COUNCIL CABINET 20 February 2013 ITEM 9

Report of the Cabinet Member for Planning, Environment and Public Protection

D2N2 Local Transport Body – Proposed Governance and Assurance Framework

SUMMARY

1.1 The purpose of this report is to

 advise Cabinet of the latest position on the devolution of decision-making and funding for local major transport schemes including the establishment of a , , and (D2N2) Local Transport Body, governed by a board of elected members

 to seek approval to city council representation on the D2N2 Local Transport Body, proposed to be called the D2N2 Local Transport Board

 to seek delegated authority for the approval of the D2N2 Local Transport Body Assurance Framework at the first meeting of the D2N2 Local Transport Board prior to submission to Government.

1.2 In November 2012 the Department for Transport (DfT) announced its firm intention to devolve funding for local major transport schemes to Local Transport Bodies. This is for major scheme funding over the next spending review period 2015-2019 and beyond. The Department has proposed that local authorities establish these based on the same geography as local enterprise partnerships. Local Transport Bodies will be responsible for allocating future funding for major schemes. DfT will shift its focus to scrutinising the governance arrangements of local transport bodies against centrally specified standards.

1.3 The Department now wants Local Transport Bodies to establish governance systems and effective processes for identifying local major scheme transport priorities. All prospective local transport bodies have to submit an Assurance Framework by the end of February 2013.

1.4 The D2N2 Infrastructure Group, comprising the directors with responsibility for strategic transport for the four constituent authorities, recommends that the Local Transport Body is governed by a board, to be named the ‘D2N2 Local Transport Board’ (D2N2 LTB), comprising voting members and advisory members.

1.5 Officers of the D2N2 Infrastructure Group are currently progressing the development of the Assurance Framework, including prioritisation processes and programme management and assurance. An early meeting of the D2N2 LTB will be required in order to approve the Assurance Framework to be submitted to Government before the end of February.

1 1.6 Once the Assurance Framework is signed off by the DfT, individual authorities, guided by the framework, will need to submit a small number of potential local major transport schemes to the D2N2 LTB. This process needs to be completed by the 31st March 2013. D2N2 LTB will prioritise the local major schemes and submit details of the prioritised schemes to Government by the end of July 2013.

RECOMMENDATIONS

2.1 To approve for the Cabinet Member for Planning, Environment and Public Protection, and one other authorised/allocated representative to represent Derby City Council on the D2N2 Local Transport Board.

2.2 To give delegated authority to the Strategic Director for Neighbourhoods in consultation with Derby’s elected D2N2 Local Transport Board members to agree the Assurance Framework prior to submission to Government, and for this position to be represented by the elected members to the first meeting of the D2N2 LTB.

REASONS FOR RECOMMENDATION

3.1 In order to promote and safeguard Derby City Council’s local major transport scheme interests it is recommended that Derby is directly represented on the Local Transport Board by two elected members.

3.2 Derby City Council, through representation on the D2N2 Local Transport Board, will in part be held accountable for any financial decisions that are taken by the Local Transport Body on the prioritisation and allocation of future major scheme funding. As such, the Governance arrangements need to be understood and endorsed by the City Council.

3.3 The operational detail of the Assurance Framework will be approved at the first meeting of the elected D2N2 Local Transport Board for submission to Government by the end of February 2013

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COUNCIL CABINET 20 February 2013

Report of the Strategic Director for Neighbourhoods

SUPPORTING INFORMATION

Devolution of Local Major Scheme Funding and Creation of Local Transport Bodies

4.1 Local major transport schemes have traditionally been approved and funded individually by central Government under a centralised bidding process. The previous Government’s Regional Funding Allocations (RFA) process took the initial scheme prioritisation away from Whitehall, but business cases for individual schemes were still required to be submitted, as before, for Department for Transport (DfT) approval.

4.2 In November 2012 the DfT published guidance on ‘Local Frameworks for Funding Major Transport Schemes: Guidance for Local Bodies’ announcing its firm intention to devolve funding for local major transport schemes to local transport bodies (LTBs). This is for major scheme funding over the next spending review period 2015-2019 and beyond. In brief the DfT proposals will:

 Devolve capital funding for local major transport schemes to new democratically accountable Local Transport Bodies. The detailed membership of these Local Transport Bodies will be for the local area to propose and agree;

 Allocate budgets to the Local Transport Bodies by formula based on population;

 Within a common approach to assessing value for money and priority, Local Transport Bodies will determine their own programmes of local major transport schemes;

 Put both local transport authorities and local enterprise partnerships (LEP) in influential roles in the decision making arrangements of Local Transport Bodies over which transport schemes are delivered.

4.3 The DfT is proposing that local authorities establish new Local Transport Bodies, typically based on the same geography as local enterprise partnerships, responsible for allocating future funding for major schemes. Instead of appraising proposals for individual transport projects, the DfT will shift its focus to scrutinising the governance arrangements of LTB’s against centrally specified standards.

3 4.4 The Governments guidance note sets out the view that the existing arrangements in place governing local authorities’ financial management are not adequate for the purposes of managing devolved major scheme funding. This is because it is the Local Transport Body and not the LA that is the effective decision making body. Local Transport Bodies will make decisions about distribution of resources between local authorities. More specific arrangements are therefore required that are tailored to the requirements of the programme and appropriate to the size and nature of the schemes that are likely to be funded. As a consequence, the DfT now wants Local Transport Bodies to establish good governance systems and effective processes for identifying priorities.

4.5 All prospective Local Transport Bodies have to submit their assurance framework documents by the end of February 2013. These will include details of proposed governance arrangements and the operating principles of the Local Transport Body. The Assurance Framework is made up of;

 proposed governance arrangements,

 prioritisation processes, and

 programme management and assurance.

The guidance sets out that assurance frameworks will have to cover the following elements:

 Name of the Local Transport Body  Geography  Membership and governance  Management of conflicts of interest  Policy on the acceptance and declaration of gifts and hospitality  Status and role of accountable body  Audit and scrutiny arrangements  Strategic objectives and purpose of Local Transport Body  Support and administration  Working arrangements and meeting frequency  Transparency and local engagement  Complaints and whistle blowing

4.6 The prioritisation process will need to deal with deliverability, fit with strategic objectives and the predicted effectiveness of the scheme. The assurance framework will also set out programme management and assurance processes, and resolution of disputes. There will be some difficult issues for the D2N2 LTB to resolve, not least that of financial accountability and risk management. The governance and prioritisation process are outlined in more detail in the following paragraphs.

4 D2N2 Local Transport Board and Governance

4.7 On 28th September 2012 DfT asked for confirmation of the geographic arrangements for Local Transport Bodies. All 4 local transport authorities replied supporting a Local Transport Body coincident with the D2N2 LEP geography, comprising Nottinghamshire, Nottingham, Derbyshire and Derby. However; the Derbyshire districts of NE Derbyshire, Bolsover and Chesterfield as well as the Nottinghamshire district of Bassetlaw expressed a preference for local major schemes in their area to be funded by the Sheffield City Region/ LTB. In January 2013 the DfT acknowledged that the Sheffield City Regions Governance Review and plans for a will have a bearing on the LTB geography. The DfT expect local partners to propose a definitive LTB boundary once the Governance Review is complete.

4.8 It is proposed that the Local Transport Body is created as a voluntary non-statutory organisation. The D2N2 Infrastructure Group, comprising the directors with responsibility for strategic transport for the four constituent authorities, recommends that the Local Transport Body is governed by a board, to be named the ‘D2N2 Local Transport Board’ (D2N2 LTB). The Board will comprise voting members and advisory members;

Voting members

 Eight elected members – two from each of the four local transport authorities  A representative from the D2N2 LEP  A representative from the Sheffield City Region LEP, required to comply with Government guidance because of the overlapping areas of interest.  Two elected members from D2N2 area District Councils

Non-voting advisory members

 Non-voting advisory members should include DfT, Highways Agency and Network Rail

4.9 A draft constitution is currently being prepared for consideration and approval by the D2N2 LTB. The D2N2 LTB will convene an initial meeting to review membership, secretariat and other administration arrangements, meeting programme, and organisation of supporting boards and task groups.

4.10 The initial meeting will also appoint one of the local transport authorities to act as the financially accountable body for receipt and management of Local Transport Body grants, funding and budgets.

4.11 It is accepted that the four Local Transport Authorities will collectively provide support to the D2N2 LTB. Costs associated with administration of the process will be monitored and reviewed in the future.

5 Prioritisation Process of Local Major Schemes

4.12 As part of the assurance framework of the D2N2 LTB, the board members will need to agree a prioritisation process and mechanism to appraise and develop a major scheme programme. Officers are progressing proposals for the prioritisation process for consideration by the Board.

4.13 The Department for Transport requires LTBs to publish and submit to DfT a prioritised list of schemes by July 2013. In order to meet this deadline and assess schemes consistently across the D2N2 area, local authorities within the D2N2 LTB will need to prioritise their individual local major transport schemes by 31st March 2013. In January 2013, DfT provided indicative figures for funding from 2015/16 to 2018/19 for the D2N2 LEP area of £46.8m.This sets the programme limit for the D2N2 area and therefore the number of schemes that each authority should realistically prioritise. It is noted that within the likely funding constraints it should be assumed that each LTA will continue to secure local contributions to the capital cost of a scheme to improve its value for money. 4.14 An initial assessment of the strategic transport and economic need, scheme prioritisation and value for money would be required from each local transport authority. Individual transport authorities will need to propose programmes that are realistic in terms of funding and flexible in terms of delivery timings. If each local transport authority continues to use DfT guidance for cost benefit analysis or a similar consistent approach the consideration of competing priorities could be used to inform programming decisions. 4.15 The D2N2 LTB, with appropriate information and advice would determine a D2N2 wide programme based the agreed prioritisation process.

Summary of Key Activities and Dates

4.16 The required activity between now and the commencement of the operation of the devolved funding stream from April 2015 to March 2019 is as follows:

 February 2013: each local transport body agrees an assurance framework setting out its governance and its approach to scheme selection, and submits this the Department for Transport.

 July 2013: each local transport body agrees its programme of schemes matched to available budgets, and submits this to the Department for Transport.

 July 2013 to March 2015: business cases, compliant with DfT guidance, are developed for selected schemes (alongside any required processes for planning consent and land assembly). For schemes to be delivered later in 2015-2019 period; these processes could be on-going beyond March 2015.

OTHER OPTIONS CONSIDERED

5.1 None.

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This report has been approved by the following officers:

Legal officer Janie Berry, Director of Legal and Democratic Services Financial officer Amanda Fletcher, Head of Finance, Neighbourhoods and CEO Human Resources officer N/A Service Director(s) Christine Durrant, Director of Planning and Facilities Management Other(s)

For more information contact: Rachel Harvey or Tara McKenna on 01332 641771 or 641755 [email protected] or [email protected]

Background papers: None List of appendices: Appendix 1 – Implications

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IMPLICATIONS

Financial and Value for Money

1.1 It is accepted that the four Local Transport Authorities will collectively provide support to the operation of the D2N2 LTB. This will be provided and contained within existing revenue resources but the future costs of facilitating the operation of the D2N2 LTB will be reviewed as the process is established.

1.2 The local major transport scheme funding will be devolved on a population basis across the relevant Local Transport Body area. It is estimated that the D2N2 LTB will receive around £46.8 million for the period 2015/6 to 2018/19. Using Derby’s population as a guide we might expect to secure in the region of £6m over this 4 year period, however securing this level of funding is still subject to the submission of eligible schemes to, and prioritisation by, the D2N2 LTB.

1.3 It is noted that within the likely funding constraints it should be assumed that each local transport authority will be required to secure local contributions to the capital cost of a scheme to improve its value for money.

Legal

2.1 In accordance with the DfT Guidance, the establishment of the D2N2 Local Transport Body will require the formulation and agreement of a robust governance framework to address such issues as membership and voting rights, financial accountability and resolution of disputes. Any Elected Member appointed to the D2N2 LTB will have to give consideration as to whether any interests should be recorded within the Council’s Register of Interests.

2.2 Derby City Council, through representation on the D2N2 Local Transport Board, will in part be held accountable for any financial decisions that are taken by the Local Transport Body on the prioritisation and allocation of future major scheme funding.

2.3 One of the constituent Local Transport Authorities will be required to act as the accountable body for the D2N2 LTB.

2.4 These issues are yet to be agreed.

Personnel

3.1 None at this stage.

Equalities Impact

4.1 None at this stage.

8 Health and Safety

5.1 None at this stage.

Environmental Sustainability

6.1 None at this stage.

Asset Management

7.1 None at this stage.

Risk Management

8.1 None at this stage.

Corporate objectives and priorities for change

9.1 Appropriate investment in transport infrastructure within the city will contribute to the achievement of a thriving sustainable economy.

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