Public Document Pack
Investment Board
Date: Monday 26 March 2018
Time: 10.00 am Public meeting Yes
Venue: Room 116, 16, Summer Lane, Birmingham, B19 3SD
Membership
Councillor Izzi Seccombe (Chair) Warwickshire County Council Councillor Jim O'Boyle Coventry City Council Councillor Sean Coughlan City of Wolverhampton Council, Dudley MBC, Sandwell MBC and Walsall MBC Councillor Robert Hulland Solihull Metropolitan Borough Council Councillor Majid Mahmood Birmingham City Council Councillor Peter Richards Non-Constuent Authorities Nick Abell Coventry & Warwickshire Local Enterprise Partnership Paul Brown Black Country Local Enterprise Partnership Gary Taylor Greater Birmingham & Solihull Local Enterprise Partnership Sue Summers Finance Birmingham
Quorum for this meeting shall be three members.
If you have any queries about this meeting, please contact:
Contact Carl Craney Governance Services Officer West Midlands Combined Authority Telephone 0121 214 7965 Email [email protected] AGENDA
No. Item Presenting Pages
Meeting Business Items
1. Apologies for Absence (if any) Chair None
2. Notification of Substitutes (if any) Carl Craney None
3. Declarations of Interests (if any) Chair None Members are reminded of the need to declare any disclosable pecuniary interests they have in an item being discussed during the course of the meeting. In addition, the receipt of any gift or hospitality should be declared where the value of it was thought to have exceeded £25 (gifts) or £40 (hospitality).
4. Minutes of last meeting Chair 1 - 4
5. Matters Arising Chair None
Business Items for Consideration
6. Investment Board Programme Update Sean Pearce 5 - 20
7. Wednesbury - Brierley Hill Metro Extension - Phil Hewitt 21 - 38 Change Request
Item for Noting
8. Coventry Friargate Business District Phase 1 - Sean Pearce None File Note re: Assurance (To follow)
9. Exclusion of the Public and Press Chair None [To pass the following resolution: That in accordance with Section 100(A) of the Local Government Act, 1972 the press and public be excluded from the meeting for the following items of business as it involves the likely disclosure of exempt information relating to the business or financial affairs of any particular person (including the authority holding that information)]
Business Items for Noting
10. WMCA CIF Dashboard Nick Oakley 39 - 42
Agenda Page 2 of 3 11. WMCA BLPDF Dashboard Nick Oakley 43 - 46
Agenda Page 3 of 3 This page is intentionally left blank Agenda Item 4
Investment Board
Tuesday 13 March 2018 at 10.00 am
Minutes
Present Councillor Izzi Seccombe (Chair) Warwickshire County Council Councillor Robert Hulland Solihull Metropolitan Borough Council Councillor Majid Mahmood Birmingham City Council Gary Taylor Greater Birmingham & Solihull Local Enterprise Partnership Councillor Tony Jefferson Non-Constituent Authorities
In Attendance Carl Craney West Midlands Combined Authority Sean Pearce West Midlands Combined Authority Liz Grove Solihull Metropolitan Borough Council Lucy Lee Solihull Metropolitan Borough Council Nafees Arif Midland Metro Alliance
Item Title No. 73. Apologies for Absence (if any) Apologies for absence had been received from Councillor Jim O’Boyle (Coventry City Council), Councillor Sean Coughlan (City of Wolverhampton Council, Dudley MBC, Sandwell MBC and Walsall MBC), Councillor Peter Richards (Non-Constituent Authorities), Nick Abell (Coventry and Warwickshire Local Enterprise Partnership), Paul Brown (Black Country Local Enterprise Partnership) and Sue Summers (Finance Birmingham).
Apologies for absence had also been received from Sarah Middleton (Black Country Local Enterprise Partnership), David Cockroft (Coventry City Council) and Perry Wardle (Solihull MBC).
74. Notification of Substitutes (if any) Councillor Peter Richards had nominated Councillor Tony Jefferson as his substitute.
75. Declarations of Interests (if any) Councillor Robert Hulland declared a non-pecuniary interest in Agenda Item No. 8 (Change request for Solihull Metropolitan Borough Council’s Strategic Business Case 1 (SMBC SOC1) for the UK Central Infrastructure Package insofar as he was a member of Solihull MBC.
76. Minutes of last meeting Page 1 of 4 Page 1 Resolved: That the minutes of the meeting held on 13 February 2018 be confirmed as a correct record and signed by the Chair.
77. Matters Arising There were no matters arising from the minutes of the meeting held on 13 February 2018.
Sean Pearce reminded the Board that at the meeting held on 29 January 2018 an application in respect of Coventry Friargate Business District Phase 1 had been approved subject to a briefing being arranged for the Chair and Gary Taylor to address the concerns expressed at that meeting. He reported that such a meeting had been held and circulated a File Note on the proceedings. He invited the Chair and Gary Taylor to submit comments to him on the contents of the File Note prior to its submission to the next meeting of the Board to confirm that the necessary assurances had been provided.
Sean Pearce also reminded the Board that at the meeting held on 29 January 2018 an application in respect of Opus Land (Oldbury) Ltd. – BLPDF had been considered with funding being provided from the Brownfield Land and Property Development Fund (BLPDF) but subsequently from the Black Country Land Remediation Fund (BCLRF). He advised that the monies could be allocated from either funding source but that on this occasion it would be met from the BCLRF.
Resolved: 1. That the reports be noted; 2. That a report be submitted to the a future meeting on the various funds under the auspices of this Board together with details on arrangements for draw down of funding and the source of any replenishment of the various funds; 3. That a report on the overall investment programme be submitted to the next meeting of the Board.
78. Consortium for the Demonstration of Intelligent Systems (CDIS) - Accountable Body Amendment Sean Pearce presented a report which reminded the Board that at the meeting held on 29 January 2018 approval had been given to the early draw down of a sum of £250,000 to support the preparation of a Full Business Case with regard to the Consortium for the Demonstration of Intelligent Systems (CDIS). The Outline Business Case considered at that meeting had stated that the Black Country Consortium would act as the Accountable Body but this had not been made clear in the report to the Board.
Resolved: That the Black Country Consortium be assigned responsibility as the Accountable Body for the CDIS Programme.
79. Exclusion of the Public and Press Resolved: That in accordance with Section 100A4 of the Local Government Act Page 2 of 4 Page 2 1972, the press and public be excluded from the meeting during the consideration of the following items of business as they involve the likely disclosure of exempt information relating to the business affairs of any particular person (Including the authority holding that information).
80. Change request for Solihull Metropolitan Borough Council's Strategic Outline Case 1(SMBC SOC1) for the UK Central Infrastructure Package Lucy Lee and Liz Grove presented a report which detailed a change request to enable the development funding approved previously to be extended to enable the next milestone for each of the 14 projects to be delivered during 2018/19 through to 2020/21. This was primarily to reach Outline Business Case (OBC) or Full Business Case (FBC) stage for the main Phase 1 programme. There were also a number of individual studies and Strategic Outline Business Cases (SOC’s) relating to the planned Phase 2 programme.
The total development funding requested amounted to £8.15 million being a £4.76 million increase above the original amount and covering project development activity in 2018/19 through to 2020/21. The assurance and approval of the overall programme as detailed in the OBC approved previously was unaffected. The change request provided a more sensible funding approval period allowing development of each project to the next stage.
Liz Grove provided further background information and responded to questions in relation to valuation methodology, the basic proposals involved with the scheme, progress with negotiations with property owners and commercial owners and the advantages of this course of action being followed.
Resolved: 1. That £4.76 million of Devolution Deal funding to enable the 14 projects within Phase 1 programme to progress to OBC or FBC stage be approved; 2. That £3.90 million of Devolution Deal to enable the early acquisition of property in Kingshurst Village Centre in order to respond flexibly and pro-actively to acquisition opportunities that arise be approved.
81. Lessons Learnt regarding Metro Scheme Estimates and On-going Control Further to Minute No. 47(4) of the meeting of the Board held on 29 November 2017, Nafees Arif presented a Lessons Learnt report with regard to the Wolverhampton Metro extension element of the Wolverhampton Interchange scheme. He responded to various questions from the Board.
Resolved: 1. That the report be received and noted; 2. That the report be forwarded to the Audit, Risk and Assurance Committee for consideration; 3. That the report be circulated to the Overview and Scrutiny Page 3 of 4 Page 3 Committee; 4. That a further Lessons Learnt report with regard to the Wolverhampton Railway Station element of the Wolverhampton Interchange scheme be presented to a future meeting of this Board; 5. That a presentation be made to the Audit, Risk and Assurance Committee on the benefits from alliance operations in relation to the Bilston Road Track Replacement scheme.
The meeting ended at 10.49 am.
Page 4 of 4 Page 4 Agenda Item 6
Investment Board
Date 26 March 2018
Report title Investment Programme Update
Portfolio Lead Councillor Izzi Seccombe - Finance & Investments
Accountable Chief Deborah Cadman Executive Email [email protected] Tel 0121 214 7200 Accountable Sean Pearce Employee Email [email protected] Tel 0121 214 7936 Report to be/has been considered by Recommendation(s) for action or decision: The West Midlands Combined Authority Investment Board is recommended to: 1) Note the progress against the Investment Programme agreed as part of the region’s first Devolution Deal be noted. 2) Endorse a summary update on the overall programme as detailed in the report be presented to all future meetings of the Investment Board 3) Approve that the Chair of the Investment Board be nominated as the representative of this Board on the Task and Finish Group as set out in the report and be required to provide updates back to the Board through April to July 2018 1 Purpose 1.1 The Investment Programme was agreed as a result of the region’s first Devolution Deal agreed with HM Government in 2015. The purpose of this report is to set out the entirety of the Investment Programme to ensure that the Investment Board is able to consider the decisions before it as well as the delegated decisions to the West Midlands Combined Authority Leadership Team in light of funding that has been secured to date and funding that is forecast over the medium term. 1.2 The report also sets out the current position in terms of approvals provided to date as well as the work currently being delivered by the West Midlands Combined Authority Leadership Team to support the work of the Task and Finish Group. This Task and Finish Group was commissioned through the Budget process. It sets out a summary of the internal work commissioned to ensure the benefits across the Programme are captured and understood. 1.3 The report sets out the work undertaken within the West Midlands Combined Authority across the Investment Programme since October 2016. It presents a Page 5 potential way in which going forward the Investment Board can receive information to help provide a regular update across the Investment Programme for confirmation and challenge ahead of Investment Decisions. 2 Background 2.1 The Investment Programme was agreed as part of the first Devolution Deal with HM Government and contained an £8 billion package of measures to help stimulate economic growth in the West Midlands region. The Investment Programme decision making framework was agreed by the West Midlands Combined Authority Board when the West Midlands Combined Authority was established. The Investment Programme has been established and agreed through Constituent Authorities prior to the incorporation of the West Midlands Combined Authority. 2.2 This report provides a snap-shot of where the West Midlands Combined Authority is at present in managing the Investment Programme with a specific focus on how the risks and issues inherent within the delivery stage of the Investment Programme are being managed. A previous report was provided that focused just on funding. 2.3 The Investment Board itself was established as part of the approvals process across the Investment Programme. The Investment Board was not originally set up to consider the progress being made across the Investment Programme as a whole. However, what has become clear is the need for the Investment Board and the West Midlands Combined Authority Board to consider appropriate information across funding, expenditure and approvals to support it in relation to its decision making process. 3 Investment Programme Summary 3.1 The £8 billion Investment Programme consists of 20 Programmes. There are 12 Programmes funded in part or in full through resources intended to be generated by the West Midlands Combined Authority. The following table sets out a summary of these Programmes.
Page 6 Table 1: Summary of Programmes that comprise the Investment Programme
£ millions WMCA Funding Total Funding
1 UKC Interchange 398.0 604.6
2 UKC Infrastructure 288.0 634.3
3 HS2 Connectivity Programme schemes 607.1 1,102.4
4 Brierley Hill Metro Extension 103.0 343.6
5 Programme Governance 3.0 3.0
6 Coventry City Centre Regeneration 150.0 357.7
7 Coventry UKC North 21.6 142.9
8 Coventry UKC South 156.4 327.9
9 Land Remediation Funds* 200.0 200.0
10 Business Innovation 50.0 50.0
11 Employment, Education & Skills 20.0 20.0
12 Commonwealth Games* 25.0 25.0
13 Curzon Street Station Masterplan - 556.2
14 Metro Birmingham Eastside Extension - 137.2
15 HS2 – Metro Birmingham Interchange - 735.0
16 Collective Investment Vehicle - 1,000.0
17 Devolved Transport Investment - 1,299.0
18 High Speed Supply Chain and Business Support - 350.0
19 National College of High Speed Rail - 26.3
20 Enterprise Expansion excluding Curzon - 20.0
GRAND TOTAL 2,022.1 7,935.1
*Subject to further assurance processes
Page 7 4 Investment Programme Approvals 4.1 The Table in the previous section sets out the Investment Programme that the West Midlands Combined Authority Board, Investment Board and Leadership Team are responsible for making approvals against. The delegated basis of those decisions are set out below: Table 2: Summary of Investment Programme Approval delegations
£ millions
1 West Midlands Combined Authority Board Over 20
2 Investment Board 5 - 20
3 West Midlands Combined Authority Leadership Team Under 5
4.2 The Investment Programme Approvals to date total £455.8 million and represents the value of commitments West Midlands Combined Authority Board has agreed to fund in pursuance of the Investment Programme deliverables. This is summarised in the table below and is as at the 13 March Investment Board. Table 3: Summary of Investment Programme approvals made to March 2018
£ millions Approvals WMCA Funding Total Funding
1 UKC Interchange 20.0 398.0 604.6
2 UKC Infrastructure 3.3 288.0 634.3
3 HS2 Connectivity Programme schemes 161.9 607.1 1,102.4
4 Brierley Hill Metro Extension 5.6 103.0 343.6
5 Programme Governance 0.7 3.0 3.0
6 Coventry City Centre Regeneration 150.0 150.0 357.7
7 Coventry UKC North 0.2 21.6 142.9
8 Coventry UKC South 0.8 156.4 327.9
9 Land Remediation Fund 87.8 200.0 200.0
10 Business Innovation 0.5 50.0 50.0
11 Employment, Education & Skills 0.0 20.0 20.0
12 Commonwealth Games 25.0 25.0 25.0
13-20 Other non WMCA Funded Schemes N/A N/A 4,123.7
GRAND TOTAL 455.8 2,022.1 7,935.1
4.3 Five projects have been signed off at Full Business Case stage to all or part of the works and are now moving into delivery phase or have been completed, a summary is provided below: Coventry City Centre South – Project 6 Coventry Friargate Business District – Project 6 Page 8 Coventry Station Master Plan – Project 3 Metro Edgbaston – Project 3 Metro Wolverhampton Interchange – Project 3 4.4 It should be noted that the HS2 Connectivity Package consists of around 25 schemes across a range of programme headings including Metro, Sprint and Rail investment packages and governed through the West Midlands Combined Authority Project Boards. The HS2 Connectivity Package allocation has also been used to part fund the Coventry Station Masterplan and Very Light Rail programmes sponsored by Coventry City Council. Of the 25 schemes, the Metro Bilston Road scheme is complete with the remainder of the schemes either in the development or, in the case of the Edgbaston, Wolverhampton and Centenary Square Metro Programmes, delivery stages. 4.5 Whilst risk and reward in most parts is held by Constituent Authorities on their projects, risk and reward on the HS2 Connectivity Package is managed and owned by the West Midlands Combined Authority with the exception of the two Coventry projects detailed above. 4.6 Appendix 1 sets out the current forecast approvals that are planned based on latest information from the Programme Management Office. These approvals are set against the firm / secure funding sources for the Investment Programme. This is effectively at this stage the Annual Devolution Deal Grant of £36.5 million per annum over 30 years. This income yields £1.1 billion over 30 years and allows the West Midlands Combined Authority to invest approximately £748 million into infrastructure with the balance being required to meet debt service costs. The actual value the Devolution Deal Grant will buy will be influenced by the interest rate at the time the debt is undertaken and the duration of the borrowing. This is further explored in the Funding section of this report. 4.7 Appendix 1b sets out a summarised forward plan of anticipated approvals required over the 2018/19 Financial Year for the Investment Board and West Midlands Combined Authority Board (the Forward Plan). This sets out that £39.5million of potential decisions are programmed in between this Investment Board meeting and the July 2018 West Midlands Combined Authority Board. 5 Investment Programme Funding 5.1 The West Midlands Combined Authority Board received a report at its meeting on of 12 January 2018 titled: Progress Update on the West Midlands Combined Authority Investment Programme documenting the status against the Investment Programme funding streams. This report has been shared with the Investment Board and associated Boards involved in the delivery of the Investment Programme. The following table sets out a summary of the Funding Position as reported. This position remains the current position at the time of this report.
Page 9 Table 4: Summary risk rating of the funding for the Investment Programme
PwC Report February 2016 WMCA review December 2017 £ billion % £ billion % Green 0.5 6% 2.4 30% Amber 6.5 81% 3.6 45% Red 1.0 13% 2.0 25% Total 8.0 100% 8.0 100% 5.2 The £8 billion programme value in February 2016 referenced above refers to the original Investment Programme value which included items such as the £500 million Revolving Housing fund, which ultimately did not make the final version of the Devolution Deal. As the programme has matured, however, additional private sector leverage and other contributions have been identified and the gross total of the Investment Programme remains broadly comparable to the original £8 billion expectation, with the latest gross programme value being £7.935 billion as referenced throughout this report. 5.3 The table above covers all funding streams and more detail is provided in Appendix 2 in terms of sources of funding. In accordance with the January 2018 West Midlands Combined Authority report confirmation is being provided at the West Midlands Combined Authority Finance Director meeting with the responsible Finance Director for securing each Income Stream. The intention is for this to be reported back to the April Investment Board following confirmation by Finance Directors. 5.4 The January Report provided further detail with regard to the West Midlands Combined Authority internally generated resources and this is set out in the following table. Table 5: Summary of the Funding Streams that support the West Midlands Combined Authority £2 billion contribution to the Investment Programme
Investment created by Internally Generated Funds £ billion % Annual Devolution Grant 0.7 35% Business Rates 0.5 25% Supplementary Business Rate 0.6 30% Mayoral Precept 0.2 10% Total 2.0 100% 5.5 The Annual Devolution Grant is rated as Green for Years 1 to 5 at this point and Amber for Years 6 – 30 due to the need to satisfy a 5 Yearly UK Government Gateway Review. The scope is currently being agreed with UK Government. As set out in the Budget Report of February 2018 and specifically within the finance comments that support Investment decisions following the February 2018 Budget Report, the Investment Programme approvals are based on full receipt of the Annual Devolution Grant over the 30 Years. A requirement of each approval sets out the annual revenue cost of debt service that would need to be supported by
Page 10 each Constituent Authority should that Annual Devolution Grant be reduced or funding not be realised. 5.6 The achievement of additional business rates is currently ahead of the original plan due to a windfall gain in relation to 2016/17 from the Ministry of Housing, Communities and Local Government. Work is currently underway to secure a medium to long term agreement with Constituent Authorities on the West Midlands Combined Authority share of Business Rate growth. 5.7 The West Midlands Combined Authority Board indicated that a Precept would not be approved for the 2018/19 financial year. This shortfall for 2018/19 could be met materially through the windfall described above. The risk on the income stream is stability of income after 2020 when UK Government intend to redesign the local government finance system including business rates. 5.8 Within the same report, the West Midlands Combined Authority indicated that it was minded to support a Precept to be raised from 2019/20 onwards for the purpose of funding the Investment Programme as indicated in the table above. Should this occur and based on revisions to income that could be delivered based on an updated taxbase then the income achieved over the 30 year period will be materially similar to that envisaged within the original devolution deal. Should this not materialise then a shortfall of £151 million on available investment will be realised. 5.9 The most ‘at risk’ funding shown above which the West Midlands Combined Authority is directly responsible for relates to the £0.6 billion of Supplementary Business Rates funding. At the point of agreeing the regions first Devolution Deal the anticipation was that this would be secured through new powers granted to the West Midlands Combined Authority and introduced on 1 April 2018. 5.10 This could no longer be delivered when the Local Government Finance Bill 2017 fell and needs to be replaced by powers being provided to the West Midlands Combined Authority that are currently only available to Local Authorities. Approvals have been gained through the West Midlands Combined Authority Board and Constituent Authorities for these powers to be granted and the West Midlands Combined Authority is currently working with the Ministry of Housing Communities and Local Government to acquire the necessary powers. These powers are anticipated to be obtained in May 2018 and the key difference is the need to potentially obtain consent for the introduction of a scheme through a Ballot of affected businesses, which is estimated provisionally to be around 15% to 30% of all businesses across the West Midlands. 5.11 The Supplementary Business Rate powers will only be exercisable by the Mayor acting on behalf of the West Midlands Combined Authority. The West Midlands Combined Authority has established a Supplementary Business Rates Board which is aiming to consider the scheme design for potential implementation. The intention is for a report to be provided to the West Midlands Combined Authority Board by September 2018 for a decision from the Board about whether to proceed with the further scheme development and delivery of a prospectus for consultation with Business. 5.12 Given the scale of the income that is intended to be generated and the scope and geographic breadth of those businesses that need to be consulted this project represents a key opportunity and risk to the delivery of the Investment Programme. Immediate priorities through to the July Board are set out below. Develop stakeholder group to consider the principles of a potential scheme.
Page 11 Acquire the existing knowledge and financial models from the Local Authorities and also meet with the Greater London Authority and Ministry of Housing, Communities and Local Government to understand the lessons learned in implementing Crossrail. Assemble a robust financial model to underpin the options development. Design an outline scheme for consideration by West Midlands Combined Authority Board. To assemble a strategy for stakeholder management and generate support for the Investment Case. To develop a plan for Phase 2 which will include the Initial Prospectus, consultation with Business, a potential ballot with business, the development of a Final Prospectus and the launch of the scheme. 5.13 As detailed above, launching a Supplementary Business Rates scheme requires a significant number of both financial and reputational risks to be managed. 5.14 In order for the West Midlands Combined Authority to undertake borrowing to secure Investment Funding to be repaid over a 30 year period it is currently in the process of acquiring borrowing powers from UK Government. 5.15 The West Midlands Combined Authority has entered into the borrowing agreement with HM Treasury and consents from the Constituent Local Authorities have been provided to Ministry of Housing, Communities and Local Government who subsequently laid the regulations before Parliament on 12 March 2018. It is expected the Bill will be approved during April with an effective date of around the end of April 2018. 6 Investment Programme Expenditure 6.1 Actual Expenditure incurred in relation to the Investment Programme is reported to the West Midlands Combined Authority Board at each meeting and the intention to provide this summary to the Investment Board alongside updates of the information provided above. Set out below is a summary of the position as at 31 January 2017 with further detail provided in Appendix 2. Table 6: Current Status of Expenditure on the Investment Programme
£ millions 2017/18 2017/18 Cost to Forecast Plan Complete
1 UKC Interchange 2.0 2.0 604.6
2 UKC Infrastructure 2.5 4.4 634.3
3 HS2 Connectivity Programme schemes 55.4 68.1 1,102.4
4 Brierley Hill Metro Extension 5.0 2.1 343.6
5 Programme Governance 0.4 0.6 3.0
6 Coventry City Centre Regeneration 6.4 7.8 357.7
7 Coventry UKC North 0.0 0.5 142.9
8 Coventry UKC South 2.7 2.7 327.9
Page 12 £ millions 2017/18 2017/18 Cost to Forecast Plan Complete
9 Land Remediation Fund 20.0 20.0 200.0
10 Business Innovation 0.2 <0.1 50.0
11 Employment, Education & Skills 0.0 0.0 20.0
12 Commonwealth Games 0.0 0.0 25.0
13 Curzon Street Station Masterplan 1.0 1.0 556.2
14 Metro Birmingham Eastside Extension 2.0 1.7 137.2
15 HS2 – Metro Birmingham Interchange 3.9 2.0 735.0
16 Collective Investment Vehicle 20.0 20.0 1,000.0
17 Devolved Transport Investment 0.0 0.0 1,299.0
18 High Speed Supply Chain and Business Support 25.7 25.7 350.0
19 National College of High Speed Rail 10.0 8.7 26.3
20 Enterprise Expansion excluding Curzon 0.0 0.0 20.0
GRAND TOTAL 157.2 167.3 7,935.1
6.2 Appendix 3 to this report includes a summary of Investment Programme expenditure incurred to the end of January 2017 and the forecast to the end of the 2017/18 financial year. This shows an expected under-spend against the 2017/18 budget of £14.6 million largely influenced by the Wolverhampton Interchange scheme, off-set by acceleration against other Metro network schemes. The slippage against the Wolverhampton scheme is expected to be recovered during 2018/19. 6.3 It is expected that West Midlands Combined Authority will be able to meet its 2017/18 direct funding and grant funding obligations under the Investment Programme from available resources (i.e. receipt of gainshare and efficient cash management) but West Midlands Combined Authority forecasts are currently showing a borrowing requirement in 2018/19 which will require West Midlands Combined Authority to acquire the amended borrowing powers from Government if it is to meet the grant requirements for the Coventry Regeneration and other non- transport schemes. 6.4 The cost at completion shows a favourable £307 million variance but £415 million of that total relates to the removal of both costs and 3rd party funding underpinning the UK Central Interchange scheme. As a result, no programme flexibility is realised as part of this change and the programme will be rebased in April 2018 across income and expenditure. The reason for the downwards movement relates to the removal of aspects of the programme which are not directly controlled or managed by Solihull MBC, for instance, the £90m for the Automated People Mover which is being delivered by HS2. 6.5 It is important to note, however, that the overall investment in the UK Central hub area remains unchanged, but the value which the West Midlands Combined Authority are expected to manage has now been refined. Of the other variances at Page 13 cost to completion the Solihull and Brierley Hill Metro schemes are both forecasting potential over-spends of £60 million and £34 million respectively which relate to optimism bias at this stage. The HS2 Connectivity over-spend relates mainly to the Wolverhampton Interchange Scheme where an agreement on sharing any additional expenditure has been reached between the West Midlands Combined Authority and the City of Wolverhampton Council. The West Midlands Combined Authority are responsible for the Governance of the Metro scheme within this Programme. 6.6 The Investment Board needs to be aware of decisions and their contribution to the outcomes of the Programme in the light of funding constraints at this point. Each Investment decision should also be reviewed for the opportunity to return investment gains through to the Investment Programme from the Investment in addition to the share of Business Rates to address the funding gap that currently exists across the Programme. 7 Investment Programme Ranking & Scheduling 7.1 Based on the planned schedule of commitments as set out in Appendix 1 the £748 million is likely to be fully allocated by Quarter 4 2018/19. This means that the West Midlands Combined Authority will need to have further assurance of funding before additional commitments can be made from April 2019. A review has been commenced through a Task and Finish Group to determine whether any rescheduling of Investment Programme commitments is required for the remainder of the 2018/19 financial year. 7.2 Further funding security is intended to be achieved through an agreement on Precept and Business Rates Growth, identification of other funding streams or securing other funding currently set out across the remainder of the plan and set out in Appendix 2. A plan is also being assembled to consider a Supplementary Business Rate scheme but this income stream is exposed to a greater level of risks than the aforementioned sources referenced in this report. 7.3 The report to 12 January 2018 WMCA Board agreed, following consideration of the on Investment Programme funding report, to commence a process with Leaders of Constituent Authorities, Chief Executives and Finance Directors to rank and sequence the Investment Programme based on the current assessment of when funding streams would be realised. This is expected to align to specific project approvals only where funding had been or was likely to be secured. 7.4 A plan has now been agreed with the Chair of the Investment Board and will be shared with the Mayor to take this forward with the Metropolitan Leaders. It is expected that the working group of Finance Directors will sign off the Terms of Reference in March 2018 to assess the current Investment Programme status. The West Midlands Combined Authority together with Constituent Members are currently in the process of identifying suitable representation on this group which will need to include representation from across the whole area. The groups will report into Investment Board as follows:
Page 14 Figure 1: Task and Finish Group Reporting Structure
7.5 The first task of the Working Group will be to identify those schemes which may be subject to the prioritisation and scheduling and propose a criteria to Finance Directors for each project to be consistently assessed against that can be recommended to Chief Executives and Leaders. This will be informed by recently commissioned work through Arcadis to develop a Benefits Register for the Investment Programme. 7.6 Agreement is sought from the Investment Board for the Chair of the Investment Board to be the representative on the Task and Finish Group as set out in the report and to provide updates back to the Board through April to July 2018. 7.7 The initial outcomes of this ranking / sequencing exercise will then be presented back to Finance Directors and Chief Executives before seeking endorsement from Leaders, expected to be in July 2018 at the West Midlands Combined Authority Board. This will be supported by early engagement with the Mayor, the Portfolio Lead for Finance and Metropolitan Leaders Group before the West Midlands Combined Authority Board and Investment Board meetings. 8 Investment Programme Assurance and Governance 8.1 This report sets out a summary of the Investment Programme in order that the Investment Board can consider requests for funding in the context of the current Investment Programme. 8.2 Agreement has been reached with the Chair of the Investment Board that the information set out in Tables 1, 3, 4, 5 and 6 of this report supplemented by Appendices 1 to 3 will be provided to each Investment Board alongside an update of the work considered by the Task and Finish Group and a Forward Plan of anticipated decisions as a matter of routine. 8.3 A review was commenced of the Investment Programme following a number of resignations and long term vacant posts potentially impacting on the Assurance process. This was supported by a review of the maturity of the programme against industry good practice. 8.4 This review commenced in the last quarter of 2017 and delivered interim findings in early February 2018. The review was delivered by Arcadis and has resulted in a number of appointments recently being made to strengthen the internal resources of the team. This includes the appointment for the first time of a Benefits Manager in the programme management office who is working with the external consultants to define the programme wide approach to benefits management.
Page 15 8.5 A Head of Strategic Programme Delivery has now been approved through the Job Evaluation Process and is being recruited actively to strengthen strategic leadership of the Investment Programme Management Team. 8.6 A key finding of this review is the need to develop a strategic risk register and benefits register for the Investment Programme that should be reported to the Investment Board and West Midlands Combined Authority Board. Plans are now in place to deliver the Strategic Risk Register to the April 2018 Board and the Benefits Register will support the work of the Task and Finish Group and scheduling prior to routine reporting into a future Investment Board. 8.7 Arcadis have been commissioned to deliver work on the effectiveness and application of the Governance and Assurance Framework and inform the Governance process in the future. This work alongside the delivery of a Benefits Register are planned to provide interim deliverables at the start of April 2018 and then report with final outcomes at the start of May 2018. The intention is to include this as part of the Task and Finish Group and the Investment Board will receive an update of this work at is May 2018 meeting. 8.8 The Programme Management Office team continues to work with all parties in receipt of West Midlands Combined Authority funds to make sure that they understand and work within the required assurance and governance framework. This activity is being undertaken in close co-operation with West Midlands Combined Authority Finance and Audit and Assurance colleagues.
Page 16 APPENDIX 1 : WMCA Investment Programme Commitments (As at 13 March 2018)
WMCA FORECAST FORWARD PLAN OF INVESTMENT PROGRAMME APPROVALS Total Expected Funding WMCA Funding 2018/19 2019/20 Post 2019/20 TOTAL Scheme (£000) Approved Timescale Into APPROVALS to be July to October to January to April to July to October to January to to be Programme April May June 2020/21 2021/22 2022/23 2023/24 2024/25 Released September December March June September December March Confirmed
Approved Investment WMCA Management Board & Assurance Framework:
UK Central Interchange 397,600 20,041 9,270 250,200 118,089 397,600
UK Central Infrastucture 288,440 3,346 9,813 275,281 288,440
HS2 Connectivity Package 486,740 145,992 20,533 102,870 49,710 64,240 76,795 26,600 486,740 Brierley Hill Metro Extension 103,000 5,600 97,400 103,000
Programme Governance 3,023 721 277 281 284 286 289 292 593 3,023
Coventry City Centre Regeneration 149,954 149,954 149,954 Coventry UK Central North 22,700 200 3,861 18,639 22,700
Coventry UK Central South 156,500 800 1,325 500 8,000 33,225 2,675 52,200 43,875 13,900 156,500 Land Remediation Funds 200,000 87,854 5,186 5,000 5,000 32,500 32,460 32,000 200,000
Business Innovation 50,000 472 250 3,825 11,383 12,884 11,383 5,000 4,804 50,000
Commonwealth Games 25,000 25,000 25,000
Sub Total - Approvals to Date and Forecast Based on Approved SOCs 1,882,957 439,979 15,276 14,270 6,325 21,033 200,520 11,861 612,522 64,240 120,764 159,301 116,145 58,032 37,292 5,397 1,882,957
Projects Yet to Enter Assurance Process:
HS2 Connectivity Package 119,305 15,985 103,320 119,305 Page 17 Page Employment Education & Skills 20,000 - 20,000 20,000 Sub Total - Projects Yet to Enter Assurance 139,305 15,985 123,320 139,305
Total Potential Commitment Against Devolution Grant 2,022,262 455,964 15,276 14,270 6,325 21,033 200,520 11,861 612,522 64,240 120,764 159,301 116,145 58,032 37,292 5,397 123,320 2,022,262
Cumulative WMCA Approvals 455,964 471,240 485,510 491,835 512,868 713,388 725,249 1,337,771 1,337,771 1,402,011 1,522,775 1,682,076 1,798,221 1,856,254 1,893,546 1,898,942 2,022,262 2,022,262
Devolution Deal 1 Capital Funding Available 748,000 Appendix 1b
Forward Plan of Investment Board Approvals Required via Assurance Framework Scheme Approval Value to be Committed
UK Central Infrastructure April 2018 £9.8m
UK Central Interchange June 2018 £9.2m (Birmingham International Hub Redevelopment)
Sutton Coldfield Gateway July – September 2018 £20.5m
Sprint - Hagley Road (Phases 1 & 2) October to December 2018 £7.5m
HS2 Connectivity (Rail Stations) October to December 2018 £86.8m
Wednesbury Brierley Hill Metro October to December 2018 £97.4m*
Coventry South - Tile Hill Station January to March 2018 £6.5m Improvements
* This scheme and the associated approval are the subject of another paper to this Investment Board meeting (26th March 2018).
Page 18 Appendix 2 : WMCA Investment Programme - Funding Summary (£000)
LSTF / LGF / Collective Enterprise DFT Block Funding Gap / Highway Local Growth Private OLEV Additional WMCA Borrowing DFT Private (Direct) Network Rail Local Authority Investment Other Grand Total Zone Grants Not Identified England Fund (Leverage) Funding Fund (Not Secure)
UKC Interchange 398,041 205,650 131 821 604,643
UKC Infrastructure 288,000 22,410 300,000 22,015 1,923 634,348
Curzon Street Station Masterplan 556,200 556,200
Metro Birmingham Eastside Extension - 129,260 7,940 137,200
HS2 - Metro Birmingham Interchange 492,000 183,300 59,700 735,000
HS2CP Bilston Road 15,985 15,985
HS2CP Centenary Square 28,804 16,774 6,100 7,550 59,228
HS2CP Metro Edgbaston Extension 30,096 58,350 1,500 89,946
HS2CP Sprint Programme 212,810 35,050 22,419 8,100 950 279,329 HS2 Connectivity Programme HS2CP Wolverhampton Metro 27,400 13,500 40,900 81,800
HS2CP Rail Programme 186,100 40,500 198,500 425,100
Coventry Station Masterplan) 51,000 5,000 25,047 12,567 93,614
Coventry Very Light Rail 55,000 2,460 57,460
Bri 19 Page erley Hill Metro Extension 103,000 207,000 33,200 400 343,600
National College of High Speed Rail 7,465 18,847 26,312
Programme Governance 3,023 3,023
High Speed Suply Chain and Business Support 7,100 342,900 350,000
SUB TOTAL - HS2 GROWTH STRATEGY 1,399,259 926,660 756,274 28,519 - 368,560 300,000 198,500 73,962 76,563 342,900 - - 21,591 4,492,788
Coventry City Centre Regeneration 149,955 207,816 357,771
Coventry UKC North 21,600 68,800 52,500 142,900
Coventry UKC South 156,450 80,850 16,300 65,000 500 8,805 327,905
Collective Investment Vehicle 1,000,000 1,000,000
Land Remediation Funds 200,000 200,000
Devolved Transport Investment 429,000 870,000 1,299,000
EZ Expansion Excluding Curzon 20,000 20,000
Business Innovation 50,000 50,000
Employment, Education & Skills 20,000 20,000
Commonwealth Games 25,000 25,000
SUB TOTAL - INVESTMENT PROGRAMME OTHER 623,005 149,650 20,000 276,616 429,000 - 65,000 - 500 8,805 - 870,000 1,000,000 - 3,442,576
GRAND TOTAL 2,022,264 1,076,310 776,274 305,135 429,000 368,560 365,000 198,500 74,462 85,368 342,900 870,000 1,000,000 21,591 7,935,364 APPENDIX 3 : Investment Programme Financial Summary Period Ending 31st January 2018
2017 / 2018 TO DATE 2017 / 2018 FULL YEAR COST TO COMPLETION G A R
T FUTURE TOTAL
C PRIOR YEAR 2017/18 TOTAL
E ACTUAL BUDGET VARIANCE BUDGET FORECAST VARIANCE YEARS FORECAST VARIANCE J ACTUAL FORECAST BUDGET O FORECAST OUTTURN R P £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000
UK CENTRAL : HS2 INTERCHANGE 1,459 1,545 86 2,016 2,040 (24) 1,982 2,040 600,581 604,603 1,019,937 415,334
UK CENTRAL : HS2 INFRASTRUCTURE 579 3,127 2,548 4,387 2,513 1,874 751 2,513 631,083 634,347 648,648 14,301
CURZON STREET STATION MASTERPLAN 0 0 0 1,000 1,000 0 0 1,000 555,200 556,200 556,000 (200)
METRO BIRMINGHAM EASTSIDE 1,418 1,520 102 1,678 2,033 (355) 4,457 2,033 130,710 137,200 137,200 0
METRO BIRMINGHAM INTERCHANGE 2,058 1,801 (257) 2,026 3,856 (1,830) 1,041 3,856 730,103 735,000 675,000 (60,000)
HS2 WIDER CONNECTIVITY PACKAGE * 42,081 54,087 12,006 68,187 55,430 17,099 56,729 55,430 990,306 1,102,465 1,070,624 (31,841)
BRIERLEY HILL METRO EXTENSION 3,955 1,703 (2,252) 2,133 5,017 (2,884) 2,021 5,017 336,562 343,600 310,000 (33,600)
NATIONAL COLLEGE FOR HIGH SPEED RAIL 8,671 8,671 0 8,687 9,985 (1,298) 16,022 9,985 0 26,007 25,233 (774)
HS2 GROWTH STRATEGY PROGRAMME MANAGEMENT 272 549 277 594 417 177 304 417 2,303 3,024 4,400 1,376
HIGH SPEED SUPPLY CHAIN & BUSINESS SUPPORT ** 400 400 0 25,748 25,748 0 10,870 25,748 313,382 350,000 350,000 0 % % % 7 2
HS2 Growth Strategy Total 60,893 73,403 12,510 116,456 108,039 12,759 94,177 108,039 4,290,230 4,492,446 4,797,043 304,597 6 1 1
COVENTRY UK CENTRAL PLUS CONNECTIVITY* 1,560 2,091 531 3,217 2,746 471 454 2,746 467,600 470,800 472,350 1,550
COVENTRY CITY CENTRE REGENERATION 940 3,041 2,101 7,842 6,498 1,344 464 6,498 351,239 358,201 359,311 1,110
COLLECTIVE INVESTMENT VEHICLE 13,607 13,607 0 20,000 20,000 0 3,589 20,000 976,411 1,000,000 1,000,000 0
LAND RECLAMATION 0 0 0 20,000 20,000 0 0 20,000 180,000 200,000 200,000 0
DEVOLVED TRANSPORT INVESTMENT 0 0 0 0 0 0 0 0 1,299,000 1,299,000 1,299,000 0
EZ EXPANSION EXCLUDING CURZON 0 0 0 0 0 0 0 0 20,000 20,000 20,000 0
BUSINESS INNOVATION 21 21 0 25 25 0 0 25 4,975 50,000 50,000 0
EMPLOYMENT, EDUCATION & SKILLS 0 0 0 0 0 0 0 0 20,000 20,000 20,000 0
COMMONWEALTH GAMES 0 0 0 0 0 0 0 0 25,000 25,000 25,000 0 % % % 4
OTHER INVESTMENT PROGRAMME SCHEMES 16,128 18,760 2,632 51,084 49,269 1,815 4 4,507 49,269 3,344,225 3,443,001 3,445,661 2,660 0 1 % % % 6
GRAND TOTAL 77,021 92,163 15,142 167,540 157,308 14,574 9 98,684 157,308 7,634,455 7,935,447 8,242,704 307,257 4 1
Spend to the end of January 2018 is £15.1m behind budget. This variance includes £11.9m relating to the Wolverhampton Interchange Station / Car Park FUNDING SUMMARY (JANUARY YTD ACTUAL) £000 works within the HS2 Connectivity Package caused by the delays in the procurement of the main contractor. Other significant year-to-date underspends to budget are UK Central Infrastructure (£2.5m - delayed start to land acquisition and construction works) and Coventry City Centres South regeneration WMCA 25,114 (£2.1m - delayed land acquisition). LGF 9,189 DFT 16,373 The UK Central Interchange project out-turn has been restated to exclude projects not directly managed and sponsored by Solihull MBC and UGC. Previous financial returns have included a number of investment projects relating to the Interchange Hub zone, as set out in the published UGC Growth & BCC Borrowing (CIF) 13,607 Infrastructure Plan, but which are not directly managed by SMBC/UGC. These projects included an element of HS2 direct investment in the Interchange EZ 4,587 Station, car park and Automated People Mover (APM). Local Authority 185 RGF 400 The UK Central Interchange RAG status has been changed to red for the December report. This reflects the position in regard to the £205m matched funding Central Govt Other 4,207 element of the Birmingham International Station (CEF) redevelopment proposal which is not secured. This funding represents 71% of the forecast cost of EU 110 this project (£287m). The balance of the Interchange programme, including the remainder of the CEF project, is primarily funded by WMCA. Private 118 The UK Central Infrastructure scheme programme continues to show a reduction against the initial budget as activities and funding are aligned to TfWM 3,131 programmes. Previous financial returns have included projects set out in the published UGC Growth & Infrastructure Plan. TOTAL 77,021 The forecast out-turn for the Birmingham to Interchange and Brierley Hill Metro Extensions continue to exceed the original budget as a result of the inclusion of optimism bias into the initial business case estimates. No new funding has been identified to cover these variances. * NOTE : An element of the HS2 Connectivity Package is included within the UK Central Hub Growth and Infrastructure Plan. The recent Devo II announcement confirmed the DCLG/DfT funding for the Brierley Hill Metro extension and therefore the RAG status has moved to green. The RAG status remains red for the Birmingham to Interchange Metro extension because Government funding has not been confirmed. WMCA are working with ** NOTE : The High Speed Supply Chain work stream is not a WMCA funded project stakeholders to identify a funding strategy for this project. programme and included for information only. The Investment Programme baseline of £350m includes substantial sums as leveraged investment from business. Within the HS2 Connectivity Package, the Wolverhampton Interchange Station / Car Park scheme is now forecasting an additional £30.0m of cost which has emerged as part of the procurement activity to be funded by WMCA (50%) and the City of Wolverhampton (50%).
Page 20 [NOT PROTECTIVELY MARKED] Agenda Item 7
Investment Board
Date 26 March 2018
Report title Midland Metro Wednesbury to Brierley Hill Extension
Cabinet Member Councillor Roger Lawrence – Transport Portfolio Lead
Accountable Chief Laura Shoaf, Managing Director TfWM Executive Email: [email protected] Tel: 0121 214 7444
Accountable Phil Hewitt, Metro Programme Director Employee Email: [email protected] Tel: 0121 214 7254
Report to be/has been Previous Meetings considered by WBH Project Board 17/1 Leadership Team 20/02/18
Future Meetings WMCA Investment Board 26/3/18
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Recommendation(s) for action or decision:
The Investment Board is recommended to:
1. Note that the Outline Business Case for the project, considered by the Panel on 12 April 2017, and subsequently finalised and updated via DfT scrutiny has secured the Government funding sought, therefore the next consideration of the project at Technical Appraisal Panel will be for the Final Business Case stage; 2. Note that, in a separate approvals process, authority will be sought for a further allocation of up to £40 million for acceleration works aimed at bringing forward the completion and opening for passenger services of the Wednesbury to Dudley Town Centre section ahead of the Commonwealth Games in summer 2022; 3. Approve in line with the Outline Business Case planned expenditure profile, the maximum allocation of £12m million from the DfT Transforming Cities Fund (Project total of £19.6m cumulative, of which £19.2m will now be allocated/ recovered from DfT funding) to cover ongoing design, development and contingency cost to the end of the current stage of development as set out in sections 3 – 6 of this report and authorise the Metro programme Director to place the necessary contracts / orders under the Programme Alliance Agreement.
1.0 Purpose
1.1 To approve base funding for the next stages of development of Wednesbury to Brierley Hill project to Midland Metro Alliance stage gate B.
2.0 Background
2.1 The Wednesbury to Brierley Hill extension project was the subject of a report to WMCA Board on 21 April 2017, following consideration by the Technical Appraisal Panel on 12 April, which approved the submission of a business case to Government with a Benefit to Cost Ratio (BCR) of 1.6:1.
2.2 Subsequent to that report, work continued to finalise and enhance the project business case and this work was completed in June 2017, with an enhanced BCR of 2.5:1. The Outline Business Case was formally presented to the Secretary of State for Transport on 19 June by the Mayor for the West Midlands. Further to the submission of the Outline Business Case, it was scrutinised by the Department of Transport. Queries concerned clarifications and requests for additional information on the commercial and management cases, and (at the end of August) on the transport modelling, and further questions on both on 23 October. Following scrutiny by the DfT the business case was revised giving a BCR of 2.3:1. The updated business case was submitted to TAP ahead of approval being sought from the WMCA Board to submit a Transport and Works Act Order application for the scheme
2.3 In November 2017 Government allocated firm funding of £250 million to WMCA through the Transforming Cities Fund, and on 8 December 2017 the WMCA Board allocated £207 million of this funding to the Wednesbury to Brierley Hill Extension and approved an application being made for an additional Transport and Works Act Order for the scheme. This enables WMCA and Midland Metro Alliance (MMA) to transition the project from the
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development to the delivery stage, with the aim of securing the earliest possible delivery of the first phase of the Wednesbury to Brierley Hill project to serve Dudley town centre.
2.4 With that aim Midland Metro Alliance (MMA) is developing a strategy to bring forward work packages from within the overall project cost envelope of £343.6 million so as to enable earlier delivery by de-risking the delivery schedule in relation to programme-critical elements. This will also demonstrate a growing momentum towards delivery of the scheme on site, and continue to build public support for, and belief in, the reality of the project’s renaissance. This strategy will be subject to a separate application for allocation of funding.
2.5 It is necessary to maintain good governance and a control on costs, continuing to demonstrate value for money whilst at the same time retaining flexibility to amend the delivery plan as further detail emerges from ongoing investigative work, particularly in relation to the railway corridor structures. MMA therefore recommends a staged approach to budget approvals, enabling the WMCA to take measured and timely decisions based on the best available information and the most up-to-date cost information at any decision point. However, in order to ensure that these essential works are not unduly delayed by lengthy Governance processes, a separate paper will be presented for the next key stages of programme advancement to enable the necessary timely progress to be made so as to ensure that every effort is made to deliver the Wednesbury – Dudley section as early as possible.
2.6 The first stage in the ongoing development and delivery of the scheme will be to continue to progress the design, development and Order management works in line with the base schedule for the Wednesbury Brierley Hill Outline Business Case. The key activities within the base schedule are set out in the following sections of the report but briefly comprise:
OBC Base Schedule Key Activities Continuation of current outline design work – section 3 Management of the statutory processes – section 4 Preparation of Target Cost 1 (TC1) – section 5 Development of Final Business Case – section 6
3.0 Continuation of current outline design work
3.1 The MMA design team will continue to progress outline design in the following disciplines:-
Alignment and track design Traffic Assessment Systems design Environmental design Highway design Structures Urban Realm design
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4.0 Management of the Statutory Processes
4.1 Following completion of the statutory objection period to the TWA Order on 30 January the MMA will manage the ongoing statutory processes, with its own experienced team working in partnership with Parliamentary Agents, Counsel, WMCA legal team and expert witnesses as necessary. It is currently anticipated that a local public inquiry will be held commencing in October 2018. The work will include:
Negotiation with objectors and achieving an agreed settlement via legal agreement or assurances prior to inquiry where possible, Preparation of Statement of Case Preparation of Proofs of Evidence Management of the public inquiry process Preparation of rebuttals Public Inquiry
5.0 Preparation of Target Cost 1 (TC1)
5.1 TC1 is the first formal cost estimate provided to the WMCA within the MMA Programme Alliance Agreement and is a contractually committed cost from the Non-Owner Participants (designer and contractor). This requires outline design of the main scheme elements to be completed, and is planned to be available from October 2018. This will provide greater certainty of outturn costs and inform subsequent decisions on early works package commitment and the Final Business Case. The TC1 will be prepared by the MMA commercial team working together with the design and early contractor involvement teams, and reviewed/benchmarked by the Independent Programme Assurance Advisor.
5.2 The TC1 will be prepared with options for WMCA to accelerate the project further, with the aim of opening the extension to Dudley town centre prior to the 2022 Commonwealth Games. This cannot be guaranteed at this time, given the project complexity and the key risks to delivery, but if the acceleration measures set out in this report are not adopted, such an acceleration will not be feasible.
6.0 Development of Final Business Case
6.1 Firm allocation of funding from Government and the commitment in the second Devolution Deal on local assurance are likely to allow the project’s Final Business Case to be developed earlier than previously planned, and approval sought through the WMCA Assurance process, in parallel to the TWAO process. This will provide further flexibility in the drawdown of local funding and minimise the risks of expenditure on advance works.
6.2 MMA will work with Mott MacDonald’s PRISM modelling team (if new modelling is required) and Systra to develop the Final Business Case in parallel with the TC1 preparation. The PRISM priorities will need to be approved by the PRISM Management Group and/or Strategic Transport Officers Group as necessary to enable this to go ahead. This work is anticipated to cost some £200,000. The Final Business Case will be brought back to the WMCA’s Technical Appraisal Panel in accordance with the WMCA Assurance process.
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6.3 The anticipated costs for the items set out in sections 3 to 6 of this report, representing a continuation of the current planned project work to the end of Stage Gate B plus a three month buffer for governance/approvals, including Owner team costs is c£11 million plus a contingency of £1m to allow for management of any risks / exploitation of opportunities. This is in line with the business case spend profile of £12 million in 2018/19.
6.4 TfWM, Dudley and Sandwell Council’s have agreed to work together to undertake a study that will identify opportunities to maximise the regenerative benefits of the scheme and the monetary value that this can bring to the project. This will serve to both further enhance the final business case and also to identify opportunities to attract third party / private sector contributions towards the funding of the scheme.
6.5 The Investment Board is recommended to approve project cumulative of £19.6m (£19.2m from the DfT Transforming Cities Fund) that will support the existing costs incurred on the project of £7.6 million and the forecast costs to the next Stage of £12 million. This funding is to the end of 2018/19 to cover the costs of the works set out in in sections 3 - 6 of this report, in line with the Outline Business Case planned expenditure profile.
7.0 Risk
7.1 The most significant risk on the project relates to Network Rail, where both a lack of engagement and too onerous a level of engagement could delay opening to Dudley and increase costs, especially in relation to agreement in relation to the level of passive provision required for future freight use. Mitigation actions to date have included the Mayor for the West Midlands writing to and meeting with Network Rail’s Chief Executive Mark Carne, a technical workshop to achieve engagement and buy-in of technical specialists within Network Rail, and progression of the Heads of Terms relating to the purchase of the corridor by WMCA.
7.2 Another significant risk relates to the TWAO statutory process and the extent and nature of objections to the proposed land acquisition. This is mitigated through WMCA’s experienced TWA team (Team of the Year 2017 at the UK Light Rail Awards), working within MMA together with experienced Parliamentary Agents and Counsel to overcome objectors’ concerns prior to Inquiry.
7.3 It should be noted that costs incurred in the development of the final business case of this nature would be abortive if the final business case is not approved. At this stage the costs can be recovered from the government grant allocated by DfT of £207m as detailed in section 8 below, without overall risk to the investment programme.
8.0 Financial Implications
8.1 Funding of £250 million from the new Transforming Cities Fund was allocated to WMCA by Government on 20 November, including the Government funding requested in the Outline Business Case. The WMCA Board approved the allocation of £207 million of this funding to the WBHE project on 8 December 2017.
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8.2 The DfT have now confirmed the funding allocation of the £250m over the four years to 2021/22 as detailed in the letter in Appendix 1, of which £207m has been allocated to this project and the proposed drawdown is summarised in table 1 below.
2016/17 & 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 Total Prior Estimated Capital Cost (QCE) 2.0 5.6 12.0 12.2 39.0 126.1 117.1 29.6 343.6 Funded By: BCLGF 0.4 0.4 DFT Transforming Cities Fund 18.0 13.4 39.0 126.1 10.5 207.0 WMCA Contribution 1.6 5.6 -6.0 -1.2 0.0 103.0 103.0 Other Contribution 3.6 29.6 33.2 Total 2.0 5.6 12.0 12.2 39.0 126.1 117.1 29.6 343.6
Table 1 December 2017 Funding Profile amended for DfT Grant confirmation.
8.3 The funding has been re-profiled to make allowance for the early drawdown of the DfT Transforming Cities Fund, recovering the initial sunk costs which were funded from WMCA contribution.
8.4 The project currently has approved funding of £7.2m, which consists of BCLGF £0.4m and £1.6m WMCA contribution approved by Metro programme board in 2016/17. A further £5.6m has been approved in 2017/18 from the WMCA contribution through borrowing. (Project total of £19.6m cumulative, of which £19.2m will now be allocated/ recovered from DfT funding)
8.5 Funding contributions to cover the £33.2m costs will be sought from third parties or other sources and will be confirmed prior to a Final Business Case submission.
8.6 The main costs headings are summarised in table 2 below, which have been approved by the TAP as part of the OBC business case review.
Table 2 Proposed 2018/19 Funding Requirement
9.0 Impact on the Delivery of the Strategic Transport Plan
9.1 The Wednesbury to Brierley Hill Extension is an important element in the expansion of Midland Metro, and in the development of the Strategic Transport Plan’s Metropolitan Rail and Rapid Transit Network.
10.0 Wider WMCA Implications
10.1 The WBHE is a key part of the Midland Metro extensions programme. This expansion of Midland Metro, as part of an integrated Rail and Rapid Transit Network, will enable better connectivity of key centres and corridors in the Black Country with the wider Combined Authority area through effective interchange with suburban and regional rail services. Page 26 Page 6 of 7 [PROTECT]
11.0 Legal implications
11.1 Any legal issues are covered within the main body of this report.
12.0 Equalities implications
12.1 The Midland Metro extensions will facilitate fully accessible journeys and access to employment, leisure and education, and link to other transport modes (buses and rail services).
13.0 Other implications
13.1 None.
14.0 Schedule of background papers
14.1 WMCA report 30 September 2016 Midland Metro Update. 14.2 WMCA report 21 April 2017 Midland Metro Wednesbury to Brierley Hill Extension 14.3 WMCA Board report 8 December 2017 Midland Metro Wednesbury to Brierley Hill Extension - Submission of Transport and Works Act Order
15.0 Appendices
15.1 DfT letter March 2018 confirming the DfT transforming Cities Fund.
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WMCA Investment Programme Change Request Form
Part A – To be completed by Project Manager
Programme: Project Name: Finance Code:
MMA 5512 - WBHE 5512
Change Reference Number: Raised By: Date Raised:
INVCR009 Peter Adams 08 January 2018
Baselined Tolerance Level for the Project
(captured in the Business Case)
Cost Tolerance Time Tolerance Scope Tolerance
£343m October 2023 Baselined Owners Brief 21 November 2017
Change Description
Change Title:
Request for release of funding from the DfT Transforming Cities Fund to support spend against baseline funding for WBHE in 2018/2019 financial year.
Change Description:
This change concerns the anticipated spend for WBHE in line to the Outline Business Case. No additional costs are required as a result of this change.
The OBC forecasts £12m spend in 18/19 and this Change Request formalises this position. (Project total of £19.6m cumulative, of which £19.2m will now be allocated/ recovered from DfT funding).
A further change control will be presented for works associated with Dudley Town Centre and Wednesbury Delta Junction, specifically detailed design, works associated with utilities in Dudley Town Centre and construction of Delta Junction tie-in to main line 1.
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Part B – To be completed by Project Manager / Stakeholders
Impact Assessment
Impact on Project Justification/Business Case
WBHE anticipated costs for 2018/2019 are in line with the OBC provided for WBHE Project. The maximum £12m is requested in order to allow the project team to continue works in line with planned progress to complete Stage Gate B and the Final business case completion January 2019. The project deliverables have been included in Appendix 2 – Extract from Owners Brief.
Project Cost Impact (£s)
No additional budget is required, this is simply the drawdown of the next tranche of funding in line with the spend profile for the WBHE project the detail of which is set out in Board Report 5512 REP 180118 WBHE Project Board v4.
Time Impact (+/- days)
There is no time impact and the end date for the project remains in line with the project’s OBC forecast schedule.
Scope Impact
There is no impact on the project scope.
Technical Interfaces
Technical interfaces have been identified with other projects. Specifically, works associated with VLRIC at Tipton Road (Dudley MBC), Portersfield Development (Dudley Town Centre) and Dudley Bus Interchange (TfWM).
All projects are being developed and managed within a similar schedule window and it will be necessary to identify, agree and manage these technical interfaces as part of the development and delivery process.
The advanced works is not included in this request and will be covered in future change requests for the project, which is currently being developed by MMA team.
Risk Impact
Reduction is risk is associated with the impact of early completion of works on the largest and most critical section of the scheme, at Wednesbury Delta Junction.
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Risk reduction has been assessed as being associated with an overall decrease in risks associated with:
• Delays associated with inclement weather, due to the advanced works at Delta Junction being completed in late Autumn (November 2022).
• The opportunity to reach early agreement on tie in arrangements for the project with the existing Metro Line 1.
• Improving delivery certainty for the overall project through the development of the advance works to TC2 level thereby creating greater detail on the largest scope item earlier than planned and de-risking the project overall. A separate submission will be made with the respect to funding requirements related to these activities.
The current approach to risk management will continue to be used to support project delivery activities.
Issue Impact
No issues impacting the project have been identified as a result of this Change Request
Benefit Impact
These works is for the management of TWAO application process and progress design development to TC1, which includes Network rail and Stakeholder Management. All planned project benefits are associated with completion of the main works. The detailed approach to benefits realisation management will be set out in the FBC.
Finance Comments
Funding of £250 million from the new Transforming Cities Fund was allocated to WMCA by Government on 20 November, including the Government funding requested in the Outline Business Case. The WMCA Board approved the allocation of £207 million of this funding to the WBHE project on 8 December 2017.
The DfT have now confirmed the funding allocation of the £250m over the four years to 2021/22 as detailed in the letter in Appendix 1, of which £207m has been allocated to this project and the proposed drawdown is summarised is included in the Investment Board report for March 2018.
The funding has been re-profiled to make allowance for the early drawdown of the DfT Transforming Cities Fund, recovering the initial sunk costs which were funded from WMCA contribution.
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The costs as been approved as part of the business case as approved by TAP.
The project currently has approved funding of £7.2m, which consists of BCLGF £0.4m and £1.6m WMCA contribution approved by Metro programme board in 2016/17. A further £5.6m has been approved in 2017/18 from the WMCA contribution through borrowing. (Project total of £19.6m cumulative, of which £19.2m will now be allocated/ recovered from DfT funding).
Signed: Bhavna M patel
Date: 14/03/18
Areas Consulted
Business Area Consultee Date consulted
PMO Claire Jones 24/1/18
Finance Sean Pearce 31/1/18
Completed by Project Manager/PMO Manager/Project Delivery Manager
Change Authority
Leadership Board followed by Investment Board
Part C – Decision
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Action
Approve Reject Defer
Suspend Project Date(s) of Decision:
Name(s):
Signature(s):
Reason for decision:
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Deliverables Required
036 Based on the information provided above and elsewhere in this document, the Owner requires the deliverables listed in the table below to be provided by MMA:
High level review by all WBHE Discipline Leads of previous design work High Level Design Review developed in the following scheme proposals: Report • ATKINS work to support the TWAO 2005, • Mott MacDonald IOBC Study (handed over in mid-February 2017).
• Ecological5urveys: O Factual Report: Phase 1 Habitat Survey Report. • Phase 2 Protected Species Survey Report. Noise and Vibration Survey Surveys and Investigations o Environment Statement including Scope/ LA screening . (Preliminary Design) • Topographical Surveys. Technical Report and Survey Model. • Ground Investigation. Technical Report and Cross Section Drawings. • Oreinage Survey. Technical Report and Cross Section Drawings. • Track Bed Investigation. Technical Report and Drawings. • Highways Survey. Technical Report and Drawings. Operation study Operation Study and Assessment. Technical Report. (Preliminary Design)
• Urban Integration. Technical Report. • Urban design drawings including: Urban Design o Urban realm illustrative plans at 1/1000 scale. (Preliminary Design) O Focus on specific points at 1/500 scale (tram stops, major junctions, major/ listed structures etc.). o Cross-sections (1/200 scale) for each urban sequence.
• Track Form A. Technical Report and Drawings. • Track layout design criteria alignment and profile. • Gauging Report. • Running way Infrastructure drawings (Treck road and GAs.). Track /Running way • Technical drawings including: infrastructure O Alignment drawings at 1/1000 scale, including centreline of the (Preliminary Design) track, rail, gauge, street arrangements, buildings or structures to be demolished. o Focus on specific points at 1/500 scale (major junctions). O Cross-sections (1/200 scale) for each homogeneous section. • Track bed formation. Technical Report and Drawings. • Running Way Infrastructure Drawings (Track form). Utilities Technical Report on utilities assessment and drawings. (Preliminary Design)
Structures to be designed to a level that is sufficient to ensure a robust TCl. Technical Report and Drawings Structures and Civics • Structures Identification first appraisal. (Preliminary Design) • Lineside infrastructure. • Earth works, Foundation and Retaining Wall Designs. • Change of Use Evaluation Form. Drainage Drainage. Technical Report and Drawings. (Preliminary Design)
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• OLE Equipment. Technical Report and Drawings. • Telecoms AIP and Operations Management System. Technical Report and Drawings: Tramway Systems o Fare and ticketing system. (Preliminary Design) o System Safety and Security. • Signalling system. Technical Report and Drawings. • Electrical &Power. Technical Report and Drawings. • EMC Strategy. Technical Report.
• Delivery Plan. • Programme. ConsVuction Strategy Report • phasing. • Method statements. • Risk assessments.
• Traffic analysis (Impact on road traffic assessment). Technical Report Transport Impact Assessment and project appreisal. (Preliminary Design) • Transport studies &Traffic modelling (tram traffic forecast demand). Treffic Modelling Technical Report.
Environmental surveys, impact assessment and transport assessment: • Screening Environmental Statement • Scoping • Planning application statement
Project Flnancial and • Final Business Case. Economic Appraisal • Submission of Target Cost 1(TCl) Project Proposal.
The following table shows the list of documents to be submitted for land acquisition only (i.e. not fora 'full' TWAO application):
Nb Document Lead Resaonsibiliri 1 Declaration as to Status of Applicant MMA 2 Application Letter MMA 3 Statement of Aims MMA Transport andWorkSAct 4 Funding Statement MMA Order (2017/18) 5 Consultation Report MMA 6 Draft Order Winckworth Sherwood 7 Explanatory Memorandum Winckworth Sherwood 8 List of Consents Winckworth Sherwood 9 Land Plans MMA 10 Book of Reference Terrequest 11. Draft expert witness proofs of evidence MMA —as required 12 Objection Management —pre enquiry MMA—as required
Table 1: Deliverebles Required
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