the associated contract.
3.6.2 For some contracts, price-only criteria will be appropriate. This is the simplest form of evaluation, where the lowest bidder is selected. This option is suitable only where the service or product is of a standard nature or brand, and where the Council is confident that all the bidders have sufficient financial standing and technical capacity to deliver.
3.6.3 Use of ‘price-only’ criteria is an efficient method of securing value for money in both process and outcome, when applied to a restricted process. Using this approach, all organisations are invited to tender from a select list or an approved contractor management system. This list/management system is maintained of organisations that each meet the Council’s required standards of financial standing, professional and technical expertise, and that can demonstrate compliance with appropriate health and safety and equalities requirements and environmental considerations.
3.6.4 As with the procurement process as a whole, it is important that the evaluation stage is proportionate to value and risk. To minimise the cost of evaluation the Council also uses pre- qualification questionnaires to ensure that only bids that comply with required financial, technical and professional standards progress to the evaluation stage.
3.6.5 The pre-qualification process ( PQQ ) will typically require a potential supplier to produce Method Statements that capture the information required by the Council. The PQQ may vary in content dependent on a number of considerations principally related to value and risk – however it should always be proportionate and not include unnecessary content which is not relative to the requirements of the procurement. Equally the requirement to evidence information contained within a PQQ may be introduced at a later stage within the procurement process to minimise the burden on bidders – adoption of this approach is likely to be proportionate to the risk.
3.6.6 For many a ‘price-only’ evaluation will not secure value for money. These are contracts where it is not possible to standardise the product or service so the quality of the product and service is also part of the evaluation.
3.6.7 For these contracts, a relative weighting is applied to both price and quality. This weighting can be anything between 0% for a ‘price only’ evaluation and 100% where quality is the only concern, although in the majority of cases, it will be somewhere in between.
3.6.8 The criteria to be used in contract evaluation has to be determined at the specification of the contract and be transparent to all potential bidders. Criteria that can be applied in respect of quality can be directly related to the contract and can also be indirect. Examples of indirect criteria include:
• Compatibility with existing IT systems
• Quality assurance
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• Contract monitoring costs
• Ability to support other areas of Council activity
3.6.9 The Council’s contract procedure rules cover the arrangements for formal evaluation of tenders and, in particular, how tenders are received and opened. In addition, the scoring and evaluation process has to be transparent and objective. It also has to be recorded with a high degree of accuracy as it is at this stage that the Council is most vulnerable to legal challenge from unsuccessful bidders.
3.6.10 It is likely that the evaluation stage will also include some form of testing and verification. This process may involve some or all of the following, but should be proportionate to the risk and value of the contract:
• Second-stage interviews with bidders
• Site visits to organisations where a supplier is engaged
• Visits to premises
• References from other sites
3.6.11 The quality model can also be used to include an evaluation based upon the Council’s wider objectives
3.6.12 It is vitally important to understand that the criteria for tender evaluation has to be identified extremely early in the procurement process. While there is considerable scope for including a variety of direct and indirect criteria within the contract specification, and disclosing this to potential bidders, it is not lawful to apply any further criteria once bids have been received.
3.6.13 This is particularly important where the Council is seeking to use procurement to deliver its wider social and environmental objectives.
3.7 Partnership Arrangements
3.7.1 Achieving Value for Money through procurement requires a proportionate approach to process and evaluation. While our objective is to minimise the costs of procurement to the Council, it has to be acknowledged that for some high risk, high value contracts, a great deal of intervention by Members and Officers is warranted.
3.7.2 These are contracts of a strategic nature, where the Council has to keep very close regard on contractor performance at all times. In these instances, a partnership approach may be appropriate.
3.7.3 St Helens has extensive experience of partnerships within construction. Under a partnership arrangement, the Council uses a competitive process to identify a suitable partner in a particular venture, rather than a traditional contractor.
3.7.4 Under a partnership venture, a very high weighting is placed on quality. The Council and the contractor share expertise throughout the project and work towards shared objectives. Partnership arrangements are particularly suited to ensuring that the wider social and environmental aspects of a project are achieved.
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3.7.5 While partnerships have been typically undertaken within major construction projects, there is no reason why this approach cannot be adapted in other areas.
3.8 Support for Schools
3.8.1 St Helens schools are able to directly choose their sources of supply under the terms of their delegated powers. As a result, school governors have a duty to ensure that they are purchasing goods and services lawfully and in line with value for money principles.
3.8.2 Where possible, the Council will seek to minimise the cost of procurement to schools through the use of framework agreements. Such agreements will be accessible by schools and enable them to select and evaluate competitive products and services within a robust legal framework.
3.8.3 Where schools prefer to operate independently of these arrangements, advice support and guidance will be provided throughout the procurement process, if requested.
3.8.4 Similar advice and guidance will be available to Academy based schools under appropriate ’trading arrangements’.
3.9 The Yorkshire Purchasing Organisation
3.9.1 The Yorkshire Purchasing Organisation (YPO) is a joint procurement venture, of which St Helens has full member status , along with a further twelve local authorities in Yorkshire and the North West. As such, St Helens has a financial interest in the commercial success of YPO, and has received substantial dividend payments over many years.
3.9.2 YPO offers a highly convenient route to market for many types of contract – particularly lower risk contracts. In using YPO to procure goods and services, the Council is accessing products that have already been subject to a robust competitive process.
3.9.3 The Council supports YPO and uses YPO as a source for general supplies, direct delivery and contractual arrangements, examples being school meals and fuel. YPO’s stock catalogue is represented on the Council’s E-Procurement system, enabling effective and efficient acquisition by Council budget holders. YPO is also a significant supplier for St Helens schools.
3.9.4 More recently YPO has become a member organisation of a wider collective of purchasing consortia known as Pro5 and offers a wider range of services arrangements to complement its existing supply portfolio.
3.10 Summary
3.10.1 There are many aspects to achieving Value for Money through the procurement process. Key to all of these is to select a procurement model that is proportionate to the value and risk of individual contracts. The procurement model must also be the one that is best-suited to delivering all of the desired outcomes for the requirement/service in question.
3.10.2 The Council must maintain adequate procurement expertise to guide it through the process. All officers and members must engage this support at the earliest stage in the process. This is particularly important if the Council is to deliver its broader social and environmental objectives through the remaining principles of effective procurement covered in the following sections.
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4. Supporting the Local Economy
4.1 Introduction
4.1.1 This Principle underpins the Council’s intention to use the procurement process to encourage local entrepreneurial activity, and to provide opportunities for employment and training within the borough reflecting social value considerations/opportunities.
4.1.2 Action to help the local economy is a lawful exercise of well-being powers, however these powers are constrained by other statutes, particularly in this instance, The Treaty of Rome. The Treaty precludes any explicit local buying policies, even though these would greatly help the local economy. It does not, however, preclude the Council from procuring in such a manner that benefits the local economy.
4.2 Legal Constraints
4.2.2 The Council recognises that there are significant advantages of engaging with small local businesses, both for the Council, and for the local economy. The Council is committed to using procurement processes that encourage such businesses to compete for work and to benefit from the Council’s purchasing power.
4.2.3 The following sections illustrate this commitment, and show how the overall procurement strategy will support the local economy.
4.3 The Benefits of Engaging with Small Local Businesses
4.3.1 For some types of contract, small businesses are often the most willing and best able to do the work. The Council is committed to ensuring that our procurement arrangements encourage the service providers most likely to give the best service. This is especially the case where there are benefits to the Council, and to the local economy.
4.3.2 The strengths of small, local businesses often include:
• an acceptance of small packages of work
• rapid accommodation to the approaches and methods of their clients
• a readiness to provide key add-ons to bigger and more complex contracts and services
• a close relationship with clients at partner and manager level, resulting in closer understanding of clients’ needs, and the development of services specifically designed to secure them
• a willingness to go the extra mile in giving service
• a good knowledge of local social conditions, the local market for labour and materials, and travelling difficulties
• a convenient location, and willingness to work from local bases
• a high value which they put on working for their ‘host’ local authorities.
4.3.3 In addition to these strengths, supporting small local businesses also encourages entrepreneurial activity and employment in the borough, and will bring environmental benefits through shorter travel to work journeys. 18
4.4 Encouraging Small, Local businesses to compete.
4.4.1 There are many ways in which the Council is able to encourage small local businesses within the law, and with due regard to achieving value for money. The Council is committed to providing a procurement framework that welcomes approaches from small local businesses.
4.4.2 Many large businesses are extremely adept in promoting their services to prospective buyers, however many smaller suppliers may lack such promotional expertise. It is important that the Council, through its officers and members is welcoming to approaches from small businesses.
4.4.3 Although there is obviously the need to observe extremely rigorous standards of transparency and lawfulness during a tender process, It is proper as well as constructive, however, at any time before procurement has begun for small businesses to draw authorities’ attention to their own particular expertise and standing and the packaging, selection and evaluation criteria which they think would be most likely to bring out these qualities, without disadvantaging any other potential bidder.
4.4.4 The Council welcomes all approaches such as this, and is committed to maintaining a comprehensive awareness of the local supply chain, and the opportunities that arise within it.
4.4.5 The Council is aware that expressing the desire to work with small local businesses is not in itself sufficient, and that for many firms, more tangible steps need to be taken. This section contains a summary of the powers available to the Council that can be used within the Tender process to help small, local businesses.
4.4.6 The Council is committed to considering the following throughout the procurement process.
Due notice of contract opportunities
4.4.7 The Council will maintain an accurate database of all its current contract opportunities, along with the date that current contracts will expire. This database will be published on the Council’s website and should allow businesses to anticipate contract opportunities, allowing sufficient time to gear up their business capacity.
4.4.8 This proactive approach will also ensure that the Council meet’s its obligations in terms of compliance with the Government’s Transparency requirements.
4.4.9 Similarly, the Council will also maintain and publicise a list of all its current ‘Approved Lists’, along with information for businesses on the conditions for inclusion on each of these lists.
4.4.10 The website will also include the Council’s contract conditions. Potential suppliers will also be able to access information about the authority’s standard requirements with regard to discrimination, environmental protection, Health & Safety, and sustainability.
4.4.11 The Council’s forward plan of key decisions will also include details of any significant medium term commissioning or construction schemes that will be of interest to local businesses.
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Packaging of Contracts and Pricing Mechanisms
4.4.12 The Council are aware that the size of contracts to be let can have an impact on the type of enterprise that is attracted to the work. Economies of scale will sometimes dictate that large contracts are most appropriate, however the Council, where possible will let contracts in such a way as to encourage small and local enterprises to be successful, even where this means packaging contracts ‘small’.
4.4.13 The Council will consider the capacity of small and local businesses in determining the size of contracts to be let. Where appropriate, the Council will let contracts in lots, to provide more opportunity for smaller businesses to win amounts of work that they are able to deliver within their capacity.
4.4.14 Pricing mechanisms for contract payments can also inhibit small and local companies from bidding for work. The Council recognises that small businesses work on small margins and cannot afford to take significant risks not directly under their own control. The Council will not use pricing mechanisms that unnecessarily require small businesses to carry such risks and where possible, the Council will employ a ‘schedules of rates’ approach to pricing contracts.
4.4.15 The Council will also consider opportunities for introducing early payment terms where this is beneficial to both the Council and ‘supplying’ businesses.
Advertising and Contract Notification
4.4.16 The Council is committed to placing advertisements where small and local suppliers can be reached. The Council will advertise all of its current contract opportunities on the website, and will expand its use of the North West CHEST as the ‘default’ tender opportunities portal.
4.4.17 In addition to this, the Council will actively seek expressions of interest from local providers through prompting, even where this involves direct contact with potential suppliers to ensure that they are aware of current opportunities – the Chamber and VCA may also appropriate channels for this approach.
4.4.18 The Council will also take an active role in encouraging local enterprises to apply to join select and approved lists for services within their area of expertise.
Contract Conditions, Documentation and Tender Evaluation Criteria
4.4.19 Contract conditions will be appropriate to each contract to be let. That said, the Council will consider the needs of small, local business in determining contract conditions and will not adopt conditions that effectively exclude small businesses. The reasons for all contract conditions will be clearly indicated within contract documents.
4.4.20 Contract documentation will similarly be proportionate to the size and risk associated with each contract. We will endeavour not to use documentation designed for large contracts for all our contracts. It is not in the Councils interests to deter small businesses, or for them to require legal/specialist advice before tendering – see also 3.6.5
4.4.21 Evaluation criteria, including technical and professional ability, and financial standing will also be proportionate to the contract being let.
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4.4.22 Officers and members evaluating contract documentation, and presentations from bidders, will judge each on the content and substance. The Council recognises that large companies often have professional, dedicated staff responsible for preparing tenders, and delivering presentations, and that smaller businesses do not have such capacity.
4.4.23 In summary, the evaluation and selection process for each contract will be proportionate, and based on substance rather than form.
Debriefing
4.4.24 A constructive debriefing will be provided where this is requested by a tendering party. This will include the relative strengths and weaknesses of their bids, documentation and presentation.
4.5 Guidance, Support and Training for Small Local Businesses
4.5.1 The Council and its partners within the Chamber are committed to encouraging entrepreneurial activity within the borough. As such, the Council will also provide guidance, support and training for companies to help them prepare for tender opportunities, and to remove some of the barriers to tendering.
4.5.2 Such direct intervention will include seminars and training specifically for small local businesses, with a focus on improving their ability to identify business opportunities, and take advantage of them. The Corporate Procurement section will continue to support the Chamber in its ‘Meet the Buyer’ events and other initiatives, enabling potential bidders to discuss forthcoming tender opportunities with the Council.
4.5.3 Other forms of intervention may include help with business premises and assistance with the support arrangements necessary to deliver a contract.
4.6 Sharing the Benefits from Large Contracts
4.6.1 The Council recognises that for some high risk, high value contracts, the most appropriate tender mechanism will often be unsuitable for all but the largest, most specialised companies. Such contracts will typically be large scale construction contracts, where economies of scale, the requirement for bonds and technical and professional ability will prevent smaller suppliers from winning work.
4.6.2 In such cases the Council is still able to derive significant benefits to the local economy through working with large contractors to secure employment, training and opportunities for smaller organisations in a sub-contracting capacity.
Subcontracting
4.6.3 In letting large contracts, the Council is able to ask businesses who have applied to tender how much work they propose to subcontract, if this enquiry is for the purpose of encouraging small businesses. The Council can also, where appropriate, require a main contractor to open a percentage of a contract sum to subcontractors, and to package this in such a way that small businesses will be able to compete.
4.6.4 The Council will continue to explore and open up such opportunities within its supply chains.
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Employment and Training
4.6.5 The Council and its partners are committed to reducing worklessness in the borough. Procurement activity plays a key role in this, and the Council will use its purchasing capability to boost employment and training within the borough. This will reflect it’s support for the Liverpool City Region Charter for Employment and Skills through Procurement.
4.6.6 It is unlawful for the Council to specify that any supplier must employ a local labour force, as this would be considered a protectionist policy contrary to the Treaty of Rome. It is, however permissible to ask potential suppliers to provide opportunities for the long-term unemployed, and to evaluate bids using this criteria.
Sustainability
4.6.7 The Council is committed to using the procurement process to minimise any negative environmental impact of its service. Section 6 below covers this in more detail, however support for the local economy will support this objective. Supporting local employment, local subcontractors and local suppliers significantly reduces the mileage associated with deliveries of materials and journeys to work associated with significant projects.
4.6.8 Again, as Section 6 demonstrates, the Council will, where appropriate, evaluate contracts using the environmental impact of working practices as a factor.
Partnership Approach to Procurement
4.6.9 While there will be opportunities to influence main contractors in many types of contract, the Council will have more leverage to pursue its wider economic and social objectives through partnerships. The Council has significant experience of this in major construction projects and is committed to building on this experience in all high value contracts – the Building Schools for the Future initiative is an example of where this has been successfully deployed.
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5 Making best use of the Local Community and Voluntary Sector
5.1 Introduction
5.1.1 The Council recognises and values the work undertaken within the community and voluntary sector, and is committed to making best use of this capacity in achieving its vision for the borough.
5.1.2 The Council recognises the diversity of organisations within the voluntary sector, and uses the government definition of the ‘Third Sector’ in relation to these groups. For the purposes of this strategy, the community and voluntary sector is synonymous with the ‘Third Sector’, and embraces:
• Voluntary organisations . These are organisations formed independently of government to pursue social, ethical and environmental objectives, and other objectives of general public benefit, including voluntary sports clubs. Any profits these organisations make are used solely to further these objectives;
• Community organisations . These are bodies, usually wholly voluntary, formed to improve the lives of all people, or of particular types of people, in a particular geographical area; and
• Social enterprises . These are organisations which trade for specified social, community and environmental purposes; and commit their surpluses to achieving these purposes. They may also be wholly-owned subsidiaries of voluntary and community organisations (VCOs) which have been formed specifically to trade on behalf of their parent bodies.
5.1.3 The Council already places substantial amounts of high risk and high value work within the community and voluntary sector. This is particularly the case within social care and supported housing. These contracts are typically placed with large national or regional charities, and are subject to the Council’s Contract Procedure Rules regarding tendering (although as ‘Part B’ services, they fall outside the scope of the OJEU requirements currently – see also 2.3.7).
5.1.4 The Council is also committed to working with the community and voluntary sector on a smaller scale, to take advantage of the opportunities provided particularly at a local and community level.
5.2 The Benefits of working with the Community and Voluntary Sector
5.2.1 Community and voluntary sector service providers are likely to have a close focus on their own chosen fields, and as such are often to be the best, and possibly the only, service providers willing and able to undertake certain types of work. Knowledge of particular groups such as substance misusers, ex-offenders, or people with particular medical conditions is very often concentrated entirely or substantially within the community and voluntary sector.
5.2.2 As a result of this focus on specialist areas, the community and voluntary sector often has greater open-mindedness about methods of service delivery, and can be highly innovative and flexible in the pursuit of its objectives. Significantly, unlike providers in the public
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sector, the regulators of community and voluntary sector organisations are similarly less concerned with their methods, but more with their overall governance.
5.2.3 The legal status of community and voluntary sector organisations also has practical benefits in enabling the partnerships to which they belong to qualify for external funding such as National Lottery or Sport England.
5.2.4 The Council recognises that all these strengths are inherent throughout the community and voluntary sector, however it also values the particular strengths of small, locally based voluntary and community organisations. These include:
• the ability to foster good relations and credibility with target groups;
• an often intimate knowledge of local communities generally;
• the ability to generate trust in new local projects;
• convenient locations, and willingness to work from local bases;
• the ability to accept small packages of work;
• the flexibility of recruiting from target groups and local communities.
• a good basis for judging the type of service that is most needed by a particular target group
• their ability to act as expert advisers within partnerships.
5.2.5 Money spent in the local community and voluntary sector feeds through more directly into disadvantaged communities than money spent in almost any other way.
5.2.6 The Council is also extremely keen to promote the growth of social enterprises within the borough. It recognises the special strengths of social enterprises within communities. These strengths are similar to those of smaller voluntary and community organisations, with the additional advantage of being able to trade outside constraints of charity and trust law.
5.2.7 This has direct benefits in enabling social enterprises to win contracts through a tendering process, and also fulfils the wider social and economic objectives of stimulating entrepreneurial activity within the borough – particularly amongst disadvantaged groups or localities.
5.2.8 Social enterprises have already established strong national positions in waste recycling, leisure management, community transport, and vocational training.
5.2.9 It has to be recognised, however that contracting with the community and voluntary sector, particularly smaller organisations may require both greater input from service managers and from corporate procurement, and result in less ability to derive economies of scale.
5.2.10 Not all contracts will therefore be suitable for community and voluntary sector delivery, however where the benefits of engaging the Third Sector outweigh these costs, the Council is committed to encouraging associated organisations to tender for work.
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5.3 Helping the Community and Voluntary sector to Compete for Contracts
5.3.1 The legal position of the Council in relation to the community and voluntary sector is similar to that with small, local businesses. It is expressly forbidden for the Council to contract with an organisation simply because of the type of organisation it is. Having said this, it is possible to use the procurement process to encourage community and voluntary sector providers of services to bid for work. ( see also 5.5 below ).
5.3.2 Many of the actions that can be taken to assist third sector organisations to tender for work mirror those that were considered in the previous section, relating to small, local businesses. These are summarised below. Most importantly, however, the Council will endeavour to maintain an open relationship with community and voluntary sector providers and welcome any and all approaches.
5.3.3 The Council will also work closely with the local Voluntary and Community sector, through the Halton and St. Helens Voluntary Community Action (VCA) to maintain knowledge of the services available through voluntary and community organisations within the borough.
5.3.4 The Council recognises that for many smaller organisations, the burden of bureaucracy associated with contracting with the Council is a barrier to service provision. While the Council is clearly unable to waive health and safety requirements, for example, it is committed to a proportionate approach to each tender process.
5.3.5 In particular, the Council will review its tender documentation to ensure that this is appropriate for the size and risk of the contract being let – see also 3.6.5
5.3.6 In certain circumstances, where the value of working with a particular community or voluntary group is very high, other direct support may be provided by the Council. This can include:
• Reviewing payment terms, where it would be unreasonable to expect a small organisation to accept payment in arrears
• Reviewing financial standing criteria, where this would mitigate against smaller organisations, subject to the risk involved in the contract
• Assuming a greater burden of contract monitoring costs, where an organisation does not have in place a professional infrastructure for reporting performance
• Provision of certain office functions, where an organisation does not have dedicated professional services. This, for example, could include payroll
• Provision of facilities, such as premises or ICT to enable a voluntary or community organisation to deliver services from Council assets where it would be unreasonable to expect an organisation to provide its own physical assets.
5.3.7 The Council also recognises that potential TUPE 3 liabilities may be a barrier for some community and voluntary sector service providers. Unaffordable long-term liabilities associated with TUPE may inhibit smaller organisations from tendering for a contract, unless they are sure (and the staff affected agree) that TUPE does not apply.
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5.3.8 The fundamental position is that TUPE applies to all transfers of all undertakings between authorities and service providers when work is contracted out or brought back in-house, and between one service provider and another.
5.3.9 The Council will only support applications for Admitted Body Status to the Local Government Pension Scheme on a partially funded basis. Providers bidding for Council contracts should take appropriate advice on this as it may incur financial implications. It should be noted that the Council will not be liable for the cost of any bond required to support Admitted Body Status in the Local Government Pension Scheme as administered by the Merseyside Pension Fund where TUPE applies.
5.3.10 The Council may, however package its contracts in such a way that TUPE does not apply, where to do otherwise would prevent community and voluntary sector service providers from bidding for contracts where their expertise would be considered valuable.
5.3.11 The table below summarises other actions that the Council is committed to taking to assist the community and voluntary sector in bidding for, and delivering Council contracts.
Summary of Commitments to Supporting the community and Community and Voluntary sector.
Commitment Action
Due Notice The Council will maintain a list of all current contracts, with their expiry date on its website, and provide a link to this list through the CVS.
The Council, where appropriate, will directly contact appropriate voluntary and community organisations to give notice of forthcoming contract opportunities
Packaging The Council will consider the implications to voluntary and community groups in the packaging of all contracts.
Where appropriate, contracts may be let in small ‘lots’, or as single-skill contracts if to do otherwise would prevent third sector organisations from bidding for contracts where their expertise would be beneficial.
Advertising The Council will advertise in such a way that will enable local voluntary and community groups to have notice of current tender opportunities.
Contract Conditions Contract conditions will be proportionate to the size and risk of each contract. In determining contract conditions, the Council will be mindful of the
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implications to third sector organisation.
Contract Evaluation Contract evaluation criteria will be proportionate to the size and risk of each contract.
Debriefing Opportunities to discuss successful and unsuccessful bids will be available to all organisations
Guidance Support and Training Meet the buyer events or similar
3 Transfer of Undertakings : Protection of Employment. These are liabilities under the EU Acquired Rights Directive and relate to the transfer of employment terms and conditions between organisations where a contractor has been awarded a contract previously undertaken by another organisation, and the staff who undertake that work will be undertaking substantially similar work
5.4 Subcontracting Opportunities
5.4.1 Not all contract opportunities will be suitable for voluntary and community groups to deliver, particularly small organisations. The Council recognises, however that such organisations can still make a valuable contribution to certain specialist aspects of larger contracts. The Council will encourage larger contractors to use Third Sector providers.
5.4.2 More information on the Council’s powers in respect of subcontracting opportunities is included in section 4.6 above.
5.5 Buying Goods and Services from Sheltered Workshops
5.5.1 Procurement Regulations allow the Council to legally reserve one contract for a supported factory or business, where at least 50% of the employees are registered disabled. The Council is able to do this without undertaking a tender exercise.
5.5.2 The Council recognises the potential value of contracting with a Supported business and will continue to seek opportunities to benefit from this regulation.
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6. Sustainable Procurement
6.1 Introduction
6.1.1 The Council is committed to procuring goods and services in a way that encourages sustainability of supply, and ethical sourcing of materials to minimise the negative impact of economic activity on the local environment.
6.1.2 The Council recognises that as a major consumer of goods and services, it has a responsibility to procure responsibly, and in accordance with its overall values and objectives.
6.1.3 In particular, the Council is committed to:
• using goods and services that minimise environmental damage in the sourcing of materials, the production process, transportation and disposal
• minimising the consumption of non-renewable resources
• maximising the use of recycling
• promoting the principles of ‘Fair Trade’; and
• engaging with suppliers who can demonstrate high standards of corporate and social responsibility
6.2 Minimising Environmental Damage through Procurement
6.2.1 The Council recognises that it needs to play its part in the global response to climate change and our procurement policies need to reflect this. The Procurement Strategy reaffirms this commitment.
6.2.2 Environmental issues are important throughout the procurement process, however the greatest benefits will arise from anticipating environmental benefits and costs at a very early stage. This begins before the procurement stage, with Commissioning Decisions, and in particular whether the Council requires replacement goods, or whether existing ones are sufficient.
6.2.3 An example of such decision making would be a decision to replace a fleet of vehicles, where the environmental costs of maintaining an old and fuel-inefficient fleet may justify the benefits of commissioning a new fleet by reducing emissions and fuel consumption.
6.2.4 Environmental considerations need to be included within contract specifications, where the Council intends to use these are part of the contract evaluation criteria. These may be direct, such as the nature of materials or the generation of waste, or indirect, such as the mileage generated from operational activity.
6.2.5 In the example at 6.2.3 above, commissioning a new fleet of vehicles would involve procuring vehicles with greater fuel-efficiency. Standards for fuel efficiency would be written into contract specifications, and potential suppliers would understand that emissions and consumption were a part of the evaluation criteria. (See below for more information regarding transport procurement policies)
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6.2.6 The Council is particularly aware of the potential impact of major construction schemes and will specify detailed sustainability requirements within contract documentation. The Building Schools for the Future programme is an example of where the Council had set ambitious targets that were both achieved and will be used as a model of best practice for all construction schemes undertaken by the Council.
6.2.7 As this illustrates, the Council will specify the environmental considerations associated with each contract at the specification and pre-qualification stage. An example of a pre- qualification questionnaire for furniture is included within the following table:
Example: Pre Qualification Questionnaire : Furniture
Give details on products that have been awarded an eco -label, such as
Fairtrade or equivalent?
Which products are made from recycled materials?
Please provide details.
Give details on products that are made from renewable resources.
Is packaging made of recycled materials?
If Yes provide details below.
Can packaging be reused or recycled?
Will suppliers take back packaging for re-use?
Can any of your products or their components be re-used or recycled?
If Yes provide details below.
Which products can be easily dismantled into its single components?
If possible provide details below.
6.2.8 St Helens Council is committed to managing its own sustainability impacts and expects all its contractors, suppliers and organisations to do the same. Evidence about an organisations’ sustainability systems, processes and practices will be sought through the pre-qualification questionnaire. Applicants without a Sustainability Policy can comply with the basic requirements of this section by completing the Council’s Template Sustainability Policy, copied below:
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TEMPLATE SUSTAINABILITY POLICY
The following Sustainability/ Environmental Policy fulfils the basic requirements of the Sustainability Checklist. If your company wishes to adopt this Sustainability Policy then you must complete the Sustainability Policy, retain a copy for your own reference and return a signed copy with the application/tender documents.
Sustainability Policy
Name of Organisation seeks to deliver its products/ services in a sustainable and socially responsible manner.
Name of Organisation recognises the need to manage and develop its businesses in a sustainable manner – ie, business development that meets the needs of the present without compromising the needs of future generations.
We are aware of our legal duties and responsibilities towards protecting the environment. Working with our partners across the community we will deliver improvements in environmental management performance and meet all environmental legislative requirements.
We will develop an action plan to improve sustainability performance, set targets against appropriate performance indicators to monitor progress and publish our performance to stakeholders on an annual basis.
We will aim to: • Deliver energy efficiency. • Minimise waste production and prevent pollution. • Reduce water use. • Develop sustainable transport solutions. • Protect and enhance local biodiversity. • Reduce consumption of natural resources. • Tackle the causes of Climate Change and mitigate against the likely impacts. • Promote the local economy. • Offer fair and equitable terms to employees and sub contractors to help tackle poverty.
We will ensure that all our workers, customers and clients are aware of the policy, and that they understand that they are responsible for observing it.
This Policy is fully supported by (please sign)
______(delete as applicable) The Owner/ Chief Executive/ Managing Director
6.3 Prohibited Substances
6.3.1 Depending on the type of contract, the Council will specify appropriate sustainability criteria within the contract documentation, and within its standard terms and conditions. In particular, the Council will adhere to the list of prohibited products maintained by the UK Government (Red List) and EU Directives (Black List). A comprehensive list of products currently prohibited is maintained on the Procurement Portal and through the Council’s Website but includes materials such as Mercury, Cadmium, Asbestos and DDT-based pesticides. 30
6.3.2 Products included on the prohibited list will not be purchased by the Council, nor should they be used by any contractors working for the Council. The only exceptions to this would arise where no alternative substitute is available.
6.3.3 In addition to the list of prohibited materials, the Council sets standards for the use of tropical hardwoods. Any tropical hardwoods should be independently certified as coming from a sustainably managed forest. Examples of both are :
The building is to be constructed of sustainable and renewable systems and materials which have low embodied energy and low volatile organic compounds with a minimum of 20% of the total value of materials used in the building and 70% in external works being derived from recycled and reused sources. Furthermore, 80% of major building elements, floor slabs, external fabric, roof and windows are to achieve an A rating as defined within the BRE Green Guide to Specification
The Forest Stewardship Council (FSC), International Standards Organisation (ISO) and African Timber Organisation.
6.4 Quality Assurance and Labelling
6.4.1 The Council recognises that some procurement decisions are routine and low risk. As the Council is committed to taking a proportionate approach to the procurement process, it will not be realistic to evaluate the environmental impact of these transactions. This is significant, however as the environmental impact of routine purchases can be extreme, particularly in terms of waste and disposal.
6.4.2 For low risk purchases, the Council will need to rely on environmental labelling and standards from recognized organisations to provide necessary assurance. The Council is aware, however that there is considerable commercial incentive for companies to exaggerate their environmental credentials. As such, the Council will maintain a list of recognized organisations who provide effective Quality Assurance. This list currently includes:
• Fair Trade
• European Energy Label (as commonly displayed on fridges and freezers)
• Forestry Stewardship Council
• ISO14001
• The Marine Stewardship Council
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7. Equality & Diversity
7.1 Introduction
7.1.1 St.Helens Council has made a corporate commitment through its Comprehensive Equality Policy to meet the duties of the Equality Act 2010 and the Human Rights Act 1998.
7.1.2 Equality and Human Rights duties apply to all Council decision, functions and services, including those delivered in house, in partnership or through contractual arrangements. As such, the Council must take reasonable steps to ensure “due regard” is given to the equality and Human Rights duties within its commissioning and procurement processes.
7.1.3 Therefore, the Council is committed both in law, and in policy, to ensuring that its resources are not spent on practices that lead to unlawful discrimination, harassment or victimisation, and instead are used to uphold Human Rights, advance equality of opportunity and foster good community relations.
7.1.4 The Council has developed a Procurement Equality Standard and a template Business Equality Policy. These tools are designed to ensure “due regard” is given to the equality and Human Rights duties within Council commissioning and procurement processes.
7.2 The Procurement Equality Standard
7.2.1 Every Council Department must integrate and use the Procurement Equality Standard within commissioning and procurement processes, including select lists and approved lists and the pre-qualification stage of all invitations to tender for contracts or Service Level Agreements
7.2.2 Procurement Equality Standard sets out three areas of assessment. These are used to identify whether a potential provider is fit to meet the Equality and Human rights duties upon them as an employer.
Procurement Equalities Standard
Procurement Equality Standard Assessment Areas
Equality Policy Assessment This assessment asks potential providers and suppliers to demonstrate that they maintain appropriate, and lawful equality policies. It uses a checklist that includes amongst other thing an assessment of (i) Legal duties and statutory codes (ii) Protected characteristics and prohibited conduct.
Equality Impact Assessment An Equality Impact Assessment is undertaken by the Commissioning Team so that appropriate actions and requirements to demonstrate due regard to Equality Duties can be built into the Contract Specification
Equality Monitoring Monitoring of the Contractor’s workforce using Equality Profiles to demonstrate equality of opportunity in employment. The Council may use the data to promote initiatives to improve employment for groups such as disabled people
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7.3 Template Business Equality Policy
7.3.1 Any organisation that has an Equality Policy that does not comply with the Equality Policy Checklist will not be considered for select lists, approved lists, service level agreements or contracts.
7.3.2 The Council, however, recognises that for some businesses, particularly small businesses, new businesses, or community and voluntary groups, it may be unrealistic to expect these policies to be in place as tender opportunities arise.
7.3.3 The Council will endeavour not to use this as a barrier to prevent such organisations from doing business with the Council. The Council will maintain a standard Business Equality Policy template, which meets current equality employment duties. Any organisation that does not have an effective Equality Policy may adopt the Council’s template Business Equality Policy in order to demonstrate legal compliance and progress with tender procedures.
7.3.4 The template Business Equality Policy also includes an Action Plan to help businesses implement the policy commitments into their business practice
7.3.5 O rganisations that decline to accept the Business Equality Policy template, and fail to adopt appropriate standards of their own Equality Policy will not be eligible for further consideration.
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8. Arrangements and Responsibilities
8.1 Responsibilities of Budget Holders
8.1.1 Budget Holders in this context represent the purchasers of goods, services or works. In many cases, budget holders will be individual service managers, however for more complex contracts, this could be service departments, Chief Officers, the Executive or the Council itself.
8.1.2 Budget holders are responsible for commissioning services. As was stated at section 2.1, this does not necessarily involve a procurement process. Where commissioning decisions do lead to procurement activity it is important that the commissioning process has been robust and proportionate to the risk and value of a proposed contract.
8.1.3 The initial commissioning stage is critical to achieving a successful outcome through procurement, and it is vital that budget holders retain ownership of this process. This Corporate Procurement Strategy shows how procurement can be used to achieve a range of successful outcomes, however these will only be realised if they are planned for at the earliest stage in the process.
8.1.4 The initial commissioning stage is important in maximising the potential benefits from procurement activity, and avoiding any unforeseen consequences that may for example be harmful to the local economy or the environment.
8.1.5 It is extremely important to the success of any procurement undertaking that contract specifications and evaluation criteria are drafted in such a way as to accommodate all the outcomes desired from any given contract. A range of evaluation criteria can be lawfully applied to a tender process, however these have to be made clear to bidders at the outset, and cannot be applied retrospectively.
8.1.6 The Corporate Procurement Team will support and guide budget holders through this process of selecting an appropriate route to market, and drafting tender specification documentation, however determining the best outcomes for any service continues to be the responsibility of budget holders and service managers.
8.1.7 The Table below identifies a range of issues that need to be considered at the initial commissioning stage, although the application of these will be dependent upon the risk and value of any potential contract. As can be seen, these questions all relate to the requirement/service. Problems will be encountered at the procurement stage if these issues are not considered beforehand, particularly with regard to requirements for robust monitoring arrangements.
Commissioning Goods, Works and Services – Key Questions for Service Managers
What are you seeking to achieve? A High level strategic decision based on the Sustainable Communities Plan / LSP Objectives What other objectives do you want to achieve? Boost to local employment and training Boost to local supply chain
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Increased efficiency ‘Future Proofing’ Engagement with community and voluntary sector Minimise environmental impact of service delivery Reduce costs of contract monitoring What other ‘impacts’ relative to the scope of ‘social value’ need to be considered ? What is the best way to achieve these Outcomes? What group or locality is being served What resources are available? What are the risks associated with it? Is this a core service with business continuity implications? Is there the capacity to deliver in-house? Are any partners better suited to delivering this? (eg Health / Police/other LA’s) What Monitoring/Performance Review arrangements need to be established along with their scope, frequency and ownership ? Is Project Management required and if so what level required ? Is the service suitable for contracting externally? Is there a local market currently delivering this service or will it need to be developed? What are the implications on the local economy? Would the local community and voluntary sector be suitable suppliers? What would be the implications for the Supporting an external contract? What would be the extent of change and is there the capacity to deliver this? What would be an appropriate timescale? Does the service have appropriate technical expertise? Is there capacity to support effective project management? Would an external contract require additional ICT Infrastructure development? What additional other costs associated with implementing contract? Are there HR Implications? (TUPE or redundancy)
8.1.8 Contract Procedure Rules also require a formal risk assessment to be undertaken for all contracts with a likely value in excess of £100,000.
8.2 Business Continuity
8.2.1 The Council recognises that arrangements for business continuity for core services must not be compromised through any contractual agreements. This responsibility resides with the service manager regardless of the vehicle for service delivery.
8.2.2 As such, any high risk activities that effect the Council’s Civil Contingency arrangements have to be highlighted at the earliest stage in the commissioning process, so that appropriate mechanisms can be included in any procurement specification, evaluation and monitoring process.
8.2.3 As with other aspects, the extent of these arrangements will be based on proportionality and risk.
8.3 Corporate Procurement Arrangements
8.3.1 The Council is committed to maintaining a professional procurement function that is able to support the Council in achieving its overall objectives through procurement activity. The
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Council will continually review the function and nature of its procurement arrangements to ensure that it has the capacity and knowledge to provide advice and guidance across the whole range of procurement activity.
8.3.2 The Corporate Procurement Function sits within the Finance Division and is represented by the Finance portfolio holder on Cabinet, who also acts as the Council’s Procurement Champion.
8.3.3 The Assistant Chief Executive (Finance) has overall responsibility for the development and delivery of the Corporate Procurement Strategy. The Assistant Treasurer effectively acts as the Head of Procurement and is supported by the Corporate Procurement Manager, who oversees the Corporate Procurement Function, and provides technical guidance to the Council.
8.3.4 The Corporate Procurement Team are responsible for delivering specific procurement exercises. An element of their work relates to contracts that are not service-specific, such as fuel, office equipment and furniture. The Division is also responsible for providing advice and guidance of the type discussed above.
8.3.5 A key element of the role of the Corporate Procurement Function is its ability to challenge service managers, and to help them select the procurement model that best suits the desired outcomes of the service. As such, it is very important that this section continues to have an appropriate level of skills and expertise.
8.3.6 It is important that the procurement function remains relevant to the type of service that is using procurement. In particular, the Council is committed to maintaining appropriate commissioning and contracting expertise within the following high risk areas:
• Construction and Engineering Contracts
• Social Care, Health and Supported Housing
• Information and Communications Technology
8.3.7 The Council is committed to the training and development of procurement staff and all staff and members involved in procurement. Training needs are met and delivered in accordance with the Procurement Annual Service Plan.
8.3.8 Within the Council, there are a number of services that rely almost entirely on external suppliers of goods, works and services. These key areas require a considerable amount of technical expertise in the drafting and evaluation of contracts. As such, these areas manage much more of the procurement process than is the case in other services. This proximity is a feature of both the high risk, and high value of these contracts, and the frequency with which services need to undertake procurement activity.
8.3.9 In cases where the procurement requires a high degree of technical or professional knowledge and skills, the Assistant Chief Executive (Finance) may determine that the procurement process can be more effectively undertaken by a particular service. Examples of this include ICT Equipment and infrastructure, Construction and Engineering, Supporting People, Adult Social Care & Health, and Public Health
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8.3.10 Each of these services remains bound by this Strategy and by Contracts Procedure Rules, and must consult with the Assistant Chief Executive (Finance) on all significant procurement undertakings.
8.4 Project Management
8.4.1 Significant procurement undertakings will usually involve some element of change, and as such may involve a high degree of financial and operational risk. As such, appropriate project management arrangements need to be in place at an early stage in the commissioning process.
8.4.2 For contracts where this is evident, service managers and budget holders need to ensure that appropriate project management plans are in place and include the following:
• Designated Project Sponsor
• Project Manager
• Project Team
• Risk Assessment including Risk Register
• Project Timetable
• Reporting Requirements, including frequency of meetings
• Contract monitoring requirements and responsibilities
• Success criteria and desired outcomes
• Benefits Realisation criteria
8.4.3 Consideration of project management issues must be undertaken as part of the initial Commissioning Process (8.1 above). In particular, there needs to be an assessment of the capacity of services to manage the process of change, or whether specialist external project management support is required (which will itself be subject to further procurement activity).
8.4.4 Advice and guidance must be sought from the Corporate Procurement Team in drafting a project timetable to allow sufficient time for the procurement process to be effective, and to allow appropriate resources to be deployed to support the tender evaluation stage.
8.4.5 All significant procurement undertakings must be subject to the Council’s accepted project management methodology, and where appropriate be included on the Project Initiation Document (PID) database.
8.5 The Procurement Portal and Cross Departmental Procurement Forum
8.5.1 The Procurement Portal of the Council’s intranet contains up to date and accurate information regarding procurement rules and regulations. In addition to statutory guidance, the portal also gives officers and members access to the CIPFA Standing Guide to Local Authority Procurement of Goods, Works and Services. This is a comprehensive on-line library and reference source for all procurement and contract related regulations and best practice.
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8.5.2 The Procurement Portal also contains the Procurement Forward Plan and Contracts Database.
8.5.3 As mentioned earlier within Section 4, the Council will maintain an accurate database of all its current contract opportunities, along with the date that current contracts will expire. The database functionality will support the publication of contacts on the Council’s website and will allow businesses to anticipate opportunities of interest, allowing sufficient time to gear up their business capacity.
8.5.4 This proactive approach will also ensure that the Council meet’s it’s obligations in terms of compliance with the Government’s Transparency requirements.
END
April 2014
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ST HELENS PARKSIDE LINK ROAD
Preliminaries £ 2,709,182.68
Bill of Quantities - Civils £ 16,736,648.00
Inflation £ 1,797,402.93
£ 21,243,233.61
Working Area Overhead @ 9.00% £ 1,911,891.03
£ 23,155,124.64
Pre-Construction Works £ 349,081.68
£ 23,504,206.32
Fee @ 2.50% £ 587,605.16
Design £ 1,600,454.01
£ 25,692,265.48
Scape Fee @ 0.50% £ 128,461.33
£ 25,820,726.81
Contractors Risk £ 2,000,000.00
Total Construction Cost £ 27,820,726.81
Clients Costs
Statutory Undertakers £ 1,200,000.00
Public Bodies £ -
Client Costs £ -
Clients Risk £ 3,000,000.00
Total Scheme Costs £ 32,020,726.81
ST. HELENS COUNCIL STATEMENT OF ACCOUNTS 2015-2016
APPROVAL OF ACCOUNTS
I confirm that these Accounts were approved by the Audit and Governance Committee meeting held on 19 September 2016.
Chair of meeting approving the Accounts
Date: 19 September 2016
TABLE OF CONTENTS
Page No .
NARRATIVE REPORT BY THE DEPUTY CHIEF EXECUTIVE & STRATEGIC DIRECTOR OF CORPORATE SERVICES 5
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE COUNCIL 16
STATEMENT OF MAIN PRINCIPLES, ACCOUNTING POLICIES AND 19 ESTIMATION TECHNIQUES
STATEMENT OF RESPONSIBILITIES FOR THE STATEMENT OF ACCOUNTS 35
ANNUAL GOVERNANCE STATEMENT 36
CORE FINANCIAL STATEMENTS
- MOVEMENT IN RESERVES STATEMENT 50
- COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT 51
- BALANCE SHEET 52
- CASH FLOW STATEMENT 53
NOTES TO THE CORE FINANCIAL STATEMENTS 54
SUPPLEMENTARY FINANCIAL STATEMENTS
- COLLECTION FUND INCOME AND EXPENDITURE ACCOUNT 111
NOTES TO THE SUPPLEMENTARY FINANCIAL STATEMENTS 112
GLOSSARY OF FINANCIAL TERMS 115
OTHER INFORMATION AVAILABLE 122
NARRATIVE REPORT BY THE DEPUTY CHIEF EXECUTIVE & STRATEGIC DIRECTOR OF CORPORATE SERVICES
The Statement of Accounts which follow demonstrate the Council's financial performance for the year ended 31 March 2016 and present its overall financial position at the end of that period. To assist the reader, an explanation of the various sections contained within the Statement of Accounts is set out below:
Statement of Main Principles, Accounting Policies and Estimation Techniques Details and explains the Accounting Policies adopted by the Authority.
Statement of Responsibilities for the Statement of Accounts This outlines the responsibilities of both the Authority and Deputy Chief Executive & Director of Corporate Services.
Annual Governance Statement This statement explains the effectiveness of the governance framework operating during the financial year.
Movement in Reserves Statement This statement shows the changes in reserves held by the Authority and splits them into usable and unusable reserves. Usable reserves can be used to fund expenditure or reduce the Council Tax; unusable reserves cannot. The reserves represent the Council’s net worth.
Comprehensive Income and Expenditure Statement (CIES) This statement is fundamental to the understanding of the Authority’s activities, in that it reports the net cost for the year of all the functions for which the Authority is responsible and demonstrates how that cost has been financed from general government grants and income from local taxpayers. The CIES is prepared in accordance with International Financial Reporting Standards and the detail will differ from the Council’s internal reports (e.g. Corporate Financial Report). However, the Council’s overall financial position, i.e. working balances and reserves, will be the same.
Balance Sheet This shows the Authority’s financial position at the financial year-end, including balances and reserves, the assets employed in carrying out the Authority’s functions and its liabilities.
Cash Flow Statement This statement summarises the flows of cash arising from transactions with third parties for both revenue and capital purposes during the year and shows the changes to the Council’s cash and ‘cash equivalents’ during the financial year.
Notes to the Core Financial Statements These notes provide additional information concerning items included within the core financial statements.
Supplementary Financial Statements – Collection Fund This statement shows the income received from Council Taxpayers and Non-Domestic Ratepayers and how the income is distributed between St Helens Council, the Police & Crime Commissioner for Merseyside, Merseyside Fire & Rescue Authority and Central Government.
5 Each account within the Statement of Accounts contains an explanatory note covering the purpose of the account and more detailed notes explaining key items. The statements have been prepared in accordance with all relevant prescribed guidance, Codes of Practice and Reporting Standards.
REVENUE 2015-2016
The original budget was set in March 2015, with Council Tax levels increased by 1.99% when compared to 2014-2015. The comparison of actuals against this budget is summarised below:-
Original Actual Variance Budget £000 £000 £000 Spending on St. Helens Services 103,456 114,395 10,939 Precepts and Levies 22,972 22,972 - Treasury Costs 10,605 6,163 (4,442) Expenditure 137,033 143,530 (6,497) Revenue Support Grant (36,085) (36,085) - Retained Non-Domestic Rates & Top-up receipts (41,727) (41,727) - Income from Council Tax (59,052) (59,052) - New Homes Bonus (2,587) (2,722) (135) Section 31 Grants (1,414) (1,826) (412) Income (140,865) (141,412) (547) Transfers to/(from) Earmarked Balances 3,832 4,486 654 Net Contribution (to)/from General Fund Balances - 6,604 6,604
The Council has declared a contingent liability in previous Statements of Accounts in relation to equal pay claims lodged by Unions on behalf of some of their members. In setting the budget for 2015-2016, the Council recognised the high financial risk associated with the claims and the significant costs that could arise if the scheduled Employment Tribunal were to find in favour of the claimants. In so doing, it approved an increase in the underlying level of General Fund balances to cover such an eventuality.
The Council was subsequently advised that the decision of the Tribunal was against the Council’s defence and no grounds were found to appeal that decision on a point of law. Both parties have entered into ‘without prejudice’ settlement discussions and these continue to be had. Pending agreement of the total amount to be settled, these Financial Statements recognise a provision of £10.2m based on a reasonable estimate of sums due, and for which General Fund balances had been identified.
The variations in expenditure can be broadly analysed as follows:
£m
- Provision for Equal Pay 10.2 - Early implementation of savings proposals for the 2016-2017 (2.7) Budget Strategy, recruitment freeze, spending moratorium and other managed underspends arising during 2015-2016 - Managed underspends subject to carry forward (to 2016-2017) (1.4) - Debt Repayment Costs (see ‘ Borrowing’) (3.9) - Other Treasury Management savings (0.5) - Dividend from Yorkshire Purchasing Organisation (0.3) 6 - Managed underspends and use of earmarked balances approved 2.2 as carry forward (from 2014-2015) - Budget pressures - Looked After Children 1.0 - Budget pressures – Urban Regeneration 0.4 - Budget pressures – Adult Social Care 2.4 - Restructuring Costs 0.4 - Utilisation of additional Public Health Grant Funding (0.8) - Utilisation of additional NHS Contributions (0.5) Net Increase in Expenditure 6.5
The net transfer to Earmarked Balances includes:
(i) The creation of a £0.4m Special Educational Needs Reserve to target new duties placed on the Council and to help improve outcomes for children and young people, and increase choice and control for parents.
(ii) The earmarking of an additional £0.9m in the Service Development Fund to support the Council in relation to its 2020 Vision and the associated change management agenda.
(iii) A £0.4m reduction in relation to Pensions Fixed Costs as a consequence of revised staffing profiles.
(iv) A net £0.2m reduction in relation to other in-year decisions.
RESERVES & BALANCES
The resultant position in relation to General Fund Balances is shown below:
£m
General Fund Balances 1 April 2015 24.357 Net Contribution from General Fund Balances 2015-2016 (6.604) General Fund Balances 31 March 2016 17.753
In addition to the General Fund Balances, the Council has other usable Reserves & Balances in the form of the following:-
£m North West Regional Leaders Board Balances (previously 4NW) 0.973 Schools Balances 10.780 Capital Receipts 29.419 Unapplied Capital Grants 9.036 Earmarked Reserves 44.589
A detailed list of Earmarked Reserves is shown in the Notes to the Core Statements.
7 CAPITAL 2015-2016
The Council spent £13.906m in 2015-2016 on capital items. This included over £2.8m of investment in the Council’s Schools Infrastructure. The schemes reflect the Authority’s responsibilities in relation to health and safety; the need to ensure the existence of sufficient pupil places; and priorities identified within school asset management plans.
Other significant items of capital investment included:-
Capital Programme Schemes £m Highways & Transportation Schemes 6.300 Disabled Facilities Grants 2.008 Vehicle Replacement 0.843
The financing of the 2015-2016 capital expenditure was as detailed below:-
Type of Funding £m Grants & Other Contributions 9.988 Capital Receipts 3.191 Revenue Contribution 0.727 TOTAL 13.906
RETIREMENT BENEFITS
The net liability for retirement benefits shown in the Balance Sheet is as follows:
31 March 31 March Change 2015 2016 £m £m £m Local Government Pension Scheme (LGPS) 232.3 219.4 (12.9) Teachers’ Pension Scheme (TPS) 27.7 25.8 (1.9) TOTAL 260.0 245.2 (14.8)
The overall net liability for retirement benefits has reduced significantly during the 12-month period to 31 March 2016. Two principal factors have contributed to this movement:
(i) the favourable movement in discount rates (which are a key component of the measurement of future scheme liabilities) during the 12 month period. These contrast with the significant unfavourable movements experienced in 2014-2015; and
(ii) the remeasurement losses relating to scheme assets, whereby investment returns achieved are below those forecast by the actuary at the start of the year.
The Government has previously resolved to implement a fundamental structural change to public service pensions, and legislation was provided during 2013 to introduce a framework for reforms that seek to significantly reduce costs in the longer term.
LGPS2014 was launched on 1 April 2014 and this introduced a number of changes to the LGPS, including a new career average pensions scheme and revised rates for employee contributions.
8 More recently, the Government has signalled its intent to pool the existing 89 local authority pension funds and create 7 British Wealth Funds, with the aim of reducing costs and enhancing returns.
The employer's contribution (rates and lump sums) for the three years commencing 1 April 2014 were determined arising from the 2013 Actuarial Valuation and have been calculated having regard to the Funding Strategy Statement as agreed by the Pensions Committee in November 2013. This has resulted in a single lump sum of £18.352m payable in 2014- 2015. No lump sums fall as due in 2015-2016 and 2016-2017 under this arrangement. The Council is currently awaiting the 2016 Actuarial Valuation and the implications arising from it.
This approach supports the Administering Authority’s long-term funding objective for the Fund to achieve, and then maintain, sufficient assets to cover 100% of projected accrued liabilities (the “funding target”), with a maximum deficit recovery period of 22 years for scheme employers.
BORROWING
At 31 March 2016, the Council’s level of borrowing was £73.4m, which is at a similar level to the previous year and remains considerably below the underlying need for borrowing, as a result of long-standing strategy decisions to use available resources to negate the need to incur additional borrowing.
This strategy also serves to reduce the Council's exposure to Treasury risk by reducing the levels of investments held. In keeping with previous years, no new borrowing was undertaken in 2015-2016, while no economic opportunity arose for rescheduling or repayment of existing debt.
The Council's debt portfolio includes £23.0m of market debt where there are certain 'options' on the part of both the borrower (St. Helens Council) and the lender at specified points in the loans' existence. During the course of 2015-2016, £15.5m of this debt was subject to 'options' that the lenders opted not to trigger. Debt to the value of £5.0m is subject to options during 2016-2017 and it remains to be seen whether the lenders exercise these. The Council has the option to repay the borrowing in full should that be the case.
During the year, the Council reviewed the methodology by which it makes provision for repayment of its borrowings and approved revisions to its Annual Revenue Provision policy. The revised policy provides a stronger link between annual charges and the benefits received from its non-current assets, and offers a significantly lower net present value of cash flows whilst providing for the repayment of the whole of the debt portfolio over the longer term. The revised policy resulted in savings of some £3.9m in 2015-2016.
2015-2016 PERFORMANCE AND THE DELIVERY OF COUNCIL OBJECTIVES
During 2015-2016, in response to significant challenges, the Council has begun to embark on a programme of organisational change and transformation to achieve its 2020 vision of being an adaptive and innovative organisation capable of improving the lives of local people and communities.
In moving towards 2020, the Authority has continued to build on its strengths as a well- managed, effective and efficient Council, at the heart of which are strong leadership and governance arrangements, supported by a robust approach to strategic planning and financial and performance management.
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The Council’s performance management framework in 2015-2016 has been driven by the objectives and key measures of success within the St Helens Plan 2015-18, with the twin aims of improving people’s lives and creating a better place.
Critical to the achievement of the Council’s desired outcomes for both the organisation and the community is the strong link that exists between budgets, service planning and delivery and performance targets. A proportionate, but comprehensive, set of performance indicators exist to measure progress against key objectives and operational areas. An annual review of measures and targets is conducted to ensure their ongoing relevance, a process subject to internal challenge. Performance targets are set to be challenging, but realistic and commensurate with the available level of resource.
Budget and Performance Monitoring is conducted monthly, with reports to Cabinet detailing, by portfolio, analysis of spend against budgets, progress against service delivery and performance against targets. Commentary on action required to ensure portfolio budgets remain within allocated cash limits or to address any identified concerns in relation to performance or service delivery is included within the reports. Reports are also reviewed by the Audit and Financial Monitoring Overview and Scrutiny Panel, allowing the opportunity for examination of any specific areas of under-performance or concern.
The provisional performance outturn at March 2016 indicates that 52% of the Council’s performance measures reported to Cabinet over the course of 2015-2016 achieved or exceeded target. The Council’s performance outturn report demonstrates areas of both strong performance against targets and good progress in terms of service delivery across all portfolios. The report also highlights some areas in which the Council is not yet meeting ambitious targets and delivering its high aspirations. An overview of some of the key points in relation to performance and delivery of strategic objectives are set out below.
• Joint working with Merseyside neighbour authorities secured the devolution agreement for the Liverpool City Region, which transferred a range of powers and responsibilities focussed on skills, transport, planning and economic development to the sub-region. • Renewed support continued for economic development and growth within the Borough. Work continued through the joint venture company on the redevelopment of Parkside into a major employment site. The first phase of the West Point retail and leisure site was completed. 2015-2016 saw significant progress in the creation of employment land with over 700,000 square foot of land either completed, under construction, with planning approval or with a live planning application. The Council’s £1 million Business Grant Programme continued to support business development and job creation. Since its launch in July 2014 and to March 2016, the programme has supported 70 business start-ups with a project value of £163,000, allocated micro-grants to 40 existing businesses with a project value of over £700,000 and provided business support grants to a total of 63 companies to support their growth and development. • Support for the Town Centre continued with the appointment of a Town Centre Manager and a study undertaken by consultants to assist in shaping its future. Despite fluctuations over the year, the percentage of retail vacancies met target and improved on the previous year’s performance.
10 • £4.9 million of external funding for the ‘Ways to Work’ programme was secured to support adults and young people into employment, with a focus on those residents at a distance from the labour market. Numbers of people claiming out of work benefits fell and met target. The target for numbers of people in employment was not met, although the employment rate increased and St Helens’ gap on the North West and England averages reduced for both benefit claimants and numbers in employment. • Strong support continued to improve the connectivity of the Borough and its transport infrastructure. Approval for the provision of new long-distance direct rail services from St Helens stations to key economic centres was gained and good progress was made on a number of major schemes to improve the local transport infrastructure. Road safety targets were met and showed improvement on the previous year. • Effective support to developers resulted in 575 net housing completions in 2015- 2016, building on strong performance over a number of years, and demonstrating an ongoing upturn in the local housing market and growing confidence in the area. Performance in relation to planning processes remained very strong throughout the year. • Adult Social Care, in a challenging financial climate, effectively provided personalised care and support services to over 9,000 of the Borough’s most vulnerable people. • Strong performance was maintained across the national Adult Social Care Outcomes Framework and high levels of user satisfaction continued. Local safeguarding arrangements were strengthened and performance remained positive. A number of indicators did not meet challenging targets, but comparative performance remains, on the whole, very positive. Admissions to permanent residential or nursing care did not meet target and showed an increase on the previous year’s low numbers. Admissions continue to be very closely monitored and Care Management work closely with service users and families to explore all appropriate community options before a decision is taken to admit to a residential or nursing home on a permanent basis. • Phase 1 of the Care Act continued to be delivered effectively. The national Care Act stock-takes over the year showed that performance in St Helens compared well with both neighbour and comparator authorities in respect of safeguarding, assessments, eligibility, support for carers, and advocacy amongst other areas. Which? Magazine positively identified St Helens as one of the best performing councils in the country in terms of information for carers. • Further progress continued in the integration of health and care services through joint working with St Helens Clinical Commissioning Group. The delivery of 7-day services is steadily being implemented across social care and a number of joint initiatives are delivering efficiencies and better outcomes. • A Peer Review of Children’s Services identified a number of positives, including a strong family of schools within the Borough and strong foundations to build on in children’s social care. In response to a number of issues acknowledged across children’s services, a new departmental structure was agreed and implemented in March 2016, along with a methodology to demonstrate assurance and effectiveness. • Standards within school, as judged by Ofsted, have shown significant improvement during 2015/2016, although further improvement is required at secondary level. 100% of special schools and 67% of secondary schools are now judged to be ‘good’ or ‘outstanding’. High standards within primary schools and attainment levels at Key Stage 2 have been maintained. Key Stage 4 results remained broadly in line with
11 the previous year’s performance and some schools showed strong results. However, the target for Key Stage 4 attainment results were not met and performance remains below the regional average. The appointment of a Virtual Head has seen improvements in educational outcomes for children in care. However, the performance of a number of gap reduction indicators, measuring the attainment of vulnerable groups compared to their peers across the Key Stages and Level 3, are areas for improvement. Aspirations and targets have also not been fully met in relation to the required national development of Special Educational Needs and Disability Services. Commissioned school improvement work and the School Improvement Board continue to provide challenge and support to schools to further raise standards. The profile of vulnerable groups continues to be raised with schools to ensure that the needs of pupils are met and the performance gap narrowed. Additional capacity will be invested in the area of Special Educational Needs and Disability to ensure that statutory requirements are being met. • In respect of children’s social care, particular issues around high volumes in areas of referrals, child protection and children looked after have remained during the year, with a number of indicators not meeting target. Work has continued over the year to deliver the actions within the improvement plan for Children’s Social Care and the Local Safeguarding Children’s Board. A revised approach to planning and prioritisation of work, governance arrangements and service delivery across the People’s Services Department was agreed early in the new financial year. This will be taken forward over the course of 2016/2017 and beyond to ensure that effective outcomes are being delivered for all children and young people. • The 2015 Short Quality Screening Inspection of Youth Offending Services (YOS) by HM Inspectorate of Probation showed many positives. The number of first-time entrants to the youth justice system continued to improve and showed a further fall. The level of youth re-offending represents the greatest area of challenge for the service. A multi-agency reducing re-offending sub-group has been established by the YOS Partnership Board and the group is currently under review to ensure its future effectiveness in reducing re-offending. • In the area of public health there were significant developments in terms of service delivery and commissioning over the course of the year. Positive outcomes include a further reduction in the 3-year teenage conception rate, reductions in childhood obesity at year 6 and a further narrowing of the gap compared with the regional and national average for obesity at reception year. Achievement of the mortality rate indicators was challenging, with the rate sensitive to changes in many factors such as the economy, environment, lifestyle and health care service and it can therefore be difficult to ensure a consistent reduction. Work is ongoing across a number of areas to reduce mortality rates. • The Council’s Green House Gas Emissions showed a further in-year reduction and emissions are now 22% lower than the 2009/2010 baseline. The Council will continue to address emissions through measures including improvements in energy management practice and investment in green technology. • Household recycling rates did not achieve the expected outturn performance. However, the trend over the past 4 years has been very positive, increasing by over 10%, performance remains strong compared to authorities across the Liverpool City Region. Further work will be undertaken to educating households to recycle more and areas of low participation will be targeted through enforcement strategies.
12 • There was strong performance against target across a range of housing services indicators, including support provided to address homelessness, fuel poverty, energy efficiency and vacant properties returned to occupation. • Performance pressures were encountered over the course of the year around some of the community safety indicators, with changes in police recording practices accounting for increases in levels of crime recorded. However, crime rates remain below or around the average for St Helens’ comparator group and there was also some strong performance, with increasing numbers of residents feeling safe and reductions in acquisitive crime, secondary fires and re-offending rates. Further details of the Council’s performance, including the Outturn Report, Annual Report and the monthly Budget and Performance reports may be found on the performance pages of St Helens Council website.
RISK MANAGEMENT
Risk management is embedded in the culture of the Council, a Risk Management Policy exists along with strong arrangements and processes for identifying, evaluating and managing risks to the delivery of the Council’s strategic objectives. Strategic Directors take the lead for identifying risks in their respective areas and an electronic corporate risk register exists to further identify the likelihood, potential impact and means of mitigation. Each risk has a review timeline linked to severity and likelihood. The Register has been reviewed during 2015-2016 and re-formatted incorporating a detailed process for continual re- assessment of risks by risk owners. The process is overseen by the Safety and Risk Management Group which meets quarterly and is chaired by the Deputy Chief Executive and Strategic Director of Corporate Services. The Risk Register is reported to members via the Audit & Governance Committee on a periodic basis. Key strategic risks contained within the Corporate Risk Register include: • Failure to cope with sudden increases in service demand • Failure to manage budget pressures • Failure to safeguard children from significant harm • Significant failure of adult social care practice • Ineffectiveness of the school improvement service • Failure of key IT systems and services • Failure to respond to emergency events
FUTURE OUTLOOK
Looking ahead to 2020 and beyond, the requirement for further transformation and change is an accepted reality if the Council is to address its future challenges and continue to successfully meet the needs of the community.
This requirement is driven by a number of factors, at the forefront of which is the financial reality the Council is facing. Over a number of years on the back of significant cuts in government funding, the Council has delivered significant savings, whilst maintaining the range and quality of essential services. However, an ongoing programme of austerity and fundamental changes to the way in which local government is funded in the future sees the Council facing unprecedented financial pressures.
13 The latest Local Government Grant Settlement continues support for the Government’s austerity plan into its 10 th year until 2020. The Council faces an £8.9 million reduction in its general grant for 2016-2017 and an anticipated further £15.9 million over the course of the following 3 years, bringing equivalent grant funding reductions in the period 2010 to 2020 to £90 million. This equates to £510 for every person living in the Borough and comes on top of significant reductions in capital investment support and the loss of other key funding programmes.
The Grant Settlement of 2016 to 2017 confirmed the offer of a 4-year budget for local government, which if accepted through the presentation of an ‘Efficiency Plan’, would allow councils to plan ahead and bring a level of financial certainty. However, this position is offset against a number of other factors which bring significant additional risk and uncertainty to the Council’s income and overall financial position. These include:
• the removal of the Revenue Support Grant by 2020; • general uncertainty caused by an as yet fragile economic climate; • the move to the complete localisation of Business Rates and their revaluation; • the transfer of additional responsibilities from central to local government, such as the impact of the Care Act; • the reduction in specific funding streams (e.g. Public Health Grant); • the significant liabilities to arise from Equal Pay/Value claims; • the increasing cost implications of the National Living Wage, the Apprenticeship levy and re-evaluation of the Pension Fund contributions; • significant demand pressures on care services stemming from an ageing population and the Council’s duty to ensure that children and young people are adequately protected from harm and neglect.
To partially offset the financial implications of service demand pressures within Adult Social Care, the Government allowed Councils with social care responsibilities to increase Council Tax levels by an additional 2% on the condition that the additional funds are given over to supporting care provision. However, given St Helens’ demographic of a population ageing faster than many other authorities and the scale of demand on services, the relief afforded by the additional funding is limited.
As in previous years, work will be ongoing to examine the implications of future cuts and the actions necessary to deliver the required savings. The Authority will again consult widely through its Budget Consultation and Budget Simulator exercise, encouraging stakeholders and interested parties to advise on the most valued areas of spend. At the same time work will continue in the form of Zero-Based Reviews of portfolio budgets and reviews of specific service areas. Savings proposals will be developed and agreed in a responsible and targeted way before finalisation of the portfolio budgets in the final quarter of 2016-2017.
At the same time, the Council will take forward a programme of transformation that focuses on the organisation, as well as reaching out to partners and communities within St Helens. Key work programmes will include:
14 • To fully implement and embed the Council’s structural review, whilst further reshaping specific service areas; • To create a transformation team to drive forward a programme of change and service redesign; • To create a revitalised Borough-wide partnership, that redefines the concept of joint working and broadens engagement and the role of Members to effectively meet needs and improve people’s lives; • To agree a long-term Communities Plan for St Helens with a shared vision and priorities capable of driving and sustaining future partnership working; • To produce a new Council Operational Plan and Delivery Plan that clearly sets out the direction that the Council will take to achieve its 2020 vision.
CONCLUSION
Over the course of 2015-2016, despite significant ongoing constraints, the Council has continued to successfully manage its finances and achieve all required savings, whilst continuing to invest in, and deliver, strong performance and outcomes for the community.
Significant additional efficiencies have been achieved and the Council’s comparatively sound financial platform has been maintained.
Spending pressures due to increased demand for services and the cost of their provision will remain and as reductions in funding continue we will have to do more with less. We must now make the most of the opportunities before us, particularly promoting greater growth and investment within our local economy which will be a key driver in our future. Our starting position as an effective well-managed Council leaves us in a strong position to deliver our programme of change and achieve our 2020 vision.
I would like to thank all Members and Officers for the commitment shown in making 2015- 2016 a successful year and would particularly like to thank colleagues in the Finance function for the dedication and hard work shown in completing this Statement of Accounts and all the supporting information.
IAN ROBERTS Deputy Chief Executive & Strategic Director of Corporate Services
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ST HELENS METROPOLITAN BOROUGH COUNCIL
We have audited the financial statements of St Helens Council (the "Authority") for the year ended 31 March 2016 under the Local Audit and Accountability Act 2014 (the "Act"). The financial statements comprise the Movement in Reserves Statement, the Comprehensive Income and Expenditure Statement, the Balance Sheet, the Cash Flow Statement, the Collection Fund and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16.
This report is made solely to the members of the Authority, as a body, in accordance with Part 5 of the Act and as set out in paragraph 43 of the Statement of Responsibilities of Auditors and Audited Bodies published by Public Sector Audit Appointments Limited. Our audit work has been undertaken so that we might state to the members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Authority and the Authority's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of the Deputy Chief Executive & Strategic Director of Corporate Services and auditor
As explained more fully in the Statement of Responsibilities for the Statement of Accounts, the Deputy Chief Executive & Strategic Director of Corporate Services is responsible for the preparation of the Statement of Accounts, which includes the financial statements, in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16, which give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of whether the accounting policies are appropriate to the Authority’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Deputy Chief Executive & Strategic Director of Corporate Services; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Narrative Report and the Annual Governance Statement to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
16 Opinion on financial statements
In our opinion the financial statements: • present a true and fair view of the financial position of the Authority as at 31 March 2016 and of its expenditure and income for the year then ended; and • have been prepared properly in accordance with the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom 2015/16 and applicable law.
Opinion on other matters
In our opinion, the other information published together with the audited financial statements in the Narrative Report and the Annual Governance Statement is consistent with the audited financial statements.
Matters on which we are required to report by exception
We are required to report to you if: • in our opinion the Annual Governance Statement does not comply with the guidance included in ‘Delivering Good Governance in Local Government: a Framework’ published by CIPFA/SOLACE in June 2007; or • we issue a report in the public interest under section 24 of the Act; or • we make a written recommendation to the Authority under section 24 of the Act; or • we exercise any other special powers of the auditor under the Act.
We have nothing to report in these respects.
Conclusion on the Authority’s arrangements to secure value for money through economic, efficient and effective use of its resources
Respective responsibilities of the Authority and auditor
The Authority is responsible for putting in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources, to ensure proper stewardship and governance, and to review regularly the adequacy and effectiveness of these arrangements.
We are required under Section 20(1)(c) of the Act to be satisfied that the Authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources. We are not required to consider, nor have we considered, whether all aspects of the Authority's arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively.
Scope of the review of the Authority's arrangements to secure value for money through economic, efficient and effective use of its resources
We have undertaken our review in accordance with the Code of Audit Practice prepared by the Comptroller and Auditor General as required by the Act (the "Code"), having regard to the guidance on the specified criteria issued by the Comptroller and Auditor General in November 2015, as to whether the Authority had proper arrangements to ensure it took properly informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people. The Comptroller and Auditor General determined these criteria as those necessary for us to consider under the Code in satisfying ourselves
17 whether the Authority put in place proper arrangements to secure value for money through the economic, efficient and effective use of its resources for the year ended 31 March 2016.
We planned our work in accordance with the Code. Based on our risk assessment, we undertook such work as we considered necessary to form a view on whether in all significant respects the Authority has put in place proper arrangements to secure value for money through economic, efficient and effective use of its resources.
Conclusion
On the basis of our work, having regard to the guidance on the specified criteria issued by the Comptroller and Auditor General in November 2015, we are satisfied that in all significant respects the Authority has put in place proper arrangements to secure value for money through economic, efficient and effective use of its resources for the year ended 31 March 2016.
Certificate
We certify that we have completed the audit of the accounts of the Authority in accordance with the requirements of the Act and the Code.
Robin Baker Robin Baker for and on behalf of Grant Thornton UK LLP, Appointed Auditor
Royal Liver Building Liverpool L3 1PS
27 September 2016
18 STATEMENT OF MAIN PRINCIPLES, ACCOUNTING POLICIES AND ESTIMATION TECHNIQUES
GENERAL
The Statement of Accounts summarise the Authority’s transactions for the financial year 2015-2016 and the position at the year-end 31 March 2016. The Authority is required to prepare an annual Statement of Account by the Accounts and Audit Regulations 2015 , which require the accounts to be prepared in accordance with proper accounting practices. These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2015/16 and the Service Reporting Code of Practice 2015/16 , supported by International Financial Reporting Standards (IFRS).
The following accounting policies and estimation techniques have been adopted and they are consistent with the Council’s overarching accounting concepts and, where appropriate, the relevant accounting standards.
ACCRUALS OF INCOME AND EXPENDITURE
Activity is accounted for in the year that it takes place, not simply when cash payments are made or received. In particular:
• Council Tax and Non-Domestic Rates income is accrued in accordance with the assessed liability for the period to 31 March; ó fees, charges and rents due from customers are accounted for as income at the date the Council provides the relevant goods or services; ó supplies are recorded as expenditure when they are consumed – where there is a gap between the date supplies are received and their consumption, they are carried as inventories on the Balance Sheet; • expenses in relation to services received are recorded as expenditure when the services are received rather than when the payments are made; ó interest payable on borrowings and receivable on investments are accounted for on the basis of the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract; ó where revenue and expenditure have been recognised but cash has not been received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet. Where debts may not be settled, the balance of debtors is written down and a charge made to revenue for the income that might not be collected; ó Capital Receipts from non-current asset disposals are recorded on completion of the asset sale.
The one exception which merits comment occurs where no apportionment of wages' costs is made at 31 March where that date does not coincide with the end of the 'wages week'.
In accordance with IAS18 Revenue Recognition , revenue should be measured at the fair value of the amount payable or receivable. In practice, this is the amount that the Council has invoiced, or for which it has been invoiced.
ASSETS HELD FOR SALE – see Property, Plant and Equipment
19 CAPITAL RECEIPTS
Capital Receipts on non-current asset disposals are initially credited to the Comprehensive Income and Expenditure Statement as part of the gain or loss on disposal, with a subsequent appropriation to the Usable Capital Receipts Reserve made via the Movement in Reserves Statement.
Usable Capital Receipts are classed as a usable Reserve in the Balance Sheet.
CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents are represented by:
(i) cash-in-hand/cash overdrawn; (ii) un-presented cheques or other un-presented methods of payment; (iii) investments repayable on demand without penalty or change in value.
CHANGES IN ACCOUNTING POLICIES, ESTIMATIONS, ERRORS AND PRIOR PERIOD ADJUSTMENTS
Prior period adjustments may arise as a result of changes in accounting policies, to correct material errors or to provide a consistent representation of current and prior period activity/positions.
Changes in accounting policies are only made when required by proper accounting practices or the change provides more reliable or relevant information about the effect of transactions, other events or conditions on the Authority’s financial position. Where a change is made, it is applied retrospectively by adjusting opening balances and comparative amounts for the prior period, as if the new policy had always been applied.
Material errors discovered in prior period figures are corrected retrospectively by amending the opening balances and comparative amounts for the prior period.
CHARGES TO REVENUE FOR NON-CURRENT ASSETS
Service revenue accounts, support services and trading accounts are debited with the following amounts to record the cost of holding non-current assets during the year:-
(i) depreciation attributable to the assets used by the relevant service;
(ii) revaluation and impairment losses on assets used by the service where there are no accumulated gains in the Revaluation Reserve (specific to the individual asset) against which they can be written off;
(iii) amortisation of intangible fixed assets attributable to the service.
The Council is not required to raise Council Tax to cover these items. However, it is required to make an annual contribution from revenue towards the reduction in its overall borrowing requirement (see “Redemption of Debt”). The items detailed above are therefore replaced by the contribution in the General Fund Balance by way of an adjusting transaction with the Capital Adjustment Account in the Movement in Reserves Statement.
CONTINGENT LIABILITIES – see Provisions and Contingent Liabilities
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DEPRECIATION – see Property, Plant and Equipment
EMPLOYEE BENEFITS
(i) Benefits Payable during Employment
Short-term employee benefits are those due to be settled within 12 months of the year end. They include such benefits as wages and salaries, and paid annual leave for employees, and in accordance with IAS 19 Employee Benefits and the provisions of the Code, are recognised as an expense for services in the year in which employees render service to the Authority. An accrual is made for the cost of accumulating compensated absences earned by employees but not taken before the year end, which employees can carry forward into the next financial year. The accrual is charged to Surplus or Deficit on the Provision of Services, but reversed out through the Movement in Reserves Statement to the Accumulating Compensated Absences Adjustment Account.
(ii) Termination Benefits
Termination benefits are amounts payable as a result of a decision by the Authority to terminate an officer’s employment before the normal retirement date or an officer’s decision to accept voluntary redundancy, and are charged on an accruals basis to the appropriate service in the Comprehensive Income and Expenditure Statement at the earlier of when the Authority can no longer withdraw the offer of those benefits or when the Authority recognises costs for a restructuring.
(iii) Post Employment Benefits
As part of the terms and conditions of employment of its Officers and other employees, the Authority offers retirement benefits to those individuals and participates in three Pension Plans:-
(i) the Local Government Pension Scheme (LGPS) for staff employed under NJC terms and conditions – this is a defined benefit plan where the Authority and the employees pay contributions into a fund, calculated at a level intended to balance the pensions liabilities investment assets. This plan is administered by the Merseyside Pension Fund;
(ii) the Teachers' Pension Scheme (TPS) for those employed under Teachers' terms and conditions, administered by Teachers’ Pensions on behalf of the Department for Education. The TPS is a statutory scheme subject to the Teachers’ Pensions Regulations 1997 (as amended) . It provides Teachers with defined benefits upon their retirement, and the Authority contributes towards the cost by making contributions based on a percentage of members’ pensionable salaries;
(iii) the NHS Pension Scheme (NHSPS) for those Public Health staff who have compulsorily transferred from the PCT’s as a result of the Council’s Public Health responsibilities. The NHSPS is a statutory scheme administered by NHS pensions and provides its members with defined benefits upon retirement, with the Authority contributing based on specified percentages of members’ pensionable pay.
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All schemes provide defined benefits to members (retirement lump sums and pensions), earned as employees work/worked for the Authority. These benefits are related to a combination of pay and service.
However, the arrangements for the Teachers’ and NHS schemes mean that liabilities for these benefits cannot ordinarily be identified specifically to the Authority. In accordance with IAS 19 Employee Benefits , the schemes are therefore accounted for as if they were defined contribution schemes and, consequently, no liability for future payments of benefits is recognised in the Balance Sheet. The Children’s and Education Services line in the Comprehensive Income and Expenditure Statement is charged with the employer’s contributions payable to Teachers’ Pensions in the year, whilst the Public Health line is charged with payments relating to the NHS scheme members.
The LGPS
The LGPS is accounted for as a defined benefits scheme:
• The liabilities of the Merseyside Pension Fund attributable to the Authority are included in the Balance Sheet using the Projected Unit Credit actuarial cost method – an assessment of the future payments that will be made in relation to retirement benefits earned to date by employees, based on assumptions about mortality rates, employee turnover rates, etc., and projections of projected earnings for current employees;
• Liabilities are discounted to their value at current prices, using a discount rate based on the indicative rate of return on high quality corporate bonds of currency and term appropriate to the currency and term of the scheme’s liabilities;
• The assets of Merseyside Pension Fund attributable to the Authority are included in the Balance Sheet at their fair value;
• The change in the net pensions liability is analysed into the following components:
° current service cost; ° past service cost (including curtailments); ° pensions administration expenses; ° net interest expense (interest on plan assets and plan liabilities); ° remeasurement gains and losses; ° contributions paid to the Merseyside Pension Fund.
Statutory provisions require the General Fund Balance to be charged with the amount payable by the Authority to the pension fund or directly to pensioners in the year, not the amount calculated according to the relevant accounting standards. This is achieved via the Movement in Reserves Statement, by way of appropriations to/from the Pensions Reserve to remove the notional debits and credits for retirement benefits and to replace them with debits for the cash paid to the pension fund and pensioners (and any such amounts payable but unpaid at the balance sheet date).
22 Discretionary Benefits
The Authority also has restricted powers to make discretionary awards of retirement benefits in the event of early retirements. Any liabilities estimated to arise as a result of an award to any member of staff (including teachers) are accrued in the year of the decision to make the award and accounted for using the same policies as are applied to the Local Government Pension Scheme. No such awards have been made for a number of years.
Pensions Reserve
The cost of providing pensions for employees is funded in accordance with the statutory requirements governing the particular pension plans in which the Authority participates. However, accounting for employees' pensions is in accordance with prevailing accounting standards, subject to any interpretations set out in the Code.
Where the payments made for the year in accordance with the Plan requirements do not match the Authority's recognised operating and finance costs for the same period, the recognised cost of pensions will not match the amount required to be raised in taxation. An appropriation to or from the pensions reserve, which equals the net difference is recognised through the Movement in Reserves Statement.
Remeasurement gains and losses during the year, which impact on the net surplus or deficit of the Fund, will also be subject to a corresponding appropriation to/from the Pensions Reserve.
FAIR VALUES
The Council measures some of its non-financial assets, such as surplus assets and investment properties at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either:
• In the principal market for the asset or liability; • Or, in the absence of a principal market, in the most advantageous market for the asset or liability.
The Council measures the fair value of an asset or liability on the same basis that market participants would use when pricing the asset or liability (assuming those market participants were acting in their economic best interests).
When measuring the fair value of a non-financial asset, the Council takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Council uses appropriate valuation techniques for each circumstance, maximizing the use of relevant known data and minimizing the use of estimates or unknowns. This takes into account the three levels of categories for inputs to valuations for fair value assets:
23 • Level 1 – quoted prices; • Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; • Level 3 – unobservable inputs for the assets or liabilities.
FINANCIAL INSTRUMENTS – ASSETS
All investments used by the Council are of the type whereby they are classed as 'Loans and Receivables' and are initially recognised on the basis of Fair Value, and subsequently accounted for using the Amortised Cost basis. In doing so, annual credits to the Comprehensive Income and Expenditure Statement for interest receivable are based on the carrying amount of the asset, multiplied by the effective interest rate for the instrument. The interest credited to the Comprehensive Income and Expenditure Statement is the amount receivable for the year in the loan agreement. For most loans that the Council has made, this means that the amount presented on the face of the Balance sheet is the outstanding principal receivable plus accrued interest.
However, the Council has made a number of loans to other parties at less than market rates (soft loans). When soft loans are made, a loss is recorded in the Comprehensive Income and Expenditure Statement for the present value of interest that will be foregone over the life of the loan, resulting in a lower amortised cost than the outstanding principal. Interest is thereafter credited at a higher effective rate of interest than the rate receivable, with the difference serving to increase the amortised cost of the loan in the Balance Sheet.
There are two types of arrangements undertaken by the Council which fall to be classified as soft loans: Housing loans and Residential Care deferred payments.
The Housing loans are offered to provide financial assistance to owners and occupiers within the private rented and owner occupied sectors to improve the quality of privately- owned homes for those most in need. Financial assistance is available following a detailed assessment of client circumstances, including finances, medical conditions and health impact of housing conditions.
Deferred payments arise as a consequence of the Council entering into agreements with clients in relation to specific Social Care services, as permitted by the Care Act 2014.
Statutory provisions require that there should be no impact on the Council Taxpayer arising from these accounting transactions, and a transfer to or from the Financial Instruments Adjustment Account (via the Movement in Reserves Statement) achieves this requirement.
FINANCIAL INSTRUMENTS – LIABILITIES
The provisions within the Code are derived from the same Accounting Standards as detailed in the policy on Financial Assets.
Financial liabilities are initially measured at fair value and carried at their amortised cost. Annual charges to the Financing and Investment Income and Expenditure part of the Comprehensive Income and Expenditure Statement for interest payable are based on the carrying amount of the liability, multiplied by the effective rate of interest for the instrument. For all of the borrowings that the Council has, this means that the amount presented in the Balance Sheet is the outstanding principal repayable (adjusted for accrued interest) and interest charged to the Comprehensive Income and Expenditure Statement is the amount payable for the year in the loan agreement.
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Where premiums and discounts on the repurchase or early settlement of borrowing have been charged to the Comprehensive Income and Expenditure Statement, regulations allow the impact on the General Fund Balance to be spread over future years. The Council has a policy of spreading the gain/loss over the term that was remaining on the loan against which the premium was payable or discount receivable when it was repaid. The reconciliation of amounts charged to the Comprehensive Income and Expenditure Statement to the net charge required against the General Fund Balance is managed by a transfer to or from the Financial Instruments Adjustment Account in the Movement in Reserves Statement.
GOVERNMENT GRANTS AND CONTRIBUTIONS
Whether paid on account, by instalments, or in arrears, government grants and third party contributions are recognised as due when there is reasonable assurance that the Council will comply with the conditions attached to the payments (if any) and that the grants or contributions will be received.
Amounts recognised as due to the Council are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grant or contribution have been satisfied. Conditions are stipulations that specify that the future economic benefits or service potential embodied in the asset acquired, using the grant or contribution, are required to be consumed by the recipient as specified or must otherwise be returned to the transferor.
Monies advanced as grants and contributions for which conditions have not been satisfied are carried in the Balance Sheet as Revenue or Capital Grants Receipts in Advance. When conditions are satisfied, the grant or contribution is credited to the relevant line in the Comprehensive Income and Expenditure Statement.
Where capital grants are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance in the Movement in Reserves Statement. Where the grant has yet to be used to finance capital expenditure, it is posted to the Capital Grants Unapplied Reserve. Where it has been applied, it is posted to the Capital Adjustment Account. Amounts in the Capital Grants Unapplied reserve are transferred to the Capital Adjustment Account once they have been applied to fund capital expenditure.
HERITAGE ASSETS
Heritage Assets are recognised and measured, including treatment of revaluation gains and losses, broadly in line with the Council’s accounting policies on Property Plant and Equipment. However, some of the measurement rules are relaxed in relation to Heritage Assets and these are detailed below.
The Council’s Heritage Assets can be categorised into three different sub-groups:
• Fine art and museum collection; • Civic regalia; and • Statues and monuments.
Fine Art and Museum Collection
The Council’s art collection is comprised of the paintings held by the Council on display within the Town Hall, those paintings held on display in the World of Glass, a number of
25 sculptures that are displayed on various Council buildings and a collection of small value artefacts held as a museum collection at the World of Glass. The collection of artefacts, paintings and sculptures, which are located in a number of premises across the Borough, have been accessioned to or acquired by the Council and its predecessor Authorities.
The fine art collection held at the World of Glass and that held within the Council comprises of various types of paintings (oil, watercolour and pen and ink). Records of all paintings are stored on a database, a copy of which is held by the Council’s Insurance Section. The paintings held within the Council’s collection are included on the Balance Sheet and have been valued based on their insurance valuations. External valuations for the Council’s fine art collection were carried out by Bonham and these have been used as the basis upon which to establish the value of individual items within the collection. There are over 300 items within the fine art collection.
The collection held at the World of Glass comprises of around 2,500 artefacts. The collection comprises of diverse items that have been deemed to be of historical interest. External valuations for these items have not been obtained for this collection on the grounds of materiality: as no individual items within the collection are deemed to have significant values it is believed that the cost of obtaining valuations would outweigh the benefit gained. An inventory of all items within the collection is maintained by the museum curator and a hard copy of this is retained within the Insurance Section.
The Council has a local history and archives library which contains a number of public records relating to local institutions which the National Archives deems to be records of national significance. In addition, the library houses a number of collections relating to St. Helens which includes correspondences, deeds and plans that are unique and are of historical importance. Whilst these collections are recognised to have local historical significance, they do not have a material value and for this reason have not been valued or included on the Balance Sheet.
Civic Regalia
The Council’s civic regalia comprises of various mayoral chains and jewels, a mace and a variety of pieces of civic silverware. The value at which the civic regalia has been recognised in the Balance Sheet is based on the valuations obtained by the Insurance Section. Insurance valuations for these items were provided by Outhwaite and Litherland.
Statues and Monuments
The Council has a number of statues and monuments located across the Borough which fall to be recognised in the accounts as Heritage Assets. The most valuable items within this sub-category of Heritage Assets are the Saints Tribute statue and the Big Art Project: Dream. All material items classified as statues and monuments have been recognised at historic cost. This is deemed to be appropriate as this reflects the amount that has been spent on these assets since their construction.
No depreciation is charged on the Council’s Heritage Assets, since the Council believes that the assets it currently holds as Heritage Assets will have infinite lives and as such any depreciation charge calculated would be immaterial.
26 INTANGIBLE ASSETS
Expenditure on non-monetary assets that do not have physical substance but are controlled by the Council (e.g. software licences) is capitalised when it is expected that future economic benefits or service potential will flow from the intangible asset to the Authority. Intangible assets are measured at cost and the balance is amortised over its useful life to the relevant service line in the Comprehensive Income and Expenditure Statement on a straight-line basis typically over a period of 5 years. These amortisation charges are not permitted to have an impact on the General Fund Balance and are reversed to the Capital Adjustment Account via the Movement in Reserves Statement.
INVENTORIES
Inventories are included in the Balance Sheet at the lower of actual cost and net realisable value. The cost of inventories is assigned using an average costing formula.
INVESTMENT PROPERTIES
Investment properties are those that are used solely to earn rentals and/or for capital appreciation. The definition is not met if the property is used in any way to facilitate the delivery of services or production of goods.
Investment properties are measured, initially, at cost and, subsequently, at fair value, based on the amount at which the asset could be exchanged between knowledgeable parties at arms length. Properties are not depreciated but are re-valued annually according to market conditions at the year end. Gains and losses on revaluation are posted to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. The same treatment is applied to gains and losses on disposal.
Rentals received in relation to investment properties are credited to the Financing and Investment Income line and result in a gain for the General Fund Balance. However, revaluation and disposal gains and losses are not permitted by statutory arrangements to have an impact on the General Fund Balance. The gains and losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account and the Capital Receipts Reserve.
JOINT ARRANGEMENTS
Joint Arrangements are arrangements in which two or more parties have joint control bound by a contract. A Joint Arrangement can be classified as:
(i) A Joint Venture This is an arrangement under which two or more parties contractually agree to share control, such that decisions about activities of the entity require consent from all parties. Material interests in Joint Ventures would ordinarily necessitate the completion of group accounts using the equity method of consolidation.
(ii) A Joint Operation This is an arrangement under which parties that have joint control have the rights to the assets and obligations for the liabilities relating to the arrangement. Under such arrangements the Council recognises the assets and liabilities it controls on the Balance Sheet and debits/credits the Comprehensive Income and
27 Expenditure Statement for its proportion of any expenditure incurred/income received.
LEASES
Under the requirements of IAS 17 Leases , the Council is required to consider/review all its lease arrangements and apply the primary and secondary tests detailed in the standard to determine the extent to which the risks and rewards incidental to ownership lie with the lessor or lessee and therefore whether leases should be classified as operating or finance leases, with the subsequent accounting treatment being in accordance with the standard.
Authority as Lessee – operating leases
Rentals paid under operating leases are charged to the Comprehensive Income and Expenditure Statement as an expense of the service(s) benefiting from use of the leased property, plant or equipment. Charges are made on a straight-line basis over the life of the lease.
Authority as Lessor – operating leases
Where the Authority grants an operating lease over an item of Property, Plant or Equipment, the asset is retained in the Balance Sheet. Rental income is credited to the Comprehensive Income and Expenditure Statement on a straight-line basis over the life of the lease.
OVERHEADS AND SUPPORT SERVICES
The costs of overheads and support services are charged to those that benefit from the supply or service in accordance with the costing principles of the CIPFA Service Reporting Code of Practice 2015/16 (SeRCOP). The total absorption costing principle is used – the full cost of overheads and support services are shared between users in proportion to the benefits received.
PENSIONS – see Employee Benefits
PRIVATE FINANCE INITIATIVE (PFI)
PFI contracts are agreements to receive services, where the responsibility for making available the assets needed to provide those services passes to the PFI contractor. However, as the Council is deemed to control the services that are provided under its PFI schemes and as ownership of the assets will pass to the Council at the end of the contract for no additional charge, the Council is required to carry the assets used under the contract on its Balance Sheet as part of Property, Plant and Equipment.
The original recognition of these assets at fair value (based on the cost to purchase the Property, Plant and Equipment) was balanced by the recognition of a liability for amounts due to the operator to pay for the capital investment.
Non-current assets recognised on the Balance Sheet under PFI schemes will be subject to revaluation and depreciation in the same way as Property, Plant and Equipment owned by the Council.
The amounts payable to the PFI operator each year are analysed into five elements:
28 • Fair value of services received during the year – debited to the relevant services in the Comprehensive Income and Expenditure Statement; • Finance cost – an interest charge is raised on the outstanding Balance Sheet liability and debited to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. The interest rate is calculated for the scheme so that the Balance Sheet liability is zero at the end of the contract. The interest rate applicable for the Authority’s PFI scheme is 9.8897%; • Contingent rent – increases in the amount to be paid for the property arising during the contract; • Payment towards liability – applied to write down the Balance Sheet liability towards the PFI; • Lifecycle replacement costs – are split between revenue and capital costs. Revenue lifecycle costs are debited to the relevant service in the Comprehensive Income and Expenditure Statement in the year in which they are incurred. Any capital lifecycle costs are debited to Property, Plant and Equipment to reflect enhancements to the PFI asset. In the early years of the scheme no lifecycle costs are incurred.
PROPERTY, PLANT AND EQUIPMENT
Recognition
Assets that have a physical substance and are held for use in the production or supply of goods or services, or for administrative purposes and that are expected to be used during more than one financial year are classified as Property, Plant and Equipment.
In line with the requirements of IAS 16 Property Plant and Equipment , the Council recognises and accounts separately for any components where the value of the asset is of sufficient materiality and the component costs are significant in relation to the total cost of the asset.
Expenditure on the acquisition, creation or enhancement of Property, Plant and Equipment is capitalised on an accruals basis, provided that it is probable that the future economic benefits or service potential associated with the item will flow to the Council and the cost of the item can be measured reliably. Expenditure that maintains, but that does not add to, an asset’s potential to deliver future economic benefits (repair and maintenance) is charged as an expense when it is incurred.
Measurement
Assets are initially measured at cost, which includes:
• the purchase price; and • any costs attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
The Council does not capitalise borrowing costs incurred while the asset is under construction.
Assets are then carried in the Balance Sheet using the following measurement bases:-
• infrastructure, community assets and assets under construction – depreciated historical cost;
29 • school buildings – current value but due to their specialist nature depreciated replacement cost is used as an estimate of current value; • surplus assets – the current value measurement is fair value which is estimated as the highest and best use from a market participant’s perspective; and • all other assets – fair value, determined as the amount that would be paid for the asset in its existing use (existing use value EUV).
Where there is no market-based evidence of current value because of the specialist nature of an asset, depreciated replacement cost (DRC) is used as an estimate of current value.
Where non-property assets have short useful lives or low values (or both), depreciated historical cost is used as a proxy for current value.
Assets included in the Balance Sheet at fair value are revalued sufficiently regularly to ensure that their carrying amount is not materially different from their current value at the year end, which is, as a minimum, every 5 years. Revaluations are carried out as part of a rolling programme by a qualified internal Valuer, in accordance with guidance issued by the Royal Institute of Chartered Surveyors (R.I.C.S.). The effective date of the revaluation is the date on which the revaluation was produced.
Key assumptions used in revaluing the assets include:
• good title can be shown and the properties are not subject to any unusual or onerous restrictions, encumbrances or outgoings; • the land and properties are not contaminated; • there are no prevailing environmental factors that would alter the valuations provided.
Increases in valuations are generally matched by credits to the Revaluation Reserve to recognise unrealised gains. In some circumstances, gains may be credited to the Comprehensive Income and Expenditure Statement where they arise from the reversal of a loss previously charged to a service.
Where decreases in value are identified, the appropriate accounting treatment is dependent on whether the asset has been previously revalued upwards and there is a corresponding gain on the Revaluation Reserve. Where there is a balance of revaluation gain for the asset in the Revaluation Reserve, then the carrying amount of the asset is written down against that balance (up to the amount of accumulated gains). Where there is no balance on the Revaluation Reserve or insufficient balance, the carrying amount of the asset is written down against the relevant service line(s) in the Comprehensive Income and Expenditure Statement.
The Revaluation Reserve contains revaluation gains recognised since 1 April 2007 only, the date of its formal implementation. Gains arising before that date have been consolidated into the Capital Adjustment Account.
Impairment
Assets are assessed at each year end as to whether there is any indication that an asset may be impaired. Where indications exist and any possible differences are estimated to be material, the recoverable amount of the asset is estimated and, where this is less than the carrying amount of the asset, an impairment loss is recognised for the shortfall.
30 Where an impairment loss is identified, the appropriate accounting treatment is dependent upon whether the asset has been previously revalued upwards and there is a corresponding gain on the Revaluation Reserve. Where there is a balance of revaluation gain for the asset in the Revaluation Reserve, then the carrying amount of the asset is written down against that balance (up to the amount of accumulated gains). Where there is no balance on the Revaluation Reserve or insufficient balance, the carrying amount of the asset is written down against the relevant service line(s) in the Comprehensive Income and Expenditure Statement.
Any subsequent reversal of impairment loss is credited to the relevant service line(s) in the Comprehensive Income and Expenditure Statement, up to the amount of the original loss adjusted for depreciation that would have been charged if the loss had not been recognised.
Depreciation
Depreciation is provided for on all Property, Plant and Equipment assets by the systematic allocation of their depreciable amounts over their useful lives. An exception is made for assets without a determinable finite life (e.g. freehold land and certain Community Assets) and assets that are not yet available for use (assets under construction).
Depreciation on all Property, Plant and Equipment assets is calculated by allocating the asset value over the period expected to benefit from their use on a straight-line basis. All assets are assessed individually in relation to their asset lives for the purpose of calculating depreciation. Conditions relative to each asset are considered in arriving at this determination.
The Authority will apply component accounting (i.e. major components of the asset are depreciated over their respective estimated economic lives) to assets with a book value in excess of £3m where the impact of component accounting is considered material to the Financial Statements. The Council has adopted a policy in which assets are split into five component parts. The assets are split using standard percentages of the building. Each of the component categories have standard average lives, which are then used for the purpose of calculating the depreciation charge.
Revaluation gains are also depreciated, with an amount equal to the difference between the current value depreciation charged on assets and the depreciation that would have been chargeable based on their historic cost being transferred each year from the Revaluation Reserve to the Capital Adjustment Account.
Assets Disposal and Non-Current Assets held for Sale
When it becomes probable that the carrying amount of an asset will be recovered principally through a sale transaction rather than through its continuing use, it is reclassified as an Asset held for Sale. The asset is revalued and carried at the lower of this amount and fair value less costs to sell. Where there is a subsequent decrease to fair value less costs to sell, the loss is posted to the Comprehensive Income and Expenditure Statement. Gains in fair value are recognised only up to the amount of any previous losses recognised in the Surplus or Deficit on Provision of Services. Depreciation is not charged on Assets held for Sale.
If assets no longer meet the criteria to be classified as Assets held for Sale, they are reclassified back to non-current assets and valued at the lower of their carrying amount before they were classified as held for sale, adjusted for depreciation, amortisation or
31 revaluations that would have been recognised had they not been classified as Held for Sale, and their recoverable amount at the date of the decision not to sell.
When an asset is disposed of or decommissioned, the carrying amount of the asset in the Balance Sheet (whether Property, Plant and Equipment or Assets held for Sale) is written off to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement as part of the gains or loss on disposal. Receipts from disposal (if any) are credited to the same line in the Comprehensive Income and Expenditure Statement also as part of the gain or loss on disposal (i.e. netted off against the carrying value of the asset at the time of disposal). Any revaluation gains accumulated for the asset in the Revaluation Reserve are transferred to the Capital Adjustment Account.
Amounts received for a disposal of a non-current asset are categorised as capital receipts and credited to the Capital Receipts Reserve and then can be set aside either for new capital investment or set aside to reduce the Council’s underlying need to borrow (the Capital Financing Requirement). Receipts are appropriated to this Reserve from the General Fund Balance in the Movement in Reserves Statement.
The written-off value of disposals is not a charge against Council Tax, as the cost of fixed assets is fully provided for under separate arrangements for capital financing. Amounts are appropriated to the Capital Adjustment Account from the General Fund Balance in the Movement in Reserves Statement.
PROVISIONS AND CONTINGENT LIABILITIES
The Council sets aside provisions for any liabilities of uncertain timing or amount that have been incurred in accordance with the requirements of the Code and IAS 37 Provisions, Contingent Liabilities and Contingent Assets . Provisions are disclosed as separate balance sheet items, whilst provisions for bad and doubtful debts are netted off the carrying amount of debtors.
Provisions are recognised when:
(i) the Authority has a legal or constructive obligation as a result of a past event;
(ii) it is probable that a transfer of economic benefits will be required to settle the obligation; and
(iii) a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement in the year that the Authority becomes aware of the obligation, and are measured at the best estimate at the Balance Sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. Where payments for expenditure are incurred to which the provision relates, they are charged direct to the provision carried in the Balance Sheet.
Provisions are reviewed at each Balance Sheet date to reflect the current best estimate, taking into account the risks and uncertainties surrounding the events. Where it is subsequently assessed that it becomes less than probable that a transfer of economic benefits will now be required (or a lower provision is required), the provision is reversed and credited back to the relevant service.
32 In contrast, Contingent Liabilities are not accrued in the accounting statements. They are disclosed by way of notes if there is:
(i) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Authority; or
(ii) a present obligation that arises from past events, but where it is not certain that an outflow of resources will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.
REDEMPTION OF DEBT
Provision for the redemption of debt is made in accordance with the requirements contained in the Capital Finance and Accounting Regulations 2008 . The Council calculates its annual revenue provision with reference to assumed lives of its assets. For borrowing incurred under the prudential arrangements (i.e. unsupported by Government funding), the charge is calculated on a straight line basis over the estimated life of the asset. For its PFI scheme and that element of the CFR that was prior to the prudential regime supported by Central Government, the Authority calculates a revenue provision using the annuity method. Whilst this calculation is still broadly based on a charge over the asset’s life, the resultant profile for revenue provision is more closely aligned with the flow of economic benefit which, it is felt, is more appropriate for PFI schemes.
RESERVES
The Authority sets aside specific amounts as reserves for future policy purposes or to cover contingencies. Earmarked reserves are created by appropriating amounts out of the General Fund Balance in the Movement in Reserves Statement. When expenditure to be financed from a reserve is incurred, it is charged to the appropriate service in that year to score against the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement. The reserve is then appropriated back into the General Fund Balance in the Movement in Reserves Statement so that there is no net charge against Council Tax for the expenditure.
Certain reserves are kept to manage the accounting processes for non-current assets, financial instruments, retirement and employee benefits and do not represent usable resources for the Authority.
The purpose and usage of each reserve is disclosed in notes accompanying the Core Statements.
REVENUE EXPENDITURE FUNDED FROM CAPITAL UNDER STATUTE (REFCUS)
Expenditure incurred during the year that may be capitalised under statutory provisions, but that does not result in the creation of a non-current asset, has been charged as expenditure to the relevant service in the Comprehensive Income and Expenditure Statement in the year. Where the Authority has determined to meet the cost of this expenditure from existing capital resources or by borrowing, a transfer in the Movement in Reserves Statement from the General Fund Balance to the Capital Adjustment Account then reverses out the amounts charged so that there is no impact on the level of Council Tax.
These items are generally grants and expenditure on assets not owned by the Authority.
33
SCHOOLS
The Code of Practice on Local Authority Accounting the United Kingdom confirms that the balance of control for local authority maintained schools (those categories of schools identified in the Schools Standards and Framework Act 1998 ) lies with the local authority. The Code stipulates that those schools’ assets, liabilities, reserves and cash flows are recognised in the local authority single entity financial statements. Therefore these schools’ transactions, cash flows and balances are recognised in the financial statements as if they were transactions of the local authority.
TAX INCOME (COUNCIL TAX, NON-DOMESTIC RATES)
Non-Domestic Rates
The Council acts both as an agent (collecting Non-Domestic Rates on behalf of the Merseyside Fire & Rescue Authority and Central Government) and as a principal (collecting Non-Domestic Rates for itself). Non-Domestic Rates transactions and balances are therefore allocated between the Council, Merseyside Fire & Rescue Authority and Central Government, applying accepted agent and principal treatments as appropriate. Under the legislative framework for the Collection Fund, all three parties share proportionately the risks and rewards that the amount of Non-Domestic Rates collected could be more or less than predicted.
Council Tax
Similarly, the Council acts both as an agent (collecting Council Tax on behalf of the Police and Crime Commissioner for Merseyside and the Merseyside Fire & Rescue Authority) and as a principal (collecting Council Tax for itself). Council Tax transactions and balances are therefore allocated between the Council and the major preceptors, applying accepted agent and principal treatments as appropriate. Under the legislative framework for the Collection Fund, all three parties share proportionately the risks and rewards that the amount of Council Tax collected could be more or less than predicted.
The Council’s proportionate share of both Non-Domestic Rates and Council Tax will be recognised in the Comprehensive Income and Expenditure Statement in the line Taxation & Non-Specific Grant Income. As a billing authority, the difference between the Non-Domestic Rates and Council Tax income included in the Comprehensive Income and Expenditure Statement and the amount required by regulation to be credited to the General Fund, shall be taken to the Collection Fund Adjustment Account and reported in the Movement in Reserves Statement.
For both Council Tax and Non-Domestic Rates, the Council’s proportionate share of assets and liabilities (debtors, receipts in advance, provision for doubtful debt, etc.) are recognised individually within the Balance Sheet. The net asset/liability in relation to the other parties is shown as a single debtor/creditor figure, as appropriate.
VALUE ADDED TAX (VAT)
VAT payable is included as an expense only to the extent that it is not recoverable from Her Majesty’s Revenue and Customs. VAT receivable is excluded from income.
34 STATEMENT OF RESPONSIBILITIES FOR THE STATEMENT OF ACCOUNTS
THE AUTHORITY'S RESPONSIBILITIES
The Authority is required:
(i) to make arrangements for the proper administration of its financial affairs and to secure that one of its Officers has the responsibility for the administration of those affairs. In this Authority, that Officer is the Deputy Chief Executive & Strategic Director of Corporate Services; (ii) to manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets; (iii) to approve the Statement of Accounts.
RESPONSIBILITIES OF THE DEPUTY CHIEF EXECUTIVE & STRATEGIC DIRECTOR OF CORPORATE SERVICES
The Deputy Chief Executive & Strategic Director of Corporate Services is responsible for the preparation of the Authority's Statement of Accounts in accordance with proper practices as set out in the CIPFA/LASAAC Code of Practice on Local Authority Accounting in the United Kingdom ('the Code of Practice').
In preparing this Statement of Accounts, the Deputy Chief Executive & Strategic Director of Corporate Services has:
(i) selected suitable accounting policies and then applied them consistently;
(ii) made judgements and estimates that were reasonable and prudent;
(iii) complied with the Code of Practice.
The Deputy Chief Executive & Strategic Director of Corporate Services has also:
(i) kept proper accounting records which were up-to-date;
(ii) taken reasonable steps for the prevention and detection of fraud and other irregularities.
CERTIFICATE
I certify that this Statement of Accounts gives a true and fair view of the financial position of St. Helens Council at 31 March 2016 and its income and expenditure for the year then ended. In doing so, I authorise the Statement for issue and confirm that it is this date up to which events after the Balance Sheet date have been considered in preparing the Statement.
Ian Roberts Deputy Chief Executive & Strategic Director of Corporate Services Date: 19 September 2016
35 ANNUAL GOVERNANCE STATEMENT
2015-2016
1. Scope of Responsibility
1.1 St.Helens Council is responsible for ensuring that its business is conducted in accordance with the law and proper standards, and that public money is safeguarded and properly accounted for, and used economically, efficiently and effectively. The Council also has a duty under the Local Government Act 1999 to make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.
1.2 In discharging this overall responsibility, the Council is responsible for putting in place proper arrangements for the governance of its affairs, facilitating the effective exercise of its functions, and which includes arrangements for the management of risk.
1.3 The Council approved and adopted a Code of Corporate Governance in September 2008 based on the principles in the CIPFA /SOLACE Framework and in line with the revised framework, “Delivering Good Governance in Local Government ”. A copy of the Code of Corporate Governance is held on the Council’s Intranet.
1.4 This statement explains how St.Helens Council complies with the Code and meets the requirements of regulation 4(3) of the Accounts and Audit Regulations 2015.
2. The Purpose of the Governance Framework
2.1 The governance framework comprises the systems and processes, and culture and values, by which the Council is directed and controlled, and its activities through which it accounts to, engages with and leads our communities. It enables the Authority to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate services and value for money.
2.2 The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level. It cannot eliminate all risk of failure to achieve policies, aims and objectives and can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement of the Council’s policies, aims and objectives; to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically.
2.3 The governance framework at St.Helens Council has continued to operate and will remain subject to ongoing review in order to ensure its operational effectiveness in the future.
36 3. The Governance Framework
3.1 Overview
3.1.2 Detailed below are the systems and processes that the Council has put in place and demonstrates the extent to which the governance framework is robust and fit for purpose.
3.1.3 Good governance builds on the principles for the conduct of people in public life, known as the Nolan Principles, and the Local Government Act 2000. The framework establishes how the arrangements meet the six core principles of effective governance as outlined in the CIPFA / SOLACE Delivering Good Governance in Local Government Framework.
3.2 Strategic Planning
3.2.1 The Council prides itself in its role as a community leader in shaping, articulating and giving effect to the ambitions of the community. Led by the Council, and supported by our Local Strategic Partners the Council pursues its ambitious vision to make St.Helens a modern, distinctive, economically prosperous and vibrant Borough.
3.2.2 Our vision is articulated in the St Helens Plan 2015-18, which has been developed by the Council and the wider partnership and stakeholders. The Plan contains our shared priorities for the Borough, summary details of the actions that we will take to deliver our vision, and a proportionate number of key indicators, which we will monitor to measure our progress.
3.2.3 St. Helens Plan has six primary aims and these are:-
i. Healthy and Active People ii. Skilled and Educated People iii. Independent and Empowered People iv. A Safer and Stronger Place v. A Cleaner, Greener and Accessible Place vi. A Thriving, Vibrant and Competitive Place
3.2.4 Each of the above aims has a small number of priorities. It is the priorities within the St Helens Plan that drive the Council’s annual service planning process, ensuring appropriate activity is undertaken to deliver our long-term vision and goals for the community. A proportionate number of plans covering all service functions and key areas of expenditure are produced each year by the Departments. The Divisions of Service and the Sub Divisions of Service contained in the CIPFA Service Reporting Code of Practice are linked to plans through the Financial Information System (FIS) allowing close monitoring of budgets and service expenditure. An annual process of quality assurance and on-going monitoring and review of plans ensures a continued focus on the effectiveness and value for money of Council services.
3.3 The Decision Making Framework
3.3.1 The Council has adopted and approved a Constitution that establishes an efficient, transparent and accountable decision-making structure. Member and Officer roles are clearly defined within the Constitution.
37 3.3.2 The Cabinet is the main decision making Body. Meetings are open to the public except where personal or confidential matters are being discussed. It comprises the Leader of the Council and eight Cabinet members with portfolios. The portfolios for 2015/16 were:
i. Corporate Services, Strategy, Governance and External Affairs; ii. Transport, Housing, and Community Safety; iii. Children, Families and Young People; iv. Education and Lifelong Learning; v. Adult Social Care and Health; vi. Green Smart & Sustainable Borough; vii. Employment, Planning & Growth; viii. Public Health and Wellbeing.
3.3.3 Supporting this is an effective scheme of delegation which is well understood and adhered to. These arrangements are clearly established in the Constitution and supporting documents, particularly financial and contract procedure rules.
3.3.4 The Assistant Chief Executive – Legal and Administrative Services is the appointed Monitoring Officer for the Council whose primary function is to ensure that the Council operates in a lawful manner.
3.3.5 The Council actively involves local residents and young people in shaping the Borough’s future and in providing direction to the Council and its partners in the development of local services. Strong consultation and engagement mechanisms enable the Council to understand the views, needs and preferences of all its stakeholders. Particular effort is made to reach the views of those who tend to be excluded from the decision making process or who have very specific needs.
3.4 Overview and Scrutiny Commission
3.4.1 The Council’s Overview and Scrutiny Commission consists of fifteen Members of the Council alongside two Church representatives. Members of the Overview and Scrutiny Commission are independent of the Cabinet.
3.4.2 The Overview and Scrutiny Commission is supported in its work by a number of specific Overview and Scrutiny Panels. These are:-
i. Audit and Financial Monitoring; ii. Children and Young People’s Services; iii. Health and Adult Social Care; iv. Environment, Regeneration, Housing, Culture and Leisure; v. Safer Communities.
3.4.3 The Overview and Scrutiny Commission and Panels have the authority to request the relevant Cabinet Members and officers to attend meetings to provide further information on issues of performance in their area of responsibility. Health partners and other partners are also invited to attend to review performance. The Panels also prepare reports for direct consideration by the Cabinet. A detailed Action Plan is produced of recommendations made by Scrutiny, and monitoring arrangements are in place to monitor progress.
38 3.4.4 Dedicated resources have been made available to support the Scrutiny function, including a dedicated Scrutiny Support Manager role.
3.5 Financial Management
3.5.1 The Deputy Chief Executive and Strategic Director of Corporate Services is the responsible Officer to the Council for the proper management of its financial affairs in order to meet the statutory requirements of Section 151 of the Local Government Act 1972, and complies with the requirements of the CIPFA ‘Statement on the Role of the Chief Financial Officer in Local Government’.
3.5.2 Financial management is recognised as strength in St.Helens and the Council’s medium term financial strategy is aimed at maximising resources for priority areas, while minimising the burden on local taxpayers through the achievement of value for money.
3.6 Codes of Conduct for Members and Officers
3.6.1 The Council has a Code of Conduct for both Officers and Members together with a range of policies and procedures that includes:-
i. Risk Management Strategy; ii. Health and Safety; iii. Equalities and Diversity; iv. Finance; v. ICT and Information Management; vi. Service Standards; vii. Procurement; viii. Declaration of interests by Members and Officers; ix. Member / Officer relationships; x. Confidential Reporting (Whistleblowing); xi. Code of Recommended Practice on Local Authority Publicity; xii. Anti-fraud, Bribery and Corruption.
3.6.2 These policies and procedures are underpinned by an ongoing programme of training for Officers and Members providing coverage on a wide range of topics ensuring awareness on new and developing issues.
3.6.3 The Council’s Standards Committee seeks to promote and maintain high standards of conduct of Council Members, and meets to discuss matters of ethical standards. The Monitoring Officer provides reports to the Standards Committee in relation to the operation of the Code of Conduct and the maintenance of high ethical standards.
3.7 Equality and Diversity
3.7.1 The Council has effective arrangements in place to ensure it is able to meet its duties in relation to the Equality Act 2010 and the Council’s Comprehensive Equality Policy through the impact assessment of decisions, services and employment.
3.8 Performance Management
3.8.1 The Council continues to recognise the importance of closely managing and monitoring performance. Ensuring a strong link between budgets, service delivery
39 and performance targets is critical to the achievement of our desired outcomes both for the organisation and wider community, particularly given the scale of government cuts and the impact on the availability of resources.
3.8.2 A proportionate set of performance indicators exists to cover those areas the organisation feels it is important to measure, monitor and report. An annual review of indicators is conducted to ensure their continued relevance. Three-year targets, linked to the medium term Budget Strategy, are set annually. Targets are challenging, but realistic and commensurate with the available level of resource. All targets are approved annually by Cabinet. Benchmarked performance information is collated and examined to ensure that there is challenge to the robustness of the target setting process.
3.8.3 Financial and service planning are fully integrated and joint financial and performance reporting ensures that resources are concentrated on achieving priority outcomes. Monthly meetings between the Deputy Chief Executive and Strategic Director of Corporate Services and Strategic Directors of Departments are held to discuss budgets, progress against key performance measures, significant issues of service delivery and action required to address any identified concerns. Monthly Budget and Performance Monitoring Reports are presented to Cabinet and individual monthly performance briefings are provided for Cabinet Portfolio holders. Joint targets are shared and incorporated into partners key plans.
3.9 Risk Management
3.9.1 The Council’s risk management arrangements have traditionally been effective with strong commitment from Members and Officers of the Council supported by significant staff training.
3.9.2 Risk management is embedded in the culture and operation of the Council. The Council’s corporate risk register identifies threats and risks to the achievement of its strategic priorities set out in the St Helens Plan 2015-18. Service Plans contain an assessment of the likelihood and impact of service level risk, along with control measures . The development of the Council’s business continuity and disaster recovery arrangements has been informed by the Civil Contingencies Act.
3.9.3 A Safety and Risk Management Forum, convened on a quarterly basis, is a strategic group chaired by the Deputy Chief Executive and Strategic Director of Corporate Services and attended by the Strategic Directors of Services and Chief Officers together with Trade Union and Human Resources representation. It considers occupational health, organisational safety and risk management issues including civil claims and losses.
3.10 Data Protection and Information Management
3.10.1 The Council takes its Data Protection and Information Management responsibilities very seriously and has a corporate Information Management Group in place to ensure that standards, training and monitoring arrangements are robust and effective.
3.10.2 Information management policies governing how data is accessed and protected are regularly reviewed, and subject to consultation prior to amendments to reflect current and emerging practice.
40
3.11 Workforce Planning
3.11.1 The Council recognises the benefits of having a committed, capable, skilled and diverse workforce. There is a requirement for workforce planning and the implications thereof to be considered within departmental service planning and associated action plans.
3.11.2 The Council places great importance on the quality of its workforce, and was especially pleased to achieve the Investors In People (IIP) Gold Award accreditation for the whole Council initially in 2009, and has been subsequently re-accredited.
3.11.3 The Council maintains an effective appraisal system that links individual targets and performance to its shared and corporate priorities and which, in turn informs its corporate training programme.
3.12 Transparency
3.12.1 The transparency guidelines are complied with and information is provided from the website on procurement, payment to suppliers, allowances and pay, grants, fees and charges, assets and fraud.
3.12.2 All agendas and minutes are published on the Council’s website together with any Delegated Executive Decisions taken by Chief Officers and approved by the relevant Cabinet Member in accordance with the Council’s Constitution. Administrative Decisions are also published on the Council’s website
4. Assurance
4.1 The Council’s Audit and Governance Committee has a key role as the “body charged with governance” and within its Terms of Reference is required to gain and monitor the necessary assurances in respect of the Council’s control, governance, financial management and reporting framework.
4.3 All Chief Officers of the Council are required, on an annual basis, to provide written assurance as to the adequacy and effectiveness of management arrangements based on specified criteria.
4.4 In assessing the performance of services, the Council actively seeks the views of its community and places great emphasis on customer satisfaction. The Council has established standards of service, particularly at the front line, which are regularly monitored.
4.5 An open and transparent complaints procedure is available to the community and complaints are closely monitored together with the quality of the complaint handling processes. The Council conducts regular surveys to assess the levels of satisfaction with its services and their accessibility, and feeds these into service reviews.
5. The Primary Assurance Group
5.1 The Primary Assurance Group consists of senior officers of the Council and undertakes a detailed annual self-assessment of the effectiveness of our governance arrangements based on the CIPFA/SOLACE six core principles. It also considers
41 emerging risks to the Council’s ability to meet its objectives and drafts the Annual Governance Statement for subsequent challenge, consideration and approval by the Audit and Governance Committee.
5.2 The Primary Assurance Group is chaired by the Deputy Chief Executive and Strategic Director of Corporate Services and includes senior representatives with responsibilities covering all the elements of the overall framework.
5.3 The remit of the Primary Assurance Group is:
i. to obtain, document and evaluate the Council’s internal control and governance framework using a robust and evidence-based methodology on which to form an opinion;
ii. to evaluate assurances received from services regarding Directors assessments of the internal control environment and corporate governance arrangements for individual services;
iii. to review the internal audit outturn report;
iv. to advise the Council of any significant internal control issues that may have implications for the Annual Governance Statement;
v. to recommend actions for improvement where appropriate; and
vi. to review and monitor the implementation of any actions for improvement that arise from the annual assessment of the governance framework.
5.4 The Primary Assurance Group has evaluated the outcomes of the self-assessment and the assurances from Strategic Directors and Chief Officers and have produced an Action Plan of issues which need to be addressed to ensure the governance framework is not compromised. Of particular concern were aspects of non- compliance with the governance framework within the Children and Young Peoples Department. Action Plans for Improvement have been developed by the Strategic Director of People’s Services to address the weaknesses.
5.5 During 2015/16 the Primary Assurance Group also undertook a review against the governance issues that were identified following the Statutory Inspection of Rotherham Council (Casey Report) and an Action Plan for improvement areas has been produced as a result.
6. Reviewing the Effectiveness of the Governance Framework
6.1 Overview
6.1.1 The annual review of the effectiveness of governance has reviewed information and assurances from a number of sources, both internal and external, and a detailed self-assessment has been undertaken by members of the Primary Assurance Group and the conclusions and sources of assurance documented.
6.1.2 During 2015/16 the Council has embarked on a programme of organisational change and transformation in order to meet its future needs and aspirations and deliver the
42 ‘2020 Vision for St. Helens’. This process will be continually reviewed and any impact on the governance arrangements considered as part of decision making.
The principle sources of assurance are as follows:-
6.2 Formal Review of the Constitution
6.2.1 The Assistant Chief Executive responsible for legal services conducts an annual, formal review of the Council’s Constitution. The objective of this review is to ensure that the aims and principles within the Constitution are given full effect and that it continues to be relevant and appropriate.
6.2.2 This review was conducted in May 2015 when amendments to the Constitution were approved by Council.
6.3 The Standards Committee
6.3.1 The Standards Committee monitors adherence to proper standards of conduct by Members of the Council. The activities of the Standards Committee form a part of our governance framework and are part of our assessment of effectiveness.
6.3.2 The changes to the ethical framework brought about by provisions in the Localism Act 2011 has reduced the need for the Committee to meet as often as previously. The Standards Committee continues to monitor the behaviour of elected members within its remit to maintain high standards in accordance with the Nolan Principles.
6.4 Audit and Governance Committee
6.4.1 The Audit and Governance Committee reviews the Council’s progress in the implementation of recommendations arising from internal and external audit and inspection reviews. This includes the Council’s progress in addressing any issues arising from previous Annual Governance Statements.
6.4.2 The Committee has also considered the Statement of Accounts, matters raised by the external auditor, risk management, and the arrangements for fraud, bribery and corruption.
6.5 Overview and Scrutiny
6.5.1 The Overview and Scrutiny Commission and Panels have delivered their work programme to provide scrutiny of a range of Council activities, and have presented their findings and recommendations for consideration by Cabinet.
6.5.2 The review work has also incorporated proposed Policy changes and responding to formal consultation on strategic issues affecting the Borough including Health services, and participating in joint scrutiny reviews.
6.5.3 The role of the Commission also involves scrutiny of the Council’s annual budget process, and the Audit and Financial Monitoring Overview and Scrutiny Panel also review internal audit reports and the implementation of actions arising from them.
43 6.6 Internal Audit
6.6.1 The findings arising from the delivery of the annual Internal Audit Plan, and from any unplanned activity relating to fraud, management or other issues are used to assess the effectiveness of the governance framework. This includes the review of the Council’s Corporate Governance and Risk Management arrangements.
6.6.2 In the Internal Audit annual outturn report for 2015/16 the Assistant Treasurer has confirmed that, based on work undertaken in the year, the control environment was operating effectively and there were no significant issues required to be brought to the attention of Members. There were however a range of system and operational control weaknesses identified, which in all cases have been resolved by the agreement of action plans for improvement with management.
6.6.3 The implementation of agreed audit recommendations is monitored and reported to the Audit and Financial Monitoring Overview and Scrutiny Panel. During the year there have been some issues identified with unsatisfactory progress being made, and these issues have been highlighted, and assurances sought from the Strategic Director on a robust process to implement outstanding recommendations.
6.6.4 Internal Audit undertook a self-assessment against the Public Sector Internal Audit Standards (2013) in 2015, and this has been reported to the Audit & Governance Committee along with progress against the Action Plan for full compliance with the Standards.
6.6.5 A self-assessment has also been undertaken against the CIPFA Code of Practice on Managing the Risk of Fraud and Corruption, which identified that key policies are in place and overall arrangements are robust. An Improvement plan has been identified to further enhance compliance and performance.
6.7 Strategic Risk Register
6.7.1 The Council’s Corporate Strategic Risk Register is regularly reviewed by risk owners to ensure that it continues to be relevant, comprehensive and appropriate. The Risk Register is reported to members via the Audit & Governance Committee on a periodic basis. The Register has been reviewed during 2015/16 and reformatted incorporating a detailed process for continual re-assessment of risks by risk owners.
6.7.2 New and emerging risks that are identified within decisions taken by Cabinet, or Delegated Executive Decisions are also incorporated within the Corporate Risk Register.
6.8 Corporate Financial and Performance Reporting
6.8.1 There is a formal reporting cycle of reports, which incorporates financial and performance information on a portfolio basis. Reports are produced on a monthly, quarterly and annual cycle, and are available to all elected members: are formally presented to Cabinet for consideration; and are published on the Council’s website.
6.8.2 Financial and performance monitoring reports provide for alignment with the corporate meeting cycle and a strategic approach to the reporting of financial and performance issues. Monthly budget and performance monitoring reports to Cabinet
44 focus not solely on the performance of indicators, but also on wider aspects of service delivery and performance.
6.8.3 The service planning process provides for a fully electronic approach to monitoring of progress, annual review, and quality assurance of plans.
6.9 External Assessment and Inspection
6.9.1 The Council’s external auditors, Grant Thornton, fulfil their statutory audit obligations to include the production of an Annual Audit Management Letter which considers the quality of our governance arrangements and the veracity of our published financial statements of accounts.
6.9.2 The findings of our external auditors are included in Section 7.1 below.
6.9.3 The Council is also subject to external inspection from statutory inspectorates including Ofsted and the Care Quality Commission. The findings of these are considered in Section 7.2 below.
7. External Audit and Inspection
7.1 External Audit Opinion
7.1.1 Grant Thornton, in their Annual Audit Letter dated October 2015, confirmed for the financial year 2014/15 that the Council received:
i. an unqualified opinion on our financial statements; ii. an unqualified conclusion in respect of our arrangements for securing economy, efficiency and effectiveness in our use of resources; iii. an unqualified opinion on our Whole of Government Accounts submission.
7.1.2 In respect of the Council’s Annual Governance Statement (AGS), Grant Thornton found that it fairly reflects the Councils risk assurance and governance framework and were able to confirm that there they were not aware of any significant risks that are not disclosed within the AGS.
7.1.3 In respect of the Council’s financial resilience the Audit report stated that the the Council continues to demonstrate good financial performance and has good financial planning and review processes in place, and a track record of delivering financial plans and savings.
7.2 Ofsted/CQC and other Statutory Inspection Bodies
7.2.1 The Care Quality Commission (CQC) inspected the Council’s Reablement Service, which is a jointly funded intermediate care service that aims to promote independence so that people can remain living in their own homes, help people recover from illness and prevent unnecessary admission to hospital and long-term care facilities. The results of the inspection were very positive with the CQC concluding that overall the service was ‘Good’, being effective, safe, caring responsive to needs and well led.
7.2.2 A Local Government Association Peer Review was undertaken of the Safeguarding function within the Adult Social Care and Health Department as part of the Council’s
45 commitment to sector led improvement. The findings were overwhelmingly positive, acknowledging clear policies and procedures, statutory responsibilities being met and a mature partnership with strong relationships. In conclusion no significant areas were highlighted for further development.
7.2.3 The 2014 Ofsted inspection of the Council’s services for Children in Need of Help and Protection, Children Looked After and Care Leavers and a review of the Local Safeguarding Children’s Board (LSCB) found the services to be ‘Requiring Improvement.’ The inspection was carried out under a revision to the Single Inspection Framework and combined case tracking, case sampling, observations of practice and interviews – with the aim of understanding the experiences of children and young people.
7.2.4 An improvement plan for each element of the inspection was developed and update reports presented to Cabinet during the year. Following the establishment of the new People’s Services Department the actions have been reviewed and the implementation plans reassessed to ensure the necessary improvements are achieved.
7.2.5 A Peer Review of Children’s Services was conducted through the North West Directors of Children’s Services body as a further means of constructive challenge. In schools and education it was noted the appointment of a Virtual Head Teacher and the focus on supporting vulnerable groups is strong, along with a ‘family’ of schools who are willing to work together to improve performance for pupils. In social care it was noted that there is a strong foundation to build on but there are particular problems around high volumes in areas of referrals, child protection and children looked after. A number of recommendations for improvement were made including the need for a fuller understanding of the origins of demand pressures, the strengthening of quality assurance processes and ensuring that the impact of the voice of children and families is evident in terms of service development. The findings subsequently influenced and fed into a number of action plans.
7.2.6 The Short Quality Screening Inspection of Youth Offending Work in St. Helens by HM Inspectorate of Probation found that overall the quality of work with children and young people in the St. Helens Youth Offending Service (YOS) was good and had improved since the past inspection in 2009. A number of strengths were highlighted, notably the strong engagement and relationships the Service had developed with children, young people and their parents/carers. The key area of challenge was to reduce reoffending and it was acknowledged that to achieve this, children and young people required further support from a range of partner agencies to allow the YOS to focus on specific direct offending behavior work.
8. Conclusion
8.1 It is our opinion, based on the self-assessment undertaken and the assurances provided above, that our systems of internal control and governance are fit for purpose and are in accordance with the framework.
8.2 On this basis we can report that whilst there are no significant governance issues that require addressing by the Council, improvements to existing arrangements necessary to assure full compliance and mitigate exposure of the Council have been identified and are addressed by improvement plans. More detail of the evidence is
46 provided against the relevant core principles in the corporate assessment and the Summary Action Plan appended to this report.
8.3 The Council continues to face significant funding challenges in response to Central Government’s year on year funding reductions. The Council has successfully delivered significant savings whilst maintaining efficient services and responding to increasing service demands.
8.4 The Local Government Grant Settlement, localisation of Business Rates and Council Tax support also have transferred additional financial risks and uncertainty to the Council. These changes increase the financial risk profile of the Council as any national or local economic downturn directly impacts on the Council's revenue generation through business rates and additional direct cost of increased numbers of Council Tax rebate claimants.
8.5 The Council is committed to improving the lives of local people and communities and fostering strong partnerships to become an adaptive and innovative organisation. We are working with our partners to deliver integrated service delivery models and business support within the local economy to support local employment initiatives.
8.6 At the same time, the Council continues to face many ongoing challenges and rising service demands which impacts on its resources. The ability to manage Adult Social Care demand remains a key priority given the demographics of St. Helens and the requirements and responsibilities associated with the Care Act 2014. The ability to raise additional funds from the additional 2% Council Tax increase for 2016/17 will support the cost of rising demand but not wholly.
8.7 Addressing the issues outlined in the Ofsted inspection of services for children in need of help and protection, children looked after and care leavers and to improve the effectiveness of the Local Safeguarding Children's Board is of critical importance for the Council. The improvement plans have been reassessed by the Strategic Director and the actions strengthened along with clear lines of accountability. The plans have been subject to approval by Cabinet and review by Scrutiny members. The departmental governance arrangements to support and deliver this program of work have also been subject to internal review to ensure that the objectives are achieved.
8.8 To meet the increasing financial challenge and deliver necessary service improvements and redesign a new Transformation Service has been created which will lead and support this priority. Alongside this, the governance framework to support the program will be subject to on-going review and improvement.
8.9 The Council’s commitment to consultation and wider engagement with our residents and stakeholders continues, with the continuation of the Budget Consultation and Simulator exercise. This is becoming increasingly important as the future decisions about service priorities are being taken.
8.10 The Council is working closely with Health Partners, in particular the Clinical Commissioning Group (CCG) to further develop governance arrangements in respect of decision making for prioritised local services, to ensure that our collective needs are met.
47 8.11 Ensuring that the Borough benefits from increased economic growth is central to the Council's ambitions as is the continuation of joint working through the Liverpool City Region Combined Authority(CA), the Liverpool City Region Local Enterprise Partnership (LEP), and through the Devolution Agreement with Government which was signed in November 2015. Under the Agreement the pooled powers over economic development, regeneration and transport policy assigns new responsibilities and powers, and significant funds of £900m over a 30-year period. The Council continues to support the strategic management and establishment of governance arrangements for the Combined Authority.
8.12 The Council has a strong track record of promoting and maintaining high standards of behaviour and will remain committed to doing so by all available means.
8.13 The Council remains committed to seeking continuous improvement and will continue to review and strengthen the control, risk and governance environment wherever appropriate.
Signed: ______Date: 15 June 2016 Chief Executive
Signed: ______Date: 15 June 2016 Leader of the Council
48 APPENDIX 1 Annual Governance Statement Action Plan 2015/16 Action Ref. Issue Action Lead Officer Completion Date
1 Revised Organisational Structure Completion and impleme ntation of the structural Chief Executive & Strategic September review Directors 2016 2 Delivery of 2020 Vision Identification and delivery of a program of work for Chief Executive September the new 2020 Transformation service 2016 3 Strategic and Operat ional Planning Produce new Communities and Operational Chief Executive March 2017 approach revised Delivery Plans 4 Partnership arrangements to be Review current arrangements and redefine Chief Ex ecutive December enhanced integrated service delivery and partnership model 2016 5 The Council’s Code of Corporate A review of the Council’s Code of Corporate Assistant Chief Executive – Legal December Governance needs updating Governance is to be undertaken to ensure it Services 2016 accurately describes the Council’s governance framework (CIPFA SOLACE 2016 Guidance) 6 Governance arrangements for the Governance arrangements to be determined and Assistant Chief Exe cutive – Legal March 2017 Liverpool City Region Combined Constitution amended Services Authority and Devolution Deal need to be agreed 7 Delivery of budget savings Robust budget monitoring and reporting Deputy Chief Executive & March 2017 Director of Corporate Services 8 Improved service and performance for Monitoring delivery of Ac tion Plans for Ofsted Director of People’s Services March 2017 Children’s Services improvements, and Governance improvements 9 Enhanced governance arrangements in Monitoring delivery of Action Plan Deputy Chief Executive & September response to Casey Review Director of Corporate 2016 Services/Director of People’s Services/ Primary Assurance Group
49 MOVEMENT IN RESERVES STATEMENT
This Statement shows the movement in the year on the different reserves held by the Authority, analysed into ‘usable reserves’ (i.e. those that can be applied to fund expenditure or reduce local taxation) and other reserves. The Surplus or (Deficit) on the Provision of Services line shows the true economic cost of providing the Authority’s services, more details of which are shown in the Comprehensive Income and Expenditure Statement. These are different from the statutory amounts required to be charged to the General Fund Balance for Council Tax setting purposes. The Net Increase/Decrease before Transfers to Earmarked Reserves line shows the statutory General Fund Balance before any discretionary transfers to or from earmarked reserves undertaken by the Council.
Total Authority Reserves NOTES NOTES General Fund Balance Schools Balances NW Regional Leaders Board Other Earmarked Gen.Fund Reserves Capital Receipts Reserve Capital Grants Unapplied Total Usable Reserves Unusable Reserves £000 £000 £000 £000 £000 £000 £000 £000 £000 Notes 7 7 7 8 9 6 Balance at 31 March 2014 (Restated) 21,289 8,038 1,034 48,239 32,195 8,366 119,161 76 ,986 196 ,147 Mo vement in Reserves during 2014 -2015 Restated
CIES Surplus or (Deficit) on the Provision of Services (1,208) - - - - - (1,208) - (1,208) CIES Other Comprehensive Income and Expenditure ------(59,710) (59,710) CIES Total Comprehensive Income and Expenditure (1,208) - - - - - (1,208) (59,710) (60,918) 5 Adjustments between accounting basis and funding basis (4,153) - - - (1,485) (612) (6,250) 6,250 - under Regulations Net Increase/(Decrease) before Transfers to Earmarked (5,361) - - - (1,485) (612) (7,458) (53,460) (60,918) Reserves 7 Transfers to/from Earmarked Reserves 8,429 1,525 (26) (9,928) - - - - - Increase/(Decrease) in 2014 -2015 3,068 1,525 (26) (9,928) (1,485) (612) (7,458) (5 3,460 ) (6 0,918 ) Balance at 31 March 2015 carried forward 24,357 9,563 1,008 38,311 30,710 7,754 111,703 23,526 135,229 Movement in Reserves during 2015 -2016
CIES Surplus or (Deficit) on the Provision of Services (32,103) - - - - - (32,103) - (32,103) CIES Other Comprehensive Income and Expenditure ------39,840 39,840 CIES Total Comprehensive Income and Expenditure (32,103) - - - - - (32,103) 39,840 7,737 5 Adjustments between accounting basis and funding basis 32,958 - - - (1,291) 1,282 32,949 (32,949) - under Regulations Net Increase/(Decrease) before Transfers to Earmarked 855 - - - (1,291) 1,282 846 6,891 7,737 Reserves 7 Transfers to/from Earmarked Reserves (7,460) 1,217 (35) 6,278 - - - - - Increase/(Decrease) in 2015 -2016 (6,605) 1,217 (35) 6,278 (1,291) 1,282 846 6,891 7,737 Balance at 31 March 2016 carried forward 17,752 10,780 973 44,589 29,419 9,036 112,549 30,417 142,966
50 COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT This Statement shows the accounting cost in the year of providing services in accordance with generally accepted accounting practices, rather than the amount to be funded from taxation. Authorities raise taxation to cover expenditure in accordance with Regulations; this may be different from the accounting cost. The taxation position is shown in the Movement in Reserves Statement. 2014-2015 (Restated) 2015-2016 Gross Gross Net Gross Gross Net NOTES Expenditure Income Expenditure Expenditure Income Expenditure
£000 £000 £000 £000 £000 £000 6,115 (4,734) 1,381 Central Services to the Public 5,943 (3,803) 2,140 12,682 (3,225) 9,457 Cultural and Related Services 11,041 (2,936) 8,105 12,599 (9,134) 3,465 Environmental and Regulatory Services 12,911 (5,274) 7,637 5,598 (2,520) 3,078 Planning Services 5,328 (2,538) 2,790 10 186,062 (146,321) 39,741 Children’s and Education Services 185,014 (146,455) 38,559 70,129 (23,434) 46,695 Adult Social Care 73,723 (30,080) 43,643 16,857 (6,051) 10,806 Highways and Transport Services 14,094 (2,791) 11,303 82,663 (74,412) 8,251 Housing Services 77,773 (70,300) 7,473 2,517 (16) 2,501 Corporate and Democratic Core 2,643 (29) 2,614 11 1,437 - 1,437 Non-Distributed Costs – Pensions 1,291 - 1,291 407 - 407 Non-Distributed Costs – Other 5,869 - 5,869 11,441 (12,060) (619) Public Health 14,670 (14,369) 301
3,37 - - - Provision for Equal Pay 10,204 - 10,204 15, 16 408,507 (281,907) 126,600 COST OF SERVICES 420,504 (278,575) 141,929
12 26,086 Other Operating Expenditure 23,641
13 10,436 Financing and Investment Income and Expenditure 17,440
14 (161,914) Taxation and Non-Specific Grant Income (150,907)
15 1,208 (SURPLUS) OR DEFICIT ON PROVISION OF SERVICES 32,103
(12,843) (Surplus) or Deficit on Revaluation of Non-current Assets (10,146)
11 72,553 Remeasurement (Gains)/Losses on Pension Assets/Liabilities (29,694)
59,710 OTHER COMPREHENSIVE INCOME AND EXPENDITURE (39,840)
60,918 TOTAL COMPREHENSIVE INCOME AND EXPENDITURE (7,737)
51 BALANCE SHEET The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Authority. The net assets of the Authority (assets less liabilities) are matched by the reserves held by the Authority. Reserves are reported in two categories. The first category of reserves are usable reserves i.e. those reserves that the Authority may use to provide services subject to the need to maintain a prudent level of reserves and any statutory limitations on their use. The second category of reserves is those that the Authority is not able to use to provide services (unusable reserves). Unusable reserves include:
(i) reserves that hold unrealised gains and losses, particularly in relation to the revaluation of Property, Plant and Equipment;
(ii) adjustment accounts that absorb the difference between proper accounting practices and the requirements of statutory arrangements for funding expenditure.
Restated Restated 31 March NOTES 31 March 31 March 2016 2014 2015 £000 £000 £000 25, 26 384,168 391,416 Property, Plant and Equipment 389,871 27 3,529 3,529 Heritage Assets 3,191 28 25,675 24,440 Investment Property 20, 384 29 2,082 1,709 Intangible Assets 1,368 30 29,041 10,033 Long Term Investments 25 31 12,146 12,609 Long Term Debtors 12,606 456,641 443,736 Long Term Assets 427,445
30 80,637 84,491 Short Term Investments 98,108 33 8,123 7,990 Assets held for Sale 3,377 34 20,777 19,323 Short Term Debtors 17,646 636 410 Inventories 441 39 34,883 15,392 Cash and Cash Equivalents 24,398 145,056 127,606 Current Assets 143,970
35 (1,114) (1,112) Short Term Borrowing (1,117) 4(b)(ii),36 (35,882) (38,602) Short Term Creditors (37,103) 16 (1,507) (1,135) Capital Grants Receipts in Advance (1,438) 16 (5,177) (5,865) Revenue Grants Receipts in Advance (6,076) 37 (3,269) (3,582) Provisions (14,6 31 ) (46,949) (50,296) Current Liabilities (60,365)
11 (194,580) (260,081) Pensions Liability (245,161) 16 - - Capital Grants Receipts in Advance - 16 (4,094) (5,559) Revenue Grants Receipts in Advance (6, 809 ) 35 (73,363) (73,357) Long Term Borrowing (73,351) 37 (6,057) (6,001) Provisions (5,789) 38 (80,507) (40,819) Other Long Term Liabilities (36,974) (358,601) (385,817) Long Term Liabilities (368,084)
196,147 135,229 Net Assets 142,966
Financed by: MIRS 119,161 111,703 Usable Reserves 112,549 6 76,986 23,526 Unusable Reserves 30,41 7 196,147 135,229 Total Reserves 142,966
In preparing this Statement, events up to 19 September 2016 have been considered. This is the date when the Deputy Chief Executive & Strategic Director of Corporate Services authorised the Statement for issue.
52 CASH FLOW STATEMENT
The Cash Flow Statement summarises the flows of cash that have taken place into and out of the Authority’s bank accounts over the financial year.
NOTES 2014-2015 2015-2016 £000 £000
CIES (1,208) Net Surplus or (Deficit) on the Provision of Services (32,103)
42 4,357 Adjustments to Net Surplus or Deficit on the Provision of 45,768 Services for Non-Cash Movements
43 (2,989) Adjustments for items included in the Net Surplus or Deficit (3,103) on the Provision of Services that are Investing and Financing Activities
44 160 Net Cash Flows from Operating Activities 10,562
45 (20,555) Investing Activities (1,871)
46 904 Financing Activities 315
(19,491) Net Increase or Decrease in Cash and Cash Equivalents 9,006
34,883 Cash and Cash Equivalents at the start of the Reporting 15,392 Period
39(d) 15,392 Cash and Cash Equivalents at the end of the Reporting 24,398 Period
53 INDEX OF NOTES TO THE ‘CORE’ FINANCIAL STATEMENTS 2015-2016
Note No . Note Content Page No.
1 ACCOUNTING STANDARDS THAT HAVE BEEN ISSUED BUT HAVE NOT 56 YET BEEN ADOPTED 2 CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES 56 3 ASSUMPTIONS MADE ABOUT THE FUTURE AND OTHER MAJOR 58 SOURCES OF ESTIMATION UNCERTAINTY 4 CHANGES IN ACCOUNTING AND OPERATIONAL POLICY AND OTHER 59 SIGNIFICANT MATTERS CONSIDERED IN PRODUCING THE 2015-2016 STATEMENT OF ACCOUNTS 5 ADJUSTMENTS BETWEEN ACCOUNTING BASIS AND FUNDING UNDER 63 REGULATIONS 6 UNUSABLE RESERVES 68 7 NW REGIONAL LEADERS BOARD, SCHOOL BALANCES AND OTHER 72 EARMARKED GENERAL FUND RESERVES 8 CAPITAL RECEIPTS RESERVE 73 9 UNAPPLIED CAPITAL GRANTS 74 10 SCHOOLS BUDGET FUNDED BY DEDICATED SCHOOLS GRANT 74 11 PENSIONS 75 12 OTHER OPERATING EXPENDITURE 80 13 FINANCING AND INVESTMENT INCOME AND EXPENDITURE 80 14 TAXATION AND NON-SPECIFIC GRANT INCOME 80 15 RECONCILIATION OF PORTFOLIO INCOME AND EXPENDITURE TO THE 80 COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT 16 GRANT INCOME 84 17 TRADING ACCOUNTS 86 18 NATIONAL HEALTH SERVICE ACT 2006 POOLED FUNDS 86 19 LEASING 88 20 OFFICERS’ REMUNERATION IN EXCESS OF £50,000 89 21 MEMBERS’ ALLOWANCES AND EXPENSES 90 22 RELATED PARTY TRANSACTIONS 91 23 AUDIT FEES 91 24 EXIT PACKAGES 92 25 PROPERTY, PLANT AND EQUIPMENT 92 26 PRIVATE FINANCE INITIATIVE (PFI) AND SIMILAR CONTRACTS 95 27 HERITAGE ASSETS 96 28 INVESTMENT PROPERTY 96 29 INTANGIBLE ASSETS 98 30 SHORT & LONG TERM INVESTMENTS 98 31 LONG-TERM DEBTORS 98 32 CAPITAL EXPENDITURE AND FINANCING 99 33 ASSETS HELD FOR SALE 99 34 SHORT-TERM DEBTORS 100 35 SHORT & LONG-TERM BORROWING 100 36 SHORT-TERM CREDITORS 101 37 PROVISIONS 101 38 OTHER LONG-TERM LIABILITIES 102 39 FINANCIAL INSTRUMENTS 103 40 TRUST FUNDS 108 41 CONTINGENT LIABILITIES 108
54
Note No . Note Content Page No.
42 CASHFLOW STATEMENT – ADJUSTMENTS TO NET SURPLUS OR DEFICIT 109 ON THE PROVISON OF SERVICES FOR NON-CASH MOVEMENTS 43 CASHFLOW STATEMENT – ADJUSTMENTS FOR ITEMS INCLUDED IN THE 109 NET SURPLUS OR DEFICIT ON THE PROVISION OF SERVICES THAT ARE INVESTING AND FINANCING ACTIVITIES 44 CASHFLOW STATEMENT – NET CASHFLOW FROM OPERATING 110 ACTIVITIES 45 CASHFLOW STATEMENT – INVESTING ACTIVITIES 110 46 CASHFLOW STATEMENT – FINANCING ACTIVITES 110
55 NOTES TO THE ‘CORE’ FINANCIAL STATEMENTS
1. ACCOUNTING STANDARDS THAT HAVE BEEN ISSUED BUT HAVE NOT YET BEEN ADOPTED
The CIPFA Code of Practice on Local Authority Accounting (the Code) requires disclosure of information related to the anticipated impact of changes in accounting standards that have been issued, but not yet adopted. The 2016-17 Code incorporates several changes to accounting standards that will apply from 1 April 2016.
The CIPFA Code of Practice on Transport Infrastructure Assets (the Infrastructure Code) takes effect from 1 April 2016. The change of accounting policy will be applied prospectively from 2016-17, as the 2016-2017 Code includes an adaptation to IAS 1, removing the requirement for a full retrospective restatement of the accounts and, as such, the change will be accounted for as an adjustment to the opening balance as at 1 April 2016.
Under the Infrastructure Code a new class of asset, Highways Network Asset, will be established which will be measured at depreciated replacement cost. The new class of asset will have seven components: carriageways, footways and cycle tracks, structures, street lighting, street furniture, traffic management systems and land. However, this will be recorded on the Balance sheet as a single asset. The creation of the new Highways Network Asset will require a transfer of assets from the existing Infrastructure Asset category. The transfer of assets is likely to result in a revaluation gain due to the change from depreciated historic cost to depreciated replacement cost.
There are a number of other amendments to International Financial Reporting Standards that will apply from 1 April 2016, however these are not expected to have a material impact on the Council’s accounts. The most significant changes arising in the next reporting period are those relating to the changes to the format of the Comprehensive Income and Expenditure Statement, the Movement in Reserves Statement and the introduction of a new Expenditure and Funding Analysis, which will require a restating of the 2015-16 Comprehensive Income and Expenditure Statement and Movement in Reserves Statement to reflect the new reporting requirements.
2. CRITICAL JUDGEMENTS IN APPLYING ACCOUNTING POLICIES
In applying the accounting policies, the Authority has had to make certain judgements about complex transactions or those involving uncertainty about future events. The critical judgements made in the Statement of Accounts are detailed below. Critical estimation uncertainties are described in Note 3.
Funding The Government has taken the unprecedented step of offering a 4-year settlement “to any council that wishes to plan ahead with confidence”. Despite this offer there are many other variables that are subject to change and volatility and that add up to a high degree of uncertainty about future levels of funding for local government. However, the Authority has determined that this uncertainty does not present a significant risk to the Council’s ability to operate as a going concern.
56 Leases The Council has examined its significant leases to determine whether they should be classified as operational or finance leases. In certain instances the application of IAS17 tests for the assessment of lease transactions is not conclusive and the Council has used its judgement in determining whether or not the lease is a finance or operating lease.
As part of the review of leases and arrangements that may be deemed to contain a lease, the Council’s PFI arrangement has been considered and deemed to have an implied finance lease within the agreement. In calculating the finance lease, the Council has estimated the interest rate implicit within the lease to calculate the interest and principal repayment schedule.
Investment Properties Investment properties have been categorised as such, based on careful consideration of the criteria for recognition identified in IAS40 Investment Property . As a result, the Council has determined that it holds assets with a value of £20.4m that it judges are held for capital appreciation or for the generation of investment income, or both.
Schools In determining the accounting treatment to be applied to the various types of school within the Borough, the Council has had due regard to the application of IFRS 10, which means that for the purposes of the accounts, maintained schools (all schools excluding academies and free schools) are treated as entities for the purpose of assessing control. This assessment has indicated that the balance of control of these entities lies with the local authority and that, therefore, the income and expenditure assets and liabilities and reserves of these schools are recognised within the single entity accounts of the local authority.
In respect of the recognition of schools’ land and buildings and equipment assets, these should be recognised in accordance with the asset recognition tests relevant to the arrangements that prevail for that type of property. To this end, the Council recognises schools’ land and buildings on its Balance Sheet where it has direct ownership of the assets, there is formal agreement or evidence that the rights of ownership have been transferred, or that these are no longer substantive.
The Council has undertaken an assessment of the different types of maintained schools within the Borough to determine the arrangements in place and the appropriate accounting treatment to be applied to the schools’ land and buildings. The assessment has been based on a composition of information obtained in respect of legal title and information provided by the relevant dioceses. On the basis of this assessment, a judgement has been formed on each of the schools and a conclusion reached that only those land and building assets in respect of community schools should be included on the Council’s Balance Sheet. For all of the voluntary controlled and aided schools within the Borough, legal title for the schools rests with the relevant diocese and in all instances no formal agreements exist between the school and the diocese which would indicate a transfer of rights and obligations. As such, all schools are occupied under a ‘mere licence’ and therefore it is judged that the land and building should not be included on the Council’s Balance Sheet.
Joint Arrangements During 2013-2014, the Council entered into an arrangement with Langtree Group to regenerate the former Parkside Colliery site. A limited liability partnership was established as the vehicle through which the site would be acquired, developed and the necessary planning permissions obtained to allow the site to be used for business, thus achieving the Council’s aim of economic development and job creation.
57
This arrangement has been assessed under the relevant accounting standards to determine how this should be accounted for within the Council’s accounts. Based on this assessment it has been determined that this arrangement falls to be classified as a joint venture which would ordinarily necessitate the completion of group accounting statements. Having reviewed the companies’ financial statements, it has been determined that, on the grounds of materiality, group accounting statements are not required for 2015-2016. To this end, the Council’s interest of £6m in the company continues to be reflected within the Council’s single entity accounts as a long-term Debtor (see Note 31). Further detail about the Council’s interest in the joint venture is included with the Related Parties (see Note 22).
The Council is party to two Section 75 Arrangements with the St Helens Clinical Commissioning Group (CCG); a pooled budget in respect of Continuing Health Care assessments and a pooled budget covering the Better Care Fund. Both arrangements have been assessed under the relevant accounting standards and it has been determined that they fall to be classified as joint operations, which require that the Council account for the assets and liabilities it controls on its Balance Sheet, together with its elements of income and expenditure within the Comprehensive Income and Expenditure Statement.
3. ASSUMPTIONS MADE ABOUT THE FUTURE AND OTHER MAJOR SOURCES OF ESTIMATION UNCERTAINTY
The Statement of Accounts contains estimated figures that are based on assumptions made by the Authority about the future, or that are otherwise uncertain. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates. The items in the Balance Sheet, where there is a risk of material adjustment in the forthcoming financial year, are as follows:
Debtors The Council makes provision for bad and doubtful debts on the basis of historic collection rates, experience, and any specific circumstances that may apply to any of its individual material sums due. However, pressures arising from the current economic climate and changes to benefits may result in a deterioration in collection rates. Should that be the case, additional impairment of the doubtful debts may be required.
Pensions Liability The estimation of the net liability to pay pensions depends on a number of complex judgements relating to the discounts used, the rate at which salaries are projected to increase, changes in retirement ages, mortality rates and expected returns on pension fund assets. A firm of consulting actuaries is engaged to provide the Council with expert advice about the assumptions to be applied. Further detail on the assumptions used is provided in Note 11 to the Core Financial Statements.
Equal Pay Provision The Council has included a provision of £10.204m for the settlement of claims lodged against the Council in respect of Equal Pay. The Council has made a provision for the settlement of claims based on the number of claims received and estimates of the claims received.
58 Other Provisions Notwithstanding the fact that the Insurance provision is based on a consultancy opinion, which combines a scientific modelling process and expert advice, it may be that the prevailing economic, environmental or physical conditions give rise to more claims against the Authority than have been built into the assumption model. If this should occur, then increases to future provisions will be required.
Public Finance Initiative (PFI) In estimating the future payments to be made to the PFI contractor through the unitary charge, the Council has assumed that increases in RPI over the life of the contract will remain constant at 2.5%. Whilst it is acknowledged that the current rate of inflation is running below this level, it is believed that it is appropriate to maintain this rate of inflation over the long term, as this is broadly in line with the level of inflation that the Bank of England seeks to maintain over the longer term and which it seeks to achieve through its powers to set interest rates.
Non-Domestic Rates On 1 April 2013 the Government introduced the Non-Domestic Rates Retention Scheme, under which Local Authorities are directly impacted from successful appeals against Non- Domestic rates by ratepayers. Although the rates retention scheme only became operational from the start of 2013-2014, the Council is liable to meet 49% of the financial impact of any outstanding appeals against both the 2005 and 2010 Rating Lists. A provision has therefore been created to meet the cost to the Council of these backdated appeals. The estimate has been calculated based on an analysis of information provided by the Valuation Office Agency detailing all appeal transactions (settled and outstanding) relating to the 2005 and 2010 list. Using the data on settled appeals, average success and rateable value reduction, factors have been calculated for each category of appeal and applied to the outstanding appeals to arrive at an annual reduction in rateable value and consequently converted into a cash figure.
Fair Value Measurement Where the fair values of assets and liabilities cannot be measured using Level 1 inputs, fair value must be calculated using valuation techniques. Where possible the inputs to these valuation techniques are based on observable data but where this is not possible judgement is required in establishing fair values. These judgements typically include considerations such as uncertainty and risk. Changes in the assumptions used could affect the fair values of the Authority’s assets and liabilities. Where Level 1 inputs are not available, the Authority employs relevant experts to identify the most appropriate valuation techniques to determine fair value.
4. CHANGES IN ACCOUNTING AND OPERATIONAL POLICY AND OTHER SIGNIFICANT MATTERS CONSIDERED IN PRODUCING THE 2015-2016 STATEMENT OF ACCOUNTS
(a) Changes in Accounting Policy
(i) Annual Revenue Provision
During 2015-2016, the Council reviewed its approach to the calculation of its Annual Revenue Provision for its previously supported borrowings, moving from the Capital Financing Requirement (CFR) method of calculation (a charge of 4% on the balance of the supported CFR) to applying the annuity method. In doing so it was considered more appropriate and prudent to apply the annuity method of calculating the Revenue Provision as it matched the charge to the flow of economic benefits from the assets and ensured that
59 over a period of 50 years the debt was extinguished in full. By applying this approach, the Council was able to reduce its Revenue Provision charge in the year by £3.68m.
(ii) Schools
In previous periods, the Council’s accounting policy in respect of the de-recognising schools that have transferred (or are to transfer) to academy status, has been to recognise the asset on the Council’s Balance Sheet until such time as the formal lease arrangement between the Council and the Academy Trust has been signed. Following a review of the Council’s accounting policies, it has been determined that academies should be de-recognised when it is clear that the Council no longer controls the economic benefit and that whilst legal title may not have passed to the Academy Trust, the substance of the transaction is such that the Council no longer controls the service potential associated with the asset.
Applying the substance over form argument has led to the Council de-recognising the Hope and Sutton Academies from its Balance Sheet. The Council’s prior period financial statements and applicable notes have been amended to reflect this change in accounting policy. The impact of these changes has been summarised below.
Summary Movement in Reserves Statement
Usable Unusable Academies Restated Restated Reserves Reserves Restatement Unusable Total (Original) (Original) Reserves Authority Reserves £000 £000 £000 £000 £000 Balance at 31 March 2014 119,161 120,195 (43,209) 76,986 196,147 Surplus/(Deficit) on the Provision of (1,208) - - - (1,208) Services Other Comprehensive Income and - (61,119) 1,409 (59,710) (59,710) Expenditure Total Comprehensive Income and (1,208) (61,119) 1,409 (59,710) (60,918) Expenditure Adjustments between accounting (6,250) 6,250 - 6,250 - basis and funding under Regulations Net Increase/(Decrease) before (7,458) (54,869) 1,409 (53,460) (60,918) Transfers to Earmarked Reserves Transfers to/from Earmarked - - - - - Reserves Increase/(Decrease) in 2014-2015 (7,458) (54,869) 1,409 (53,460) (60,918) Balance at 31 March 2015 Carried 111,703 65,326 (41,800) 23,526 135,229 Forward
60 Summary Comprehensive Income and Expenditure Statement
Original Academies Restated 31 March Adjustment 31 March 2015 2015 £000 £000 £000 (Surplus) or Deficit on Provision of Services 1,208 - 1,208 (Surplus) or Deficit on Revaluation of Non- (11,434) (1,409) (12,843) Current Assets Remeasurement (Gains)/Losses on Pension 72,553 - 72,553 Assets/Liabilities Other Comprehensive Income and Expenditure 61,119 (1,409) 59,710 Total Comprehensive Income and Expenditure 62,327 (1,409 ) 60 ,918
Summary Balance Sheet
31 March Academies Restated 31 March Academies Restated 2014 Restatement 31 March 2015 Restatement 31 March (Original) 2014 (Original) 2015
£000 £000 £000 £000 £000 £000 Long Term Assets 499,850 (43,209) 456,641 485,536 (41,800) 443,736 Current Assets 145,056 - 145,056 127,606 - 127,606 Current Liabilities (46,949) - (46,949) (50,296) - (50,296) Long Term Liabilities (358,601) - (358,601) (385,817) - (385,817) Net Assets 23 9, 356 (43 ,209 ) 196 ,147 177 ,029 (41 ,800 ) 135 ,229 Usable Reserves (119,161) - (119,161) (111,703) - (111,703) Unusable Reserves (120,195) 43,209 (76,986) (65,326) 41,800 (23,526) Total Reserves (23 9, 356 ) 43 ,209 (1 96 ,147 ) (17 7,029 ) 41 ,800 (135,229 )
Unusable Reserves
31 March Academies Restated 31 March Academies Restated 2014 Restatement 31 March 2015 Restatement 31 March (Original) 2014 (Original) 2015
£000 £000 £000 £000 £000 £000 Revaluation Reserve 57,081 (1,243) 55,838 61,429 (1,243) 60,186 Capital Adjustment 261,891 (41,966) 219,925 268,283 (40,557) 227,726 Account Financial Instruments (2,181) - (2,181) (2,062) - (2,062) Adjustment Account Pension Reserve (194,580) - (194,580) (260,081) - (260,081) Collection Fund 395 - 395 1,099 - 1,099 Adjustment Account Deferred Capital 398 - 398 368 - 368 Receipts Accumulating (2,809) - (2,809) (3,710) - (3,710) Compensated Absences Adjustment Account TOTAL 120 ,195 (43 ,209 ) 76 ,986 65 ,326 (41 ,800 ) 23,526
61 (b) Other significant matters considered in producing the 2015-2016 Statement of Accounts
(i) Pensions Lump Sum
Arising from the Merseyside Pension Fund Triennial Valuation 2013, the Fund issued a valuation schedule requiring the Council to pay a sum of £18.352m in 2014-2015 in relation to deficit contributions. Under this arrangement, no deficit contributions are required in 2015-2016 or 2016-2017. This contrasts with previous periods, whereby deficit contributions have been payable each year.
The Fund did provide the Council with an alternative option of continuing to pay deficit contributions on an annual basis. However, the Council opted to make a single payment on the basis that it would offer the Council better value for money and reduce its exposure to credit risk. The indicative sums that would have been payable are as follows:
2014-2015 £6.278m 2015-2016 £6.544m 2016-2017 £6.813m
The Capital Accounting and Financing Regulations state that charges to the revenue account must be equal to the contributions payable for that financial year. As a consequence, the whole £18.352m was included as a cost in the Movement in Reserves Statement in 2014-2015.
(ii) Long Term Liabilities
The Council’s statements have been amended so as to recognise that part of the repayment of capital for the Rainford High Technology College PFI Scheme that falls due within one year as a short term creditor. Previously the sums had been classified as Long Term liabilities on the face of the Balance Sheet. The adjustments are as follows:
Short Term Creditors Long Term Liabilities Original Adjustment Revised Original Adjustment Revised £000 £000 £000 £000 £000 £000
31 March 2014 (35,325) (557) (35,882) (81,064) 557 (80,507) 31 March 2015 (37,985) (617) (38,602) (41,436) 617 (40,819)
Notes 26, 36 and 38 provide additional detail.
(iii) Financial Instruments – Credit Risk Note
In previous years the Council has included a figure within its credit risk note for customers. On reconsidering the requirements for disclosure in respect of credit risk this figure has been removed from the 2015/2016 statements. The focus of this note is to provide the reader of the accounts with an understanding of the Council’s exposure to credit risks with institutions with whom the Council invests its surplus cash balances. By its nature the customers figure was a composite of amounts owed to the Council as part of its day to day business and on reflection it was felt that this did not assist in the understanding of the Council’s credit risk and was therefore removed.
62 5. ADJUSTMENTS BETWEEN ACCOUNTING BASIS AND FUNDING BASIS UNDER REGULATIONS
This note details the adjustments that are made to the total comprehensive income and expenditure recognised by the Authority in the year in accordance with proper accounting practice to the resources that are specified by statutory provisions as being available to the Authority to meet future capital and revenue expenditure.
63 Usable Reserves General Capital Capital Movement 2015-2016 Fund Receipts Grants in Unusable Balance Reserve Unapplied Reserves £000 £000 £000 £000 Adjustments involving the Capital Adjustment Account (Reversal of items debited or credited to the Comprehensive Income and Expenditure Statement): Charges for Depreciation and Impairment of Non-Current Assets 16,221 - - (16,221) Revaluation losses on Property, Plant and Equipment 6,258 - - (6,258) Movement in the fair value of Assets held for Sale - - - - Movements in the fair value of Investment Properties 7,045 - - (7,045) Amortisation of Intangible Assets 394 - - (394) Capital Grants and Contributions applied credited to the Comprehensive Income (6,948) - - 6,948 and Expenditure Statement Revenue expenditure funded from capital under Statute 2,997 - - (2,997) Amounts of non-current assets written off on disposal or sale as part of the 2,031 - - (2,031) gain/loss on disposal to the Comprehensive Income and Expenditure Statement Other items debited or credited to the Comprehensive Income and Expenditure 11 - - (11) Statement Adjustments involving the Capital Adjustment Account (Insertion o f items not debited or credited to the Comprehensive Income and Expenditure Statement): Provision for the repayment of debt (2,731) - - 2,731 Capital expenditure charged against the General Fund balance (727) - - 727 Adjustments primarily involving the Capital Grants Unapplied Account: Capital Grants and Contributions unapplied credited to the Comprehensive Income (4,323) - 4,323 - and Expenditure Statement Application of grants to capital financing transferred to the Capital Adjustment - - (3,041) 3,041 Account Adjustments involving the Capital Receipts Reserve:
Transfer of sale proceeds credited as part of the gain/loss on disposal to the (1,739) 1,402 - 337 Comprehensive Income and Expenditure Statement Use of the Capital Receipts Reserve to finance new capital expenditure - (3,191) - 3,191 Amount of Deferred Capital Receipts and Long Term Debtors received - 49 9 - (49 9) Transfer from the Capital Receipts Reserve equal to the amount payable into the 1 (1) - - Housing Capital Receipts Pool
64 Usable Reserves General Capital Capital Movement 2015-2016 Fund Receipts Grants in Unusable Balance Reserve Unapplied Reserves £000 £000 £000 £000 Adjustments involving the Financial Instruments Adjustment Account: Amount by which finance costs charged to the Comprehensive Income and (228) - - 228 Expenditure Statement are different from finance costs chargeable in the year in accordance with statutory requirements Adjustments involving the Pensions Reserve: Amount by which pension costs calculated in accordance with the Code are 14,775 - - (14,775) different from contributions due under the pension scheme regulations Adjustments inv olving the Collection Fund Adjustment Account: Amount by which Council Tax income and Non-Domestic Rates credited to the (79) - - 79 Comprehensive Income and Expenditure Statement is different from the amount taken to the General Fund in accordance with regulations Adjustment involving the Accumulating Compensated Absence Adjustment Account: Amount by which officer remuneration charged to the Comprehensive Income and - - - - Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements Total Adjustments 201 5-201 6 32,958 (1,291) 1,282 (32,949)
65
Usable Reserves 2014-2015 General Capital Capital Movement Comparative Fund Receipts Grants in Unusable Figures Balance Reserve Unapplied Reserves £000 £000 £000 £000 Adjustments involving the Capital Adjustment Account (Reversal of items debited or credited to the Comprehensive Income and Expenditure Statement): Charges for Depreciation and Impairment of Non-Current Assets 16,236 - - (16,236) Revaluation losses on Property, Plant and Equipment 2,697 - - (2,697) Movement in the fair value of Assets held for Sale - - - - Movements in the fair value of Investment Properties 940 - - (940) Amortisation of Intangible Assets 426 - - (426) Capital Grants and Contributions applied credited to the Comprehensive Income and (10,391) - - 10,391 Expenditure Statement Revenue expenditure funded from capital under Statute 4,846 - - (4,846) Amounts of non-current assets written off on disposal or sale as part of the gain/loss 2,084 - - (2,084) on disposal to the Comprehensive Income and Expenditure Statement Other items debited or credited to the Comprehensive Income and Expenditure 27 - - (27) Statement Adjustments invo lving the Capital Adjustment Account (Insertion of items not debited or credited to the Comprehensive Income and Expenditure Statement): Provision for the repayment of debt (6,853) - - 6,853 Capital expenditure charged against the General Fund balance (2,557) - - 2,557 Adjustments primarily involving the Capital Grants Unapplied Account: Capital Grants and Contributions unapplied credited to the Comprehensive Income (3,500) - 3,500 - and Expenditure Statement Application of grants to capital financing transferred to the Capital Adjustment Account - - (4,112) 4,112 Adjustments involving the Capital Receipts Reserve: Transfer of sale proceeds credited as part of the gain/loss on disposal to the (1,138) 772 - 366 Comprehensive Income and Expenditure Statement Use of the Capital Receipts Reserve to finance new capital expenditure - (2,870) - 2,870 Amount of Deferred Capital Receipts and Long Term Debtors received - 617 - (617) Transfer from the Capital Receipts Reserve equal to the amount payable into the 4 (4) - - Housing Capital Receipts Pool
66
Usable Reserves 2014-2015 General Capital Capital Movement Comparative Fund Receipts Grants in Unusable Figures Balance Reserve Unapplied Reserves £000 £000 £000 £000 Adjustments invo lving the Financial Instruments Adjustment Account: Amount by which finance costs charged to the Comprehensive Income and (118) - - 118 Expenditure Statement are different from finance costs chargeable in the year in accordance with statutory requirements Adjustments invol ving the Pensions Reserve: Amount by which pension costs calculated in accordance with the Code are (7,053) - - 7,053 different from contributions due under the pension scheme regulations Adjustments involving the Collection Fu nd Adjustment Account: Amount by which Council Tax income credited to the Comprehensive Income and (704) - - 704 Expenditure Statement is different from the amount taken to the General Fund in accordance with regulations Adjustment involving the Accu mulating Compensated Absence Adjustment Account: Amount by which officer remuneration charged to the Comprehensive Income and 901 - - (901) Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements Total Adjustments 2014 -2015 (4,153) (1,485) (612) 6,250
67 6. UNUSABLE RESERVES
Restated Restated Movements 31 March Movements 31 March in year 2016 in year 2015 2015-2016 2014-2015 £000 £000 £000 £000 4,348 60,186 Revaluation Reserve (a) 7,625 67,811 7,801 227,726 Capital Adjustment Account (b) (15,929) 211,797 119 (2,062) Financial Instruments Adjustment Account (c) 227 (1,835) (65,501) (260,081) Pensions Reserve (d) 14,920 (245,161) 704 1,099 Collection Fund Adjustment Account (e) 79 1,178 (30) 368 Deferred Capital Receipts (f) (31) 337 (901) (3,710) Accumulating Compensated Absences - (3,710) Adjustment Account (g) (53,460) 23,526 TOTAL 6,891 30,417
(a) Revaluation Reserve
The Revaluation Reserve contains the gains made by the Authority arising from increases in the value of its Property, Plant and Equipment. The balance is reduced when assets with accumulated gains are:
• re-valued downwards or impaired and the gains are lost; • used in the provision of services and the gains are consumed through depreciation; or • disposed of and the gains are realised.
The Reserve contains only revaluation gains accumulated since 1 April 2007, the date that the Reserve was created. Accumulated gains arising before that date are consolidated into the balance on the Capital Adjustment Account.
2014-2015 2015-2016 (Restated) £000 £000 £000 £000 55,838 Balance brought forward at 1 April 60,186 11,416 Upward Revaluation of Assets 13,153
(5,012) Downward Revaluation of Assets and Impairment Losses not (4,184) charged to the Surplus/ Deficit on the Provision of Services
6,404 Surplus or Deficit on Revaluation of Non-Current Assets not 8,969 posted to the Surplus or Deficit on the Provision of Services
(1,057) Difference between Fair Value Depreciation and (1,059) Historical Cost Depreciation
(999) Accumulated Gains on Assets Sold, Disposed or (285) Decommissioned
(2,056) Amount written off to the Capital Adjustment Account (1,344) 60,186 Balance carried forward at 31 March 67,811
(b) Capital Adjustment Account
The Capital Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for the consumption of non-current assets and for financing the 68 acquisition, construction or enhancement of those assets under statutory provisions. The Account is debited with the cost of acquisition, construction or enhancement as depreciation, impairment losses and amortisations are charged to the Comprehensive Income and Expenditure Statement (with reconciling postings from the Revaluation Reserve to convert fair value figures to a historical cost basis). The Account is credited with the amounts set aside by the Authority as finance for the costs of acquisition, construction and enhancement.
The Account contains accumulated gains and losses on Investment Properties and gains recognised on donated assets that have yet to be consumed by the Authority. The Account also contains revaluation gains accumulated on Property, Plant and Equipment before 1 April 2007, the date that the Revaluation Reserve was created to hold such gains.
Restated 2014-2015 2015-2016 £000 £000 219,925 Balance brought forward at 1 April 227,726 Reversal of items relating to capital expenditure debited or credited to the Comprehensive Income and Expenditure Statement (16,236) - Charges for Depreciation and Impairment of Non-Current Assets (16,221) (2,697) - Revaluation losses on Property, Plant and Equipment (6,258) - - Revaluation losses on Assets held for Sale - (426) - Amortisation of Intangible Assets (394) (4,846) - Revenue expenditure funded from capital under Statute (2,997) (2,084) - Amounts of Non-Current Assets written off on disposal or sale as (2,031) part of the gain/loss on disposal to the Comprehensive Income and Expenditure Statement (27) - Other Items (11)
2,056 Adjusting amounts written out of the Revaluation Reserve 1,344
Capital financing applied in the Year 2,870 - Use of the Capital Receipts Reserve to finance new capital 3,191 expenditure 7,337 - Capital grants and contributions credited to the Comprehensive 5,051 Income and Expenditure Statement that have been applied to capital financing 3,054 - Capital grants and contributions credited to the Comprehensive 1,897 Income and Expenditure Statement that have been applied to Finance Revenue expenditure financed by capital under statute 4,113 - Application of grants to capital financing from the Capital Grants 3,041 Unapplied Account 6,853 - Provision for the financing of capital investment charged against 2,731 General Fund balances 2,557 - Capital expenditure charged against General Fund balances 727
(940) Movements in the market value of Investment Properties debited or (7,045) credited to the Comprehensive Income and Expenditure Statement
(221) Long Term Debtors and Loan Repayments (131)
Other Adjustments 4,825 - School recognition (Mill Green) - 1,613 - Derecognised assets 1,177 227,726 Balance carried forward at 31 March 211,797
69 (c) Financial Instruments Adjustment Account
The Financial Instruments Adjustment Account absorbs the timing difference arising from the different arrangements for accounting for income and expenses relating to certain financial instruments and for bearing losses or benefiting from gains per statutory provisions. The Authority uses the Account to manage premiums paid on the early redemption of loans. Premiums are debited to the Comprehensive Income and Expenditure Statement when they are incurred, but reversed out of the General Fund Balance to the Account in the Movement in Reserves Statement. Over time, the expense is posted back to the General Fund Balance in accordance with statutory arrangements for spreading the burden on Council Tax. Similar principles apply to the credits relating to discounts earned on the early redemption of loans.
2014-2015 2015-2016 £000 £000 £000 £000 Premiums on Early Debt Redemption (1,590) Balance brought forward at 1 April (1,355)
235 Proportion of premiums incurred in previous years 234 charged against the General Fund balance in accordance with statutory requirements (1,355) (1,121) Discounts on Early Debt Redemption 794 Balance brought forward at 1 April 480
(314) Proportion of discounts incurred in previous years (256) credited against the General Fund balance in accordance with statutory requirements 480 224 Soft Loans (1,385) Balance brought forward at 1 April (1,187)
198 Amount by which finance costs charged to the 249 Comprehensive Income and Expenditure Statement differ from finance costs chargeable in accordance with Regulations (1,187) (938) (2,062) Balance carried forward at 31 March (1,835)
(d) Pensions Reserve
The Pensions Reserve absorbs the timing differences arising from the different arrangements for accounting for post employment benefits and for funding benefits in accordance with statutory provisions. The Authority accounts for post employment benefits in the Comprehensive Income and Expenditure Statement as the benefits are earned by employees accruing years of service, updating the liabilities recognised to reflect inflation, changing assumptions and investment returns on any resources set aside to meet the costs. However, statutory arrangements require benefits earned to be financed as the Authority makes employer’s contributions to Pension Funds or eventually pays any pensions for which it is directly responsible. The debit balance on the Pensions Reserve therefore shows a substantial shortfall in the benefits earned by past and current employees and the resources the Authority has set aside to meet them. The statutory arrangements will ensure that funding will have been set aside by the time the benefits come to be paid.
70
2014-2015 2015-2016 £000 £000 (194,580) Balance brought forward at 1 April (260,081) (72,553) Re-measurement (Gains)/Losses on Pension Assets/Liabilities 29,695 (24,406) Reversal of items relating to retirement benefits debited or (28,287) credited to the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement 31,458 Employer’s pensions contributions and direct payments to 13,512 pensioners payable in year (260,081) Balance carried forward at 31 March (245,161)
(e) Collection Fund Adjustment Account
The Collection Fund Adjustment Account manages the differences arising from the recognition of Council Tax income in the Comprehensive Income and Expenditure Statement as it falls due from Council Taxpayers compared with the statutory arrangements for paying across amounts to the General Fund from the Collection Fund.
2014-2015 2015-2016 £000 £000 395 Balance brought forward at 1 April 1,099 586 Amount by which Council Tax income credited to the 180 Comprehensive Income and Expenditure Statement is different from Council Tax income calculated for the year in accordance with statutory requirements 118 Amount by which Non-Domestic Rates income credited to (101) the Comprehensive Income and Expenditure Statement is different from Non-Domestic Rates income calculated for the year in accordance with statutory requirements 1,099 Balance carried forward at 31 March 1,178
(f) Deferred Capital Receipts
These represent capital income to be received in the future, when disposals have taken place, and deferred payments have been agreed e.g. the principal outstanding from the sale of ex-council houses.
31 March 31 March 2015 2016 £000 £000 366 Preserved Right to Buy Receipts 337 2 Sales of Council Houses – Principal Outstanding - 368 TOTAL 337
(g) Accumulating Compensated Absences Adjustment Account
The Accumulating Compensated Absences Adjustment Account absorbs the differences that would otherwise arise on the General Fund Balance from accruing for compensated absences earned but not taken in the year e.g. annual leave entitlement carried forward at 31 March. Statutory arrangements require that the impact on the General Fund Balance is neutralised by transfers to or from the Account.
71
2014-2015 2015-2016 £000 £000 (2,809) Balance brought forward at 1 April (3,710) (901) Amount by which officer remuneration charged to the - Comprehensive Income and Expenditure Statement on an accruals basis is different from remuneration chargeable in the year in accordance with statutory requirements (3,710) Balance carried forward at 31 March (3,710)
7. NW REGIONAL LEADERS BOARD, SCHOOL BALANCES AND OTHER EARMARKED GENERAL FUND RESERVES
31 March Movements 31 March 2015 in Year 2016 2015-2016 £000 £000 £000 4,803 Insurance Fund (a) 187 4,990 939 Commuted Sums (b) 5 944 3,000 Care Services Transitional Demand Fund (c) - 3,000 2,351 Service Development (d) (179) 2,172 15,455 Service Modernisation (e) 6,195 21,650 956 Borough Wide Employment Initiatives (f) (432) 524 1,162 Pension Liability Reduction Reserve (g) - 1,162 1,852 Business Development Fund (h) (180) 1,672 163 School Improvement Initiative Fund (i) - 163 814 Welfare Assistance Fund (j) (30) 784 1,500 Essential Equipment Replacement Fund (k) - 1,500 558 Councillor Improvement Fund (l) (129) 429 957 Town Centre Improvement Fund (m) (15) 942 3,801 Waste Management Development Fund (n) (41) 3,760 - Special Educational Needs Reserve (o) 399 399 - Economic Regeneration Fund (p) 498 498
38,311 Sub -Total 6,27 8 44,5 89 1,008 NW Regional Leaders Board (q) (35) 973 9,563 Schools Balances ( r) 1,21 7 10,7 80 48,882 TOTAL 7,460 56,342
(a) The Insurance Fund Reserve has been established to be used to offset any uninsured losses that may occur and to cover any additional liabilities arising from the run-off of Municipal Mutual Insurance (MMI) – see note 41(a).
(b) Sums received from property developers invested to generate returns sufficient to meet ongoing Council obligations arising from agreements with those developers (typically grounds maintenance on private housing developments).
(c) The Care Services Transitional Demand Fund was set up to be utilised in order to mitigate the implications of short term demand fluctuations within the Care Services.
(d) The Service Development Fund is designed to provide short-term development capacity to support areas or initiatives by providing 'seed corn funding'.
(e) The Service Modernisation Fund is used to assist in any necessary rationalisation or reprofiling of services as part of the Council's ongoing modernisation agenda. The Fund was used to enable a distribution of the £18.352m lump sum payable to 72 Merseyside Pension Fund in 2014-2015 over the three-year period to 2016-2017, with contributions to be made back to the fund during 2015-2016 and 2016-2017.
(f) The Borough Wide Employment Initiatives Fund was established to support the development of a new apprenticeship scheme within the Borough and other priority sustainable employment projects.
(g) This reserve is set aside to recognise the Local Government Pension Scheme (LGPS) liabilities relating to former 4NW employees.
(h) The Business Development Fund was established to facilitate viable business projects that will provide sustainable employment opportunities.
(i) The School Improvement Initiative Fund has been established to provide funding for specific initiatives in support of the Council’s commitment to raising school standards.
(j) The Welfare Assistance Fund is ring-fenced for use in relation to initiatives supporting the borough’s most vulnerable residents.
(k) This Fund has been established to ensure that the Council is able to invest in IT and other essential items of equipment necessary to deliver increasingly efficient services.
(l) The Councillor Improvement Fund allows local Councillors to respond to local needs and provides funding for eligible projects.
(m) The Fund has been created to facilitate a new strategy to secure the long-term viability of the St. Helens Town Centre.
(n) This Fund has been established subsequent to the receipt of monies from Merseyside Recycling and Waste Authority and will be used to deliver actions in support of the Joint Recycling and Waste Management Strategy (JRWMS).
(o) The Special Educational Needs Reserve was established to better manage the new duties placed on the Council and to help improve outcomes for children and young people and increase choice and control for parents.
(p) The Economic Regeneration Fund has been created to provide technical and professional capacity to support specific and general developments within the Borough.
(q) Balances held as Accountable Body to the North West Regional Leaders Board.
(r) Balances held by Governors under delegated scheme arrangements, whereby such balances are committed to be spent on the Education service.
8. CAPITAL RECEIPTS RESERVE
Useable capital receipts are generally available to finance capital investment or to repay borrowing in future years. The Reserve may be analysed:-
73 2014-2015 2015-2016 £000 £000 32,195 Balance brought forward at 1 April 30,710 Amounts received in Year 772 - Asset Sales and Grant Repayment 1,402 391 - Preserved Right to Buy Receipts 366 226 - Repaid loans and advances 133
(4) Transferred to finance Housing Pooled Capital Receipts (1)
(2,870) Amounts applied to finance new capital investment in year (3,191) 30,710 Balance carried forward at 31 March 29,419
9. UNAPPLIED CAPITAL GRANTS
These are capital grants and contributions that have not been used to finance capital expenditure, and for which there are no conditions attached to their usage.
31 March 31 March 2015 2016 £000 £000 3,845 Department for Education Grants 5,116 1,593 Department of Health Grants 1,609 1,122 Gypsy and Traveller Site Grant 1,122 1,194 Other Grants and Contributions 1,189 7,754 TOTAL 9,036
10. SCHOOLS BUDGET FUNDED BY DEDICATED SCHOOLS GRANT
The Council’s expenditure on schools is funded primarily by grant monies provided by the Department for Education in the form of Dedicated Schools Grant (DSG). An element of DSG is recouped by the Department to fund academy schools in the Council’s area. DSG is ring-fenced and can only be applied to meet expenditure properly included in the Schools Budget, as defined in the School Finance (England) Regulations 2011 . The Schools Budget includes elements for a range of educational services provided on an authority-wide basis and for the Individual Schools Budget (ISB), which is divided into a budget share for each maintained school.
2014-2015 2015-2016 Central Individual Total Central Individual Total Expenditure Schools Expenditure Schools Budget Budget £000 £000 £000 £000 £000 £000 19,452 109,213 128,665 Final DSG before Academy 17,372 111,772 129,144 recoupment - (11,439) (11,439) Academy figure recouped - (13,094 ) (13,094 ) 19,452 97,774 117,226 Total DSG after Academy 17,372 98,678 116,050 recoupment 3,139 - 3,139 Brought forward at 1 April 4,538 266 4,804 22,591 97,774 120,365 Agreed budgeted distribution 21,910 98,944 120,854 (64) (485) (549) In -year adjustments (366) (480) (846) 22,527 97,289 119,816 Final budgeted distribution 21,544 98,464 120,008 17,989 97,023 115,012 Actual expenditure 18,069 98,320 116 ,389 4,538 266 4,804 Carry forward at 31 March 3,475 144 3,619
74 11. PENSIONS
(a) Transactions Accounted for Under Defined Contribution Plan Arrangements
The pensions cost reported in the Cost of Services in relation to:
(i) the Teachers Pension Scheme (TPS); and
(ii) those Public Health staff who were compulsorily transferred from the PCT’s and retained access to the NHS Pension Scheme (NHSPS)
are equal to the employer's contribution payable to the Scheme in the accounting period as summarised below:
2014-2015 2015-2016 TPS NHSPS TPS NHSPS 6.95 0.07 Employer Contribution (£m) 7.48 0.10 14.1% 14.0% Employer Contribution Rate 16.48%* 14.3% * Rate effective from September 2015. Previous rate of 14.1% applied before this date.
Any surplus or deficit in these Plans may affect the amount of future contributions payable. Save the impact of a full year at a rate of 16.48% (in relation to the Teachers Pension Scheme), sums payable in 2016-2017 are expected to be similar to 2015-2016.
(b) Transactions relating to Retirement Benefits
The following transactions have been made in the Surplus or Deficit on Provision of Services (Comprehensive Income and Expenditure Statement) during the year to comply with the reporting requirements relating to defined benefits:-
2014-2015 2015-2016 TPS LGPS TPS LGPS £000 £000 £000 £000 Cost of Services - 15,016 Current service cost - 18,315 - 107 Past service (gains)/losses - - - 1,330 (Gains)/losses on settlements & curtailments - 1,291
Other Operating Expenditure - 368 Pension Administration Expenses - 374
Financing and Investment Income and Expenditure 1,108 6,477 Net interest expense 828 7,479 1,108 23,298 Total Post Employment Benefits charged to 828 27,459 Surplus or Deficit on Provision of Services
The following transactions are then recognised in the Movement in Reserves Statement as adjustments between the accounting basis and funding basis under Regulations:
75
TPS LGPS TPS LGPS £000 £000 £000 £000 (1,108) (23,298) Reversal of net charges made to the Surplus (828) (27,459) of Deficit on the Provision of Services
- 29,352 Employers contributions payable to scheme - 11,446
2,106 - Retirement benefits payable to pensioners 2,066 - 2,106 29,352 Total Charged to the General Fund Balance 2,066 11,446
(c) Pension Assets and Liabilities recognised in the Balance Sheet
2014-2015 2015-2016 TPS LGPS TPS LGPS £000 £000 £000 £000 27,733 799,534 Benefit obligation at end of the period 25,794 780,548
- (567,186) Fair Value of plan assets at end of the period - (561,180) 27,733 232,348 Deficit as at 31 March 25,794 219,368
(d) Reconciliation of the Movement in the Fair Value of Scheme (Plan) Assets
As disclosed in the Accounting Policies, there are no assets to cover the Teachers’ added years’ liabilities. The movement in assets relating to the LGPS is provided in the following table: 2014-2015 2015-2016 £000 £000 497,455 Balance brought forward at 1 April 567,186 22,969 Interest on plan assets 18,568 (368) Pension administration expenses (374) 39,540 Re measurement gains and (losses) (15,157) 29,352 Employer contributions 11,446 4,698 Member contributions 4,701 (26,460) Benefits paid (25,190) 567,186 Balance carried forward at 31 March 561,180
The assets as at 31 March comprised:
2014-2015 2015-2016 Quoted Unquoted Total % of Quoted Unquoted Total % of £000 £000 £000 Total £000 £000 £000 Total Equities 135,331 - 135,331 24% UK 121,376 - 121,376 22% 170,836 - 170,836 30% Global 169,294 - 169,294 30% Bonds 28,359 - 28,359 5% UK Government 25,750 - 25,750 4% 14,690 - 14,690 3% UK Corporate 13,594 - 13,594 2% 55,357 - 55,357 10% UK Index Linked 49,795 - 49,795 9% Property - 31,762 31,762 5% UK Direct - 32,164 32,164 6% Property 1,872 7,544 9,416 2% UK Managed 2,296 8,906 11,202 2% Property - 5,672 5,672 1% Global Managed - 6,613 6,613 1% Property
76 2014-2015 2015-2016 Quoted Unquoted Total % of Quoted Unquoted Total % of £000 £000 £000 Total £000 £000 £000 Total Private Equity 227 16,958 17,185 3% UK 108 20,611 20,719 4% - 15,541 15,541 3% Global - 18,050 18,050 3% Cash 17,186 - 17,186 3% All 19,291 - 19,291 3% Other 1,418 3,063 4,481 1% Hedge Funds 1,421 3,032 4,453 1% UK - 17,299 17,299 3% Hedge Funds - 15,151 15,151 3% Global - 7,941 7,941 1% Infrastructure UK - 11,274 11,274 2% 1,531 4,708 6,239 1% Infrastructure 2,263 7,232 9,495 2% Global 10,380 11,627 22,007 4% Opportunities 9,716 16,011 25,727 5% UK 1,702 6,182 7,884 1% Opportunities 754 6,478 7,232 1% Global 438,889 128,297 567,186 100% TOTAL 415,658 145,522 561,180 100%
(e) Reconciliation of Present Value of Scheme Liabilities (Defined Benefits Obligations)
The liabilities show the commitments that the Authority, in the long run, is estimated to have to pay to cover its pensions-related obligations:
2014-2015 2015-2016
TPS LGPS LGPS TPS LGPS LGPS Funded Unfunded Funded Unfunded £000 £000 £000 £000 £000 £000 26,817 653,992 11,226 Balance brought forward at 1 April 27,733 787,727 11,807 - 15,016 - Current service cost - 18,315 - 1,108 28,961 485 Interest on pension liabilities 828 25,673 374 - 107 - Past service cost - - - - 1,330 - Curtailments - 1,291 - - 4,698 - Member contributions - 4,701 - Re-measurement (gains) and losses: - - - (i) Experience (gains) and losses ------(ii) (Gains) and losses arising from - - - changes in demographic assumptions 1,914 109,156 1,023 (iii) (Gains) and losses arising from (701) (43,773) (377) changes in financial assumptions (2,106) (25,533) (927) Benefits paid (2,066) (24,285) (905) 27,733 787,727 11,807 Balance carried forward at 31 March 25,794 769,649 10,899
The LGPS unfunded obligations represent additional benefits awarded upon early retirement. No such awards have been made for a number of years and the sums disclosed represent historic decisions.
77 (f) Actuarial Assumptions
Defined benefit obligations have been assessed on an actuarial basis using the Projected Unit Credit actuarial cost method, an estimate of the pensions that will be payable in future years, dependent on assumptions about mortality rates, salary levels, etc. This assessment, along with an assessment of the return on plan assets, has been undertaken by Mercer Limited, an independent firm of actuaries based on the latest full valuation of the scheme. The main assumptions used in their calculations are:-
31 March 2015 31 March 2016 Base Assumptions: 2.0% Rate of CPI inflation 2.0% 3.5% Rate of increase in salaries 3.5% 2.0% Rate of increase in pensions 2.0% 3.3% Rate of discounting plan liabilities 3.6% 50% Proportion of employees opting to 50% take a commuted lump sum Mortality Assumptions: 24.8 years Life expectancy of male future 24.9 years pensioner aged 65 in 20 years time 28.1 years Life expectancy of female future 28.2 years pensioner aged 65 in 20 years time 22.4 years Life expectancy of male current 22.5 years pensioner aged 65 25.3 years Life expectancy of female current 25.4 years pensioner aged 65
The sensitivity analysis below has been provided by Mercer Limited, and shows the illustrative impact of marginal changes to the assumptions used in relation to the long-term discount rate, inflation and life expectancy.
Using Illustrative Illustrative Illustrative Illustrative assumptions +0.1 p.a. +0.1% p.a. + 1 year life +0.1% p.a. above discount rate inflation expectancy pay growth £000 £000 £000 £000 £000 Liabilities – TPS 25,794 25,564 26,026 26,857 25,794 Liabilities – LGPS 780,548 766,340 795,019 795,777 784,117 Assets – LGPS (561,180) (561,180) (561,180) (561,180) (561,180) Deficit/(Surplus) 245,162 230,724 259,865 261,454 248,731
(g) Additional Pensions Information
The net liability of £245.162m has a significant impact on the net worth of the Authority as recorded in the Balance Sheet.
In the June 2010 Budget, the Government announced that it had created a Public Services Pension Commission to undertake a “fundamental structural review of public service pensions”, including the LGPS. The Commission, headed by Lord Hutton, issued a report which included recommendations to the Government for the future design of public service pension schemes.
Legislation introduced in the form of the Public Service Pensions Act 2013 provided the framework for redesign/reform. Revisions to schemes included the introduction of tiered member contributions; pension benefits linked to scheme participants’ career average
78 earnings rather than to final salary; linkage of the retirement age to the State Pension Age; and increasing the average contributions to be made by scheme members.
LGPS2014 was launched on 1 April 2014, whilst changes to the Teachers’ and NHS Pension Schemes came into effect in April 2015.
The Government has plans to pool the existing 89 local authority pension funds and create 7 “British Wealth Funds”, with the aim of reducing costs and enabling the schemes to demand better returns.
During 2013, the Merseyside Pension Fund provided details of the outcome of the Triennial Valuation 2013, including those employer contribution rates and lump sum payments required for the three years commencing 1 April 2014. These rates were calculated having regard to the revised Funding Strategy Statement, as agreed by the Pensions Committee at its meeting held in November 2013.
These rates support the Administering Authority’s long term funding objective for the Fund to achieve, and then maintain, sufficient assets to cover 100% of projected accrued liabilities (the “funding target”), with a maximum deficit recovery period of 22 years for scheme employers.
The Funding Strategy applies to the whole of the fund, with the stated objective of achieving investment returns of 1.4% in excess of its liabilities being achieved by:-
(i) strategic asset allocation; (ii) medium term allocation; and (iii) active investment management
However, the fund needs to allow for a level of volatility and risk over the short, medium and long-term from the liability matching return.
At an individual employer level, this approach is effectively one of applying a notional individual employer investment strategy identical to the one adopted by the fund as a whole with the employer's split between the various asset categories taken to be the same as for the whole fund. Notwithstanding this, a no cross subsidy principle is applied across employers which results in the actuarial calculations establishing notional sub-funds (assets and liabilities) for each employer which are tracked at each triennial valuation.
The relative allocation of assets and liabilities within the fund to each employer reflects the specific membership, experience and past history of each employer. This bespoke strategic benchmark is subject to formal review every three years through the triennial valuation. However, it can be subject to interim review if there are significant changes to the investment environment or liability profile. The next triennial valuation is scheduled for 2016.
Employer pension contributions forecast for 2016-2017 are: (i) LGPS funded - £10.3m in relation to the future service funding rate – a contribution rate applied to future pensionable pay and which has been set at 13.3% for 2016-2017; (ii) LGPS unfunded – similar sums to those incurred in 2015-2016; (iii) TPS unfunded – similar sums to those incurred in 2015-2016.
The weighted average duration of the defined benefit obligation for scheme members is 18 years.
79
12. OTHER OPERATING EXPENDITURE
2014-2015 2015-2016 £000 £000
277 Parish Council Precepts 294 16,187 Liverpool City Region Combined Authority Levy 14,450 87 Environment Agency Levy 89 8,217 Merseyside Recycling and Waste Authority Levy 8,140 4 Payments to the Government Housing Capital Receipts Pool 1 946 (Gains)/Losses on the Disposal of Non-Current Assets 293 368 Pension Administration Expenses 374 26,086 TOTAL 23,641
13. FINANCING AND INVESTMENT INCOME AND EXPENDITURE
2014-2015 2015-2016 £000 £000 4,968 Interest Payable and Similar Charges 4,951 2,590 PFI Interest Payable 2,534 (2,590) PFI Grant Applied (2,534) 30,554 Interest on pensions liabilities (see Note 11d) 26,875 (22,969) Pensions Interest on plan assets (see Note 11e) (18,568) (1,206) Interest Receivable and Similar Income (1,498) (911) Income and Expenditure in relation to Investment 5,680 Properties and changes in their fair value (see Note 28) 10,436 TOTAL 17,440
14. TAXATION AND NON-SPECIFIC GRANT INCOME
2014-2015 2015-2016 £000 £000 (56,451) Council Tax Income (59,233) (23,382) Retained Non-Domestic Rates (23,628) (82,081) Grants and Contributions (see Note 16) (68,046) (161,914) TOTAL (150,907)
15. RECONCILIATION OF PORTFOLIO INCOME AND EXPENDITURE TO THE COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT
(i) Amounts reported for Resource Allocation Decisions
The analysis of income and expenditure by service on the face of the Comprehensive Income and Expenditure Statement is that specified by the Service Reporting Code of Practice.
However, decisions about resource allocation are taken by the Authority’s Cabinet on the basis of budget reports analysed across Portfolio. These reports are prepared on a different basis from the accounting policies used in the financial statements, the primary difference being that the cost of retirement benefits reported to Members is based on cash payable in the year (payment of employer’s pension contributions) rather than current service cost of benefits accrued in the year in accordance with IAS 19.
80 The income and expenditure of the Authority’s Portfolios recorded in the budget reports for the year is as follows:
Total Safety Growth Borough & Health& Transport, Housing & Planning & Well-Being Community Sustainable Education & Employment, Public Health & Green, Smart & & Young& People Lifelong Learning ChildrenFamilies Adult CareSocial Strategy, Governance & ExternalAffairs Corporateand Services £000 £000 £000 £000 £000 £000 £000 £000 Portfolio Income and Expenditure 2015 -2016 Fees, Charges and (14,233) (3,519) (31,568) (14,326) (4,045) (22,503) (17,333) (5,628) (113,155) other Service Income Government Grants (130,715) (6,377) (2,163) (212) (71,174) (117) (1,995) (14,830) (227,583) Total Income (144,948) (9,896) (33,731) (14,538) (75,219) (22,620) (19,328) (20,458) (340,738) Employee Expenses 100,648 11,456 16,326 3,962 4,162 15,966 13,282 6,185 171,987 Other Service 43,611 22,976 43,298 9,962 87,306 11,437 10,692 12,784 242,066 Expenses Support Service 11,400 4,293 16,373 2,497 2,480 3,490 6,505 6,398 53,436 Recharges Total Expenditure 155,659 38,275 75,997 16,421 93,948 30,893 30,479 25,367 467,489 Contribution 1,216 ------1,216 to/(from) School Balances Net 2015-2016 11,927 28,829 42,266 1,883 18,729 8,273 11,151 4,909 127,967 Expenditure in the Portfolio Analysis
Portfolio changes occurred during 2015-2016. The income and expenditure for 2014-2015 was as follows:
Total Safety Services Health& Housing, Schools & Planning & Well-Being Community Early Years & Regeneration, Environment & Young Peoples Public Health & Neighbourhoods Lifelong Learning Adult Adult CareSocial Corporate Services £000 £000 £000 £000 £000 £000 £000 £000 Portfolio Income and Expenditure 2014 -2015 Fees, Charges and other (13,422) (3,601) (26,455) (15,801) (31,343) (16,862) (4,181) (111,665) Service Income Government Grants (130,241) (5,957) (614) (76,529) (157) (2,969) (12,371) (228,838) Total Income (143,663) (9,558) (27,069) (92,330) (31,500) (19,831) (16,552) (340,503) Employee Expenses 100,392 12,536 15,841 8,916 18,471 13,149 4,091 173,396 Other Service Expenses 45,095 21,780 43,772 92,436 24,214 5,449 12,737 245,483 Support Service 10,584 4,086 13,446 4,367 5,269 6,131 2,433 46,316 Recharges
81
Total Safety Services Health& Housing, Schools& Planning& Well-Being Community Early &Years Regeneration, Environment & Young Peoples Public HealthPublic & Neighbourhoods Lifelong Learning Adult Adult Social Care Corporate Services £000 £000 £000 £000 £000 £000 £000 £000 Total Expenditure 156,071 38,402 73,059 105,719 47,954 24,729 19,261 465,195 Contribution to / (from) 1,525 ------1,525 School Balances Net 2014 -2015 13,933 28,844 45,990 13,389 16,454 4,898 2,709 126,217 Expenditure in the Portfolio Analysis
(ii) Reconciliation of Portfolio Income and Expenditure to Cost of Services in the Comprehensive Income and Expenditure Statement
This reconciliation shows how the figures in the analysis of Portfolio income and expenditure relate to the amounts included in the Comprehensive Income and Expenditure Statement.
2014-2015 2015-2016 Notes £000 £000 Net Expenditure in the Portfolio Analysis 126,217 127,967 Amounts in the Comprehensive Income and Expenditure Statement not reported to Management in the Portfolio Analysis: 7 Movement on School Balances (1,525) (1,216) 7 Movement on NW Regional Leaders Board Balances 26 35 6(g) Movement in Compensated Absences 901 - 11(b)&(e) Pensions - Past Service Costs 107 - 11(b)&(e) Pensions - Curtailment costs 1,330 1,291 11(b)&(e) Pensions - Current Service Costs 15,016 18,315 Amounts included in the Portfolio Analysis not included in the Comprehensive Income and Expenditure Statement: 11 Pensions - Employers contributions to Schemes (12,659) (11,446) 11(b)&(d) Pensions - TPS Retirement benefits payable directly to pensioners (2,106) (2,066) School Contribution to Earmarked Reserves - (1,793) 29 Investment Properties Adjustment 1,850 1,365 6(b)&32(a) Capital expenditure charged to General Fund balances (CERA) (2,557) (727) Cost of Services in the Comprehensive Income and Expenditure 126,600 131,725 Statement
(iii) Reconciliation to Subjective Analysis
This reconciliation shows how the figures in the analysis of Portfolio income and expenditure relate to a subjective analysis of the Surplus or Deficit on the Provision of Services included in the Comprehensive Income and Expenditure Statement.
82 Portfolio Income and Expenditure 2015-2016 Total Cost of Cost Services of PortfolioAnalysis Corporate Amounts in PortfolioinAnalysis includedthe in CIES Amounts CIES in not Portfolio Portfolio Analysis not Amounts the included in reported Managementto
£000 £000 £000 £000 £000 £000 Fees, Charges and (113,155) 9 - (113,146) - (113,146) other Service Income Interest and - - 1,459 1,459 (21,525) (20,066) Investment Income Income from Council - - - - (82,861) (82,861) Tax and Retained Non-Domestic Rates Government Grants (227,583) - - (227,583) (68,046) (295,629) Total Income (340,738) 9 1,459 (339,270) (172,432) (511,702) Employee Expenses 171,987 19,606 (15,305) 176,288 - 176,288 Other Service 219,182 - (821) 218,361 468 218,829 Expenses Support Service 53,436 26 - 53,462 - 53,462 Recharges Depreciation, 22,884 - - 22,884 7,045 29,929 Amortisation, Impairment & Revaluation Interest Payments - - - - 31,826 31,826 Precepts and Levies - - - - 22,972 22,972 Payments to Housing - - - - 1 1 Capital Receipts Pool (Gain)/Loss on - - - - 294 294 Disposal of Non- Current Assets Total Expenditure 467,489 19,632 (16,126) 470,995 62,606 533,601 Contribution to /(from) 1,216 (1,216) - - - - School Balances (Surplus)/Deficit on 127,967 18,425 (14,667) 131,725 (109,826) 21,899 the Provision of Services
83 Portfolio Income and Expenditure 2014-2015 Total Cost of Cost Services of PortfolioAnalysis Corporate Amounts in PortfolioinAnalysis includedthe in CIES Amounts CIES in not Portfolio Portfolio Analysis not Amounts the included in reported Managementto
£000 £000 £000 £000 £000 £000 Fees, Charges and (111,665) (4) - (111,669) - (111,669) other Service Income Interest and - - 1,918 1,918 (26,026) (24,108) Investment Income Income from Council - - - - (79,833) (79,833) Tax and Retained Non-Domestic Rates Government Grants (228,838) - - (228,838) (82,082) (310,920) Total Income (340,503) (4) 1,918 (338,589) (187,941) (526,530) Employee Expenses 173,397 17,355 (14,767) 175,985 - 175,985 Other Service 226,932 4 (2,625) 224,311 368 224,679 Expenses Support Service 46,315 26 - 46,341 - 46,341 Recharges Depreciation, 18,552 - - 18,552 940 19,492 Amortisation, Impairment & Revaluation Interest Payments - - - - 35,523 35,523 Precepts and Levies - - - - 24,768 24,768 Payments to Housing - - - - 4 4 Capital Receipts Pool (Gain)/Loss on - - - - 946 946 Disposal of Non- Current Assets Total Expenditure 465,196 17,385 (17,392) 465,189 62,549 527,738 Contribution to /(from) 1,525 (1,525) - - - - School Balances (Surplus)/Deficit on 126,218 15,856 (15,474) 126,600 (125,392) 1,208 the Provision of Services
16. GRANT INCOME
The following grants and contributions were credited to the Comprehensive Income and Expenditure Statement during the period:
84 2014-2015 Credited to Taxation and Non -Specific Grant In come 2015-2016 £000 £000 Total Formula Grant 50,213 Revenue Support Grant 36,085 17,659 Non-Domestic Rates Top Up Grant 17,997
General Government Grants 1,861 New Homes Bonus (incl.New Homes Bonus top-slice) 2,722 1,442 Section 31 Grant 1,826 67 Local Support Services Grant 42
Capital Grants and Contributions 4,214 Department for Education 3,339 537 Department of Health 536 3,684 Department for Transport 2,419 1,242 Liverpool City Region Combined Authority 1,547 1,162 Other Grants and Contributions 1,533 82,081 TOTAL 68,046
2014-2015 Credited to Services 2015-2016 (Restated) £000 £000 115,219 Dedicated Schools Grant 116,311 73,041 Housing Benefit Subsidy 70,527 1,452 Housing Benefit/Localised Council Tax Support Admin Subsidy 1,307 1,053 Universal Free School Meals for Infants Grant 1,906 4,428 School Sixth Form Funding 4,312 9,259 Pupil Premium Grant 8,868 3,128 Education Services Grant 2,482 12,669 Public Health Grant 14,131 - Care Act (implementation, assessments and deferred payments) 1,014 802 Better Care Fund 11,568 10,027 Health Authority Contributions 4,033 1,327 Merseyside Recycling & Waste Authority – Recycling Credits 1,262 3,801 Merseyside Recycling & Waste Authority – Contribution to Waste - Management Fund 2,658 Local Sustainable Transport Fund - 664 PFI Credits 727 755 Local Welfare Provision Grant - 1,055 Disabled Facilities Grant 1,262 532 Discretionary Housing Payments Contribution 476 428 Troubled Families Grant 594 - Independent Living Fund Grant 941 6,586 Other Grants and Contributions 5, 320 248,884 TOTAL 247,041
The Council has received a number of grants and contributions that have conditions attached to them. These have not yet been recognised as income and will only be credited to the Comprehensive Income and Expenditure Statement once all conditions are met. The balances at the year-end are as follows:
31 March 2015 Capital Grants Receipts in Advance 31 March 2016 £000 £000 634 Schools Capital Grants 452 314 Better Bus Fund 790 187 Other Grants and Contributions 196 1,135 TOTAL 1,438
85
31 March 2015 31 March 2016 (Restated) Short Term Long Term Revenue Grants Receipts in Advance Short Term Long Term £000 £000 £000 £000 1,826 2,978 Dedicated Schools Grant 1,271 2,348 1,047 - Public Health Grant 689 - 545 422 Troubled Families Grant 642 426 122 - Pupil Premium Grant 206 - 479 - Housing Benefit Subsidy Grant 2,127 - 1,060 - Health Authority Contributions 165 317 241 2,159 Section 38/106 Contributions - 3,718 201 - Youth Employment Gateway 449 - 344 - Other Grants and Contributions 527 - 5,865 5,559 TOTAL 6,076 6,809
17. TRADING ACCOUNTS
There are a number of services that the Authority undertakes with the public or with other third parties and may, accordingly, be assessed as being 'trading operations'. For the purposes of this note, activity undertaken on behalf of schools (who have a choice as to which service provider they will use) is included. The most significant of these being:-
2014- 2014- 2014- 2014- 2015- 2015- 2015- 2015- 2015 2015 2015 2015 2016 2016 2016 2016 Internal School Other Surplus/ Internal School Other Surplus/ Turnover Turnover 'External (Deficit) Turnover Turnover 'External (Deficit) Parties' Parties' Turnover Turnover £000 £000 £000 £000 £000 £000 £000 £000 - 5,252 - - School & Other Catering - 5,607 - - 253 1,243 236 - Cleaning 305 1,290 241 - 293 1,185 1 - Caretaking 302 1,190 1 - 2,478 292 154 - Grounds Maintenance 2,264 294 108 - 637 234 27 - Security Services 588 205 24 - - - 688 (127) Markets - - 651 (78)
18. NATIONAL HEALTH SERVICE ACT 2006 POOLED FUNDS
The Council has entered into a pooled budget arrangement with St. Helens Clinical Commissioning Group (CCG). The pooled budget was established to make Continuing Health Care (CHC) assessments and the payment process more efficient and effective. Practically, this has been achieved by establishing a joint CHC team consisting of officers from both the Council and the CCG, and through utilising the Adult Social Care and Health Contracts Team to formulate all contracts for providers of CHC and joint funded care.
The Council is the host of this arrangement, which is governed by a Section 75 agreement which was approved by the Health and Wellbeing Board. The pool was introduced on 1 July 2014 with the partners’ contributions being split 30% from the Council and 70% from the CCG. With effect from 2015-2016, the arrangement became a true pool arrangement with the year-end being split in line with the partners’ contributions.
The table summarises the income and expenditure of the pooled budget.
86
St. Helens St. Helens Total Council CCG Pool £000 £000 £000 Funding Provided (7,283) (16,928) (24,211)
Expenditure 2015-2016 8,307 17,980 26,287
Net (surplus)/deficit arising 1,024 1,052 2,076
The Council’s share of the deficit for 2015-2016 exceeds its 30% share as a consequence of a decrease in property debt, attributable to conditions that pre-date the pool. The reduction in property debt of £572k has been met in full by the Council.
In addition, the Council operates a Better Care Fund (BCF) in partnership with the CCG, which creates a local single pooled budget to incentivise the NHS and local government to work more closely together around people, placing their well-being as the focus of health and care services. Locally, the primary aims of the fund are:-
- Supporting independence in the community by place-based activity; - Reducing non-elective admissions and reducing residential admissions by providing the right care and support within the community; and - Facilitating earlier hospital discharge.
Joint arrangements of this type are permitted under Section 75 of the National Health Service Act 2006.
BCF expenditure for 2015-2016 is detailed below:
Revenue Source of Funding Local CCG Total Authority £000 £000 £000 Local Authority - - - CCG 14,184 14,184 Total Fund - 14,184 14,184 Expenditure by Scheme Self Care 1,060 - 1,060 Falls Prevention 1,050 100 1,150 Individual Care Plans 3,419 - 3,419 Care Co-ordination 3,244 - 3,244 Intermediate Care, Reablement and 1,029 1,121 2,150 Rehabilitation Multi-disciplinary Teams 1,210 - 1,210 Care Act Burdens 555 - 555 Total Spend 11,567 1,221 12,788
In line with the approved BCF Plan 2015-2016 and the requirements of NHS England, the partners set aside BCF-Payment for Performance (P4P) funding of £1.396m to be considered for utilisation on a range of proposals subject to performance targets being met in line with the reported activity.
The agreed targets were not met and therefore this funding was subsequently utilised on enabling the CCG to support the funding of hospital services in order to meet the costs of, for example, non-elective activity which is the key service area in which payment for
87 performance would be measured. This was an agreed approach with partners, subject to the performance targets not being met and risk evaluation being undertaken.
In addition to the revenue funding, capital funding of £1.798m was contributed by the Council through the Community Capacity and Disabled Facilities Grants.
In addition to the formal pooled budget arrangement, the Council has two separate integrated provision arrangements with St Helens CCG that are registered with the Department of Health:
(i) Integrated Adults Services Commissioning (ii) Intermediate Care – Reablement and Rapid Response
19. LEASING
The Authority as Lessee – Operating Leases
The Authority uses various types of vehicles, computer equipment and furniture and fittings under terms of operating leases. The Authority also currently leases a small number of buildings/sites under operating lease terms. The expenditure charged to the Comprehensive Income and Expenditure Statement during the year in relation to these leases was £877k.
The Authority had no expenditure on contingent rents or sub-leases in 2015-2016, nor did the Authority receive any income from sub-lease arrangements.
The future minimum lease payments due under non-cancellable leases in future years are shown in the following table:
31 March 2015 31 March 2016 £000 £000 805 Not later than one year 833 2,157 Later than one year and not later than five years 1,809 4,030 Later than five years 3,555 6,992 TOTAL 6,197
The Authority as Lessor – Operating Leases
The Authority has a number of properties leased out under operating leases for investment/ commercial purposes. The future minimum lease payments receivable under non- cancellable leases in future years are:
31 March 2015 31 March 2016 £000 £000 906 Not later than one year 908 1,822 Later than one year and not later th an five years 1,8 77 42,796 Later than five years 41,334 45,524 TOTAL 44,119
The minimum lease payments receivable, shown in the table, do not include potential future income from The Hardshaw Centre/Church Square commercial properties, as payments are made to the Authority as a percentage of profit rather than a fixed annual lease payment. The Authority received £0.806m rental income in 2015-2016 on these properties (£1.32m in 2014-2015).
88
20. OFFICERS’ REMUNERATION IN EXCESS OF £50,000
(i) The number of employees receiving remuneration in excess of £50,000 is as follows:-
No. of No. of which are Remuneration No. of No. of which are Employees employed Employees employed Employees employed Employees employed by the Council by School Governing by the Council by School Governing 2014-2015 Bodies 2015-2016 Bodies 2014-2015 2015-2016 61 20 £50,000-£54,999 60 18 31 10 £55,000-£59,999 32 12 29 16 £60,000-£64,999 26 15 18 3 £65,000-£69,999 17 2 13 5 £70,000-£74,999 13 3 3 2 £75,000 - £79,999 8 1 1 - £80,000 - £84,999 4 - 2 1 £85,000 - £89,999 - - - - £90,000 - £94,999 1 - - - £95,000-£99,999 1 - 1 1 £100,000-£104,999 - - - - £105,000-£109,999 1 1 1 - £110,000-£114,999 1 - 1 - £115,000-£119,999 1 - - - £120,000-£194,999 1 -
The table includes employees whose basic remuneration for 2015-2016 was below £50k.but whose total remuneration for the year exceeds £50k as a result of redundancy payments made. The table excludes those Senior Employees for whom further detail is provided at (ii).
(ii) The remuneration of senior employees, defined as those members of the Strategic Directors’ Group, those individuals holding statutory Chief Officer posts, or those individuals earning over £150,000 per annum is detailed below.
Senior Employees Note Salary Additional Payment Employer’s Pension Contribution £000 £000 £000
Chief Executive – Mike Palin 1 140 - 18 Deputy Chief Executive and Strategic 110 - 14 Director of Corporate Services Strategic Director of People’s Services 110 - 14 Strategic Director of Environmental and 112 - 14 Trading Services Assistant Chief Executive (Legal and 100 - 13 Administrative Services)
89 During 2015-2016, the Council’s departmental and senior managerial team were restructured, resulting in a reduction in the number of departments from four to three and the previous Chief Officer Group being replaced with a Strategic Directors’ Group. The People’s Department brought the previous Adult Social Care and Health Department together with the Children and Young People’s Department, and Public Health under one Strategic Director. This restructure resulted in the Director of Children and Young People’s Services leaving the Authority and this post being deleted from the managerial structure. The postholder was paid £114k for compensation for loss of office.
Comparative information for 2014-2015 is included below, based on the structure prevailing at the time.
Senior Employees Note Salary Additional Payment Employer’s Pension Contribution £000 £000 £000
Chief Executive – Carole Hudson 2 97 5 - Director of Environmental Protection 112 - 14 Director of Children and Young People’s 3 110 1 13 Services Director of Adult Social Care and Health 112 1 14
Assistant Chief Executive (Finance) 103 - 13 Assistant Chief Executive (Legal and 98 - 12 Administrative Services) Director of Urban Regeneration and 4 67 - 8 Housing Director of Public Health 5 98 1 14 Head of Policy and Performance 5 86 - 10 Head of Human Resources 5 82 - 9
Notes 1) Mike Palin joined the Council as Chief Executive with effect from 1 April 2015. 2) Carole Hudson retired from the post of Chief Executive with effect from 31 March 2015. 3) The Director of Children and Young People’s Services left the Council in December 2015. This post was deleted as part of the restructure of the Council with senior managerial responsibility transferred to a single postholder, the Strategic Director of People’s Services (see above). 4) The Director of Urban Regeneration and Housing retired in October 2014. This post has been deleted. 5) These posts were previously part of the Chief Officer Group, hence their disclosure here. As this forum has now been dis-established, these posts are now reported as part of the disclosure of officers earning in excess of £50k.
21. MEMBERS' ALLOWANCES & EXPENSES
The following sums were paid to Members of the Council by way of expense/allowance during the year:
Period Allowances due to Members £000 2014-2015 575 2015-2016 576
90 22. RELATED PARTY TRANSACTIONS
(a) Central Government has effective control over the general operations of the Council - it is responsible for providing the statutory framework within which the Council operates, provides the majority of its funding in the form of grants and prescribes the terms of many of the transactions that the Council has with other parties (e.g. housing benefits). Details of the material transactions with Government Departments are included in the Cash Flow Statement and in Notes 34 (Debtors), 36 (Creditors) and the various Notes relating to Grants.
(b) Members of the Council have direct control over financial and operational policies of the Council, and governance arrangements exist to ensure that the decision-making processes contain provision for declarations of interest where appropriate. Various Chief Officers and Members serve as Council representatives on bodies that are in receipt of Council funding, such as Citizens Advice Bureau and World of Glass. Contributions totaling £0.315m were made to the World of Glass in 2015-2016 (£0.35m 2014-2015). The Council has member representation on the Board. The Council has processes in place to ensure that relevant interests are declared as appropriate.
Further detail relating to Members’ Allowances is included in Note 21.
(c) Other bodies that could be classified as related parties include the following:
(i) Police and Crime Commissioner for Merseyside (see Collection Fund) (ii) Merseyside Fire and Rescue Authority (see Collection Fund) (iii) Merseyside Pension Fund (see Note 11) (iv) Merseyside Recycling and Waste Authority (see Notes 12 and 16) (v) Liverpool City Region Combined Authority (see Notes 12 and 16)
(d) The Council has a Joint Venture with Langtree Property Partners (Langtree Newton LLP), which was established to acquire and regenerate the former Parkside Colliery site. The Partnership Board has been constituted on a 50/50 basis with both parties providing £1.5m equity and loan stock each. The Council has made a £4.5m interest-bearing loan to the company to fund the acquisition of the site. The Council holds 3 of the 6 positions on the Joint Venture Board.
For 2015-2016, the company’s results showed a loss of £0.367m and net assets of £4.636m.
23. AUDIT FEES
The Council incurred the following fees relating to external audit and inspection:-
2014-2015 2015-2016 £000 £000 130 Fees payable to the appointed auditors with regard to 105 external audit services carried out by the appointed auditor*
15 Fees payable to the appointed auditors for the certification 17 of grant claims and returns * The Council received a rebate of £11,877 from the Audit Commission in respect of the 2013-2014 audit in 2014-2015 . The audit fee shown is net of the rebate.
91 No other fees were payable in respect of statutory inspection or for the provision of other audit services.
24. EXIT PACKAGES
As part of its ongoing Budget Strategy, the Council will continue to undertake service reviews in order to ensure that its financial position remains sustainable. This is likely to result in future termination benefits arising as formal, detailed, plans materialise. The number of exit packages relating to Council employees, together with the total cost per band and the total cost of compulsory redundancies and other departures are set out in the following table:
Exit Package Cost No. of No. of other Total No. of Exit Total Cost of Exit Band Compulsory Departures Packages by Cost Packages in each Redundancies agreed Band Band 14-15 15-16 14-15 15-16 14-15 15-16 14-15 15-16 £000 £000 £0-£20,000 36 16 81 39 117 55 710 513 £20,001-£40,000 1 1 14 10 15 11 475 280 £40,001-£60,000 - - 6 5 6 5 311 243 £60,001-£80,000 1 - 4 4 5 4 328 295 £80,001-£100,000 1 - 1 4 2 4 169 359 £100,001-£120,000 - - - 3 - 3 - 331 TOTAL 39 17 106 65 145 82 1,993 2,022
25. PROPERTY, PLANT AND EQUIPMENT
The detailed movement in gross valuations and asset depreciation is included in the following tables.
92 (a) Movements in 2015-2016
Assets Assets Assets Buildings Land and Plant Plant and Equipment Equipment Community Construction Assets Assets under Infrastructure Furniture and Total Property, Surplus Surplus Assets Vehicles, Plant,
£000 £000 £000 £000 £000 £000 £000 Valuation - Balance b/fwd at 1 April 2015 218,725 26,482 202,345 12,715 4,644 123 465,034 Additions 2,213 1,310 6,296 170 - 839 10,828 Revaluations recognised in the Revaluation Reserve 1,486 - - - (344) - 1,142 Revaluations recognised in the Surplus/Deficit on the (2,815) (4) - (22) (6,762) - (9,603) Provision of Services De-recognition – Sales and Disposals (117) - - - (70) - (187) De-recognition – Assets with Nil Net Book Value - (3,469) - - - - (3,469) De-recognition – other - - - - (232) - (232) Assets re-classified (to)/from Assets Held for Sale/ (120) - - 13 (156) - (263) Investment Properties Other re-classifications (9,187) - - 134 9,053 - - Valuation - Balance c/fwd at 31 March 2016 210,185 24,319 208,641 13,010 6,133 962 463,250 Depreciation - Balance b/fwd at 1 April 2015 13,370 13,407 46,751 - 90 - 73,618 Depreciation Charge 7,027 4,063 5,131 - - - 16,221 Written out to the Revaluation Reserve (7,712) - - - - - (7,712) Written out to the Surplus/Deficit on the Provision of (2,519) - - - (1,309) - (3,828) Services De-recognition – Sales and Disposals (3) - - - - - (3) De-recognition – Assets with Nil Net Book Value - (3,469) - - - - (3,469) Assets re-classified (to)/from Assets Held for Sale/ (39) - - - - - (39) Investment Properties Other re-classifications (1,219) - - - 1,219 - - Other movements in Depreciation and Impairment (1,161) (248) - - - - (1,409) Depreciation - Balance c/fwd at 31 March 2016 7,744 13,753 51,882 - - - 73,379 Net carrying value at 31 March 2016 202,441 10,566 156,759 13,010 6,133 962 389,871
93 (b) Comparative Movements in 2014-2015 (Restated)
Assets Assets Buildings Land andLand Plant and Plant Equipment Equipment Community Construction Assets underAssets Infrastructure Furnitureand Total Total Property, SurplusAssets Vehicles, Plant,
£000 £000 £000 £000 £000 £000 £000 Valuation – Balance b/fwd at 1 April 2014 208,315 28,397 194,809 12,061 5,454 1,999 451,035 Additions 3,675 2,081 7,536 654 - 1,067 15,013 Revaluations recognised in the Revaluation Reserve 2,456 - - - 305 - 2,761 Revaluations recognised in the Surplus/Deficit on the (2,594) - - - 41 (280) (2,833) Provision of Services De-recognition – Sales and Disposals (1,449) - - - - - (1,449) Recognition – Mill Green school 4,825 - - - - - 4,825 De-recognition – Assets with Nil Net Book Value - (3,996) - - - - (3,996) Assets reclassified (to)/from Assets Held for Sale/ (304) - - - (18) - (322) Investment Proper ties Other reclassifications 3,801 - - - (1,138) (2,663) - Valuation – Balance c/fwd at 31 March 2015 218,725 26,482 202,345 12,715 4,644 123 465,034 Depreciation – Balance b/fwd at 1 April 2014 11,6 89 13, 301 41,818 - 59 - 66,867 Depreciation Charge 6,922 4,350 4,933 - 31 - 16,236 Written out to the Revaluation Reserve (3,643) - - - - - (3,643) Written out to the Surplus/Deficit on the Provision of (137) - - - - - (137) Services De-recognition – Sales and Disposals (96) - - - - - (96) De-recognition – Assets with Nil Net Book Value - (3,996) - - - - (3,996) Assets reclassified (to)/from Assets Held for Sale/ ------Investment Properties Other movements in Depreciation and Impairment (1,365) (248) - - - - (1,613) Depreciation – Balance c/fwd at 31 March 2015 13,370 13,407 46,751 - 90 - 73,618 Net carrying value at 31 March 2015 205,355 13,075 155,594 12,715 4,554 123 391,416
94 (c) Revaluations
The table below shows the profile of valuations for the Council’s asset base.
Land and Vehicles, Infrastructure Community Surplus Assets Total Buildings Plant and Assets Assets Assets Under Equipment Construction £000 £000 £000 £000 £000 £000 £000 Carried at historic cost - - 208,641 13,010 - 962 222,613
Valued at fair value 31 March 2016 74,242 1,306 - - 5,881 - 81,429 31 March 2015 38,445 2,345 - - 37 - 40,827 31 March 2014 58,547 5,906 - - - - 64,453 31 March 2013 19,829 3,302 - - 215 - 23,346 31 March 2012 17,829 6,524 - - - - 24,353 31 March 2011 1,293 4,936 - - - - 6,229 TOTAL 210,185 24,319 208,641 13,010 6,133 962 463,250
26. PRIVATE FINANCE INITIATIVE (PFI) AND SIMILAR CONTRACTS
Rainford High Technology College PFI Scheme
In December 2010, the Council entered into a PFI contract with Environments for Learning to design, build, finance and operate Rainford High Technology College. 2011-2012 was the first year of a 27-year PFI contract for the construction, maintenance and operation of the Rainford High Technology College. Under the contract, the Council controls the opening times for the school and has use of the sports facilities out of school hours, allowing it to let facilities and make them available to community groups. The contract specifies minimum standards for the services to be provided by the contractor, with deductions from the fees payable being made if facilities are unavailable or performance is below the minimum standards. The contractor took on the obligation to demolish and rebuild and refurbish the school and to maintain it to a minimum acceptable condition and to procure and maintain the plant and equipment needed to operate the facility. The school and any plant and equipment installed will transfer to the Council at the end of the contract term for nil consideration. The Council only has the right to terminate the contract if it compensates the contractor in full for costs incurred, including the repayment of any of the contractor’s outstanding debt attributable to the contract. There have been no changes to the arrangement over the year.
Analysis of Payments
The Council makes an agreed payment each year in respect of its PFI arrangement and these are detailed in the table below. All payments under the PFI agreement are linked in part to Retail Price Index inflation and can be reduced if the contractor fails to meet the availability and performance standards in any year, but which is otherwise fixed. Future RPI has been assumed to increase at a rate of 2.5% per annum. Lifecycle replacement costs have been included in the service charges element of the table below.
95 Payments for Repayment of Interest Total Services Capital £000 £000 £000 £000 Within one year 1,084 572 2,473 4,129 Payable within 2-5 years 5,186 2,349 9,341 16,876 Payable within 6-10 years 7,943 3,803 10,223 21,969 Payable within 11-15 years 9,540 5,317 8,205 23,062 Payable within 16-20 years 11,007 8,377 4,914 24,298 Payable within 21-25 years 3,678 4,592 659 8,929 TOTAL 38,438 25,010 35,815 99,263
Over the life of the PFI project, the Council will receive government grant of £87.8m.
Although the payments made to the contractor are described as unitary payments, they have been calculated to compensate the contractor for the fair value of the services they provide, the capital expenditure incurred and the interest payable whilst the capital expenditure remains to be reimbursed. The liability outstanding to pay the liability to the contractor for capital expenditure incurred is detailed below.
2014-2015 2015-2016 £000 £000 26,184 Balance brought forward at 1 April 25,627 - Capital expenditure incurred in year - (557) Payments during the year (617) 25,627 Balance carried forward at 31 March 25,010
27. HERITAGE ASSETS
Heritage Assets: Five Year Summary of Transactions
31 March 31 March 31 March 31 March 31 March 2012 2013 2014 2015 2016 £000 £000 £000 £000 £000 Art Collection * 1,725 1,725 1,725 1,725 1,246 Civic Regalia ** 179 179 179 179 294 Statues and Monuments *** 1,625 1,625 1,625 1,625 1,651 TOTAL 3,529 3,529 3,529 3,529 3,191
* 3 paintings were revalued in-year by Bonhams. ** Civic Regalia was revalued in-year by Outhwaite & Litherland *** In-year spend on statues and monuments was £26k.
28. INVESTMENT PROPERTY
The following items of income and expenditure have been accounted for in the Financing and Investment Income and Expenditure line on the Comprehensive Income and Expenditure Statement:
2014-2015 2015-2016 £000 £000 (1,918) Rental income from Investment Properties (1,459) 68 Direct operating expenses arising from 94 Investment Properties (1,850) Net (Income)/Expenditure (1,365)
96 There are no restrictions on the Authority’s ability to realise the value inherent in its investment properties or its right to the remittance of income and the proceeds of disposal.
The Authority has no contractual obligations to purchase, construct or develop investment properties for repairs, maintenance or enhancement.
The following table summarises the movement in the fair values of investment properties over the year:-
2014-2015 2015-2016 £000 £000 25,675 Balance brought forward at 1 April 24,440 (295) Disposals (268) (940) Net Gains/(Losses) from Fair Value adjustments (7,045) - Transfer (to)/from Property, Plant and 3,257 Equipment and Assets Held for Sale 24,440 Balance carried forward at 31 March 20,384
Fair Value Hierarchy
All the Council’s investment property assets have been assessed as Level 3 for valuation purposes. An explanation of the different fair value levels is included within the Council’s statement of main accounting principles.
Valuation Techniques used to determine Level 3 Fair Values for Investment Properties
The fair value of investment properties has been measured using the Income Method of Valuation. The Council’s valuers have completed desktop valuations, taking account of the following factors: existing lease terms and rentals from tenancy schedules, independent research into market evidence, including market rentals and yields, and then adjusted these to reflect the nature of each business tenancy or void and the covenant strength for existing tenants. There has been no change in the valuation techniques used during the year for investment properties.
Highest and Best Use of Investment Properties
In estimating the fair value of the Authority’s investment properties, the highest and best use of the properties is deemed to be their current use.
Valuation Process for Investment Properties
The fair value of the Authority’s investment property is measured annually at each reporting date. All valuations are carried out internally in accordance with the methodologies and bases for estimation set out in the professional standards of the Royal Institute of Chartered Surveyors.
97 29. INTANGIBLE ASSETS
2014-2015 2015-2016 Gross Accumulative Net Gross Accumulative Net Carrying Amortisation Carrying Carrying Amortisation Carrying Amount Amount Amount Amount £000 £000 £000 £000 £000 £000 3,066 (984) 2,082 Balance brought 3,073 (1,364) 1,709 forward at 1 April 71 - 71 Additions in year 53 - 53
(18) (426) (444) Amortised/Disposed in - (394) (394) year
(46) 46 - Derecognition of assets - - - wholly amortised 3,073 (1,364) 1,709 Balance carried 3,126 (1,758) 1,368 forward at 31 March
30. SHORT & LONG TERM INVESTMENTS
2014-2015 2015-2016 Principal Accrued Total Principal Accrued Total Interest Interest £000 £000 £000 £000 £000 £000 84,000 491 84,491 Short-Term Investments 97,495 613 98,108 10,033 - 10,033 Long-Term Investments 25 - 25 94,033 491 94,524 TOTAL 97,520 613 98,133
31. LONG-TERM DEBTORS
Fair Balance at New Repaid & Balance Adjustment Fair Value 31 March Loans Other at 31 to Fair Value 31 March 2015 in Year March Value 31 March 2015 Movement 2016 2016 £000 £000 £000 £000 £000 £000 £000 2,241 3,025 Improvement Loans - (81) 2,944 (612) 2,332 5 5 Mortgages - (5) - - - 895 1,098 Housing Innovation Loans - (47) 1,051 (153) 898 2 2 Council House Sales - (2) - - - 16 16 Housing Associations - - 16 - 16 2,457 2,657 Social Care Deferred Payments 601 (963) 2,295 (173) 2,122 2 2 Eccleston Parish Council - (2) - - - 1,000 1,000 Local Authority Mortgage Scheme - - 1,000 - 1,000 6,257 6,257 Langtre e Joint Venture - 211 6,468 - 6,468 12,875 14,062 SUB-TOTAL 601 (889) 13,774 (938) 12,836 (266) (266) Less Provi sion for Bad Debts - - (230) - (230) 12,609 13,796 TOTAL 601 (889) 13,544 (938) 12,606
The "adjustment to fair value" relates to loans made at rates below prevailing market rates (soft loans).
98 32. CAPITAL EXPENDITURE AND FINANCING
(a) Capital Financing Requirement
The total amount of expenditure financed by capital resource in the year is shown in the table below, together with the resources that have been used to finance it. Where capital expenditure is to be financed in future years by charges to revenue as assets are used by the Authority, the expenditure results in an increase in the Capital Financing Requirement (CFR) - a measure of the capital expenditure incurred historically by the Authority that has yet to be financed.
2014-2015 2015-2016 £000 £000 159,203 Opening Capital Financing Requirement 152,351 Capital Investment 14,995 Property, Plant and Equipment 10,857 71 Intangible Assets 53 4,846 Revenue Expenditure funded from Capital under Statute 2,997 19 Long-Term Debtors (Loans & Advances) -
Sources of Finance (2,870) Capital Receipts (3,191) (14,503) Government Grants and Other Contributions (9,989)
Sums set aside from Revenue (2,557) Direct Revenue Contributions (727) (6,853) Revenue Provision for repayment of borrowing and other long-term liabilities (2,731) 152,351 Closing Capital Financing Requirement 149,620 Explanation of Movements in Year - Underlying need to borrow arising from capital investment - (6,852) Revenue provision for repayment of borrowing and other long-term liabilities (2,731) (6,852) Increase/(Decrease) in Capital Financing Requirement (2,731)
(b) Capital Commitments
At 31 March 2016, the Authority had entered into a number of contracts for the construction or enhancement of property, plant and equipment, which in 2016-2017 and future years is budgeted to cost £3.1m. The Council’s major contractual commitments are £1.4m in respect of the modernisation of Brookfield, an Adult Social Care facility and £0.9m in regards to the development of sports facilities at Ruskin Drive.
33. ASSETS HELD FOR SALE
2014-2015 2015-2016 £000 £000 8,123 Balance brought forward at 1 April 7,990 322 Assets classified (to)/from Property, Plant and (3,033) Equipment & Investment Properties (18) Movement on the fair value of Assets - (437) Assets Sold (1,580) 7,990 Balance carried forward at 31 March 3,377
99 34. SHORT-TERM DEBTORS
31 March 31 March 2015 2016 £000 £000 1,925 VAT 1,035 2,893 Other Government Grants and Contributions** 379 181 Former Council Tenants 176 7,782 Council Taxpayers * 8,953 1,669 Non-Domestic Ratepayers * 2,190 125 Other Local Authorities 668 252 Police & Crime Commissioner * 218 51 Merseyside Fire & Rescue Authority * 98 3,364 Housing Benefits 4,079 36 Employees 35 410 NHS Bodies** 808 9,138 Sundry 9,313 27,826 Gross Debtors 27,952 Less: Provision for Bad Debts: (3,917) Council Tax * (5,137) (1,135) Non-Domestic Rates * (1,302) (2,327) Overpaid Housing Benefit (2,688) (181) Former Council Tenants (176) (943) Other (1,003) (8,503) Total Provision for Bad Debts (10,306) 19,323 Net Debtors 17,646 * Council Tax/Non-Domestic Rates related transactions. See Note 1 to the Collection Fund. ** Prior year figures for Government Grants and Contributions and NHS Bodies have been amended to improve consistency and accuracy of classification.
35. SHORT AND LONG-TERM BORROWING
Under the Code, balances relating to financial instruments should be shown as current or long-term depending on when amounts are payable or receivable. Accrued interest in respect of the Authority’s PWLB and market loans are separated from the principal sums as these are payable within 12 months and therefore should be treated as current liabilities.
(a) Analysis of Short-Term Borrowing by Type
2014-2015 2015-2016 Principal Accrued Total Principal Accrued Total Interest Interest £000 £000 £000 £000 £000 £000 5 793 798 PWLB 6 795 801 - 314 314 Market Loans - 316 316 5 1,107 1,112 TOTAL 6 1,111 1,117
(b) Analysis of Long-Term Borrowing by Type
Principal Principal 31 March 2015 31 March 2016 £000 £000 50,357 Public Works Loan Board 50,351 23,000 Market Loans 23,000 73,357 TOTAL 73,351
100
(c) Analysis of Long-Term Borrowing by Maturity Period
Principal Principal 31 March 2015 31 March 2016 £000 £000 7 Between one and two years 6 3,685 Between two and five years 3,682 14,596 Five to fifteen years 14,594 4,281 Fifteen to twenty five years 4,281 32,788 Twenty five to fifty years 32,788 18,000 Over fifty years 18,000 73,357 TOTAL 73,351
36. SHORT-TERM CREDITORS
31 March 31 March 2015 2016 £000 £000 3,205 NDR Agency Arrangement* 4,369 1,882 Local Government Pension Scheme 1,960 971 Teachers' Pension Scheme 1,064 2,681 Tax and National Insurance 2,559 155 Government Departments ** 211 1,146 Council Taxpayers - prepayments and credits* 1,165 1,816 Other Local Authorities 855 3,808 Employees 3,883 3,201 NHS Bodies ** 2,700 19,391 Sundry 17,539 - Merseyside Fire & Rescue Authority* 80 346 Non-Domestic Ratepayers – prepayments and 718 credits* 38,602 TOTAL 37,103 * Council Tax/Non-Domestic Rates related transactions. See Note 1 to the Collection Fund. ** Prior year figures for Government Grants and Contributions and NHS Bodies have been amended to improve consistency and accuracy of classification.
37. PROVISIONS
31 March Expenditure Increase/ 31 March 2015 Charged to (Decrease) 2016 Provision in Provision in Year £000 £000 £000 £000 Provision for Non-Domestic Rates Appeals (a) 2,919 (604) 1,599 3,914 Provision for Equal Pay (b) - - 10,204 10,204 Other Provisions (c) 663 (151) - 512 Short Term 3,582 (755) 11,803 14,630 Insurance (d) 6,001 (887) 675 5,789 Long Term 6,001 (887) 675 5,789 TOTAL 9,583 (1,642) 12,478 20,419
101 (a) The Council has made a provision for Non-Domestic Rates appeals based on
(i) an estimate of the likely level of successful appeals; and (ii) an estimated reduction in rateable value for those non-domestic rates appeals outstanding against the 2005 and 2010 Valuation Lists as at 31 March 2016.
(b) Under the Equal Pay Act 1970, as amended by the Equal Pay Act (Amendment) Regulations 2003, employees are entitled to equal pay for work of equal value. Despite having reached an agreement with the local Unions in respect of the implementation of Single Status and a Pay and Grading Review, a large number of claims have been brought against the Council under the Equal Pay Act. Consequently, the Council has set aside a provision for the settlement of these claims, based on its best estimate of claims received. The Council has developed a model to assess the likely cost of claims, which will be subject to review during the period of the audit.
(c) The other short term provisions represent amounts set aside to cover potential future liabilities. This includes liabilities arising under the Ordinary Residence process and costs associated with settling litigation brought against the Council in respect of Property Search Fees.
(d) The Council determines its insurance as part of its Risk Management process and organises cover from both external providers and its own self-insurance fund. The balance of the fund is regularly assessed for its adequacy. In the case of its combined (Public and Employers) liability provision, a consultancy opinion on size is commissioned on a frequent basis. The review of combined liability indicates that an appropriate provision for this area is £5.602m. An analysis of the other insurances shows that a provision of £0.187m is required.
38. OTHER LONG-TERM LIABILITIES
These consist of liabilities which are (re)payable over a period of time and are analysed as follows:
31 March 31 March 2015 2016 (Restated) £000 £000 487 Commuted Sums and Contractor Bonds 639 3,042 Merseyside Residual Body Debt 2,766 12,280 Merseyside Recycling and Waste Authority Investments 9,131 25,010 Rainford High PFI 24,438 40,819 TOTAL 36,974
102 39. FINANCIAL INSTRUMENTS
(a) Categories of Financial Instruments
The following table details the categories of financial instruments carried in the Balance Sheet:
31 March 201 5 31 March 201 6 Current Long Current Long Term Term £000 £000 £000 £000 Investments 84,000 10,033 Loans and Receivables 97,495 25 15,392 - Cash and Cash Equivalents 24,398 - 491 - Accrued Interest on Loans and 613 - Receivables
Debtors 9,689 12,609 Financial Assets carried at 11,212 12,606 Contract Amounts
109,572 22,642 Total Financial Assets 133,718 12,631 Borrowings (5) (73,357) Financial Liabilities at Amortised (6) (73,351) Cost (1,107) - Accrued Interest on Liabilities at (1,111) - Amortised Cost
Other Long -Term Liabilities - (25,010) PFI - (24,438)
Creditors (30,659) - Financial Liabilities carried at (28,002) - Contract Amount
(31,771) (98,367) Total Financial Liabilities (29,119 ) (97,789)
(b) Income, Expense, Gains and Losses
The table below outlines the income and expense that have been credited/charged to the Comprehensive Income and Expenditure Statement in relation to financial instruments:-
2014-2015 2015-2016 Financial Financial Financial Financial Liabilities Assets Liabilities Assets £000 £000 £000 £000 (4,968) - Interest Expense (4,951) - - 1,206 Interest Income - 1,498 (4,968) 1,206 Net Income/(Expense) for the Year (4,951) 1,498
Interest payments of £2,534m were made in respect of the PFI scheme in the year. However, this cost was met through PFI grant.
103 (c) Fair Values of Assets and Liabilities
The Council’s financial liabilities and financial assets are represented by loans and receivables and long-term debtors which are carried on the Balance Sheet at amortised cost. Their fair value can be assessed by calculating the present value of the cash flows that take place over the remaining life of the instrument (Level 2 inputs) using the following assumptions:
ó For loans from the Public Works Loan Board (PWLB), premature repayment rates from the PWLB have been applied to provide the fair value under the PWLB debt redemption procedures; ó For non-PWLB loans, prevailing market rates have been applied to provide the fair value; ó For loans receivable, prevailing benchmark market rates have been used to provide the fair value; ó No early repayment or impairment has been recognised; ó Where an instrument has a maturity of less than 12 months or is a trade receivable or payable, then the fair value is taken to be the carrying amount or billed amount; ó The fair value of the PFI scheme has been calculated by applying the PWLB annuity rate for new loans to the outstanding liability at the Balance Sheet date.
The fair values of the Financial Liabilities are detailed below:
2014-2015 2015-2016 Carrying Fair Carrying Fair Amount Value Amount Value £000* £000 £000* £000 51,156 82,524 PWLB Loans 51,152 94,342 23,314 28,773 Market Loans 23,316 29,742 25,627 48,833 PFI Liability 25,010 52,312 100,097 160,130 TOTAL 99,478 176,396 * Carrying values include accrued interest
The fair value of the Council’s financial liabilities is more than the carrying amount, because the Council’s portfolio of loans includes a number of fixed rate loans where the interest rates payable are higher than the rates available for similar loans at the Balance Sheet date. The fair value of the PWLB loans of £94.342m measures the economic effect of the terms agreed with the PWLB compared with the estimates of the terms that would be offered for market transactions undertaken at the Balance Sheet date, which have been assumed as the PWLB redemption rates. The difference between the carrying amount and fair value measures the additional interest that the Council will pay over the remaining terms of the loans under the agreements with the PWLB, against what would be paid if the loans were at prevailing market rates.
The Council has a continuing ability to borrow at concessionary rates from the PWLB rather than from the markets, termed the PWLB certainty interest rate. A supplementary measure of fair value is to compare these loans with the new borrowing rates available from the PWLB. If a value is calculated on this basis, the carrying amount of £51.152m would be valued at £82.292m. If the Council were to redeem its PWLB debt early, an interest charge of £44.19m would be payable.
104
The difference between the fair value and the carrying value of loans would only crystallise if the Council sought to terminate its arrangements and, as to the extent that the Council would not seek to voluntarily terminate loans on which premiums would be incurred, this figure should be considered notional. It should also be noted that the market loans contain Lender Option Borrower Option (LOBO) loans, whereby, at specified intervals, there are options on both the part of the Council and the Lender in relation to rates applicable to the residual terms of the loans. The Council is free to repay the loans, in full, and without penalty if it is not agreeable with any revised options proposed by the Lender.
2014-2015 2015-2016 Carrying Fair Carrying Fair Amount Value Amount Value £000* £000 £000* £000 94,491 95,190 Loans and Receivables 98,108 98,276 33 33 Loans and Receivables – Stock 25 25 15,392 15,392 Cash and Cash Equivalents 24,398 24,398 109,916 110,615 TOTAL 122,531 122,699 * Carrying values include accrued interest
The fair value of the Council’s loans and receivables is more than the carrying amount, because the Council’s portfolio of investments includes a number of fixed rate investments where the interest rate receivable is higher than the rates available for similar loans at the Balance Sheet date. This guarantee to receive interest above the current market interest rates increases the amount that the Council would receive if it agreed to the early repayment of the loans.
(d) Cash and Cash Equivalents
The balance of cash and cash equivalents is made up of the following elements:
2014-2015 2015-2016 £000 £000 (3,917) Cash overdrawn and unpresented cheques (3,078) 19 Petty Cash 21 19,290 Bank Call Accounts 27,455 15,392 Total Cash and Cash Equivalents 24,398
(e) Nature and Extent of Risks Arising from Financial Instruments
The Council’s activities expose it to a variety of financial risks, and its overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the resources available to fund services. Financial Risk Management is the responsibility of the Deputy Chief Executive & Director of Finance and, through full adoption of CIPFA’s Treasury Management in the Public Services: Code of Practice, the Council has policies and processes in place to control key financial instrument related risks. Under the policies approved by the Council in the annual Treasury Management Strategy, and through its associated Treasury Management Practices (TMP’s), the Council has in place written principles for overall risk management, as well as written policies covering specific areas such as interest rate risk, credit risk and the investment of surplus cash.
105 Credit Risk Exposure to credit risk is managed through the Council’s Counterparty lending list, which places limits on the value and duration over which investments can be made with approved counterparties to minimise the risk of loss. The counterparty list comprises of institutions that are rated independently by FITCH and meet specific rating requirements. The detailed minimum lending requirements for counterparties are outlined in the annual Treasury Management Strategy.
As detailed in the Council’s Treasury Management Strategy, the Council’s counterparty list is regularly monitored and is updated for any adverse movements in financial institutions’ ratings. Such is the robustness of the Council’s criteria for approving investments, that a reduction in an institution’s outlook from stable would lead to its removal from the counterparty list.
The Council’s maximum exposure to credit risk in relation to its investments in banks and building societies of £122.5m and £2.5m to other local authorities, cannot be assessed generally, as the risk of any institution failing to make interest payments or repay principal sums will be specific to each individual institution. Recent experience has shown that it is rare for such entities to be unable to meet their commitments. A risk of irrecoverability applies to all of the Council’s deposits, but there was no evidence at 31 March 2016 that this was likely to crystallise. All material sums are invested with UK institutions and deposit protection arrangements will limit any losses that might arise.
The following table summarises the Council’s exposure to credit risk at the Balance Sheet date, analysed by credit ratings as they were at the time of making the investment. Figures shown represent the actual investment made and therefore exclude accrued interest. They also include that part of Cash and Cash Equivalents that is represented by sums held in Bank Call Accounts:
31 March Institution Rating 31 March 2015 2016 £000 £000 55,730 Part Nationalised Institutions AA+ 12,110 19,000 Local Authorities AA+ 2,500 3,560 Banks AA-F1+ 15,340 25,000 Banks A F1 55,000 - Banks A+F1 20,000 10,000 Building Societies A F1 10,000 - Building Society A-F1 10,000 33 PFI Loan Stock N/A 25 113,323 TOTAL 124,975 The exposure highlighted in the table above reflects all investments held by the Council, which includes the sums managed on behalf of Merseyside Recycling & Waste Authority (MRWA). An agreement exists whereby the credit risk in respect of investments held is shared between the Council and MRWA in proportion to respective cash positions.
The Council does not generally allow credit for customers, such that the sum for customers reflects the debtors the Council has with other Authorities and other bodies. Based on the information held within the Council’s debtor system, £2.480m was past the Council’s standard invoicing period of 14 days at 31 March 2016 (£2.493m at 31 March 2015). The past due amounts are analysed in the table below.
106 31 March 2015 31 March 2016 £000 £000 409 Less than one month 770 436 One to three months 183 110 Three to four months 131 355 Four months to one year 423 1,183 Over one year 973 2,493 TOTAL 2,480
The figures above are gross sums due. Provision for doubtful debt is made separately.
Liquidity Risk The Council has a comprehensive cash flow management system that seeks to ensure that sufficient liquid funds are available if needed. At the present time, the Council has ready access to borrowing from the PWLB, so there is no significant risk that it will be unable to raise finance to meet its commitments under financial instruments.
Market Risk The Council is exposed to an amount of risk in terms of its exposure to interest rate movements on its investments and, to a lesser extent, on its borrowings For example, a rise in interest rates would have the following effects:-
ó borrowings at variable rates – the interest expensed charged to the Comprehensive Income and Expenditure Statement will rise;
ó borrowing at fixed rates – the fair value of the liabilities borrowing will fall;
ó investments at variable rates – the interest income credited to the Comprehensive Income and Expenditure Statement will rise; and
ó investments at fixed rates – the fair value of the assets will fall.
Borrowings and investments are not carried at fair value, so nominal gains and losses on fixed rate borrowings and loans would not impact on the Surplus or Deficit on the Provision of Services or Other Comprehensive Income and Expenditure. However, changes in the interest payable or receivable on variable rate borrowings and investments will be posted to the Surplus or Deficit on the Provision of Services and affect the General Fund Balance. The Council is risk averse and seeks to minimise exposure arising from its treasury activities and does not undertake any unnecessary borrowing or investment activity. The Council seeks to manage its interest rate risk by constantly reviewing the ratio of borrowing and investments between fixed and variable interest rates.
The table below shows the impact on existing investments and borrowings had interest rates been 1% higher with all other variables being held constant:
2014-2015 2015-2016 £000 £000 1,030 Decrease in the fair value of f ixed rate investment assets 1,257 15,918 Decrease in the fair value of fixed rate borrowing liabilities 13,730
The impact of a 1% fall in interest rates would be as above, but with the movements being reversed. 107
Price Risk The Council does not invest in any instruments whereby it would be exposed to price risk arising from movements in market prices.
Foreign Exchange Risk The Council does not have financial assets or liabilities denominated in foreign currencies and thus, have no exposure to loss arising from movements in exchange rates.
40. TRUST FUNDS
The Council administered 11 Trust Funds during the year which, in the main, consist of legacies left by individuals and are used mainly for educational, cultural and leisure purposes. The value of these trust funds at the Balance Sheet date was £0.299m.
41. CONTINGENT LIABILITIES
MMI
The Council's previous insurers, Municipal Mutual Insurance (MMI), have now ceased to trade and exist solely to discharge its obligations under policies previously issued. These responsibilities relate mainly to legal liability claims that typically take significant periods to finalise. In the event of MMI's insolvency during the period, local authority policyholders have agreed to enter into a scheme of agreement under which there are claw-back provisions on claims payments made by MMI after the implementation of the scheme. The scheme of arrangement was triggered on 13 November 2012 and consequently the administrators, Ernst & Young, advised that an initial levy of 15% was required to achieve a solvent run-off of the company. During 2013-2014, the Council made a payment of £664k to the scheme administrators to dispense its obligation to meet the 15% levy. On 16 March 2016, the Council received confirmation that, due to continuing high levels of claims against the company, the scheme administrator had proposed an increase in the levy from 15% to 25% and a reduction in the payment percentage to 75%, which was approved by the scheme creditors committee. Notwithstanding the Council has met its obligations to make payment under the levy, the scheme administrators have indicated that there will be further reviews of the level of levy required to achieve a solvent run-off of the company and, therefore, there is still a possibility that further claw-back will be required.
Non-Domestic Rates Appeals
The Council has made a provision for costs potentially arising from successful appeals by Non-Domestic Ratepayers against the rateable values applied to their business properties. Provision is based on an assessment of those appeals lodged against the 2005 and 2010 lists. There are significant uncertainties as to what the ultimate effect of these backdated appeals will be and there is also a risk that further appeals, both national and local, could be lodged with the Valuation Office Agency before the next re-set date of 2017, which may negatively impact on the Council’s financial position.
NHS Applications for Mandatory Charitable Relief from Non-Domestic Rates
In January 2016, the Council received requests for mandatory charitable relief from an agent acting on behalf of NHS Trusts. The request for relief was based upon a legal opinion obtained from a QC which concluded that, on balance, Foundation Trusts are established for
108 charitable purposes and, as such, amount to charities for rating purposes. The acceptance or otherwise of the applications has not yet been decided and the outcome of this matter is likely to be settled through the courts. If the position put forward by the agent acting on behalf of the NHS Trusts was successfully argued in the courts, then this would require the Council to grant backdated charitable relief. Based on the applications made to the Council, it is calculated that the cost of allowing backdated mandatory charitable relief would be £3.36m. Under Non-Domestic Rates Retention, the Council would be liable for 49% of this cost (£1.65m).
Equal Pay
The Council has made a provision for the settlement of claims lodged against the Council in respect of Equal Pay based on the number of claims received and an estimation of the value of these. As calculations are based on estimations there is a possibility that the final value may be more or less than the estimated value, with the risk to the Council being that it may have under estimated this provision.
42. CASH FLOW STATEMENT – ADJUSTMENTS TO NET SURPLUS OR DEFICIT ON THE PROVISION OF SERVICES FOR NON-CASH MOVEMENTS
2014-2015 2015-2016 £000 £000
Non -current assets and assets held for sal e: 16,236 Depreciation 16,221 426 Amortisation 394 3,664 Impairments and Downward Valuations 13,314 2,084 Carrying amounts of Non-current Assets and Non-current 2,032 Assets held for sale, sold or de-recognised
Current assets and current liabili ties: 691 Movement in Creditors (2,861) (1,676) Movement in Debtors (1,058) 1,530 Movement in Bad Debts Provision 1,802 226 Movement in Inventories (31) (7,053) Movement in Pension Liability charged / credited to the 14,775 Comprehensive Income and Expenditure Statement
(13,891) Capital grants and contributions credited to the (11,271) Comprehensive Income and Expenditure Statement
2,120 Other non -cash items charged to the net surplus or deficit 12,451 on the provision of services
4,357 TOTAL 45,768
43. CASH FLOW STATEMENT – ADJUSTMENTS FOR ITEMS INCLUDED IN THE NET SURPLUS OR DEFICIT ON THE PROVISION OF SERVICES THAT ARE INVESTING AND FINANCING ACTIVITIES
2014-2015 2015-2016 £000 £000 (1,138) Proceeds from the Sale of Non-Current Assets (1,738) (1,851) Investment Properties Rental Income (1,365) (2,989) TOTAL (3,103)
109
44. CASH FLOW STATEMENT – NET CASHFLOW FROM OPERATING ACTIVITIES
2014-2015 2015-2016 £000 £000 Cash Outflows (143,147) Cash Paid to and on Behalf of Employees (149,256) (73,074) Housing Benefit Paid Out (70,402) (277) Precepts Paid (294) (4) Payments to the Capital Receipts Pool (1) (129,195) Cash Paid to Suppliers of Goods and Services (120,646) (4,882) Interest Paid (4,724) (86,014) Other Payments for Operating Activities (67,136) (436,593) TOTAL CASH OUTFLOWS (412,459) Cash Inflows 80,209 Taxation 82,948 300,925 Grants 288,202 33,194 Sales of Goods and Rendering of Services 31,446 1,410 Interest Received 1,660 21,015 Other Receipts from Operating Activities 18,765 436,753 TOTAL CASH INFLOWS 423,021 160 NET CASH FLOW FROM OPERATING ACTIVITIES 10,562
45. CASH FLOW STATEMENT - INVESTING ACTIVITIES
2014-2015 2015-2016 £000 £000 Cash Outflows (14,617) Purchase of Property, Plant and Equipm ent, Investment (10,748) Property and Intangible Assets - Purchase of Short-Term and Long-Term Investments (3,731) (38,817) Other Payments for Investing Activities (3,149) (53,434 ) TOTAL CASH OUTFLOWS (17,628 ) Cash Inflows 1,389 Proceeds from the Sale of Property, Plant and Equipment, 1,901 Investment Property and Intangible Assets 15,007 Proceeds from Sale of Short-Term and Long-Term Investments - 16,483 Other Receipts from Investing Activities 13,856 32,879 TOTAL CASH INFLOWS 15,757 (20,555) NET CASH FLOW FROM INVESTING ACTIVITIES (1,871)
46. CASH FLOW STATEMENT - FINANCING ACTIVITIES
2014-2015 2015-2016 £000 £000 Cash Outflows (840) Repayments of Short-Term and Long-Term Borrowings (896) Cash Inflows 1,744 Other Receipts from Financing Activities 1,211 904 NET CASH FLOW FROM FINANCING ACTIVITIES 315
110 COLLECTION FUND INCOME AND EXPENDITURE ACCOUNT
The Collection Fund is a statutory account introduced under the Local Government Finance Act 1988. The Code of Practice on Local Authority Accounting requires the inclusion of a separate Income and Expenditure Account for the Collection Fund.
201 4-201 5 201 5-201 6 NOTES Council Non- Council Non- Tax Domestic Tax Do mestic Rates Rates £000 £000 £000 £000 INCOME 2,3 68,872 53,147 Income from Ratepayers 71,935 52,893
Transfers from General Fund (1) - - Transitional Relief - - - (122) - Transitional Protection Payments - (352)
Contribution to/(from) previous year's 5 (15) 78 Estimated Collection Fund Deficit/(Surplus) (894) (514) 68,856 53,103 TOTAL INCOME 71,041 52,027 EXPENDITURE Precepts and Demands 55,853 23,302 - St. Helens Council 58,301 23,478 7,317 - - Police & Crime Commissioner for Merseyside 7,634 - 3,273 476 - Merseyside Fire and Rescue Authority 3,417 479 - 23,777 - Central Government - 23,957
- 199 Non-Domestic Rates Cost of Collection - 199
Movement in Bad and Doubtful Debts 1,458 417 - Provisions 1,447 341 258 560 - Write-Offs 29 516
- 4,131 Provision for Appeals - 3,263
68,159 52,862 TOTAL EXPENDITURE 70,828 52,233 1 697 241 Movement on Fund Balance 213 (206) 1,4 263 357 Surplus/(Deficit) Balance brought forward 960 598 1,4 960 598 Surplus/(Deficit) Balance carried forward 1,173 392
A separate Collection Fund Balance Sheet is not mandatory. Assets and liabilities are consolidated with other accounts of the Authority (see Balance Sheet in the Core Financial Statements). However, Note 1 to the Collection Fund is included to provide a better understanding of the debtor and creditor relationships in relation to both Council Tax and Non-Domestic Rates.
111 NOTES TO THE COLLECTION FUND INCOME AND EXPENDITURE ACCOUNT
1. MEMORANDUM COLLECTION FUND BALANCE SHEETS
(i) Non-Domestic Rates
2014-2015 2015-2016 Total Central St Helens Fire Total Central St Helens Fire & Government Council Government Council Rescue £000 £000 £000 £000 £000 £000 £000 £000 3,407 1,704 1,669 34 Non-Domestic Rate Arrears 4,470 2,235 2,190 45 (2,316) (1,158) (1,135) (23) Provision for Bad Debt (2,657) (1,329) (1,302) (26) (5,958) (2,979) (2,919) (60) Provision for Appeals (7,989) (3,995) (3,914) (80) (704) (351) (346) (7) Prepaid Non-Domestic Rates (1,465) (732) (718) (15) (598) (299) (293) (6) Collection Fund (Surplus)/Deficit (392) (196) (192) (4) (122) (122) - - Transitional Protection Payment (352) (352) - - 6,291 3,205 3,024 62 Cash 8,385 4,369 3,936 80 - - - - TOTAL - - - -
(ii) Council Tax
2014-2015 2015-2016 Total St Helens Police Fire Total St Helens Police Fire & Council Council Rescue £000 £000 £000 £000 £000 £000 £000 £000 9,265 7,782 1,025 458 Council Tax Arrears 10,650 8,953 1,172 525 (4,663) (3,917) (516) (230) Provision for Bad Debt (6,110) (5,137) (672) (301) (1,365) (1,146) (151) (68) Prepaid Council Tax (1,386) (1,165) (153) (68) (960) (806) (106) (48) Collection Fund (Surplus)/Deficit (1,173) (986) (129) (58) (2,277) (1,913) (252) (112) Cash (1,981) (1,665) (218) (98) - - - - TOTAL - - - -
112 2. INCOME FROM COUNCIL TAX Calculation of the Council Tax Base
Council Tax derives from charges raised according to the value of residential properties, which have been classified into 8 valuation bands for this specific purpose. Individual charges are calculated by estimating the amount of income required to be taken from the Collection Fund by the Council for the forthcoming year and dividing this by the Council Tax base (i.e. the equivalent numbers of Band D dwellings).
The Council Tax base for 2015-2016 was 47,808 (46,715 in 2014-2015) calculated as follows:-
Estimated No. of Band D Band Taxable Properties Ratio Equivalent after Discounts Dwellings 6 A 36,803 /9 24,535 7 B 17,771 /9 13,822 8 C 14,627 /9 13,002 9 D 6,359 /9 6,359 11 E 3,270 /9 3,997 13 F 1,555 /9 2,246 15 G 549 /9 915 18 H 36 /9 72 80,970 64,948 Less: Anticipated changes during the year for (6,871) successful appeals against valuation banding, new properties, demolitions, disabled persons relief and exempt properties Less: Local Council Tax Support Discount (a) (9,293) 48,784 Less: Adjustment for collection rates 976 TOTAL Band D Equivalent 47,808
(a) In 2013-2014, the Government removed the Council Tax Benefit grant and replaced it with a Local Council Tax Reduction Scheme which was to be administered by each Local Authority. The scheme allows the Council to provide a discount to those who previously received Council Tax Benefit based on a locally determined criteria.
The average Council Tax for Band D dwellings for the Council and major precepting authorities was £1,444.50.
3. INCOME FROM NON-DOMESTIC RATEPAYERS
The Council collects Non-Domestic Rates for its area based on local rateable values multiplied by a uniform rate set by Central Government. Prior to 2013-2014, the total amount collected after allowing for deductions and certain reliefs were paid over to a central pool managed by Central Government. With the introduction of the local Non-Domestic Rate Retention scheme from 1 April 2013, the Council retains a pre-determined share of all locally raised rates (in St. Helens’ case 49%) with the remainder distributed to Central Government (50%) and the Fire & Rescue Authority (1%).
113 2014-2015 2015-2016 £130.6m NDR Rateable Value for the area £130.9m 48.2 pence Standard NDR Multiplier 49.3 pence 47.1 pence Small Business Rate Relief Multiplier 48.0 pence
4. DISTRIBUTION OF COLLECTION FUND BALANCE
The Collection Fund balance is shared by the Council, the major Precepting Authorities and Central Government as follows:
2014-2015 2015-2016 Council Tax Non- Council Non- Domestic Tax Domestic Rates Rates £000 £000 £000 £000 806 293 St. Helens Council 986 192 106 - Police & Crime Commissioner for Merseyside 129 - 48 6 Merseyside Fire & Rescue Authority 58 4 - 299 Central Government - 196 960 598 TOTAL 1,173 392
5. CONTRIBUTION TO/(FROM) PREVIOUS YEAR’S ESTIMATED COLLECTION FUND DEFICIT/(SURPLUS)
These estimates are statutorily calculated on 15 January each year and must be used in calculating budget requirement:
2014-2015 COUNCIL TAX 2015-2016 £000 £000 (12) St. Helens Council (751) (2) Police & Crime Commissioner for Merseyside (99) (1) Merseyside Fire & Rescue Authority (44) (15) TOTAL (894)
2014-2015 NON -DOMESTIC RATES 2015-2016 £000 £000 38 St. Helens Council (257) 1 Merseyside Fire & Rescue Authority (252) 39 Secretary of State (5) 78 TOTAL (514)
114 GLOSSARY OF FINANCIAL TERMS
ACCOUNTING POLICIES Those specific principles, bases, conventions, rules and practices applied that specify how the effects of transactions and other events are to be reflected in its financial statements through:
(i) recognising; (ii) selecting measurement bases for; and (iii) presenting assets, liabilities, gains, losses and changes to reserves.
ACCRUALS The concept that income and expenditure are recognised as they are earned or incurred, not as money is received or paid.
AGENT/AGENCY Where the Authority is acting as an intermediary, as opposed to on its own behalf.
AMORTISATION The accounting technique of recognising a cost or item of income in the Comprehensive Income and Expenditure Statement or the Movement in Reserves Statement over a period of years rather than when the initial payment is made. Its purpose is to charge/credit the cost/income over the accounting periods that gain benefit for the respective item. The technique is supported by relevant accounting policies and practices.
AMORTISED COST A method of determining the Balance Sheet carrying amount and periodic charges to the Comprehensive Income and Expenditure Statement of a financial instrument based on the expected cash flows of that instrument.
CAPITAL EXPENDITURE Expenditure on the acquisition or enhancement of a non-current asset or capital advances and loans to other individuals or other third parties.
CAPITAL FINANCING REQUIREMENT (CFR) Introduced as a result of the Prudential Framework for Capital Accounting and measures the underlying need of the Authority to borrow for expenditure of a capital nature.
CAPITAL RECEIPTS The proceeds from the sale of capital assets or repayment of capital advances which, subject to various limitations (e.g. Pooling obligations contained in the Local Government Act 2003) can be used to finance Capital Expenditure, invested, or to repay outstanding debt on assets originally financed through borrowing.
CARRYING AMOUNT The amount at which an asset is recognised after deducting any accumulated depreciation and impairment losses.
CASH EQUIVALENTS Short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to insignificant changes in value.
CASH FLOWS Inflows and outflows of cash and cash equivalents.
COLLECTION FUND The Collection Fund is a separate statutory fund under the provisions of the Local Government Finance Act 1988. It shows the transactions in relation to non-domestic rates, any residual Community Charge and the Council Tax, and illustrates the way in which these have been distributed to precepting Authorities and the General Fund.
CHARTERED INSTITUTE OF PUBLIC FINANCE AND ACCOUNTANCY (CIPFA) CIPFA is the leading professional accountancy body for public services, and uniquely among the professional accounting bodies in the UK, CIPFA has responsibility for setting accounting standards, for a significant part of the economy, namely Local Government.
COMMUNITY ASSETS Assets that the Local Authority intends to hold in perpetuity, that have no determinable useful life, and that may have restrictions on their disposal. Examples include parks and public open spaces.
115 CONDITIONS Stipulations that specify that the future economic benefits or service potential in an asset are required to be consumed by the recipient as specified or future economic benefits or service potential must be returned to the transferor.
CONTINGENT LIABILITY A condition which exists at the balance sheet date, where the outcome will be confirmed only on the occurrence or non- occurrence of one or more uncertain future events. Where a material loss can be estimated with reasonable accuracy a contingent liability is accrued in the financial statements. If, however, a loss cannot be accurately estimated or the event is not considered sufficiently certain, it will be disclosed in a note to the balance sheet.
CORPORATE AND DEMOCRATIC CORE The corporate and democratic core comprises all activities which Local Authorities engage in specifically because they are elected, multi-purpose authorities. The cost of these activities are thus over and above those which would be incurred by a series of independent, single purpose, nominated bodies managing the same services. There is therefore no logical basis for apportioning these costs to services.
COUNCIL TAX A property based tax levied on all domestic properties in the Borough. The banding (and resultant sums due) are based on independent assessed property values. The Council sets levels of Council Tax on an annual basis under relevant statutory provisions.
CREDITORS Financial liabilities arising from the contractual obligation to pay cash in the future for goods or services or other benefits that have been received or supplied.
CREDIT RISK The possibility that one party to a financial instrument will fail to meet their contractual obligations, causing a loss to the other party.
CURRENT REPLACEMENT COST The cost the Authority would incur to acquire the asset on the reporting date.
CURRENT SERVICE COST (PENSIONS) The increase in the present value of liabilities resulting from employee service in the period.
CURTAILMENT (PENSIONS) An event that reduces the expected years of future service of present employees or reduces for a number of employees the accrual of defined benefits for some or all of their future service. Curtailments include :
(i) termination of employees services earlier than expected, for example as a result of closing or discontinuing a segment of a business; and
(ii) termination of, or amendment to the terms of, a defined benefit plan so that some or all future service by current employees will no longer qualify for benefits or will qualify only for reduced benefits.
DEBTORS Financial assets arising from the obligation to a future cash receipt for goods or services or other benefits that have been delivered or provided.
DEDICATED SCHOOLS GRANT (DSG) The Council’s expenditure on Schools is funded by grant monies provided by the Department for Education (DfE) in the form of the Dedicated Schools Grant (DSG).
DSG is a ring-fenced grant that can only be applied to meet expenditure properly included in the Schools Budget. The Schools Budget includes elements for a restricted range of services, provided ‘centrally’, on an Authority-wide basis and also for the Individual Schools Budget, which is divided into a budget share for each School.
This specific grant is credited to the Children's and Education Service heading within Net Cost of Services in the Comprehensive Income and Expenditure Statement.
DEFINED BENEFIT PLAN A pension or other retirement benefit plan other than a defined contribution plan. Usually, the plan rules define the benefits independently of the contributions payable, and the benefits are not directly related to the investments of the plan. The plan may be funded or un-funded (including notionally funded).
116 DEFINED CONTRIBUTION PLAN A pension or other retirement benefit plan into which an employer pays regular contributions fixed as an amount or as a percentage of pay and will have no legal or constructive obligation to pay further contributions if the fund does not have sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.
DEPRECIATED REPLACEMENT COST (DRC) A method of valuation which provides the current cost of replacing an asset with its modern equivalent less deductions for all physical deterioration and all relevant forms of obsolescence.
DEPRECIATION The measure of the wearing out, consumption or other reduction in the useful life of a non-current asset over its useful economic life.
DISCRETIONARY BENEFITS Retirement benefits which the employer has no legal, contractual or constructive obligation to award and which are awarded under the Authority's discretionary powers.
EFFECTIVE INTEREST RATE (METHOD) A method that calculates the rate of interest that is necessary to discount the estimated stream of principal and interest cash flows through the expected life of a financial instrument to equal the amount at initial recognition. The rate is then applied to the carrying amount at each reporting date to determine the interest expense or income for that period. In this way the interest expense or income is recognised in a consistent manner over the life of the instrument.
ESTIMATION TECHNIQUES The methods adopted by an entity to arrive at estimated monetary amounts, corresponding to the measurement bases selected for assets, liabilities, gains, losses and changes to reserves.
EXISTING USE VALUE (EUV) The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion assuming that the buyer is granted vacant possession of all parts of the property and disregarding potential alternative uses and any other characteristics that would cause its market value to differ from that needed to replace the remaining service potential at least cost.
FAIR VALUE The fair value of an asset is the price at which it could be exchanged in an arm's length transaction, less, where applicable, any grants receivable towards the purchase or use of the asset.
FINANCIAL INSTRUMENT A contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another. The term covers both financial assets and financial liabilities and includes both the most straightforward financial assets such as trade receivables (debtors) and trade payables (creditors) and the most complex ones such as derivatives. Typical financial instruments are:-
(i) Liabilities
• Trade payables • Borrowings • Financial Guarantees
(ii) Assets
• Bank deposits • Trade receivables • Loans receivable • Investments
Amounts relating to Council Tax, Non-Domestic Rates, Government Grants etc., are outside the scope of the accounting provisions as they are statutory issues, not arising from contracts.
FINANCE LEASE A lease that transfers substantially all of the risks and rewards of ownership of a non-current asset to the lessee, with the asset then recognised the lessee’s Balance Sheet.
117 FINANCING ACTIVITIES Activities that result in changes to the size and composition of the principal, received from or repaid to external providers of finance.
GENERAL FUND The primary revenue account which records the cost of providing the majority of the Council’s services.
GOING CONCERN An assumption that the functions of the Authority will continue in operational existence for the foreseeable future.
GOVERNMENT GRANTS AND CONTRIBUTIONS Assistance in the form of cash or transfers of resources to an Authority in return for past or future compliance with certain conditions relating to the operation of activities of the Authority.
HERITAGE ASSETS The Heritage Assets are assets that are held by the Council principally for their contribution to knowledge, understanding and appreciation of the Borough’s history and/or culture.
HISTORICAL COST Deemed to be the carrying amount of an asset as at 1 April 2007 or at the date of acquisition, whichever date is the later, and adjusted for subsequent depreciation or impairment (if applicable).
IAS19 This International Accounting Standard (IAS) is based on the principle that an organisation should account for retirement benefits when it is committed to give them, even if the actual giving will be many years into the future.
IMPAIRMENT A reduction in the value of a non-current asset below its carrying amount on the balance sheet.
INFRASTRUCTURE ASSETS A class of non-current assets that are inalienable. Examples of infrastructure assets are bridges, roads and footpaths.
INTANGIBLE FIXED ASSET "Non-financial" fixed assets that do not have physical substance but are identifiable and are controlled by the Authority through custody or legal rights e.g. software licences.
INTEGRATED PROVISION An arrangement permissible under the Health Act 1999 and National Health Service Act 2006 that allows partner organisations, including Local Authorities, Primary Care Trusts and NHS Trusts to work within one management structure, and in doing so increasing the ability to join up services and provide seamless services for service users.
INTEREST ON PLAN ASSETS (PENSIONS) The annual investment return on the fund assets based on an average of the expected long-term return.
INTEREST ON PLAN LIABILITIES (PENSIONS) The expected increase during the period in the present value of liabilities as the benefits move one year closer to being paid.
INVENTORIES The amount of unused or unconsumed stocks held in expectation of future use or resale.
INVESTING ACTIVITIES The acquisition and disposal of long-term assets and other investments not included in cash equivalents.
LIQUIDITY RISK The possibility that one party will be unable to raise funds to meet its commitments associated with financial instruments.
MARKET RISK The possibility that the value of a financial instrument will fluctuate because of changes in interest rates, market prices, foreign currency exchange rates, etc.
118 MARKET VALUE The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.
MATERIAL/MATERIALITY Omissions or mis-statements are material if they could, individually or collectively, influence the decisions or assessments of users made on the basis of the financial statements. Materiality depends on the size of the omission or mis-statement judged in the surrounding circumstances. The nature or size of the item, or a combination of both, could be the determining factor.
NET BOOK VALUE The amount at which fixed assets are included in the balance sheet, i.e. their historical cost or current value less the cumulative amount provided for depreciation.
NET CURRENT REPLACEMENT COST The cost of replacing or recreating the particular asset in its existing condition and in its existing use, i.e. the cost of its replacement or of the nearest equivalent asset adjusted to reflect the current condition of the existing asset.
NET REALISABLE VALUE The open market value of the asset in its existing use (or open market value in the case of non-operational assets), less the expenses to be incurred in realising the asset.
NATIONAL NON-DOMESTIC RATES (NNDR) These are often referred to as Business Rates, and are a levy on business properties based on a national rate in the pound applied to the ‘rateable value’ of the property. The Government determines that national rate poundage, Local Authorities collect the sums due, with distribution made in accordance with rules governing the Non-Domestic Rates retention scheme.
NON-CURRENT ASSETS Assets that yield benefits to the Local Authority and the services it provides for a period of more than one year.
NON-OPERATIONAL ASSETS Non-current assets held by a Local Authority but not directly occupied, used or consumed in the delivery of services, or for the service or strategic objectives of the Authority.
OPERATING ACTIVITIES Activities of the Authority that are not investing or financing activities.
OPERATING LEASES A lease that does not transfer substantially all of the risks and rewards of ownership of a non-current asset to the lessee. The asset is recognised on the lessor’s Balance Sheet.
Expenditure financed by operating leasing does not count against capital allocations.
PAST SERVICE COST/GAIN (PENSIONS) The increase or reduction in the present value of liabilities arising from decisions in the period whose effect relates to years of service earned in earlier periods.
PLAN LIABILITIES (or PLAN DEFINED BENEFIT OBLIGATIONS) The liabilities of a defined benefit plan for outgoings due after the valuation date. Plan liabilities measured using the projected unit credit method reflect the benefits that the employer is committed to provide for service up to the valuation date.
POOLED BUDGET Arrangement permissible under the Health Act 1999 and National Health Service Act 2006 that provides an opportunity for partners to bring money together, in a discrete fund, to pay for the services that are an agreed part of the pooled fund arrangement for the client group who are to benefit from one or all of the services. Instead of users being inconvenienced by disputes about Health and Local Authority responsibilities, organisations will agree at the outset the range of Health and Local Government services to be purchased and provided from a pooled fund.
PRECEPT This is a charge levied by one public authority on the Council in order to finance its net expenditure. The precept is then collected on the preceptor’s behalf by the Council by adding the precept to its own Council Tax and paying over the appropriate cash collected.
119
PRESERVED RIGHT TO BUY AGREEMENT An agreement with Helena Housing made at the time of the full transfer of the Council’s housing stock to Helena in July 2002. The conditions are such that the Council is entitled to a percentage share of subsequent ‘Right to Buy’ sales made by Helena to qualifying tenants. The sum paid to the Council under this agreement must be classed as a Capital Receipt.
PRICE RISK The risk that the value of financial instruments will fluctuate as a result of changes in market prices.
PROJECTED UNIT CREDIT (ACTUARIAL COST) METHOD An accrued benefits valuation method in which the plan’s liabilities make allowance for projected earnings. An accrued benefits valuation method is a valuation method in which the plan liabilities at the valuation date relate to:-
(i) the benefits for pensioners and deferred pensioners (i.e. individuals who have ceased to be active members but are entitled to benefits payable at a later date) and their dependants, allowing where appropriate for future increases; and
(ii) the accrued benefits for members in service on the valuation date.
The accrued benefits are the benefits for service up to a given point in time, whether vested rights or not. Guidance on the method is given in the Guidance Note GN26 issued by the Faculty and Institute of Actuaries.
Under this method, the current service cost will increase as members of the plan approach retirement.
PROVISIONS A liability of uncertain timing or amount.
PRUDENCE The concept that revenue is not anticipated but is recognised only when realised in the form either of cash or of other assets, the ultimate cash realisation of which can be assessed with reasonable certainty.
REFCUS (REVENUE EXPENDITURE FINANCED BY CAPITAL UNDER STATUTE) Expenditure that is classified as revenue in accordance with proper accounting practices, but which statute determines may be financed by Capital sources of funding.
RELATED PARTIES Related parties are those individuals and entities that the Council either has the potential to influence or control (or be influenced or controlled by). Related include central government, other bodies’ precepting or levying demands on the Council Tax, its members and its chief officers.
RELATED PARTY TRANSACTION A related party transaction is the transfer of assets or liabilities or the performance of services by, to or for a related party irrespective of whether a charge is made. Related party transactions include the provision of services to a related party.
The materiality of related party transactions should be judged not only in terms of their significance to the authority, but also in relation to its related party.
RE-MEASUREMENT (PENSIONS) The changes in estimated assets and liabilities, assessed by the actuary and arising because:
(i) events have not coincided with the actuarial assumptions made for the last valuation (experience gains and losses); or
(ii) the actuarial assumptions have changed.
REMUNERATION The Accounts and Audit Regulations 2011 require the disclosure of amounts paid to Officers and define remuneration as:- ‘……..all amounts paid to or receivable by a person, and includes sums due by way of expense allowance (so far as those sums are chargeable to United Kingdom income tax), and the estimated money value of any other benefits received by an employee otherwise than in cash.’
120 RETIREMENT BENEFITS All forms of consideration given by an employer in exchange for services rendered by employees that are payable after the completion of employment. Retirement benefits do not include termination benefits payable as a result of either:-
(i) an employer's decision to terminate an employee's employment before the normal retirement date; or
(ii) an employee's decision to accept voluntary redundancy in exchange for those benefits, because these are not given in exchange for services rendered by employees.
REVENUE EXPENDITURE This is money spent on the day-to-day running costs of providing services and includes salaries, goods and services. It is usually of a constantly recurring nature and produces no permanent asset.
SENIOR EMPLOYEES Senior employees are defined under the Local Government and Housing Act 1989, however within St. Helens this is deemed to be the Strategic Directors, the Chief Executive and the Assistant Chief Executive (Legal and Administrative Services).
SERVICE REPORTING CODE OF PRACTICE (SeRCOP) A CIPFA Code established to modernise the system of Local Authority accounting and financial reporting to ensure that it meets the changing needs of modern Local Government.
SeRCOP establishes 'proper practice' with regard to consistent financial reporting below the Statement of Accounts level and is given statutory force in England.
SETTLEMENT (PENSIONS) An irrevocable action that relieves the employer of the primary responsibility for a pension obligation and eliminates significant risks relating to the obligation and the assets used to effect the settlement. Settlement includes the transfer of scheme assets and liabilities relating to a group of employees leaving the Authority's scheme.
SOFT LOAN A loan that is made (for policy reasons, or other) below prevailing market rates, including any interest free loans. Commonly, such loans are to individuals or voluntary organisations in pursuance of locally defined priorities.
The fair value of such a loan is less than the amount of cash lent, and in accordance with accounting standards the fair value must be calculated as the present value of all estimated future cash receipts discounted by using the prevailing market rate of interest for a similar instrument and for an organisation/individual with a similar credit rating.
SPECIFIC GOVERNMENT GRANTS These are designed to aid particular services and may be revenue or capital in nature. They typically have specified conditions attached to them such that they may only be used to fund expenditure which is incurred in pursuit of defined objectives.
TERMINATION BENEFITS Amounts payable as a result of either:
(i) an employer’s decision to terminate an employee’s employment before the normal retirement date; or
(ii) an employee’s decision to accept voluntary redundancy in exchange for those benefits.
USEFUL LIFE The period over which the Local Authority will derive benefits from the use of a non-current asset.
121 OTHER INFORMATION AVAILABLE
The Council website contains a whole host of up-to-date information on the activities of the Council and its partners (www.sthelens.gov.uk). This includes, but is not limited to, electronic versions of the documents detailed below.
Budget Book
Detailing the Council's budget (revenue and capital).
St. Helens Council Delivery Plan
St. Helens First
A copy of this community magazine is distributed to all households in the Borough three times per year in April, September and January.
Council Tax Information Leaflet
This is issued annually with the Council Tax demand note to explain the Council Tax, Non-Domestic Rates and the finances of the Authority.
Council Minutes
Reference copies are kept in the Central Library.
If you experience any difficulty in obtaining any of the above or would like further details, please contact Ian Roberts, Deputy Chief Executive & Strategic Director of Corporate Services the Town Hall, St. Helens.
Alternatively, you can contact the Council's Contact Centre:
By telephone (01744 676789) during the following hours:
- Monday to Friday 8.00 a.m. to 8.00 p.m. - Saturday 10.00 a.m. to 2.00 p.m.
Textphone: 01744 671671
In person at the offices in Wesley House, Corporation Street, St. Helens, WA10 1HF during the following hours:
- Monday to Friday 9.00 a.m. to 5.00 p.m.
By e-mail ([email protected])
Public Inspection of Accounts
Each year there is a specific time when the public may inspect the accounts. A public notice appears at least two weeks beforehand in the local press giving details of dates and times.
122 PROJECT BOARD
Members comprising senior staff from St Helens Metropolitan BC (SHMBC), Balfour Beatty (BB) and Ramboll UK (RUK)
CORE MANAGEMENT TEAM SHMBC Client Representative John Sheward
Stakeholders BB Project Manager Key Contact WBC Gareth Dickinson HE Langtree Developments
BB Health & Safety Coordinator
RUK Design RUK Environmental BB Stakeholder BB Commercial BB Design Project Manager Coordinator & Lead Manager Manager Manager Nicola Evans Nigel Cossons Key Contact
Stakeholders HSE
RUK Geotechnical RUK Structures Lead RUK Highways Lead RUK CDM Advisor RUK BIM Manager BB Project BB Public Liaison Lead Andy Marginson Chris Nicholson Rod Pirie Adam Fair Management Officer Simon Miller
ENGINEERING ENVIRONMENTAL Structures Dev Rajan Town Planning David Walton
Key Contact Key Contact Traffic Nicola Evans Ecologist Anne Pritchard Alignment Bill Atkinson Archaeologist Melissa Conway Statutory Stakeholders rd Drainage - 3 party liaison Nick Banks Noise/ Vibration Paul Driscoll Undertakers WBC Pavement Brendan Cooper Air Quality Hannah Dalton United Utilities Local Residents Signs & Landscape Architect Tracy Snell British Telecom Local Schools Road Markings Hayley Emery Hydrologist Anthony Guay Scottish Power Local Businesses Lighting Laurie Socker Contamination Damian Watkin WBC Travelling Public Geotech Tim Clifford Stakeholders Local Transport WBC Operators Landowners SUSTRANS Local Transport Emergency Operators Services Key Contact HE Key Contact Stakeholders EA Stakeholders WBC TAA LPA Highways Authority Drainage Authority Natural England HE