Public Document Pack
MEETING OF THE LIVERPOOL CITY REGION COMBINED AUTHORITY
To: The Members of the Liverpool City Region Combined Authority
Dear Member,
You are requested to attend a meeting of the Liverpool City Region Combined Authority to be held on Friday, 19th September, 2014 at 11.00 am in the Authority Chamber - No.1 Mann Island, Liverpool, L3 1BP.
If you have any queries regarding this meeting, please contact Lynn Cairns on telephone number (0151) 443 3107.
Yours faithfully
Interim Head of Paid Service
(Established pursuant to section 103 of the Local Democracy, Economic Development and Construction Act 2009 as the Halton, Knowsley, Liverpool, St Helens, Sefton and Wirral Combined Authority)
LIVERPOOL CITY REGION COMBINED AUTHORITY
AGENDA
1. APOLOGIES FOR ABSENCE
2. DECLARATIONS OF INTEREST
3. MINUTES OF THE LAST MEETING OF THE COMBINED AUTHORITY HELD ON 13 JUNE 2014 (Pages 1 - 14) Transport
4. LONG TERM RAIL STRATEGY To consider the report of the Lead Officer: Transport. (Pages 15 - 56)
5. ONE NORTH REPORT: A PROPOSITION FOR AN INTERCONNECTED NORTH To consider the report of the Lead Officer: Transport. (Pages 57 - 82)
6. HIGH SPEED RAIL DEVELOPMENT PROGRAMME: SEPTEMBER UPDATE To consider the report of the Lead Officer: Transport. (Pages 83 - 88) Economic Development
7. GROWTH DEAL IMPLEMENTATION PROCESS To consider the report of the Executive Director, Liverpool City Region Local Enterprise Partnership. (Pages 89 - 96)
8. LIVERPOOL CITY REGION INWARD INVESTMENT To consider the report of the Lead Officer: Economic Development. (Pages 97 - 102)
Governance
9. LIVERPOOL CITY REGION COMBINED AUTHORITY SCRUTINY PANEL To consider the report of the Lead Officer: Scrutiny. (Pages 103 - 106)
10. COMBINED AUTHORITY BUDGET MONITORING STATEMENT APRIL 1ST 2014 TO JUNE 30TH 2014 (QUARTER 1) To consider the report of the Section 151 Officer. (Pages 107 - 122)
11. MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY FINAL ACCOUNTS 2013-14 To consider the report of the Section 151 Officer. (Pages 123 - 224)
12. ASSOCIATE MEMBERSHIP OF THE COMBINED AUTHORITY To consider the report of the Chair of the Combined Authority. (Pages 225 - 228)
13. THE ROLE OF THE COMBINED AUTHORITY IN DRIVING A NORTHERN DEVOLUTION AGENDA To consider the report of the Chair of the Combined Authority. (Pages 229 - 244)
14. MINUTES
a) MERSEYTRAVEL COMMITTEE - 26 JUNE 2014 (Pages 245 - 260)
b) MERSEYTRAVEL COMMITTEE - 25 JULY 2014 (Pages 261 - 270)
c) MERSEYTRAVEL COMMITTEE - 4 SEPTEMBER 2014
(Pages 271 - 284)
Z For Information
15. IMPLEMENTATION OF THE LIVERPOOL CITY REGION DEAL To consider the report of the Head of the Secretariat. (Pages 285 - 288)
16. ANY OTHER ITEM(S) WHICH THE CHAIRPERSON DEEMS TO BE URGENT
Agenda Item 3
LIVERPOOL CITY REGION COMBINED AUTHORITY
At a meeting of the Liverpool City Region Combined Authority held in the Authority Chamber - No. 1 Mann Island, Liverpool, L3 1BP on Friday, 13 June 2014, the following Members were
P r e s e n t:
Mayor J Anderson OBE, Councillor P Davies, Councillor P Dowd, Councillor B Grunewald, Mr R Hough, Councillor R Polhill and Councillor R J Round.
ANNUAL MEETING BUSINESS
1. APPOINTMENT OF CHAIR AND VICE CHAIR
The Head of the Secretariat opened the meeting and invited nominations for the appointment of Chair of the Combined Authority. It was moved by Councillor B Grunewald, and seconded by Councillor R Round, and:-
RESOLVED – That Councillor P Davies be appointed Chair of the Combined Authority.
(COUNCILLOR P DAVIES IN THE CHAIR)
The Chair thanked his colleagues for his appointment. He stated that the Combined Authority was an important body in terms of attracting growth and jobs to the City Region and he was looking forward to working with all Members and partners.
The Chair then invited nominations for the appointment of Vice Chair of the Combined Authority. It was moved by Councillor B Grunewald and seconded by Councillor R Polhill, and:-
RESOLVED – That Councillor R Round be appointed Vice Chair of the Combined Authority.
2. APOLOGIES
No apologies for absence had been received.
3. DECLARATIONS OF INTEREST
The Monitoring Officer reported that no declarations of interest had been received in respect of the annual meeting business.
4. LIVERPOOL CITY REGION COMBINED AUTHORITY CONSTITUTION
Members considered a report of the Monitoring Officer confirming that no changes were proposed to the Combined Authority’s Constitution at the present time. The report also set out a number of issues that required a decision by the Authority in respect of:-
• appointments to transport related bodies;
Page 1 • scrutiny arrangements and the management of any associated appointments; and • the establishment of an Audit Committee.
RESOLVED – That:-
(i) it be noted that there are no changes proposed to the Liverpool City Region Combined Authority Constitution;
(ii) the Scheme of Delegation for the Combined Authority (Part 3 of the Constitution) as attached at Appendix One to the report submitted be reconfirmed;
(iii) the power to make transport related appointments to outside bodies be delegated to the Merseytravel Committee at its meeting on 26 June 2014;
(iv) subject to the approval of the proposed Scrutiny Model (see Minute No. 5), the power to make appointments to the Scrutiny Panel be delegated to the Head of Paid Service in accordance with the nominations received from the Constituent Councils and the Liverpool City Region Opposition Groups; and
(v) the proportions of membership of the Audit Committee be split evenly between the Combined Authority, the Merseytravel Committee and the Scrutiny Panel (i.e. 2:2:2), and the Combined Authority’s representatives be Councillors B Grunewald and R Round.
5. SCRUTINY ARRANGEMENTS
Members considered a report of the Lead Officer: Scrutiny regarding the scrutiny arrangements for the Combined Authority.
It was noted that information on the scrutiny arrangements were included at Part 5, Section B of the Authority’s Constitution. To support these arrangements, the report set out a number of proposals in relation to the establishment of a Scrutiny Panel, including:-
• how to achieve political balance; • the appointment of Members; • a programme of meetings; • the determination of topics for consideration by the Scrutiny Panel; and • training.
Members also considered further information that had been circulated in advance of the meeting setting out comments that had been received from Opposition Group Leaders and Independent Members of the six Liverpool City Region local authorities in response to the proposals in the Lead Officer’s report. In particular, the Mayor highlighted Councillor Green’s comment regarding Government guidance that the Chairperson of an overview and scrutiny committee should not be a member of the majority political party represented in the Combined Authority. In response, it was reported that the Combined Authority’s Constitution provided for the Scrutiny Panel to appoint its own chairperson at its first meeting. This appointment
Page 2 may, or may not, take account of the Government guidance, but would be a matter for the Scrutiny Panel.
RESOLVED – That:-
(i) the comments made by the Opposition Group Leaders be noted;
(ii) the Scrutiny Model and arrangements for political balance set out in the report submitted for the Liverpool City Region Combined Authority (LCRCA) Scrutiny Panel be adopted;
(iii) each Constituent Council appoint two members to the LCRCA Scrutiny Panel;
(iv) the Liverpool City Region Opposition Groups, acting collectively across the City Region geography, be requested to appoint two opposition members to the LCRCA Scrutiny Panel;
(v) a minimum of four LCRCA Scrutiny Panel meetings be held per annum in:-
(a) September 2014; (b) January 2015; (c) April 2015; and (d) July 2015;
(vi) the Scrutiny Panel develop an Annual Scrutiny Plan;
(vii) training be arranged through North West Employers Organisation for Scrutiny Panel members; and
(viii) the Agenda for the inaugural City Region Scrutiny Panel meeting be as set out at Appendix 3 to the report submitted.
6. COMBINED AUTHORITY NOMINATIONS AND APPOINTMENTS 2014-15
The Head of the Secretariat submitted a report setting out the appointment of Elected Members to the Combined Authority, and nominations to the Merseytravel Committee, by Constituent Councils at their Annual Meetings as follows:-
1. Combined Authority
Appointment Substitute Appointment
Halton Council Cllr Rob Polhill Cllr Mike Wharton Knowsley MBC Cllr Ron Round Cllr Mike Murphy Liverpool CC Mayor Joe Anderson OBE Deputy Mayor Roz Gladden Sefton MBC Cllr Peter Dowd Cllr Ian Maher St Helens MBC Cllr Barrie Grunewald Cllr Andy Bowden Wirral MBC Cllr Phil Davies Cllr Ann McLachlan
Page 3 2. Merseytravel Committee
Nominated Representatives
Halton Council Cllr Harry Howard Cllr John Stockton
Knowsley MBC Cllr Ken McGlashan Cllr Mal Sharp
Liverpool CC Cllr Daniel Barrington Cllr Joanne Calvert Cllr Mark Norris Cllr Mary Rasmussen Cllr Liam Robinson Cllr Jeremy Wolfson
Sefton MBC Cllr Anthony Carr Cllr John Dodd Cllr Gordon Friel Cllr Stephen Kermode
St Helens MBC Cllr John Fulham Cllr Marlene Quinn
Wirral MBC Cllr Ron Abbey Cllr Steve Foulkes Cllr Les Rowlands Cllr Jerry Williams
RESOLVED – That:-
(i) the appointments from constituent Councils to the Combined Authority be noted; and
(ii) the nominated representatives from constituent Councils to the Merseytravel Committee as set out above be co-opted.
7. LIVERPOOL CITY REGION COMBINED AUTHORITY FORWARD PLAN
Members considered a report of the Head of the Secretariat setting out a proposed meeting schedule and Forward Plan for the Combined Authority. It was advised that the Forward Plan had been developed to focus the work of the Combined Authority over the next 12 months. This rolling Plan would be updated on a regular basis as new items for discussion came forward.
RESOLVED – That:-
(i) the schedule of meetings for the Combined Authority be as set out in Appendix One to the report submitted; and
(ii) the Forward Plan for the Liverpool City Region Combined Authority, as attached at Appendix One to the report submitted, be adopted.
Page 4
ORDINARY MEETING BUSINESS
8. DECLARATIONS OF INTEREST
The Monitoring Officer reported that no declarations of interest had been received in respect of the ordinary meeting business.
9. MINUTES OF COMBINED AUTHORITY MEETING ON 1 APRIL 2014
RESOLVED - That the minutes of the meeting of the Liverpool City Region Combined Authority held on 1 April 2014 be approved as a correct record.
10. LIVERPOOL CITY REGION GROWTH PLAN AND LOCAL GROWTH FUND SUBMISSION
Members considered a report of the Executive Director, Liverpool City Region Local Enterprise Partnership (LEP), which summarised current and ongoing discussions with Government following the submission of the City Region Growth Plan on 31 March 2014.
It was noted that the Local Growth Fund “asks” over the 2015/16 to 2020/21 period totalled a sum of £250m. However, Government representatives had advised that the pot had been oversubscribed by three to four times.
All LEPs had received a letter from the Cities Minister outlining the fact that the process in Government would continue for a number of weeks and that further information requests may be made of LEPs. There were concerns across the LEP Network about the speed of the process, and the basis of decision-making, but it was considered that the Liverpool City Region was well placed and the LEP was actively engaging with the officials involved.
In particular, it was noted that:-
• the existing administration and the Labour Party were all committed to the LEP model being maintained during the next administration, and devolution would be encouraged. The developing Labour Party policy was looking at joining LEPs and combined authorities within areas. The Liverpool City Region’s Combined Authority model therefore meant that it was well placed in this respect;
• when colleagues met with ministers at the International Festival for Business, they would continue to emphasise the importance of this funding to the City Region’s economy. It was anticipated that the transport scheme in the Growth Plan could support up to 40,000 jobs throughout the City Region, although logistics was the primary issue in this instance;
• it was anticipated that the announcement from Government would be made in the second or third week of July, prior to Parliamentary recess; and
• the funding had been targeted against two of the five strategic projects, for example the freight and logistics hub where it was anticipated that key sites could support up to 20,000 jobs in the City Region.
Page 5 RESOLVED – That:-
(i) the progress in the agreement of the Growth Deal be endorsed;
(ii) City Region stakeholders be requested to confirm their support for the proposals within the Growth Deal and, when possible, ensure this is communicated to key stakeholders; and
(iii) the transition of the Assurance Framework from the Liverpool City Region Local Transport Body to the Combined Authority, in accordance with the decision recommended by the Merseytravel Committee at its meeting on 29 May 2014, be approved.
11. FREIGHT AND LOGISTICS IN THE LIVERPOOL CITY REGION
Members considered a report of the Lead Officer: Economic Development providing an update on issues in respect of freight and logistics in the Liverpool City Region.
It was noted that, in combination with the widening of the Panama Canal opening up new markets and trade routes, and the development of a deep water berth at the Port of Liverpool (the ‘Liverpool2’ project), the City Region was increasingly well placed to capitalise on the emerging market opportunities. The Growth Plan therefore included the development of the City Region as a ‘Freight and Logistics Hub’ as a key strategic project, and identified the need to improve access to the port of Liverpool as another strategically important requirement.
A total of £52.9m of Local Growth Fund resource had been sought to support key transport schemes throughout the City Region linked to the Freight and Logistics Hub proposals, which had received letters of support from over 30 private sector organisations and support from Cheshire and Warrington LEP and West Lancashire Council. In addition, considerable activity in relation to freight and logistics was already taking place to ensure that the economic opportunity could be grasped. Further information in this respect was set out within the report for Members’ consideration.
In particular it was noted that there was an anticipated 2m square feet of unsatisfied demand of warehouse and logistics space in the next two years. Members considered that the availability of sites was critical, and this was an area where the Combined Authority could work effectively to ensure that sufficient sites came forward.
RESOLVED – That:-
(i) the content of the report be welcomed and noted;
(ii) the considerable City Region work being undertaken, which places the City Region in a prominent position, be acknowledged and the City Region’s opportunity be promoted in moving forward;
(iii) the Lead Chief Executive for Economic Development, working with Merseytravel and the Local Enterprise Partnership, be requested to bring forward a plan to capitalise on the City Region’s prominent position in terms of jobs and growth, which may include further co- ordination of City Region activity where required; and
Page 6
(iv) the Lead Officer: Economic Development submit a further report to a future meeting of the Authority setting out proposals in respect of meeting the demand for warehouse and logistic space in the City Region over the next two years.
12. SCITECH DARESBURY - ALAN TURING INSTITUTE
Members considered a report of the Chief Executive of Halton Council seeking support from the Combined Authority to locate the proposed Alan Turing Institute at SciTech Daresbury.
It was noted that, in his March 2014 Budget, the Chancellor had announced a £222m package to develop science in the UK. Part of this package (£42m) proposed a new institute dedicated to handling ‘big data’. It was considered that this was an area where SciTech Daresbury was already world class: situated alongside the excellence that was already available at SciTech, the Alan Turing Institute would be well positioned to rapidly achieve the full potential that the UK needed and was seeking in the field of ‘big data’ and algorithm research. It would also perform a major role in re-balancing the UK economy from a geographical point of view.
Members were advised that the Government was currently undertaking an informal consultation with University Vice Chancellors and, once completed, the process for determining the location of the Turing Institute would be finalised. It was reported that, although competition would be strong, there was significant support from the University of Liverpool, the University of Manchester and North West business leaders, and letters of support were now being sought from the Combined Authority.
RESOLVED – That:-
(i) the location of the proposed Alan Turing Institute at SciTech, Daresbury, be supported; and
(ii) letters be sent to Liverpool City Region MPs, North West MPs and Liverpool City Region partners seeking support to locate the proposed Alan Turing Institute at SciTech, Daresbury.
13. EU GOVERNANCE ARRANGEMENTS 2014-2020
Members considered a report of the Lead Chief Executive: European Programme providing an update on emerging governance arrangements for the new 2014-2020 EU programme period, and seeking nominations from the Combined Authority for the three Local Authority places on the new local EU sub-committee.
It was noted that the Liverpool City Region European Strategy 2014-2020 had been submitted to Government at the end of January 2014 and had received a positive assessment. Government had confirmed that each LEP area should establish a ‘local EU sub-committee’ which would be a formal sub-committee of the national Progamme Monitoring Committee, with responsibility for oversight of local EU funds that would be delivered through the local EU strategy (ESIF). Representation on the local EU sub-committee had to conform to EU regulations which required that membership be drawn from all sectors.
Page 7 The report set out the current situation, a proposed new structure, information on the new local EU sub-committee and information on a proposal to establish a technical group to support the sub-committee and oversee management of the programme.
RESOLVED – That:-
(i) the proposals for the establishment of new EU governance arrangements be approved;
(ii) the three Local Authority nominations to the local EU sub-committee be as set out in paragraph 8.1 of the report submitted; and
(iii) delegated authority be granted to the Lead Chief Executive: European Programme, in consultation with the Mayor and Leaders of the constituent councils, to determine alternates to fulfil this role.
14. LIVERPOOL CITY REGION: DRAFT LONG TERM RAIL STRATEGY
The Authority received a presentation from Councillor Liam Robinson, Chair of Merseytravel, providing a strategic rail overview in respect of:-
• transport and the economy – including changes to the approach to transport funding post April 2015 and the fact that transport was an enabler of growth;
• the importance of rail to the Liverpool City Region – it was vital that there was a transport network that supported this so people could commute into, and across, the Liverpool City Region;
• the long term rail strategy – a Strategy had been developed with the aim of ensuring that the rail network met the needs of the City Region over the next 30 years. The Strategy supported the on-going regeneration of the City Region and provided a clear vision for the rail network and its development;
• increasing demand on the network, and the need to grow in order to cope with this so as not to hinder the growth of the City Region;
• the devolution of local decision making powers from the Department for Transport (DfT) to Rail North - an outline governance structure for Rail North had been developed, largely reflecting the model developed the previous year;
• competitive refranchising – the DfT had published prospectuses in the last week for franchises and public consultation was running until August 2014. Work had been ongoing to look at how rolling stock should be dealt with;
• the results of the HS2 economic benefits study, which had been positive; and
• key points in relation to HS2, in particular, the call for full High Speed Rail connectivity to be delivered into Liverpool City Centre – the aim of the studies was to provide a robust evidence base that convinced HS2/DfT to undertake further work which would improve the current HS2 offer to the Liverpool City Region.
Page 8 Following the presentation, the following issues were considered and noted:-
• the Southport/Wigan/Manchester route had not been specifically identified within the report. However, consultation over the summer would identify any areas that had been missed and this link would be included;
• all aspirations in respect of new stations (totalling 30 plus across the City Region) had been captured and included in the framework to determine the benefit. Discussions were now taking place with the local authorities with a view to identifying those which unlocked development sites both now and in the longer term. A number were now progressing whereas others were more aspirational – there was a series of five year funding blocks in this respect. Funding would come partly from Merseytravel’s capital programme and also from the private sector, for example when un-locking housing sites;
• there was a need to do more to engage the private sector and to ensure that they were fully informed, not just in respect of HS2 but also the East/West connection;
• there was a window of opportunity to make the case for HS2 to be connected to Liverpool Lime Street, which was vital. Lobbying activity in this respect therefore needed to be financially supported by the Authority; for example, there were a number of conferences coming up which should be attended in order that the economic benefits of this connection for all businesses in the City Region could be highlighted; and
• hard evidence supported a connection to the City Region and a stakeholder engagement plan had been circulated to all partners, which now needed to be actioned to maximise opportunities.
Members then considered the report of the Lead Officer: Transport, which provided further information on the proposed Liverpool City Region Long Term Rail Strategy including:-
• the long term Strategy process; • the impact of the future growth of the Liverpool City Region; • base and future rail demand; • scheme shortlisting; and • priorities and phasing.
It was advised that an integral part of the development of the Long Term Rail Strategy was the Long Term Narrative, which provided an overview of how the rail network could be developed over the next 30 years and incorporated all the improvements identified.
RESOLVED – That:-
(i) Councillor Robinson be thanked for an informative presentation;
(ii) the Southport/Wigan/Manchester link be included within the long list of schemes;
(iii) the report be noted; and
Page 9 (iv) the development and implementation of the Long Term Rail Strategy be endorsed.
15. HIGH SPEED 2 ACTION PLAN
Members considered a report of the Lead Officer: Transport providing an update on the work carried out as part of the High Speed Rail Development Programme since the last meeting of the Authority. The report also identified the work that had been done to ensure that the economic importance of a HS2 link was understood by the Department for Transport and HS2 Limited.
In particular, the report included information on:-
• HS2 studies; • consultation on the location of the proposed HS2 college; and • stakeholder engagement.
Members highlighted the importance of raising business, political and general understanding of the importance of High Speed Rail to the Liverpool City Region and that joint work should be commissioned to campaign for greater High Speed connectivity for the Liverpool City Region.
RESOLVED – That:-
(i) the progress made since the last meeting of the Authority be noted;
(ii) the approach adopted with HS2 Ltd and the Department for Transport be endorsed;
(iii) officers be requested to continue to work proactively with all partners to secure the best outcome for the Liverpool City Region from the High Speed 2 (HS2) proposal;
(iv) the work done that highlights the potential economic benefits which accrue to the City Region as a result of the varying options for HS2 be endorsed; and
(v) a further update be received once the work referred to in Section 6 of the report submitted is complete.
16. RAIL DEVOLUTION UPDATE
Members considered a report of the Lead Officer: Transport providing an update on the joint-working between Local Transport Authorities in the North of England and the Department for Transport (DfT) aimed at securing efficient local rail services to support economic growth and the devolution of responsibility for the Northern and TransPennine rail franchises.
The report set out information on:-
• key issues; • the franchise specification; • the development of a partnership with the DfT; • the next steps on rail devolution; and
Page 10 • the electrification task force being set up by the Secretary of State to develop a programme of further electrification for lines in the North of England.
RESOLVED – That:-
(i) the progress on Rail Devolution be noted;
(ii) the Merseytravel Committee oversee the development of the detailed specification for the next franchises;
(iii) officers from Merseytravel be authorised to continue to work proactively with Rail North, the Department for Transport, and other Local Transport Authorities, to further develop the proposals;
(iv) the Combined Authority enter into the Association of Local Transport Authorities and participate in the Rail North Special Purpose Vehicle subject to the Monitoring Officer, Head of Paid Service and Treasurer being satisfied in relation to any risks or costs arising which may affect the Combined Authority;
(v) the Chair of the Merseytravel Committee be requested to represent the Liverpool City Region in both the above Fora and to continue to develop the Partnership Structures with the DfT; and
(vi) the ‘West of Pennines’ representative on the Electrification Task Force be confirmed.
17. YOUTH UNEMPLOYMENT IN THE LIVERPOOL CITY REGION
Members considered a report of the Lead Officer: Employment and Skills providing an update on the position in relation to youth unemployment and identifying a range of actions in place to support young people into work.
It was noted that there was a balance that needed to be sought in considering the issue of youth unemployment as it was important to recognise the number of young people who were in work: the current employment rate for residents aged 16- 24 years was broadly in keeping with the national level of 50% and, in recent years, this gap had continued to close. However, the City Region had experienced higher levels of young people being out of work than other parts of the country for some time. This was partly due to the number of jobs available as well as the preparedness for employment of young people. It was noted that the Employment and Skills Board led on youth employment issues for the City Region and had identified this as a key priority, and the report set out the work that was currently underway in this respect.
In particular, Members considered the need to engage with young people via schools, and to communicate the opportunities that existed within the City Region more effectively. It was advised that some schools were engaging in this process but others were not; further work was needed to try and address these barriers to ensure children within the City Region were effectively skilled up for jobs that would exist in the area in the future. It was noted that the University Technical College in the City Region provided a good offer and there was also a tailored provision from colleges.
In respect of apprenticeships, it was advised that criteria had been strengthened and there had been increased quality demands from Ofsted, which possibly attributed to the fall in numbers. It was considered that the Combined
Page 11 Authority had a role to play in trying to encourage the number of apprenticeships, particularly with employers in terms of the opportunities coming forward.
The Authority also considered zero hour contracts. It was noted that, whilst these contracts may suit a number of individuals, there were numerous examples of where they were being abused. Members noted that these contracts were also used by local authorities, and potentially by contractors appointed by local authorities, and it was therefore suggested that the Combined Authority should receive a report highlighting areas of best practice.
RESOLVED – That:-
(i) the overall reduction in youth unemployment in the Liverpool City Region be welcomed, but the increase in longer term youth unemployment be noted;
(ii) the Growth Plan request to strengthen the local accountability of the Skills Funding Agency, Jobcentre Plus and the top 20 providers to the Employment and Skills Board be endorsed;
(iii) the Employment and Skills Board be tasked to ensure that the additional investment targeted at young people is commissioned effectively to address the identified needs;
(iv) the Employment and Skills Board be requested to provide a six monthly update on overall progress in tackling youth unemployment, including information on the education, training and employment status of 16-18 year olds in the City Region;
(v) further work be undertaken with a view to breaking down barriers in schools in order to make young people aware of the opportunities within the City Region; and
(vi) a report be brought to the Combined Authority highlighting areas of best practice in respect of zero hour contracts.
18. LIVERPOOL CITY REGION STRATEGIC LOCAL INVESTMENT PLAN (2014-17) HOUSING SITES
Members considered a report of the Lead Officer: Housing and Planning regarding the Liverpool City Region Strategic Local Investment Plan (2014-17) housing sites.
It was noted that the Combined Authority was responsible for co-ordinating housing, economic development, employment and skills and transport issues. The Strategic Local Investment Plan, approved by the City Region Cabinet on 18 October 2013, had defined that there was the ongoing need to raise the quality of the overall housing offer; to address aging housing stock in poor condition; to provide a wider range of property choices across the City Region; and to bring back into use a large number of empty homes within the City Region. The report outlined the progress made within the City Region during 2013-14 and identified the challenges ahead. In particular, the report provided information in respect of:-
Page 12
• the completed housing sites in 2013/14; • the housing sites which were being treated as a work in progress; • the housing sites that were currently in pre planning stage; and • a list of stalled sites.
Members noted that the potential to create housing within the Enterprise Zones, or adjacent to the Enterprise Zones, would, in some boroughs, replace the pressure on the green belt. In addition, it was reported that the Liverpool City Region Local Enterprise Partnership had supported two sites: the land at Southport; and the Garden Festival site.
RESOLVED – That:-
(i) the progress made in 2013/14 be approved;
(ii) the housing schemes in progress in 2014/15 be noted;
(iii) the housing sites in the pre planning stage be noted; and
(iv) a further report be brought back to the Combined Authority to identify specific actions to remove the blockages to development on the stalled sites.
19. RESPONSE TO CONSULTATION ON LEGISLATION RELATING TO COMBINED AUTHORITIES AND ECONOMIC PROSPERITY BOARDS
Members considered the report of the Head of the Secretariat setting out a proposed response to the Government consultation on legislation relating to combined authorities and economic prosperity boards.
It was noted that the operation of, and changes to, combined authorities and economic prosperity boards was governed by the Local Democracy, Economic Development and Construction Act 2009. However, the implementation of combined authorities in local areas was being done differently, depending upon local need, and this had identified a number of technical issues with the way in which the current legislation was drafted. Government had therefore issued a consultation on making changes to the legislation to address this and a number of other issues. The Liverpool City Region had considered the proposed changes and noted that the overwhelming majority could be welcomed and supported, and this had been reflected in the draft consultation response.
RESOLVED – That:-
(i) the drafted response to the consultation on legislation relating to combined authorities and economic prosperity boards be noted; and
(ii) approval to make any final changes to this response to the consultation be delegated to the Head of the Secretariat, in consultation with the Chair and the Head of Paid Service of the Authority.
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20. MINUTES
The minutes of the following meetings of the Merseytravel Committee were received and confirmed by the Combined Authority:-
(a) 10 April 2014;
(b) 29 May 2014; and
(c) 4 June 2014.
Minutes 1 to 20 received as a correct record on the 19 th day of September 2014.
Chairperson of the Combined Authority
(The meeting closed at 12.29 pm)
Page 14 Agenda Item 4
LIVERPOOL CITY REGION COMBINED AUTHORITY
To: The Chair and Members of the Combined Authority
Meeting: 19 September 2014
Authority/Authorities Affected: All
EXEMPT/CONFIDENTIAL ITEM: No
REPORT OF THE LEAD OFFICER: TRANSPORT
LONG TERM RAIL STRATEGY
1. PURPOSE OF REPORT
1.1 The purpose of this report is to present the final draft version of the Long Term Rail Strategy for comment and approval.
2. RECOMMENDATIONS
2.1 It is recommended that the Liverpool City Region (LCR) Combined Authority:
(a) Note the report and comment as appropriate; and (b) Formally adopt the attached Long Term Rail Strategy as a strategy of the City Region.
3. BACKGROUND
3.1 Members will recall that at their June 2014 meeting they received a report on the development of a Long Term Rail Strategy for the City Region. The Strategy has been developed with the aim of ensuring that the rail network meets the needs of the City Region over the next 30 years. Whilst the June report focused on the rationale and process behind the development of the Strategy, this report sets out its conclusions, and includes a full copy of the final document as Appendix One for approval.
3.2 The Strategy aims to support the ongoing regeneration of the City Region and thus maximise its potential contribution to the wider UK economy, acting as a catalyst for significant development and growth for the second half of the century and beyond.
3.3 It provides a clear vision for the rail network and its development meets the connectivity needs of the City Region and also aims to inform the future policy development of the Combined Authority and Merseytravel.
3.4 LCR’s national rail connectivity is now less comprehensive than many of its comparators and it is identified in this strategy as important to address the shortfall. Page 15 In contrast the local network is well established and increasingly successful. However, the network has seen limited investment over the past 35 years and substantial infrastructure and rolling stock renewals are likely to be needed in the near future.
3.5 The Strategy proposes a number of packages with an indicative timeline for potential implementation over the next 30 years. Considerable work will be needed to develop the detailed case for each of the packages and schemes and it is acknowledged that not all of the proposals will come to fruition, but this should not detract from the clear benefits of major investment. The Strategy has been designed to offer flexibility through regular review and whilst economic circumstances evolve and the business case for interventions will correspondingly fluctuate, the vision remains unchanged that rail should play a key role in helping deliver the economic vision of the LCR.
4. LONG TERM RAIL STRATEGY
4.1 The Long Term Rail Strategy comprises 12 prioritised packages each of which are comprised of several components which sit together to address a particular strategic objective.
Improving National Passenger and Freight Connections
4.2 The creation of enhanced and new direct passenger services to core cities is considered essential since it is now recognised that the economies of the nation’s largest cities are inextricably linked together and to the national economy as a whole. In terms of freight, the aspirations of the SuperPORT master plan 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.
4.3 The package therefore aims to:
(a) Address the existing shortfall in national connectivity by rail from Liverpool in comparison with other core cities; and (b) Resolve conflicts between passenger and freight services to ensure that the rail freight carrying aspirations of the region are realised (more detailed requirements in this regard will be known later in the year following the publication of Network Rail’s Northern Ports study).
Merseyrail Growth Enabling
4.4 Merseyrail Growth Enabling is one of the highest priority packages, and one on which many of the other packages rely. It contains the schemes necessary to introduce new higher capacity trains onto the network and to expand the network onto adjacent lines including the signalling and rail capacity enhancements this requires. Ultimately the package is considered essential to most of the other components of the Strategy and is therefore recommended as one of the highest priorities. It includes:
Page 16 (a) Replacement of the Merseyrail rolling stock with high quality metro-like vehicles with significantly higher standing capacity than the existing stock and future provision for dual voltage units to allow an efficient means of extending the reach of the Merseyrail offer; (b) Creation of capacity to run a mixture of semi-fast and stopping services to improve end-to-end journey times and maximise capacity on some of the longer corridors; (c) Enhancing the train carrying capacity on the Northern Line to allow 18-20 trains per hour to run between Sandhills and Moorfields as is likely to be required, and to allow trains to be turned back at Liverpool South Parkway rather than Liverpool Central to remove a significant operational constraint; and (d) Improvements to accessibility, including for those with mobility impairments, and ticketing integration.
Liverpool City Centre Capacity
4.5 Limited platform capacity at Liverpool Central is a significant constraint on the network’s future growth. With passenger numbers set to grow in coming years, potentially facilitated by increased capacity on trains, platform capacity is a key concern and a long term strategy is required to ensure that Central can accommodate the demand. In addition, significant work is required at Lime Street to ensure that it can accommodate additional services and ideally the potential of 400m High Speed trains to London, Birmingham and potentially across the north of England should a northern High Speed Line be constructed at some point in the future. Lime Street is the subject of a significant multimodal regeneration drive currently and there is the opportunity to merge the projects to create a truly iconic station and multi-modal interchange-based development that serves all purposes. The package includes:
(a) Making significantly better use of other City Centre stations including Moorfields as the only alternative existing Northern Line station, due to its location in the business district, and its relatively low usage out of peak time (when Central can be at its busiest); (b) Encouraging use of James Street as a Liverpool One and waterfront station with a dedicated waterfront entrance on the western side of the Strand; (c) Implementing the full Liverpool Central capacity enhancements scheme to realign the southbound track to the north under the Central Village development, creating more room for the island platform and relieving the passenger pressure; (d) Extending platforms and enhancing Lime Street as part of a wider redevelopment of the area; and (e) Reviewing the 2009 Merseyside RUS recommendation for a new station in Liverpool City Centre should demand continue to grow beyond currently considered levels.
City Line Enhancement
4.6 It is clear from Travel to Work mode share analysis, and work to identify areas of latent demand for rail, that destinations along the City Line are not as well served as equivalent destinations along the Northern and Wirral Lines. The main aim of this package is to build upon the Northern Hub and electrification improvements, Page 17 and replicate the main factors of Merseyrail success including the ability to run frequent, high quality electric services on parts of the City Line. It is also considered important to create cross-city connectivity on the City Line, providing as a by-product operational relief at Liverpool Central, by linking the Northern and City Lines via Wapping tunnel. It proposes to:
(a) Stimulate a level of rail mode choice in locations served by the City Line equal to that observed in Merseyrail Electrics served areas; (b) Provide alternative terminus locations for southbound Northern Line services, reducing the operational capacity issues at Liverpool Central; (c) Promote cross-city connectivity by connecting the Wirral, Northern and City Lines, facilitating direct journeys between Wirral and South Liverpool for example; and (d) Create a direct fixed rail link to Liverpool Airport, Speke and beyond, served by Merseyrail-type trains and with connections at Liverpool South Parkway.
Liverpool – Widnes – Warrington – Manchester Route Enhancement
4.7 As the only component of the City Line that has no committed electrification programme, the Liverpool – Widnes – Warrington – Manchester line (CLC) lags behind other parts of the network in terms of a strategy for increased growth and capacity. Timetabling constraints due to a lack of passing places, and a need to integrate stopping services with fast services on the line have led to an irregular timetable with a requirement for skip-stopping and hourly (or lower) service levels at some stations.
4.8 This package aims to:
(a) Increase capacity on the CLC with passing loops to allow the slow services to operate a metro-like timetable of frequent services to key stops without impeding faster services; (b) Electrify the line and extend Merseyrail services to Warrington and beyond via Widnes; and (c) Resolve conflicts at Hunts Cross West junction.
Halton Curve
4.9 Halton Curve is a scheme with potentially large benefits both for the LCR and its wider travel to work area, that is relatively straightforward to implement, and has recently been awarded funding for progression via the Local Growth Fund. Whilst previous demand studies have struggled to develop a strong business case, it is considered that the inclusion of wider factors such as the direct linkage of employment with residential areas in North Wales and West Cheshire, and the reduction of journey times between North Wales and Liverpool (including employment in South Liverpool and Liverpool Airport) will provide a much stronger level of justification for the scheme.
4.10 This package aims to:
(a) Restore direct connectivity to Wrexham and North Wales from Liverpool and Liverpool Airport; (b) Provide faster journey times and increased frequencies to Chester; Page 18
(c) Provide direct linkage to Frodsham and Helsby; and (d) Create an alternative route between Liverpool and Cardiff via Shrewsbury.
Improved Connections to Chester and Ellesmere Port
4.11 Whilst much of the LCR will be best served by direct connections to the proposed HS2 scheme at Lime Street and Runcorn, for residents and businesses located in east Wirral, Ellesmere Port and Chester, a connecting route via Chester might offer the best access to HS2. This would provide excellent national connections at Crewe’s HS2 hub with high frequency direct services towards London. Replacing the existing Crewe – Chester shuttle with extended Merseyrail services through Chester also carries operational benefits including Chester turn-backs.
4.12 This package aims to:
(a) Connect locations in East and South Wirral with national and proposed HS2 services at Crewe; (b) Allow increased frequencies along the North Wales Mainline, strengthening links between Liverpool and these destinations; (c) Build the rail market along the Ellesmere Port – Helsby corridor and beyond towards Warrington as development aspirations along this route are progressed and potentially realised; and (d) In the longer term, enhanced connections from Ellesmere Port might also be required as a result of large scale development in the area.
Southport – Wigan, Ormskirk – Preston Connections
4.13 Enhancements to the Southport – Wigan/ Ormskirk – Preston line are proposed to improve connections between northern areas of the City Region and areas of West Lancashire, South Ribble and Preston with large planned employment and housing growth over the next 30 years. In particular, the package aims to improve connectivity between Liverpool and large development sites at Cuerden, Leyland and Preston, and new housing in Burscough, and to better serve the intermediate Liverpool – Preston market, allowing faster trains to run between Liverpool and Preston on the St Helens line.
4.14 The explicit inclusion of the Southport – Wigan – Manchester line in this package was discussed at the June meeting of this Authority, and was further discussed at a meeting of Sefton Council, and the package has been revised to include the potential for electrification of the line and other options for its improvement.
4.15 This package aims to:
(a) Create direct connectivity from South Liverpool to Preston via Liverpool City Centre and Ormskirk, to new development and employment opportunities to the city region’s residents; (b) Provide better linkage to and from Liverpool for users of the Southport – Wigan/Manchester line; (c) Review options for improvement to Southport – Wigan/Manchester line; (d) Provide residents of new housing in Burscough with access to opportunities within Liverpool City Region and surrounding areas; and Page 19 (e) Deliver significant journey time and quality benefits for its users through electrification of the Southport – Wigan Line.
Kirkby – Wigan Line
4.16 Skelmersdale has strong cultural links with the Liverpool City Region due to widespread population migration to the town from Central Liverpool in the 1960s and 1970s. A direct electric link, forming an extension of the existing Kirkby Merseyrail line, would allow the rail network to mirror this connection for the first time and provide strong journey opportunities. The link to Skelmersdale should be considered as the first phase of a wider electrification of the entire Kirkby/Wigan line (and potentially onwards towards Manchester), given the large scale of proposed development to the south west of Wigan town centre, and the recently boosted service levels between Wigan and Scotland.
4.17 This package aims to:
(a) Provide direct rail connectivity between Skelmersdale and the LCR; (b) Enhance service levels and quality between Kirkby and Wigan / Manchester with potential through-services to Liverpool; (c) Improve accessibility to Wigan for connections to Scotland; and (d) Support aspirations to increase rail freight handling at Knowsley Industrial Park (Potter Rail Freight Terminal) by upgrading the Wigan – Kirkby line.
Borderlands Line Enhancement
4.18 Electrification of the Borderlands line between Wrexham and Bidston, and incorporation into the Merseyrail Electrics network to better connect areas of population and employment on this route with bi-directional peak demand. For this package, it is proposed that the demand for the line be built up incrementally in stages, with the first of these to be an increased frequency of service between Wrexham and Bidston. A new station at a key employment location (Deeside Industrial Park) would then follow to attract a new catchment for the services, with a full electrification of the route, incorporation into Merseyrail, and additional new or upgraded stations coming after this.
4.19 This package aims to:
(a) Improve service levels, quality and frequency on the Borderlands Line between Wrexham and Bidston; (b) Incorporate the line into the Merseyrail Wirral line to provide direct connectivity with Liverpool City Centre; and (c) Connect the Liverpool City Region with emerging employment markets at Deeside and outside Wrexham.
Mixed Passenger and Freight Lines on Current Freight-Only Lines
4.20 Usage of these lines for passenger services have different primary purposes and the ultimate network might include either, both or neither depending on demand and freight requirements to be determined by the ongoing Northern Ports Study. The North Mersey Branch provides an alternative route between Ormskirk and Central Liverpool avoiding Orrell Park, Walton and Kirkdale. In contrast, usage of the Page 20 Bootle Branch by passenger services would provide a direct rail connection to parts of North Liverpool unserved by the rail network.
4.21 This package aims to:
(a) Allow Ormskirk services to be divided between two routes freeing up capacity for Liverpool – Skelmersdale/Wigan services, and provides an enhanced service to Bootle and Bank Hall stations; (b) Provide direct connections to parts of North Liverpool including Fairfield, Newsham Park, Tuebrook and Anfield; and (c) Provide an additional mode of travel for access to Anfield and Goodison Park football stadia on match days.
Selected New Stations
4.22 This package is intended to present the other proposed new stations across the city region that made the shortlist of schemes, but which do not conveniently fit into other packages. Aside from the stations proposed as part of the other packages, a further six stations are proposed with varying lead-in timescales and levels of priority.
4.23 For each station, including those listed in other packages, a Network Rail GRIP stage process is required that leads from scheme inception, to optioneering, through option selection and business case analysis to eventual detailed design and construction. In time for the first strategic review of the Long Term Rail Strategy envisaged in late 2014/early 2015, it is intended that a new station evaluation exercise is undertaken to better understand the rationale behind each proposed station, the likely catchment it would serve and the impact upon the respective lines in terms of journey time and passenger demand etc.
4.24 This package aims to:
(a) Provide new stations that respond to new development, serve new markets, and address areas of existing latent demand.
5. IMPLEMENTATION
5.1 Clearly, with a time horizon of 30 years, the funding sources for many of these schemes are unclear. However, the grouping of individual schemes into larger packages allows the Strategy to be responsive to new funding opportunities as they come on-stream. The Halton Curve has already secured funding through the Local Growth Fund (subject to the development of a satisfactory business case) and other packages may well be suited to future rounds of Growth Fund investment.
5.2 In addition, the One North proposal, which was launched by Core City Leaders in August (and which is covered as part of the HSR Development Update report elsewhere on this agenda) has identified city-region commuter rail improvements as a core element of the proposition. Schemes contained within this Strategy be appraised as part of the One North investment plan. The content of the Strategy
Page 21 will be kept under regular review and its schemes measured against new funding streams as they are announced.
6. RESOURCE IMPLICATIONS
6.1 Financial
None as a direct result of this report
6.2 Human Resources
None as a direct result of this report
6.3 Physical Assets
None as a direct result of this report.
6.4 Information Technology
None as a direct result of this report.
7. RISKS AND MITIGATION
7.1 None as a direct result of this report.
8. EQUALITY AND DIVERSITY IMPLICATIONS
8.1 An equality impact assessment will be undertaken for the Strategy as a whole and detailed assessments will be completed on a scheme basis as these are developed.
9. COMMUNICATION ISSUES
9.1 Merseytravel has undertaken a significant stakeholder engagement exercise related to the Long Term Rail Strategy and stakeholders views will continue to be considered as the Strategy is periodically updated and reviewed.
10. CONCLUSION
10.1 The Liverpool City Region Long Term Rail Strategy presents a bold vision to equip the City Region with a modern railway providing a necessary step-change in terms of quality, accessibility and speed. The Strategy provides a pathway which ensures that projected levels of future demand are accommodated, but more than this it explains how now latent demand can be opened up to the railway, accessing untapped market, reducing the overall impact of car travel on the region’s roads and supporting economic growth.
Page 22
DAVID BROWN Lead Officer: Transport
Contact Officers: Darren Kirkman, Policy Development Advisor, Merseytravel 0151 330 1107 Liz Carridge, Communications Manager, Merseytravel 0151 330 1151
Appendices: Appendix One – Liverpool City Region Long Term Rail Strategy.
Background Documents: None
Page 23 This page is intentionally left blank Liverpool City Region Long Term Rail Strategy
“Converting Strength to Lasting Long Term Economic Growth”
Summer 2014
(01/08/2014 Issue)
Page 25
Page 26 1. Foreword
Economic Vision
Liverpool City Region (LCR) has undergone a significant renaissance over the past 10 years. With confidence in the city region rising, the recently published Strategic Economic Plan (SEP) provides the strategic framework for interventions to drive new job creation and growth in the area. In this context the LCR Long Term Rail Strategy (developed by Merseytravel in collaboration with Network Rail) 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.
Rail Investment
Across the country, confidence from passengers, politicians, and businesses in the value of the national rail network has also seen an unprecedented renaissance in recent years. Growth in passenger numbers continues to far outstrip expectations, and in recent years investments in a modernised network have increased at pace. The enhancements delivered through inter-regional electrification in North West England have already begun to deliver substantial benefits in terms of both journey quality and journey times, and proposed investment in High Speed 2 (HS2), and High Speed 3 (HS3) promises significantly enhanced national connectivity. The understanding of the contribution that good rail connectivity can make to a thriving city region economy has never been stronger.
Asset Strength
At a local level the Liverpool City Region is fortunate in having the Merseyrail network at the heart of its transport provision. In 2012/13 carrying approximately 40 million passengers, the network consistently tops the performance tables for reliability and customer satisfaction. However, the network has seen limited investment over the past 35 years and substantial infrastructure and rolling stock renewals are likely to be needed in the near future. These renewals need to take account of tightening capacity constraints on the network which threaten to stifle the vital connections between people, and employment and leisure opportunities, which are critical to the vision of the SEP. Also vital are the enhancement of national passenger links to re-connect Liverpool with London and other Northern cities with 21 st century service quality, and of provision of sufficient rail freight capacity to cater for the aspirations of the SEP for the SuperPort.
Facilitating Economic Growth
There is undoubtedly a significant opportunity for an enhanced rail offer in the Liverpool City Region to build upon the strengths of its existing assets and to help facilitate the investment and growth envisioned. Without substantial investment the rail network threatens to stifle, rather than facilitate, the economic growth potential of the City Region. This is best illustrated with reference to Liverpool City Centre. Named as the first transformational priority of the Local Growth Plan and SEP, the City Centre is expected to play a dynamic role as a strengthening and anchoring economic and tourist hub. At present the limitations of the infrastructure (which in part dates back from the earliest beginnings of the railway age) provide a considerable barrier to the successful connection of the wider travel-to-work catchment to the expanded employment and cultural offer proposed for the City Centre.
Page 27
Growing Travel Requirements
The LCR Long Term Rail Strategy set out in this document presents an ambitious vision of a network that meets future passenger needs, and opens up economic opportunity. Where good service levels exist, the network is already a success story, but more must be done to spread these benefits to a wider travel-to-work geography and to provide the capacity and frequencies required to support projected economic growth. The scale of investment required is significant, but without it the fulfilment of the SEP is likely to be compromised.
A Bold and Evolving Strategy
The strategy contained within this document (the fourth of four reports produced) proposes 12 packages with an indicative timeline for potential implementation over the next 30 years. From shorter term facilitation works to longer term connectivity aspirations the vision is necessarily bold and compliments and enhances the current proposals for HS2. Critically, the analysis undertaken to underpin this strategy in 2014 supports this bold vision - it is vital that short term barriers and short term thinking are not allowed to constrain the longer term economic potential of the city region. Considerable work will be needed to develop the detailed case for each of the packages and schemes and, realistically, it is acknowledged to be improbable that all of the proposals could come to fruition (indeed in some cases the strategy contains options which are mutually exclusive) but this should not detract from the clear benefits of major investment. The strategy has been designed to offer flexibility through regular review and whilst economic circumstances evolve and the business case for interventions will correspondingly fluctuate, the vision remains unchanged that rail should play a key role in helping deliver the economic vision of the LCR.
“Converting Strength to Lasting Long Term Economic Growth”
The long term vision for the Liverpool City Region rail network is to be “converting strength to lasting long term economic growth”.
Page 28 2. The Study Process
The development of the long term rail strategy has encompassed the four main stages shown in Figure 2.1.
Stage 1 Stage 2 Stage 3 Stage 4
Document Review
Long Term Narrative Long List of Rail Appraisal / Scoring / (to capture phased, Interventions Shortlisting packaged high level strategy)
Stakeholder Consultation
Demand Modelling
Figure 2.1: Long Term Rail Strategy Process
Early stages of the project focused on a comprehensive document review and selective stakeholder engagement process. Since the publication of the last local rail strategy (Merseyside Rail Strategy 2006, Merseytravel) there have been significant changes in local, and national context as well as some notable investments in infrastructure. During the intervening period rail industry structures and governance have continued to evolve and a large number of studies were reviewed to identify the common themes of previous work and to extract the aims, objectives, network gaps and potential remedial measures previously identified. The review allowed a long-list of previously considered schemes that have not yet been implemented to be assembled for consideration during later stages of this study. The report “Document Review Report_Final” provides a full record of the document review. Whilst some aspects of the stakeholder engagement were confidential, a record of the input that these conversations gave to the definition of options is recorded in the detailed report “Issues, Constraints and Opportunities Report”.
Following the document review and stakeholder work, a considerable work programme to develop suitable tools to understand the current and future transport demands of the City Region was undertaken. The resultant, validated, and significantly improved version of rail assignment model MOIRA was used in conjunction with DfT, Network Rail and Local Enterprise Partnership based forecasts to understand potential long term pressures and requirements from the local rail network.
The output of the above strands was a clear definition of the requirements (the “asks”) of the local rail network over the next 30 years. These are set out in Section 4, before section 5 presents the shortlisting process and the resultant packages which together are proposed to execute the vision of the strategy. Firstly, Section 3 presents a brief summary of key elements of the evidence compiled.
Page 29 3. Evidence
3.1 Liverpool City Region Aspirations for Growth
As part of the development of the LCR Growth Plan and SEP, in March 2014, the Local Enterprise Partnership released a series of forecasts of changes in population, employment and GVA across the six districts of the LCR over the following sixteen years. These represent a critical underpinning narrative of the requirements of the city region’s transport networks as population, GVA, and employment growth increase demands for travel.
For each case, two scenarios were considered, a baseline scenario based on current levels of background growth, and a ‘policy-on’ scenario in which a number of large developments across the City Region at various stages of the planning process are delivered.
Figure 3.1: LCR Population Projections (Source: Liverpool LEP, Oxford Economics, March 2014)
Figure 3.2: LCR Employment Change (Source: Liverpool LEP, Oxford Economics, March 2014)
Page 30
Figure 3.3: LCR GVA Increase (Source: Liverpool LEP, Oxford Economics, March 2014)
Whilst the city region population is considered likely to increase by between 1% and 4% according to these forecasts, employment is likely to rise even faster – between 3% and 10%. This is likely to generate an increasing propensity for travel into the city region to access employment opportunities, particularly within the City Centre. It is also clear that, regardless of scenario, the productivity of the city region is likely to continue to increase over the next few years.
Whilst the LEP forecasts concentrated predominantly on the six districts of the city region itself, the zone of influence of the area is felt significantly more widely with commuters, business travellers, leisure seekers and shoppers travelling from further afield. A fuller scenario of development potential across the area, including intelligence from neighbouring LEPs, developers and local knowledge was used to establish a clearer picture. This highlighted significant trip generating potential developments along the route between Liverpool, Warrington and Manchester; to the south of Preston in the Cuerden / Leyland area; to the south west of Wigan and in Skelmersdale town centre; and within the Chester and West Cheshire area spilling over into North Wales.
3.2 The Liverpool City Region Rail Network Today
Liverpool’s national rail connectivity is now less comprehensive than many of its comparators and it is identified in this strategy as important to redress this shortfall. In contrast, the local network is well established and increasingly successful. The existing network was substantively shaped in the 1970s by the decision to reduce the city’s three mainline termini to one at Lime Street, and to connect the rail networks to the north, south and west across the City Centre via a high frequency electrified link and loop network to be known as Merseyrail. The Merseyrail network provides high frequency services to the north and west (cross-river) of the City Centre, a single corridor to the south, but does not serve local stations to the east. The City Line with its terminus at Lime Street provides these connections, although services are generally run at lower frequency, on lower quality diesel trains. The impact of this can be seen in Figure 3.4 which highlights rail mode share for Travel- to-Work at a ward level from the 2011 census with red, orange and yellow colours indicating higher mode shares.
Page 31 Figure 3.4 clearly highlights the success of Merseyrail lines at attracting higher mode shares, with the City Line and other lines into and around the city region attracting significantly lower mode shares of travel.
Further analysis of latent passenger demand derived from modelling work reveals that the greatest potential for capturing future mode shift to rail is from sectors neighbouring the city region particularly to the south and east (Figure 3.5). This raises the prospect of better rail provision to these areas to secure higher rail mode shares. Warrington is a particularly strong example given the large number of commuter car trips into and out of the city region each day. South Wigan and Skelmersdale are similarly good candidates for future rail growth if provision is improved. In addition South Flintshire (Deeside), East Cheshire including Macclesfield, Blackpool and Lancashire are Figure 3.4: Travel to Work Rail Mode Share (2011 ) also potentially significant future markets too. Schemes (discussed as part of the strategy packages below) such as Borderlands line improvements, a Skelmersdale link, Warrington Central line electrification and Halton Curve have the potential to make a significantly positive difference for these locations.
Figure 3.5: Potential Sectors of Latent Demand to Liverpool City Region
Page 32 3.3 Forecast Growth in Travel
Demand forecasts derived from Network Rail, DfT and LEP/Rail North data were used to understand the extent at which passenger demand is forecast to grow with no additional rail network enhancement. The use of MOIRA allowed full line by line analysis of pressures and highlighted key forecast pressures on the network. All three scenarios examined contained significant levels of passenger growth, with all scenarios demonstrating major pressures within the 30 year horizon of this study. The following chart utilises the highest growth forecast as used by Network Rail to understand the full potential scope of market requirements. Figure 3.6 highlights the expected impact of growth at Central Liverpool stations over the next 20 and 30 years in terms of the daily profile of boarders.
Figure 3.6: Profiles of Boarders at Central Liverpool Stations in 2011, 2033 and 2043 (Merseyrail Station Counts with Growth Applied)
The analysis assumes only committed rail schemes are delivered, and that there is no ‘crowding off’ of passengers due to heavy use. This highlights that a further 4,000 boarders may be expected at peak times at central stations by 2043, representing a potential capacity issue – particularly at Liverpool Central (the busiest station in the Liverpool City Region, with already identified present day problems with passenger platform capacity).
On a line by line basis, the highest growth scenarios show capacity issues on all of the lines into central Liverpool within the next 30 years. Seating capacity is already regularly exceeded on the busiest services and on routes with less peak time strengthening. Services on several lines are, in fact, expected to approaching 90% to 100% of total (seating and standing) capacity within the next 10 years assuming current service patterns and train configurations.
Whilst committed schemes to electrify parts of the City Line and replace existing diesel rolling stock with higher capacity electric vehicles are likely to have a positive impact, our work shows that this is
Page 33 unlikely to be enough by itself. This indicates that doing nothing extra to what is already programmed is not an option in relation to capacity of either trains or central stations, and that the rail strategy must seek to alleviate capacity issues if it is to meet demand and help to secure lasting economic growth for the region.
With respect to freight, reference was made to pre-existing available information on likely train path requirements. This limited analysis highlighted an important potential shortfall in paths and infrastructure, however soon after this study’s inception, a parallel Northern Ports rail study was initiated by Network Rail and Merseytravel. Upon publication of this study in late 2014 further analysis will be required to understand freight requirements and their interactions with passenger requirements.
Figure 3.7: 2043 AM Peak Demand vs Seating Capacity for Rail Services on Arrival into Liverpool (Source: MOIRA, Network Rail ‘Prospering in Global Stability’)
Page 34 4. Identified Issues and Strategic Outputs
4.1 The Issues to Resolve
One of the most important outcomes of the Long Term Rail Strategy has been the identification of existing and future constraints on the rail network. Informed by present day evidence and understanding, and forecast future demand, it is clear that there are significant issues to address. These are the issues that could yet hinder the economic growth of the region and the realisation of the aspirations of the LCR Strategic Economic Plan as that plan must rely on the robustness, suitability and flexibility of its transport network to connect people and places. The aim of the Long Term Rail Strategy will be to address these issues in the most efficacious and efficient way, whilst maximising the economic benefit to the City Region.
The identified network constraints have been sorted into themes relating to capacity, connectivity, infrastructure, facilities and rolling stock, and funding. They are summarised in the following table.
Capacity Constraints – restricting the ability to run extended services to meet demand 1 Merseyrail suffers from passenger capacity problems at certain times and locations that will substantially constrain future passenger growth, especially at Liverpool Central Station and on trains into central Liverpool, due to limited platform space, and the need to turn-around services.
2 Services into Liverpool Lime Street, particularly two and three -car configurations, are often overcapacity during peak periods.
3 Constraints on the network limit the number of trains per hour that can be used on busy sections of the line, for instance the required future maximum of 18-20 trains per hour on the Northern Line between Sandhills and Liverpool Central, and the ability to provide additional cross-river services (for instance from Wrexham) cannot currently be readily accommodated.
4 Related to constraint 2, the throat on the approach into Liverpool Lime Street acts as a constraint on the number of services per hour that can access the station. This is due to the limited number and the current location of cross-over facilities on the Lime Street approach.
5 Platform lengths pose a significant capacity issue at several locations, particularly on the City Lines, with six-car trains unable to call at a number of locations.
6 The West Coast Mainline between Weaver Junction and Crewe is heavily utilised at present with a lack of available rail paths. This limits the number of services per hour that can run between Crewe and Liverpool Lime Street.
7 Single -end termini create significant capacity issues on the Merseyrail network , with Chester, Ormskirk, Kirkby and Hunts Cross identified as particular constraints. Single-end terminals create longer turnaround times and create conflicts between inbound and outbound services on single-track sections.
8 The combination of extra freight t rains plus a parallel growth in passenger services, driven by the Northern Hub passenger service expansion (service upgrade complete by 2018) and HS2 Phase 1 (opening in 2026), could prove difficult to accommodate on both the Chat Moss and West Coast Mainline routes.
Page 35 Connectivity Constraints - lack of geographical coverage of network 9 The rail network does not always link places where people live to employment sites effectively and does not always offer sufficient service frequencies to allow seamless commuting where it does;
10 There is evidence that transport networks either side of the border are developed partially in isolation from each other, leading to gaps in service provision and difficulties in seamless cross border journeys. For example, there are no through-trains between Liverpool and North Wales Coast Line /Wrexham despite a desire to create a link between Liverpool John Lennon Airport and the area (i.e. through Liverpool South Parkway);
11 There are no direct services between Liverpool and Scotland, Liverpool and South West England, or Liverpool and South Wales;
12 There is a poor frequency of services (when compared to other cities of a similar size and population) between London and Liverpool;
Infrastructure, Facilities and Rolling Stock Constraints 13 The existing Merseyrail Electrics fleet will become life expir ed before 2020, and could be replaced with new higher capacity rolling stock. Further additional rolling stock is likely to be required prior to 2040 to cope with additional demand;
14 The lack of a coherent long -term rolling stock strategy for the North of England has created a significant rolling stock constraint on services, with many local services utilising older units with capacity and quality limitations. In addition, plans to increase services between North West England and Wales are limited in number due to a shortage of available rolling stock;
15 There are operational conflicts at Hunts Cross West J unction between Merseyrail services and Cheshire Lines services, at Wavertree junction due to the merging of routes, and at Sandhills due to the confluence of Northern lines; There are also line-speed constraints on the Chester line. This can perpetuate delay and limits the number of services per hour that can currently run through these areas;
16 There is no connectivity provision for services from the C heshire Lines Committee (CLC) rail line between Liverpool, Warrington and Manchester, to use platforms 3 or 4 at Liverpool South Parkway, limiting flexibility in platform assignment;
17 The mix of (semi -fast and stopping) services on the CLC constrains timetabling options and restricts some stations to a single service per hour. This is due to a lack of passing loops and constraints at the Manchester end of the railway;
18 There is a lack of Park and Ride capacity at a number of stations on both the Merseyrail and City Line networks. As an example, the car park at Liverpool South Parkway is full by 08:00 and this is suppressing demand.
19 A lack of elect rification on key routes has led to inefficient operation of passenger services (relating to routes between Liverpool, Manchester, and Wigan via St Helens, and between Chester and Crewe, Warrington, North Wales and Wrexham). This will be partially addressed by the electrification of the Chat Moss and St Helens routes later this year, however it remains an issue on lines with no identified electrification programme including the CLC;
Page 36 20 Infrastructure constraints exist on some of the key diesel lines that serve parts of the City Region not associated with the City Centre. Southport to Wigan, Preston to Ormskirk, and Wigan to Kirkby all have sections of single track or otherwise constrained running that limits the number of services that can effectively run on each route; and
21 There is a significant capability gap for W10 gauge container freight between the Port of Liverpool and the West Coast Mainline, limiting rail freight growth in light of SuperPort proposals.
Funding Constraints 22 Government funding is constrained at present due to the current austerity measures. This places a requirement on sound economic cases for investment in order to stimulate potential funding source opportunities. In some cases this has hindered the progression of schemes whose main benefits are social or strategic rather than economic;
23 The current prevalence of split -ticketing as a result of the availability of cheaper advance purchase singles can lead to a significant skewing of demand data obtained via the Lennon database. This in turn can cause issues in planning effective services and meeting demand.
Table 4.1: Constraints for the Strategy to Resolve
4.2 Developing Proposals to address the constraints
In addressing the constraints noted above, twelve key aspirational outputs for the strategy, emerging from the study’s aims and objectives, and the findings from the document review, stakeholder engagement, latent demand analysis, and demand forecasting work, have been produced. The twelve packages of schemes contain many shortlisted schemes drawn from an initial pool of more than 150. The packages aim to bring about the changes noted above and to address the particular constraints, whilst addressing the capacity issues discussed, and serving areas of current latent demand.
The schemes that form each package have been shortlisted via an appraisal process that assessed each in terms of its fit with strategic aims and objectives, ability to engender mode shift, environmental benefits, and estimated level of deliverability including affordability.
It is important to note that the Long Term Rail Strategy is expected to evolve considerably as feasibility work is progressed, economic circumstances unfold, and funding opportunities open, or close. The strategy assumes an ongoing flexibility through regular review to re-prioritise and adjust focus, but a clear vision that recognises the need to start work now to address these long term issues. The realisation of these proposals represents a considerable challenge, but one that at the present time is evidently very important to the future economic health of the City Region.
4.3 Freight Considerations
It should be noted that the strategy has taken a pragmatic view on freight path requirements on the Bootle Branch and other key lines within the city region based upon the findings of the LCRFreight
Page 37 Study Stage 1 (MDS Trans-Modal 2013), the appendices of which present detailed forecasts for freight path requirements on each line, and a meeting with Warren Marshall of Peel Ports to understand aspirations of the Port of Liverpool. The MDS Transmodal Study assumes the following committed service levels for freight on each line by 2020:
• Bootle Branch – An additional 9 freight trains per day in each direction leading to a total of 25 trains per day in each direction (19 from Chat Moss and Olive Mount, and 6 from West Coast Mainline and Edge Hill);
• Chat Moss Line between Earlestown and Olive Mount – An additional 7 freight trains per day in each direction leading to a total of 19 freight trains per day in each direction;
• West Coast Mainline Liverpool Branch between Garston Docks and Edge Hill – An additional 2 freight trains per day in each direction leading to a total of 6 freight trains per day in each direction;
• West Coast Mainline Liverpool Branch between Ditton and Garston Docks – No additional freight trains leading to a total of 21 freight trains per day in each direction on this section of line, 15 of which travel to and from Garston Docks;
• West Coast Mainline Liverpool Branch between Weston Point junction and 3MG (Ditton) – An additional 7 freight trains per day in each direction leading to a total of 34 freight trains per day in each direction on this section of line, 13 of which travel to and from 3MG;
• West Coast Mainline Liverpool Branch between Weaver Junction and Runcorn (Weston Point Terminal) – An additional 11 freight trains per day in each direction leading to a total of 39 freight trains per day in each direction on this section of line, 4 of which travel to and from Weston Point; and
• Ellesmere Port to Helsby Line – A reduction of 1 freight train per day leading to a total of 3 freight trains per day in each direction.
The strategy refrains from putting forward significant numbers of specific freight schemes due to a cognisance of the ongoing Northern Ports Trans-Pennine study work which will assess the requirements of the area as a whole in more detail. Nevertheless, the strategy has identified a potential conflict between passenger and freight traffic particularly on the Chat Moss line and its junction with the Bootle Branch and recommends a scheme in Package 1 to reduce this conflict i.e. a grade separated solution.
It is proposed that, following the findings of the Northern Ports study, further work be undertaken to integrate the Long Term Rail Strategy with the derived future freight requirements. This revisiting of the strategy could potentially form one of the first strategic reviews recommended as part of the ongoing review process discussed earlier.
Page 38 5. The Strategic Packages
A headline description of each of the identified key study output strategic packages is provided below before a fuller explanation on the following pages. The packages represent coherent targets for the realisation of the long term vision but individually and collectively will be subject to the results of feasibility work, and the identification of appropriate funding.
In addition, each package, and the schemes that form their main components, will require significant additional work alongside partners including Network Rail and neighbouring authorities that are affected by proposals. At the time of writing, only limited consultation has been undertaken with Liverpool City Region districts, and no consultation has been carried out with authorities outside LCR but within the Travel to Work area including Warrington, Greater Manchester, Lancashire and Cheshire West and Chester. These parties will clearly become key partners in delivering the strategy and will be engaged at the earliest opportunity to ensure their own needs are fully recognised.
The Packages
1. Improving National Passenger and Freight Connections – Making the case to the rail industry for improvements to service levels, new routes and enhanced provision for freight.
2. Merseyrail Growth Enabling - Enabling growth and extension of the Merseyrail network with Rolling Stock, and capacity improvements.
3. Liverpool City Centre Passenger Capacity - Resolving Liverpool Central capacity constraints, preparing Lime Street for HS2, and making best use of assets.
4. City Line Enhancements - Improving inter-line connectivity and replicating Merseyrail success.
5. Cheshire Lines Committee Line (Liverpool – Warrington – Manchester) - Facilitating a more frequent and high quality level of service.
6: Halton Curve - Connecting LCR with West Cheshire, North and South Wales.
7. Improved Connections from Chester and Ellesmere Port - Linking Wirral Line and Chester to proposed Crewe HS2 Hub and national destinations.
8: Ormskirk – Preston Enhancements - Serving new development in West Lancashire and South Preston.
9: Kirkby – Wigan Line Improvements - Connecting to Skelmersdale, and new development in Wigan.
10: Borderlands (Wrexham – Bidston) Line Enhancements - Bringing Wrexham, Deeside and West Wirral into the Merseyrail network.
11: Conversion of Freight Lines to Mixed Passenger and Freight Usage - Converting existing and disused freight lines to passenger usage to serve new markets.
12: Selected New Stations - Responding to new developments, new markets and areas of latent demand.
Page 39 The following pages provide for each package a description of the components, concept and rationale of each package, and the next steps that should be undertaken in order to realise the vision. The packages are presented in approximate priority order based upon the analysis of capacity and forecast demand undertaken as part of the study. In addition, each package has been phased to correspond to a best case delivery or lead-in time. Whilst it is unlikely that every package will be delivered according to this timeline, the placing of each package according to phase and priority allows an understanding of the approximate order in which each scheme within the packages should be tackled so as to maximise the benefit of the strategy in tackling the identified issues.
It should also be noted that ‘Improving National Passenger and Freight Connections’ and implementation of ‘Selected New Stations’ are not prioritised since these represent a continuous process of lobbying and station business case development that sits outside of the main strategic prioritisation process.
The table below highlights the envisaged phasing and priority of the various packages as described. The timescales suggested for each package correspond to the complete timeline for implementing every component of each with the coloured squares representing points at which new components are likely to come on-stream. As an example, whilst Halton Curve itself is a relatively simple short- term scheme, interdependent components such as new services between Liverpool and Cardiff via Shrewsbury are likely to be longer term etc. In this way, each package contains a number of ‘early wins’ which can bring about lasting change within the next few years, however each also has its own longer term components which may not be realised until a point further into the future.
Sub-Package Priority CP5: 2014-2019 CP6: 2019-2024 CP7: 2024-2029 CP8: 2029-2034
National Connections -
Merseyrail Enabling 1
Liverpool City Centre Capacity 2
City Line 3
Cheshire Lines Committee 4
Halton Curve 5
Chester and Ellesmere Port 6
Ormskirk - Preston 7
Kirkby - Wigan 8
Borderlands Line 9
Conversion of Freight Lines 10
Selected New Stations -
Table 5.1: Phasing and Prioritisation of Packages
In this way, the schemes are all phased so as to be delivered within the four industry Control Periods (CP’s, 5 year planning blocks as shown in table 5.1) that make up the next 20 years.
Note: The information presented here is in summary form – more detail is included in the underpinning “Long Term Strategy Development Report”.
Page 40 (1) Improving National Passenger and Freight Connections (CP5 – CP7)
Components
• Increasing inter-peak frequency of Liverpool - London services and extending the Crewe - London interurban services to operate to Liverpool; • Extending platforms 3 and 4 at Liverpool South Parkway to allow longer trains to call; • Resolving conflict between passenger and freight services including grade separated junctions between the Bootle Branch, West Coast Mainline and Chat Moss route; and • New direct routes between Liverpool and Glasgow Central / Edinburgh Waverley, Stoke / Derby / Leicester, and Bristol / Cardiff.
Concept and Rationale
The creation of enhanced and new direct passenger services to core cities is considered essential since it is now recognised that the economies of the nation’s largest cities are inextricably linked together and to the national economy as a whole. 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.
The package therefore aims to:
• Address the existing shortfall in national connectivity by rail from Liverpool in comparison with other core cities; and • Resolve conflicts between passenger and freight services to ensure that the rail freight carrying aspirations of the region are realised (more detailed requirements in this regard will be known later in the year following the publication of the Northern Ports study).
Action Plan
To progress this package, Merseytravel plans to:
• Lobby the rail industry to incorporate proposed new and extended services within new franchising arrangements; • Support the above with business cases and evidence of demand where appropriate that justifies an increased frequency of rail services; • Undertake work on the design and business case for platform extensions to platforms 3 and 4 at South Parkway to allow Pendolinos and 6 car plus trains to call; and • Await the findings of the Northern Ports Freight Study (currently ongoing) to understand better the future requirements. for freight and to allow planning of infrastructure schemes.
Page 41 (2) Merseyrail Growth Enabling (CP5-CP8)
Components
• Replacing Merseyrail Rolling Stock with higher capacity, high quality heavy rail units with provision for dual voltage units; • Future proofing the power requirements of the Merseyrail network by undertaking a full power upgrade; • Reducing operational constraints at Liverpool Central by introducing a turnback facility at Liverpool South Parkway; • Increasing rail capacity across the network; • Increasing Merseyrail depot capacity with a new facility at Birkenhead Central; and • Introducing operational efficiencies.
Concept and Rationale Merseyrail Growth Enabling is one of the highest priority packages, and one on which many of the other packages rely. It contains the schemes necessary to introduce new higher capacity trains onto the network and to expand the network onto adjacent lines including the signalling and rail capacity enhancements this requires. Ultimately the package is considered essential to most of the other components of the strategy and is therefore recommended as one of the highest priorities. It includes:
• Replacement of the Merseyrail rolling stock with high quality metro-like vehicles with significantly higher standing capacity than the existing stock and future provision for dual voltage units to allow an efficient means of extending the reach of the Merseyrail offer; • Creation of capacity to run a mixture of semi-fast and stopping services to improve end-to-end journey times and maximise capacity on some of the longer corridors; • Enhancing the train carrying capacity on the Northern Line to allow 18-20 tph to run between Sandhills and Moorfields as is likely to be required, and to allow trains to be turned back at South Parkway rather than Liverpool Central to remove a significant operational constraint; and • Improvements to accessibility, including for those with mobility impairments, and ticketing integration
Action Plan To progress this package, Merseytravel plans to:
• Procure new DC Merseyrail Rolling Stock ensuring that there is provision for future compatible dual voltage units to facilitate network extensions; • Engage with Network Rail to understand requirements for power and signalling upgrades – lobby to undertake this work during CP5 and to include works loosely programmed for CP7/8; • Progress plans to design and construct a turnback at Liverpool South Parkway and associated signalling and capacity works; and • Work with Merseyrail to provide improved ticketing solutions at stations, and for cross-boundary journeys incorporating the ongoing SmartCard project.
Page 42 (3) Liverpool City Centre Capacity (CP6 – CP8)
Components
• Optimising passenger use at James Street and Moorfields stations; • Full implementation of the Liverpool Central Station passenger capacity enhancements scheme; • Improving rail capacity at Lime Street Station (to accommodate additional services including HS2 proposals) as part of a wider multimodal interchange scheme for the station and a large-scale redevelopment of the area; and • Assessing requirement for a new station in Liverpool City Centre.
Concept and Rationale Limited platform capacity at Liverpool Central is a significant constraint on the network’s future growth. With passenger numbers set to grow in coming years, potentially facilitated by increased capacity on trains, platform capacity is a key concern and a long term strategy is required to ensure that Central can accommodate the demand. In addition, significant work is required at Lime Street to ensure that it can accommodate additional services and ideally the potential of 400m High Speed trains to London, Birmingham and potentially across the north of England should a northern High Speed Line be constructed at some point in the future. Lime Street is the subject of a significant multimodal regeneration drive currently and there is the opportunity to merge the projects to create a truly iconic station and multi-modal interchange-based development that serves all purposes. The package includes:
• Making significantly better use of other City Centre stations including Moorfields as the only alternative existing Northern Line station, due to its location in the business district, and its relatively low usage out of peak time (when Central can be at its busiest); • Encouraging use of James Street as a Liverpool One and waterfront station with a dedicated waterfront entrance on the western side of the Strand; • Implementing the full Liverpool Central capacity enhancements scheme to realign the southbound track to the north under the Central Village development, creating more room for the island platform and relieving the passenger pressure; • Extending platforms and enhancing Lime Street as part of a wider redevelopment of the area; & • Reviewing the 2009 Merseyside RUS recommendation for a new station in Liverpool City Centre should demand continue to grow beyond currently considered levels.
Action Plan To progress this package, Merseytravel plans to:
• Undertake masterplanning and design work associated with station improvement schemes at Moorfields and James Street; • Refine designs for Liverpool Central Capacity Enhancements scheme in light of Central Village ongoing development, and continue to seek funding for this scheme; and • Progress plans for a combined regeneration and multi-modal capacity enhancement scheme at Lime Street to accommodate HS2, improve environmental quality, and facilitate additional services.
Page 43 (4) City Line Enhancements (CP5 – CP7)
Components
• Re-use of Wapping Tunnel and new underground connections into burrowing junctions south of Central on the Northern Line to allow trains to run between Central and Edge Hill and beyond; • Increasing capacity at Wavertree Junction for services between Mossley Hill and Edge Hill; • Extending Merseyrail services between South Parkway and Airport / Speke / Runcorn; • Connecting the Wirral, Northern and City Lines via the Stock Interchange and Wapping Tunnels; • Creating new stations serving the Universities and Smithdown Road corridor; and • Capitalising on the opportunities of substantially enhanced services between Liverpool, Manchester, and Wigan as a results of Northern Hub and electrification investment.
Concept and Rationale
It is clear from Travel to Work mode share analysis, and work to identify areas of latent demand for rail, that destinations along the City Line are not as well served as equivalent destinations along the Northern and Wirral Lines. The main aim of this package is to build upon the Northern Hub and electrification improvements, and replicate the main factors of Merseyrail success including the ability to run frequent, high quality electric services on parts of the City Line. It is also considered important to create cross-city connectivity on the City Line, providing as a by-product operational relief at Liverpool Central, by linking the Northern and City Lines via Wapping tunnel. It proposes to:
• Stimulate a level of rail mode choice in locations served by the City Line equal to that observed in Merseyrail Electrics served areas; • Provide alternative terminus locations for southbound Northern Line services, reducing the operational capacity issues at Liverpool Central; • Promote cross-city connectivity by connecting the Wirral, Northern and City Lines, facilitating direct journeys between Wirral and South Liverpool for example; and • Create a direct fixed rail link to Liverpool Airport, Speke and beyond, served by Merseyrail-type trains and with connections at Liverpool South Parkway.
Action Plan
To progress this package, Merseytravel plans to:
• Using influence as part of Rail North, lobby the rail industry to include proposed service level enhancements to Chat Moss and St Helens Line as part of new franchising arrangements; • Undertake survey work on Wapping Tunnel and existing Northern Line junction to better understand requirements for electrification and return to passenger use; • Review Rolling Stock Replacement options to safeguard ability to procure dual-voltage trains; • Engage with Network Rail to prioritise capacity upgrade for Wavertree junction; • Undertake optioneering and demand studies to look at the potential for a new rail link to Liverpool Airport and Speke.
Page 44 (5) Cheshire Lines Committee (CLC, Liverpool – Warrington – Manchester) Route Enhancements (CP5 – CP8)
Components
• Electrification and Capacity Enhancements on the CLC line to facilitate increased frequency, regular clock-face stopping services as well as higher quality semi-fast trains; • Extension of Merseyrail services via the CLC to Warrington Central and beyond; • New connection between CLC and West Coast Mainline (Liverpool Branch) to provide capacity relief at Hunts Cross junction; and • New stations at Tarbock Interchange (or Halewood South) and Warrington West.
Concept and Rationale
As the only component of the City Line that has no committed electrification programme, the CLC lags behind other parts of the network in terms of a strategy for increased growth and capacity. Timetabling constraints due to a lack of passing places, and a need to integrate stopping services with fast services on the line have led to an irregular timetable with a requirement for skip-stopping and hourly (or lower) service levels at some stations.
This package aims to:
• Increase capacity on the CLC with passing loops to allow the slow services to operate a metro- like timetable of frequent services to key stops without impeding faster services; • Electrify the line and extend Merseyrail services to Warrington and beyond; and • Resolve conflicts at Hunts Cross West junction.
Action Plan To progress this package, Merseytravel plans to:
• Lobby the rail industry to include proposed additional semi-fast service to Sheffield and beyond as part of new franchising arrangements; • Lobby the Electrification Taskforce to prioritise electrification for the CLC in next control period; • Provide support (in partnership with neighbouring authorities)for new station aspirations including Warrington West and Tarbock Interchange if deliverable without negatively impacting journey times and calling patterns for stations in LCR; and • Undertake feasibility study work on plans to resolve the conflicts at Hunts Cross West Junction.
Early Concept for Potential Enhanced CLC Services
Page 45 (6) Halton Curve (CP5 – CP7)
Components
• Provision for Halton Curve in upcoming resignalling of Wavertree – Weaver Junction line section; • Reinstatement of two-way frequent running on Halton Curve; • New routes between Liverpool and Chester, Wrexham, North Wales and Cardiff / South Wales; and • Provision of a new halt on the Halton Curve itself at Beechwood in Runcorn to serve a key area of growing employment.
Concept and Rationale Halton Curve is a scheme with potentially large benefits both for the LCR and its wider travel to work area, that is relatively straightforward to implement, and has recently been awarded funding for progression via the Local Growth Fund. Whilst previous demand studies have struggled to develop a strong business case, it is considered that the inclusion of wider factors such as the direct linkage of employment with residential areas in North Wales and West Cheshire, and the reduction of journey times between North Wales and Liverpool (including employment in South Liverpool and Liverpool Airport) will provide a much stronger level of justification for the scheme.
This package aims to:
• Restore direct connectivity to Wrexham and North Wales from Liverpool and Liverpool Airport; • Provide faster journey times and increased frequencies to Chester; • Provide direct linkage to Frodsham and Helsby; and • Create an alternative route between Liverpool and Cardiff via Shrewsbury.
Action Plan To progress this package, Merseytravel plans to:
• Ensure Network Rail makes provision for preliminary scheme works within Wavertree – Weaver junction signalling works circa 2016; • Review findings of upcoming Halton Curve Demand study in light of recent announcement of funding for the scheme; • Lobby rail industry to invest in complimentary electrification schemes on Chester – Shrewsbury and Chester – Warrington rail lines; and • Undertake early feasibility work for potential rail station
at Beechwood in Runcorn.
Page 46 (7) Improved Connections to Chester and Ellesmere Port (CP6 – CP8)
Components
• Electrification of Chester - Crewe line and extension of Merseyrail services from to Crewe; • New stations at Ledsham and potentially on Chester – Crewe Line; • Electrification of the North Wales Mainline providing the potential to run electric Pendolinos between London, Chester and North Wales; • Electrification of the Chester – Warrington line, and Ellesmere Port - Helsby line allowing regular electric services to run on these lines; • New route between Chester and Leeds via Newton-le-Willows; and • Increased service frequencies.
Concept and Rationale
Whilst much of the LCR will be best served by direct connections to the proposed HS2 scheme at Lime Street and Runcorn, for residents and businesses located in east Wirral, Ellesmere Port and Chester, a connecting route via Chester might offer the best access to HS2. This would provide excellent national connections at Crewe’s HS2 hub with high frequency direct services towards London. Replacing the existing Crewe – Chester shuttle with extended Merseyrail services through Chester also carries operational benefits including Chester turn-backs.
This package aims to:
• Connect locations in East and South Wirral with national and proposed HS2 services at Crewe; • Allow increased frequencies along the North Wales Mainline, strengthening links between Liverpool and these destinations; • Build the rail market along the Ellesmere Port – Helsby corridor and beyond towards Warrington as development aspirations along this route are progressed and potentially realised ; and • In the longer term, enhanced connections from Ellesmere Port might also be required as a result of large scale development in the area.
Action Plan To progress this package, Merseytravel plans to:
• Lobby rail industry and electrification taskforce to invest in electrification of Chester-Crewe line, and other linked electrification schemes; and • In the longer term, undertake demand study and feasibility work related to increasing frequencies and service levels on the Ellesmere Port – Helsby line.
Page 47 (8) Ormskirk – Preston Enhancements (CP6 – CP7)
Components
• Electrification of the Ormskirk – Preston line, with required remodelling, resignalling and line speed improvements, and extension of Merseyrail operations to Preston; • Reinstatement of Burscough curves between Ormskirk / Preston and Southport directions; and • Creation of a two-level interchange station at Burscough Bridge allowing connections between Ormskirk / Liverpool services and Southport / Wigan services.
Concept and Rationale Enhancements to the Ormskirk – Preston line are proposed to improve connections between northern areas of the City Region and areas of West Lancashire, South Ribble and Preston with large planned employment and housing growth over the next 30 years. In particular, the package aims to improve connectivity between Liverpool and large development sites at Cuerden, Leyland and Preston, and new housing in Burscough, and to better serve the intermediate Liverpool – Preston market, allowing faster trains to run between Liverpool and Preston on the St Helens line.
This package aims to: • Create direct connectivity from South Liverpool to Preston via Liverpool City Centre and Ormskirk, to new development and employment opportunities to the city region’s residents; • Provide better linkage to and from Liverpool for users of the Southport – Wigan / Manchester line; • Review options for improvement to Southport – Wigan / Manchester line; • Provide residents of new housing in Burscough with access to opportunities within Liverpool City Region and surrounding areas; and • Deliver significant journey time and quality benefits for its users through electrification of the Southport – Wigan Line.
Action Plan
To progress this package, Merseytravel plans to:
• Commence feasibility and early GRIP process for design and construction of electrification and capacity enhancements scheme for the Ormskirk – Preston line including dualling and line speed improvements; • Undertake further business case work on Burscough Curves in light of development proposals and journey time savings; and • Review Rolling Stock Replacement options to safeguard future ability to procure dual-voltage trains; and • Review options for improvements to journey time and services levels on Southport-Wigan / Manchester line.
Page 48 (9) Kirkby - Wigan Line (CP6)
Components
• Electrification of the line between Kirkby and Wigan Wallgate including new electric spurs between Rainford and Skelmersdale, and between Upholland and Skelmersdale; • New stations at Headbolt Lane (Kirkby) and Skelmersdale; and • Increased service frequencies between Kirkby and Manchester Victoria / Rochdale line with potential through-services to Liverpool.
Concept and Rationale
Skelmersdale has strong cultural links with the LCR due to widespread population migration to the town from Central Liverpool in the 1960s and 1970s. A direct electric link, forming an extension of the existing Kirkby Merseyrail line, would allow the rail network to mirror this connection for the first time and provide strong journey opportunities. The link to Skelmersdale should be considered as the first phase of a wider electrification of the entire Kirkby / Wigan line (and potentially onwards towards Manchester), given the large scale of proposed development to the south west of Wigan town centre, and the recently boosted service levels between Wigan and Scotland.
This package aims to:
• Provide direct rail connectivity between Skelmersdale and the LCR; • Enhance service levels and quality between Kirkby and Wigan / Manchester with potential through-services to Liverpool; • Improve accessibility to Wigan for connections to Scotland; and • Support aspirations to increase rail freight handling at Knowsley Industrial Park (Potter Rail Freight Terminal) by upgrading the Wigan – Kirkby line.
Action Plan
To progress this package, Merseytravel plans to:
• Commence GRIP process for design and construction of new spur and electrification between Kirkby and Skelmersdale, including construction of new stations at Headbolt Lane and Skelmersdale; • Investigate the potential long term savings and benefits that could be made by electrifying both this route and the remaining line between Wigan and Rainford concurrently, with an electric spur between Upholland and Skelmersdale; • Review Rolling Stock Replacement options to safeguard future ability to procure dual-voltage trains.
Page 49 (10) Borderlands (Wrexham – Bidston) Line Enhancements (CP5 – CP7)
Components
• Service level enhancements on the Wrexham – Bidston Line; • Line electrification and direct connectivity and integration with the Merseyrail Wirral Line; and • New stations at Beechwood, Woodchurch and Deeside Industrial Park
Concept and Rationale
Electrification of the Borderlands line between Wrexham and Bidston, and incorporation into the Merseyrail Electrics network to better connect areas of population and employment on this route with bi-directional peak demand. For this package, it is proposed that the demand for the line be built up incrementally in stages, with the first of these to be an increased frequency of service between Wrexham and Bidston. A new station at a key employment location (Deeside Industrial Park) would then follow to attract a new catchment for the services, with a full electrification of the route, incorporation into Merseyrail, and additional new or upgraded stations coming after this.
This package aims to:
• Improve service levels, quality and frequency on the Borderlands Line between Wrexham and Bidston; • Incorporate the line into the Merseyrail Wirral line to provide direct connectivity with Liverpool City Centre; and • Connect the city region with emerging employment markets at Deeside and outside Wrexham.
Action Plan
To progress this package, Merseytravel plans to:
• In partnership with the Welsh Government, Network Rail and Cheshire West and Chester Council, lobby the rail industry to include an enhanced service specification in the franchise specification for the Wales and Borders franchise; • Undertake further business case work on electrification of the route in light of enhanced employment opportunities at Deeside and the potential for overhead electrification and dual voltage trains; and • With Network Rail undertake early feasibility and initial GRIP stage work to design and construct new and upgraded rail stations on the route.
Page 50 (11) Mixed Passenger & Freight Use on Current Freight-Only Lines(CP7 – CP8)
Components
• Upgrade of North Mersey Branchline and Bootle Branchline to passenger services; • New routes between Liverpool and Ormskirk via North Mersey Branch, and between Edge Hill and Bootle via Bootle Branch; and • New stations at Anfield, Tuebrook and Edge Lane.
Concept and Rationale
Usage of these lines for passenger services have different primary purposes and the ultimate network might include either, both or neither depending on demand and freight requirements to be determined by the ongoing Northern Ports Study. The North Mersey Branch provides an alternative route between Ormskirk and Central Liverpool avoiding Orrell Park, Walton and Kirkdale. In contrast, usage of the Bootle Branch by passenger services would provide a direct rail connection to parts of North Liverpool unserved by the rail network.
This package aims to:
• Allow Ormskirk services to be divided between two routes freeing up capacity for Liverpool – Skelmersdale / Wigan services, and provides an enhanced service to Bootle and Bank Hall stations; • Provide direct connections to parts of North Liverpool including Fairfield, Newsham Park, Tuebrook and Anfield; and • Provide an additional mode of travel for access to Anfield and Goodison Park football stadia on matchdays.
Action Plan
To progress this package, Merseytravel plans to:
• Review findings of Northern Ports study to better understand the requirements for freight access to Port of Liverpool; and • If feasible, undertake business case work to support conversion of lines to passenger usage,
incorporating the potential capacity release and access to latent markets of demand.
Page 51 (12) Selected New Stations (CP5 – CP7)
Components
• New stations at Carr Mill, Ditton, Maghull North, St James, Vauxhall, Town Meadow, and other locations (mentioned in the other packages above).
Concept and Rationale
Package 12 is intended to present the other proposed new stations across the city region that made the shortlist of schemes, but which do not conveniently fit into other packages. Aside from the stations proposed as part of the other packages, a further six stations are proposed with varying lead-in timescales and levels of priority.
For each station, including those listed in other packages, a Network Rail GRIP stage process is required that leads from scheme inception, to optioneering, through option selection and business case analysis to eventual detailed design and construction. In time for the first strategic review of the Long Term Rail Strategy envisaged in late 2014 / early 2015, it is intended that a new station evaluation exercise is undertaken to better understand the rationale behind each proposed station, the likely catchment it would serve and the impact upon the respective lines in terms of journey time and passenger demand etc. This is envisaged as a proforma-based paper undertaken in co- operation with the relevant scheme promoters including neighbouring local authorities, and will form the basis of the new station recommendations that are progressed through to the various GRIP stages. Outcomes would be subject to review in the future as understanding evolves.
This package aims to:
• Provide new stations that respond to new development, serve new markets, and address areas of existing latent demand.
Action Plan To progress this package, Merseytravel plans to:
• Commence the GRIP process of design and construction for Maghull North station; • Undertake demand modelling and business case work for Carr Mill and Town Meadow stations; and • Commence survey work to understand the requirements for construction of new or replacement stations at St James and Vauxhall.
Page 52 6. Summary and Concluding Thoughts
A clear case for investment
The LCR rail offer must not stand still. With the LCR’s population growing and aspirations for significant economic expansion the rail system needs to play an enhanced role in connecting people to places. There is substantial evidence that to avoid investment in the coming years would only serve to stifle the local economy, undermining the aspiration to develop the area as an economic, leisure, tourism and cultural hub, stunting the growth driven by the SuperPort plans, and limiting the ability of the region to capitalise on its great wealth of assets.
A bold but necessary vision
The strategy presented on these pages is necessarily bold and radical since it represents a 30 year vision to equip the City Region with a modern railway providing a necessary step-change in terms of quality, accessibility and journey speed. The new infrastructure associated with the measures suggested is costly but not deemed to be outright prohibitive, with the opportunity for significant long term savings and benefits with careful advance planning and phasing. The strategy provides a pathway which ensures that projected levels of future demand are accommodated, but more than this it explains how new areas of latent demand can be opened up to the railway, accessing untapped markets, reducing the overall impact of car travel on the regions roads and supporting economic growth.
Realism?
Although challenging in terms of delivery, the aspirations of the Long Term Strategy are not simply ‘pie in the sky’. With huge rail infrastructure schemes such as the proposed HS2 railway (with mooted Northern Connectivity components and early discussion of HS3), ongoing and wide-spread electrification, large-scale expansion of the Metrolink network in Manchester, and many other current schemes there is a strong precedent for the LCR to seek significant investment in its rail infrastructure. The scale of the proposals in this strategy are not out of proportion with the needs of a growing city region and comparable investment being made elsewhere.
Opportunity
An analysis of the current policy and funding environment makes clear that there is now an opportunity unrivalled in a generation for rail in the City region to drive forward economic growth.
The funding environment is currently much more conducive to delivering rail schemes with, for example, monies potentially available through the City Deal and the LEP’s Local Growth Fund, supported by the LCR economic growth mandate, and national government and Network Rail taking a bolder more strategic approach to investment.
As discussed above the policy environment is equally supportive for LCR proposals with HS2, HS3, electrification and a pro-rail “can-do” attitude increasingly prevalent in the industry, and demonstrative of confidence in the value of rail investment.
In combination with the above there are also a ‘once in a lifetime’ set of crucial local opportunities that have arisen. The potential Merseyrail Rolling Stock Replacement scheme, the current market
Page 53 leading strength of the Merseyrail asset, local developments including SuperPort, Liverpool Waters and Wirral Waters, and local population growth, all combine to present considerable local opportunity at this time.
Flexibility
The strategy has been designed with an expectation of regular review. In this way it is envisaged as staying relevant, and able to respond to changes to the physical, policy and economic context. The packages are formed of schemes deemed most deliverable and beneficial at the present time, whilst the original long list of schemes has been retained for regular review, providing the opportunity for previously sidelined measures to re-emerge in the future as a result of circumstantial changes.
A key example of the use of this flexibility is in the consideration of freight schemes. Whilst the notion of ensuring that the freight aspirations of the city region, particularly related to SuperPort, are clear the packages presented here are predominantly passenger service related at present. The publication of a comprehensive Northern Ports study in late 2014 is programmed to be the first point of strategic review and will allow evidence based packages of freight measures to be developed which are compatible and complimentary to the passenger rail strategy.
“Converting Strength to Lasting Long Term Economic Growth”
The strategy is presented as the means by which the railway can support and enable the continuing growth of the LCR, ensuring that we do not accept the status quo, but rather that we respond to passenger growth, road congestion, and the other constraints that might limit economic development in the future. The strategy provides a blueprint as to how we, as a city region, can increase the prosperity of Liverpool, providing better connections and reducing barriers to travel. It will ensure that the area is truly able to excel as the primary port of Northern England, and as a strong cultural, tourism and economic centre.
The strategy presented in this document provides a clear direction of travel and highlights the types of solutions that are going to be required to bring about the desired outcomes. The Long Term Rail Strategy acknowledges the huge asset to the LCR that the rail network already provides, and presents a blueprint for “converting strength to lasting long term economic growth”.
Page 54 Appendix A: Envisaged Best Case Timeline for Rail Strategy
To illustrate the Long Term Rail Strategy and provide a picture of how the rail network could look at the end of the 30 year strategic process, an approximate and indicative best-case timeline of key schemes has been produced. This includes industry milestones based on the latest understanding of timescales. It also includes some of the major changes that are proposed for the network within the next four Control Periods and shows how these fit into the bigger picture.
The timeline is shown in Figure A.1 overleaf:
Page 55 Page 56 Page
Figure A.1: Indicative Timeline of Rail Strategy Enhancements (subject to development of business cases and evolution of demand requirements Agenda Item 5
LIVERPOOL CITY REGION COMBINED AUTHORITY
To: The Chair and Members of the Combined Authority
Meeting: 19 September 2014
Authority/Authorities Affected: All
EXEMPT/CONFIDENTIAL ITEM: No
REPORT OF THE LEAD OFFICER: TRANSPORT
ONE NORTH REPORT: A PROPOSITION FOR AN INTERCONNECTED NORTH
1. PURPOSE OF REPORT
1.1 This report sets out the background to, and recommendations contained within, the One North proposition, as well as outlining the intention to develop a detailed strategic investment plan for the delivery of the proposals.
2. RECOMMENDATIONS
2.1 It is recommended that the Liverpool City Region Combined Authority:
(a) endorse the report and welcome the publication of the One North proposition; (b) agree that the City Region contribute to the development of a strategic investment plan for the proposals; and (c) instruct officers to continue to work positively with public and private sector partners in the refinement of the detailed proposals.
3. BACKGROUND
3.1 In March 2014, the new Chair of HS2 Ltd, Sir David Higgins, published a review of High Speed 2 (HS2) programme, costs and deliverables. The review included a recommendation that local authorities in the North of England should work together to identify the infrastructure investments necessary to bring about a transformational change in East-West connectivity, so that the benefits of HS2 could be felt across the whole of the North and not limited to those locations directly served by the new line.
3.2 In response, political representatives of the North’s Core City Regions agreed that the five northern Combined Authority areas should jointly commission a multi-modal study into the passenger and freight infrastructure investments necessary to deliver a significant improvement in northern connectivity. The study has been led by Steer Davies Gleave, also the City Region’s transport consultants examining the economic benefits of HS2 serving the Liverpool City Region (LCR). Page 57
3.3 The work is intended to provide a platform for the North of England to make a collective case for infrastructure investment in the run-up to the next General Election and to build upon the success of the campaign to secure investment in the Northern Hub by identifying further pan-northern infrastructure improvements which will support wider economic growth efforts.
4. ECONOMIC CASE FOR TRANSPORT INVESTMENT
4.1 An increasing amount of evidence points to the geographically unbalanced nature of the national economy. The UK has a large capital and world city which attracts high levels of investment, including in transport. In contrast with most other developed economies, the next tier of cities is much smaller. Compared with equivalents in Europe, Northern cities’ GDP per capita is weak against the national average, and investment in connectivity has been neglected. This has a negative impact on both Northern and national prosperity.
4.2 Whilst the UK is characterised by an extremely dominant commercial and business centre, there are other models of national economic distribution elsewhere in the world. The One North proposition has used Randstad in the Netherlands and Rhein- Ruhr in Germany as international benchmarks as to what can be achieved through the effective binding together of neighbouring towns and cities. Both of these regions feature a number of major cities with separate but related economies and interconnected transport systems comprising of road and rail links with high speeds and short journey times. They also enjoy high quality connections between ‘hub’ cities and their neighbouring ‘spoke’ towns. The development of direct services between all major cities means that no single city dominates, but allows for the expansion of a number of neighbouring city ‘clusters’. All cities are directly connected to key international airports and rely on strong port, waterway and freight connections to support their economies. It is by applying the lessons of international comparators such as these that the One North proposition has been developed.
5. THE ONE NORTH REPORT RECOMMENDATIONS
5.1 The Commission has made use of the most up to date City Region forecasts (including the recently produced LCR LEP employment and populations forecasts) to develop a proposal that will increase the effective density of the North of England, recognising that whilst individual cities are small by international comparison, collectively they contain a population of 15 million, which is larger than London and almost as big as the whole of the Netherlands. Improving capacity and connectivity to a level similar to European comparators would enable the North to act more as a single economic unit; exploiting agglomeration economies by bringing companies and individuals closer to their rivals and partners, stimulating investment and innovation and increasing competiveness. A copy of the report is attached as Appendix One.
5.2 The proposals contained within the One North report are summarised below:
Page 58 (a) the headline proposal is for a new, 125 mph trans Pennine rail line, linking the five city regions together with Manchester Airport, the Port of Liverpool, other key ports and freight terminals and linked to the HS2 network;
(b) the proposition also includes a set of highway improvements filling in gaps in managed motorways across the M62/M60/M56 network and the M1 and the M6/M61 north-south corridors and removal of gaps from the North East to South Yorkshire;
(c) for each city region, a programme of City Region rail service development, helping to broaden the benefits of HS2, including by new rolling stock operating European style cross city region networks, centred on hub stations but also allowing for direct connections to maximise connectivity gains;
(d) a programme of investment for rail freight, concentrated on port connections and rail-linked distribution centres, and taking advantage of the new trans- Pennine route;
(e) good access that enables the efficient and timely movement of large quantities of freight by rail, road and water covering not only ports, rail links and large distribution centres but also light commercial vehicles and airports;
(f) a new railway between Newcastle and the Darlington area, designed to increase capacity and save 10 minutes on the journey time – a saving that will be of value to East Coast services in the medium term as well as HS2 services later; and
(g) early adoption of key elements of HS2 as a key catalyst for Northern city regeneration, including early construction of the HS2 line between Leeds and Sheffield, to be integrated with the new Trans Pennine link.
6. COSTS AND IMPACTS
6.1 This work is in the very early stages and a quantification of benefits is yet to be carried out. The work has been initially costed at around £10-15bn (which is comparable to the budget of London’s Crossrail). Detailed costing will only become available when business cases for individual elements of the proposals are developed (see Section 7: Implementation)
6.2 The overriding objective of the proposal is to see the North become a destination of choice for investors and a counterweight and complement to London and the South East. Higher levels of productivity and greater competitiveness of northern-based businesses delivered in a highly connected, multi-centred regional economy able to function in ways similar to the international benchmark regions highlighted in paragraph 4.2.
6.3 The key outcomes for Liverpool City Region from this proposition will be:
(a) reduced journey times, including 20 minutes from Liverpool to Manchester, 50 minutes from Liverpool to Leeds and Sheffield and 30 minutes to Manchester Airport; Page 59
(b) a 100-130% increase in commuting capacity into Liverpool; and (c) a European gauge freight route across the Pennines suitable for Port based logistics.
7. IMPLEMENTATION
7.1 In advance of the publication of the study, officers met with the Chair of HS2 Ltd, Sir David Higgins, to brief him on the proposals and to offer support as he develops his own detailed recommendations for the Chancellor on improving East-West connectivity.
7.2 The report was launched on 5 August 2014 at an event in Manchester, with the Chancellor of the Exchequer. Following its positive reception, it is proposed that the five Combined Authority areas commission a more detailed study to develop an evidence-based strategic investment plan to improve connectivity between cities of the north, their ports and international gateways.
7.3 The strategic investment plan is intended to guide national and local investment decisions over the next twenty years. It will comprise a specific set of interventions, each of which will be developed as far as a high-level business case, as well as a timetable for the implementation of the interventions.
7.4 Timescales for the delivery of the strategic investment plan are tight and are driven by the requirement to have a completed submission ready for consideration by Ministers in advance of the Autumn Spending Review in November 2014, as well as the intention to use the plan as a platform to influence party manifestos under preparation for the 2015 General Election.
7.5 In parallel to the commissioning of the investment plan, there will be a review of the governance structures surrounding the One North work stream to determine how other key partners, including business representatives and representation from other towns and cities outside of the Core City areas, can be involved in the process whilst maintaining the pace necessary to complete a large and technically demanding piece of work within a tight timeframe.
7.6 A further report will be presented to this Authority as the investment plan reaches its conclusion.
8. RESOURCE IMPLICATIONS
8.1 Financial
The City Region will contribute up to £50k to the development of the strategic investment plan in keeping with the level of contribution of other partners. This will be funded by Merseytravel from within its existing budgets.
Page 60 8.2 Human Resources
None as a direct result of this report.
8.3 Physical Assets
None as a direct result of this report.
8.4 Information Technology
None as a direct result of this report.
9. RISKS AND MITIGATION
9.1 None as a direct result of this report.
10. EQUALITY AND DIVERSITY IMPLICATIONS
10.1 None as a direct result of this report
11. COMMUNICATION ISSUES
11.1 None as a direct result of this report
12. CONCLUSION
12.1 The One North proposition represents a significant milestone in the development of proposals that could see the emergence of a genuine alternative growth pole to London and the South East. A considerable amount of work now needs to be done to move the proposition from a high level set of principles into detailed proposals which will form the basis of a collective northern ‘ask’ to all political parties in the run up to next year’s General Election.
DAVID BROWN Lead Officer: Transport
Contact Officers: Darren Kirkman, Policy Development Advisor, Merseytravel, 0151 330 1107 Liz Carridge, Corporate Communications Manager, Merseytravel, 0151 330 1151.
Appendices: Appendix One - One North: A Proposition for an Interconnected North; 2014.
Background Documents: None Page 61 This page is intentionally left blank One North A Proposition for an Interconnected North
July 2014
Page 63
ONE NORTH: AN INTERCONNECTED TRANSPORT PROPOSITION LIVERPOOL MANCHESTER LEEDS SHEFFIELD NEWCASTLE one north 3
Contents Preface ...... 4
Executive Summary ...... 5 Introduction ...... 5 Why Transport and Logistics are a Top Priority for the North ...... 5 Guiding Principles ...... 6 Economic Benefits ...... 7 The Proposition ...... 7 Next Steps and Consultation ...... 10
1 The Challenge ...... 11 Why Transport and Logistics are a Top Priority for the North’s Economy ...... 11 What the Strategic Economic Plans say about Connectivity ...... 12 What Transformed Connectivity can bring in Practice ...... 13 Page 64 Page European Comparisons ...... 14
2 Current Plans and Developments ...... 18 Highways ...... 18 Logistics ...... 20 Rail ...... 21 Airports ...... 24 In Summary ...... 24
3 The Proposition: A New Strategic Approach ...... 25 The Key Argument ...... 25 One North: A Proposition for an Interconnected North ...... 25 Elements of the Proposition Explained ...... 28 Broad Timescales for Delivering the Proposition ...... 33
4 Next Steps ...... 34 Benefits of Working Together on an All Modes Strategy ...... 34 Finalising the Proposition ...... 34 How the Strategy will be Delivered ...... 35
4 one north one north 5
Preface Executive Summary
One North is a strategic proposition for transport in the North. Introduction Led by the city regions of Leeds, Liverpool, Manchester, Newcastle and Sheffield, One In the recent report HS2 Plus, the benefits of HS2 in terms of better links North reflects the critical importance of transport for vibrant, sustainable economic between northern cities and the Midlands/London were highlighted. Sir growth across the North. It is our initial response to the challenge set out by Sir David Higgins in his report HS2 Plus: to come together to develop a coherent strategic David Higgins posed the question of whether this alone would be sufficient transport plan integrating HS2 with the existing rail network, transforming connectivity to achieve a full transformation of northern connectivity and the North’s across the North. Already the Chancellor has identified the need for a new strategic economy. The challenge he set essentially concerns connectivity between approach to connect cities to drive growth, including the principle of a northern east- northern cities and their connections to the international ‘gateways’: west high speed rail link. airports and ports. The 15m population of the North is larger than London and almost as big as the We agree this is the key outstanding issue to address and it provides the Netherlands but our economy is not doing as well. Our ambition is for the North to be basis of this proposition for One North. It has been prepared, mindful of a dynamic counterweight and complement to the London and South-East economy, a the needs of the whole of the North of England, by the city regions of destination of choice for investors, helping rebalance and grow the national economy Leeds, Liverpool, Manchester, Newcastle and Sheffield. It follows on from in the decades ahead. the speech by the Chancellor of the Exchequer in June, where he observed Transport – for freight and people - is central to our ambition. Just as the transport that “the cities of the North together can be greater than the sum of their Page 65 Page “...a highly networks in London and the Netherlands – internally, with surrounding areas and parts”. He identified the need for a new strategic approach to connecting beyond – are fundamental for their economic success, transport is fundamental for cities to drive growth and outlined the idea of a new east-west high-speed interconnected region the North. But journey times across the North are much slower, service frequencies rail link for the North. of thriving cities and are lower and the interconnectivity of our transport networks is much weaker. towns, providing a Transport connectivity across the North needs to change. Why Transport and Logistics are a Top Priority valuable counterweight The dominant method of travel in the North today is by road. Our motorways need to be kept moving through extended managed motorways east-west on the M62/M60 for the North to London” and north-south on the M1 and M6 and through tackling network gaps on the A1 and Our proposition places a transformation of connectivity at the heart of an links to ports. But our already congested highways cannot be expected to meet all the aim to maximise economic growth in the North. burden of growth. The strategic economic plans of all five city regions, prepared by the Rail is the travel sector that is growing strongest. Alongside fast frequent links to respective LEPs earlier this year, each recognised the importance of Birmingham and London provided by HS2, the North requires a new trans Pennine improving transport links to achieve economic growth. route and a faster route to Newcastle. City region rail networks need more capacity, electrification and new rolling stock to meet growing demand. They need to be closely Our proposition builds on this common perspective and aims to create interconnected with the new intercity network of services and with metro/tram a North of England that is a powerful and integrated series of economic services, bus and cycle. With this the North will be better placed to take advantage of geographies. This will be a highly interconnected region of thriving cities the lower barriers to trade with the South that HS2 will bring, multiplying the benefits and towns, providing a valuable counterweight and complement to London of investment in high-speed rail to the benefit of the country as a whole. and helping to re-balance and deliver growth for the national economy in One North sets out our proposition for transport in the North and the principles we have the decades ahead. adopted in developing it. It provides a platform for consideration by the LEPs and both private and public sector organisations across the North. Our next steps will be to work with these organisations to develop a prioritised set of economically driven investments to deliver our ambition. The prize is considerable. A transport network that supports a strong and vibrant and more productive North of England economy for the 21st century. Councillor Keith Wakefield, Leader of Leeds City Council Joe Anderson, Mayor of Liverpool Councillor Sir Richard Leese, Leader of Manchester City Council Councillor Nick Forbes, Leader of Newcastle City Council Councillor Julie Dore, Leader of Sheffield City Council 6 one north one north 7
Guiding Principles Economic Benefits We have used the following six guiding principles in setting out our vision. Better connectivity means improved journey time reliability, better travel quality and shorter journeys that will widen and strengthen the North’s 1 . Our aim is to grow the national economy by invigorating the North’s labour markets and improve business efficiency by: economy as a whole, delivering higher levels of productivity and greater competitiveness through designing a programme of transformed connectivity Stimulating business investment and innovation by supporting for the North. economies of scale and new ways of working. 2 . The vision is ‘multi-modal’ both for logistics and for personal travel. It Achieving agglomeration economies by bringing firms and their recognises that the dominant means of travel today is by road. Steps are employees closer to business rivals and partners. needed to improve the reliability and resilience of the road network across the Enabling firms to access a larger labour supply and providing wider North for all user groups. But the highway network cannot meet the burden employment opportunities for workers and those seeking work. of expected growth. Extra capacity needs to be added elsewhere. The rail network is extensive across the North yet it fails to offer a sense of a joined Increasing competitiveness through access to new and larger markets up network (in the way that London Underground does, for example). This with the benefits of increased labour market specialisation. is where additional capacity and transformational connectivity can be best Reducing trading costs and using more efficient logistics networks. Page 66 Page provided. Water and air transport is relevant too, especially because of the scope for greater activity through the North’s ports and airports. Strengthening the existing comparative advantages of the North as a place to do business. 3 . Rail is the means of travel that is growing strongest and the network will have to play a much increased role in the decades to come. This means investment. All these things mean a more productive northern economy, which means Better rail service provision offers improved connectivity, but the use of higher wages, profits and tax receipts for the Exchequer. out-dated rolling stock and infrastructure together with loosely integrated patterns of operation restrict the potential for improved quality of service. The Proposition Our proposition has therefore been cast in terms of service requirements at a Connectivity and capacity between the northern cities needs to undergo strategic level and an outline investment programme. Following investment, transformational change. To become an economic powerhouse the North growing demand and lower operating costs may result in services becoming requires: more commercially viable. The target is greater capacity, transformed connectivity and a means to drive down the level of public subsidy required for Optimisation of strategic highway capacity for both freight and personal rail services. travel through extended managed motorways and addressing strategic gaps in the road network (including links to ports), with a particular 4 . Our proposition anticipates growth. It is based on national and regional emphasis on improving reliability for freight and business. projections of population increases. Our expectation is that the North’s economy will become more productive, more competitive and more efficient A very high quality (fast and frequent) intercity rail network joining the as it competes in global markets, playing to its strengths, helped by the centres of the city regions. This will require a new trans Pennine route economies of scale that come from a balanced, transformed interconnected and a faster route to Newcastle to provide the additional capacity and network. better connectivity we are seeking for the North’s economy. It will deliver direct, fast and frequent access to Manchester Airport for all the 5 . The proposition seeks to maximise value by prioritising the investment that North’s city regions to help northern businesses access global markets. delivers the best overall return to the taxpayer in terms of net national growth. City region rail networks that provide the additional capacity needed 6 . The proposition is transformational in intent and that means that major capital to sustain city centre growth. These will be interconnected with HS2 expenditure is required, to be justified by the economic benefits. HS2 and services, new intercity services, metro/tram services and with much the North’s interconnected city regions will together make the North a new expanded park and ride facilities. They will combine the need to destination of choice for mobile international businesses: One North. connect into city region hubs with new direct cross-city services. This 8 one north one north 9
requires electrification, new rolling stock (a matter of urgency for the development and regeneration around stations with HS2 services. HS2 North in terms of quality and sufficiency), higher service frequencies, is a key catalyst for northern city regeneration, and not simply a means new services and the removal of network pinch points. to shorten journey times. All of the city regions have plans to be ready for HS2 and are committed to its success. A ‘digital’ infrastructure that offers consumers and businesses full real- time information systems, improved ticketing options, provides greater The new trans Pennine route could also deliver a new integrated east- network resilience and reliability, more capacity for growth and much faster west rail freight capability linking the major port estuaries and north- connections between key centres. south rail routes, connected to a number of major rail linked distribution centres that can reduce industry’s trading cost base. Good access that enables the efficient and timely movement of large quantities of freight by rail, road and water covering not only ports, rail The outcomes from this proposition are: links and large distribution centres but also light commercial vehicles and airports for premium logistics. The North becomes a destination of choice for investors and a dynamic counterweight and complement to the London and South East Building HS2 early – extending Phase 1 of HS2 to Crewe as envisaged economy. in ‘HS2 Plus’ and bringing forward delivery of HS2 between Leeds and Sheffield. HS2 services start in the North in 2026 and the work of Higher levels of productivity and greater competitiveness of northern- Page 67 Page the Lord Deighton Growth Task Force illustrated the scope for early based businesses, delivered in a highly inter-connected, multi-centred regional economy able to function as achieved in Germany’s Rhein-Ruhr region, the Netherlands’ Randstad and elsewhere.
New city region networks Modern infrastructure for our growing logistics industry, supporting Inter city rail networks trade and industry, offering the efficiencies that stem from high levels of Newcastle Increased Highway capacity reliability and resilience. Managed Motorway Network A broadening and deepening of the economic benefits that HS2 brings New Rail to the North. Route Teesport the motorway network
Humber Liverpool Manchester Leeds Ports £10-15bn New Trans Pennine Route HS2 brought forward
HS2 brought forward
Sheffield Improved Reliability +100% to 33-50% Faster and Resilience 150% Capacity 10 one north one north 11
1. The Challenge
A new trans Pennine route, Next Steps and Consultation Why Transport and Logistics are a Top Priority for connected to the HS2 lines and the The development of this vision by the five city regions provides a platform the North existing rail network, tunnelled as for consideration by all of the major towns and cities and Local Enterprise The national economy is unbalanced. A large capital and world city in London needed, linking the five city regions Partnerships of the North. The prize, once developed into a clearly attracts and consumes high levels of investment, including in transport. In together with Manchester Airport prioritised strategy, will be considerable. It will provide a strong strategic contrast with most other developed economies, the next tier cities are much and the ports. context for city region transport investments. It will enable the North of smaller. Compared with our equivalents in Europe, our GDP/capita in the England to compete more effectively for future resources and strengthen A facility that will need to be planned North is weak against the national average, and investment in connectivity the national economy. for intensive use as a high-reliability has been neglected. This reduces national prosperity as well as that of the all-weather central component in the We will use a transparent appraisal framework to develop a clearly North. This proposition seeks to redress these imbalances focussing transport North’s transport system. prioritised list of economically driven investment programmes and investment for maximum economic gains. interventions to deliver our ambition. This strategic investment plan will Poor transport links could be sapping the competitiveness of the North.1 cover all modes of travel and can inform national and local decision-making East–west rail journeys in the North take about twice as long as equivalent over multiple Comprehensive Spending Review periods. journeys in the South.2 GDP per capita performance of the northern city Alongside active government leadership, we will work with the key national regions is slipping compared to London and smaller southern towns and cities. “...The opportunity is Page 68 Page transport agencies – Network Rail, the Highways Agency and HS2 Ltd – to Experience with Scotland and London - where there are significant spending to achieve the benefits ensure that across the North and in each city region the best way is found powers - is that devolved authorities invest more substantially in transport.3 to maximise the value of each investment. of a larger market that While the individual cities of the North may be relatively small, experience in the most prosperous European nations shows that clusters of highly greater connectivity interconnected cities can perform very well in economic terms. The North across the North can of England population is similar to the Netherlands and bigger than London, bring” Tokyo and New York. The challenge and opportunity is to achieve the benefits “…The cities of the north are individually strong, but collectively not of a larger market that greater connectivity across the North can bring. Faster strong enough. The whole is less than the sum of its parts….We need growing regions are characterised by better infrastructure and connectivity to a Northern Powerhouse ….Not one city, but a collection of northern global markets.4 cities - sufficiently close to each other that combined they can take on the world.” There is a continuum of evidence that enhancing connectivity between the North’s city regions, within the North’s city regions and to international gateways The Rt Hon George Osborne MP and London needs to be an integral part of any strategy to accelerate the North’s Museum of Science and Industry, Manchester. 23 June 2014 economic growth. The Northern Way, Eddington and the House of Commons Transport Committee have all come to this general policy prescription.5 The 2014 Strategic Economic Plans for the largest city regions in the North each identify connectivity as a key aim – both across the North (see Leeds City Region) and internationally (see the North East, Manchester, Liverpool and Sheffield Strategic Economic Plans).
1 ‘Never Walk Alone’ The Economist April 19th 2014 2 Manchester to Hull (95 miles) is 1hr 53m by train versus London to Chippenham (95 miles) is 69mins 3 Liverpool John Moores University (Parkinson et al 2014) 4 IPPR North and the Northern Economic Futures Commission (2012) 5 ‘The Economic Case for Transport Investment in the North’ The Northern Way (March 2011). The Eddington Transport Study (Dec 2006). Transport and the Economy, House of Commons Transport Select Committee 2011 12 one north one north 13
What Transformed Connectivity can bring in What the Strategic Economic Plans say about Practice Connectivity The Department for Transport’s trans Pennine study of 2011 confirmed Leeds City Region that enhancing the Leeds-Manchester-Sheffield triangle of corridors would support the economic growth of these large city region economies. Given the Better connectivity is the lynchpin of our plan. Gaps in connectivity are extensive use of these three corridors by longer distance trips between the the missing links to developing a second UK economic powerhouse North’s city regions (including Tees Valley, Hull/the Humber and Lancashire), to compete for the country globally, alongside London and the South the study found that connectivity enhancements across this triangle would East. We have a formidable set of economic assets: what we need is a lead to balanced economic growth of the wider North. high performing transport network to connect people, places and jobs Currently, city region economies function largely in isolation from one another. seamlessly and attract new investment. Commuting between Manchester and Leeds City Regions, for example, is Greater Manchester City Region 40% lower than expected given the physical proximity of the two cities. A 20 minute reduction in train journey times between Manchester and Leeds would Greater Manchester has consistently placed connectivity and transport
Page 69 Page be worth £6.7 billion across the whole of the North of England (with only £2.7 investment at the heart of our economic strategy. We will continue to billion captured within the two city regions and £4bn spread across the wider focus investment on the city region’s strategic transport network to North).6 Bringing the North’s city regions closer together will improve labour further enhance local, national and international connectivity. market efficiency and enable firms to access a wider labour force. Improved Liverpool City Region transport links will widen employment opportunities across the North for those seeking work. Direct cross city connectivity and improved links from To build on international connectivity and brand recognition. Our remoter areas to centres with education and training facilities (such as Carlisle investment will be targeted at establishing a globally connected and Middlesbrough) are needed to reduce the number of people not in City Region, driving the attainment of the SuperPORT concept and employment, education or training. enhancing our internationally recognised visitor economy assets. The Liverpool City Region will exploit these opportunities to establish Widening and strengthening labour markets and improved business efficiency itself as a centre for trade and export led growth, as well as a leading by improving journey time reliability, travel quality and travel times will: location for inward investment. Stimulate business investment and innovation by supporting economies of Sheffield City Region scale and new ways of working. Achieve agglomeration economies by bringing firms closer (in space or Our Ambition — To improve SCR’s external connectivity, nationally and time) to other firms or workers in the same sector. internationally, by air, road and rail, including maximising the benefits of high-speed rail. Improve labour market efficiency, enabling firms to access a larger labour North East supply, and providing wider employment opportunities for workers and those seeking work. In order to achieve the vision set out in our strategic economic plan, it Increase competitiveness by opening access to new markets, principally by will be necessary for people to travel and for goods to be transported increased labour market specialisation. within, into and out of the area. Without this, the economy cannot function effectively and commercial competitiveness and social inclusion both suffer. The presence and effectiveness of road, rail, air and sea connections can place a limitation on how aspirational the North East Local Enterprise Partnership area can be. 6 ‘Strengthening economic linkages between Leeds and Manchester’ Overman et al, SERC The Northern Way 2009. This study showed a broadly similar level of benefit from high-speed rail links between these cities and London – as now being created by the HS2 plans 14 one north one north 15
GDP per Capita Increase domestic and international trade by reducing trading costs. Attract globally mobile activity to the UK, by providing an attractive business environment and good quality of life.
In practice East-West connectivity and HS2 would be growth multipliers for the Euros Germany North and nationally, with each increasing the impact of the other. HS2 lowers 70,000 Netherlands barriers to trade between the North and the South; East-West connectivity makes England the North a more productive and thus better trading partner, which increases the 60,000 returns to the additional trade that HS2 unlocks. 50,000
European Comparisons 40,000 The ability of a very large city such as London to sustain economic growth has been demonstrated through recessionary times. Less well understood is the 30,000 resilience of regional economies based on several competing/collaborating “...East-West connectivity 20,000
Page 70 Page cities. We identified two European benchmarks, Randstad in the Netherlands and HS2 would be and Rhein-Ruhr in Germany, to illustrate what can be achieved. The GDP per 10,000 growth multipliers for inhabitant is higher in both of these European city regions and, unlike the North, the Rhein-Ruhr region’s GDP per capita is growing faster than its capital city, the North and nationally, 0 Berlin. t öln ter tle K as Hull ord with each increasing the Essen erdam Leeds The striking feature of the transport systems in these two comparator regions t Utrech wc Duisburg Den Haag LiverpoolNe Sheffield Bradf impact of the other” is the complex and interconnected nature of the public transport and highway Düsseldorf Dortmund Ams Manches networks combining hub and spokes with cross city routes. On major city to city rail flows, journey times tend to be shorter, frequencies higher and services are timed to interconnect at key interchanges. But there are also through direct services between most places and there is no single spine route that dominates, Source: Eurostat - most recent data (for 2011) given the spatial pattern of the city ‘cluster’. All cities are connected directly to the key airports. Both regions rely upon port, waterway and rail freight infrastructure to support their economies. The distances between city centres is greater in the North of England compared to the European examples and the geography of the Pennines has proved to be a barrier to east-west highway and rail development especially between Manchester and Sheffield. This means we need to work harder on connectivity to develop the advantages of a unified regional economy. The evidence from the study by SERC for the Northern Way in 2009 7 is that improving east-west connectivity in effect brings to the North about the same benefit as does HS2. Addressing the connectivity challenge can be expected to double the benefits HS2 brings the North. The European examples show there is no fundamental reason why the North’s economic performance cannot be uplifted dramatically.
7 Ibid 16 one north one north 17
Randstad, Netherlands Rhein-Ruhr, Germany The Randstad is bounded by the four cities of Amsterdam, Rotterdam, Den Haag The 10 million population of the Rhein-Ruhr region in Germany is shared over five and Utrecht. With a population of 7 million, the Randstad benefits from excellent large cities (Köln, Düsseldorf, Duisburg, Essen and Dortmund) and 10 smaller cities. airport (Schiphol) and port (Rotterdam) links. City to city distances are about 30 - 50 The economy accounts for about 15% of Germany’s GDP. It has one major airport miles and the Randstad benefits from an intensive road network. The Dutch cities (Düsseldorf) which carries a similar level of passengers as Manchester – and a high- are interconnected with fast rail services each 15 minutes, supplemented by local speed rail link to Frankfurt (equivalent to Heathrow in size and function) taking just services, interconnected with city region light rail and bus networks and they also 50-55 minutes (from Köln). The region has the most intensive Autobahn network have an all-night fast hourly service. The Port of Rotterdam is linked by a waterway in Germany and there is a rail network of fast intercity, interurban and metro style freight corridor and a dedicated freight railway. services. These both rely on interchange at key hub stations and provide for direct through services across the region. Rail speeds between centres are typically 60- 70mph with a frequency in excess of 4 trains per hour. A regional transport alliance (VRR) coordinates regional public transport. Duisburg is the largest inland port in Europe, supporting heavy industry and distribution parks.
Page 71 Page
Amsterdam The Rhein-Ruhr has higher speed and higher
Duisburg Essen Dortmund
3
6
m 65mph/5tph
h p 78mph/7tph 63mph/6tph p h t / 2 4 / t h ph p h p 6m t 8
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t
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9 5 Utrecht 6 36mph/4tph
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2 h 8m p ph m /6 35mph/4tph 9
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Köln 18 one north one north 19 2. Current Plans and Developments
On connectivity, exciting progress is being made at last, but more needs to be There is a project pipeline that the Government should commit to urgently. done. Looking ahead, the managed motorways concept can be applied further to congested sections of the strategic network in the North, and new approaches Starting in 2006, the Northern Way Transport Compact forged a strong pan- to non-motorway strategic links can be found. But, we cannot expect the northern strategic direction for transport, driven by economic objectives. existing highway network to bear the brunt of expected demand growth. Focussed on links between city regions and with international gateways the strategy identified strategic delivery gaps and priorities for investment at a Our proposition demands not only the use of managed motorways and pan-northern level. technology to achieve the very best possible network performance but also completion of long standing gaps in strategic links. There is a Highways Agency Many of the short and medium term priorities (for start by 2016) identified study underway looking at the Sheffield – Manchester corridor but it is unlikely by the Northern Way are now complete, under construction, in programme to conclude in favour of a new road link given the environmental constraints. or in a project pipeline. These include the Northern Hub, rail electrification in We believe this corridor needs to be considered on a multi-modal basis. the North West and the North Trans Pennine corridor and highway schemes covering network gaps and the most congested sections of our motorways. This is a good indication of the North’s ability (with partners and the support of Government) to make rapid progress. However, more needs to be done. Beyond 2016 the Northern Way highlighted the need for trans Pennine as well Page 72 Page as north-south rail strategies involving new high-speed lines and an ongoing Journeys by road are no quicker than by rail priority to complete gaps in the strategic highway network and to address congestion. These issues remain highly pertinent in 2014 and the years ahead. Newcastle “...we cannot expect the Highways A1(M)
A section of managed motorway has been completed on the M62 between A1(M) s existing highway network A1(M) in m Leeds and Bradford and another is under construction on the M1 around 3 to bear the brunt of s s 4 Wakefield as is the A1 upgrade to motorway in North Yorkshire. Work on n in h mi m 1 56 expected demand managed motorways is due to start in the next year on the M1 around h 29 les/ 2 A1(M) s/ 2h i le s/ m Sheffield and on sections of the M60 and M62 around Manchester, along with mi le 8 growth” 74 i 9 1 m work to upgrade part of the Newcastle Gateshead bypass, the A556 (M56 to 4 4 s 1 n M6) and access to the Port of Immingham. i Leeds m 5 s 1 ins in Continued increases in congestion are leading to extended journey times and m h M62 23 m 1h 6 2 s/ 5 / le s less reliable journeys which have an economic cost. The head of the Highways mi / 4 s e 73 M62 e 6 l il i M62 Agency recently suggested that with traffic expected to grow, we may need m m m 4 i 8 4 l 8 Manchester e to get used to speeds declining, with 40mph becoming the ‘new normal’. 9 M62 s M62 / Further improvements to the strategic highway network in the North will be Liverpool 34 miles/44m 4 ins 8 M62 needed to address the emerging air quality problems around specific sections m 4 i 7 2 m ns and to complement HS2 plans in specific locations. 7 mi 3 ile les/ 8 m s/1 1h il h M1 48 es 1 M1 Northern interconnectivity at present is very dependent on the M62 in min /1 6mi s h 1 n particular across the Pennines. There is inevitably a limit to its capacity and the 2mi A628 A57 n resilience of all trans Pennine routes at times of severe adverse weather is an A57 issue. Sheffield
8 Interview: Graham Dalton, Highways Agency Civil Service World May 2014 20 one north one north 21
Logistics The efficient movement of freight is central to the economic growth ambitions Inland distribution centres that are rail linked can offer occupiers competitive of the North. Whilst the highway and rail network is publicly funded, the ports advantage, as can rail linked ports. But to take advantage of this, the North and distribution centres are mostly private sector owned and operated and needs a rail network that allows longer haul trains to both reach and use the subject to competitive forces. Freight services are provided in a competitive principal north-south rail corridors. By expanding rail terminals in the Mersey market-place. The North of England has 14m m2 of large warehouses. This and East Coast ports to serve (respectively) Irish and Continental ferry and stock is concentrated along the M62 corridor on both sides of the Pennines, container services and expanding trans Pennine rail capacity and capability, a in South Yorkshire, where the M18 provides important connectivity to the realistic alternative for some freight traffic on the M62 could also be created. expanding logistics sector in Doncaster, and in the major ports. In some cases, these warehouses play a national distribution role, one that could be Rail expanded, given improved network capability. Northern Hub, due for completion in 2018, addresses the capacity and network Within the North of England, the M62 plays a particularly important role. Freight constraints in and around Manchester. With the roll out of electrification in accounts for about 40% of traffic on this key trans Pennine route. It is crucial to the North West, Midland Main Line and northern trans Pennine, studies are in the North’s economy – and any vulnerability (for instance at times of adverse
Page 73 Page hand to consider where to prioritise further electrification of the North’s rail weather) can be damaging. The M18 and M1 also perform a significant role network. But the fundamental limitations on much of the rest of the network “…Victorian and, together with the M62, provide important links to the Humber Ports. remain, constraining service options and with much of the route capacity fully infrastructure… requires Rail freight in Britain has grown, driven by the need to move containers used especially on the approaches and at city centres. Not all the Northern Hub from ports to central distribution points while retailers are beginning to use outputs are committed and even when Northern Hub is complete and the main major investment to offer intermodal services for domestic distribution. Northern ports account for trans Pennine route electrified, the network will be operating close to capacity. the higher frequencies 30% of all port unit load traffic, with particular strengths in serving Ireland, With very strong growth on commuter lines, the existing rail services across and interconnected Scandinavia and the Benelux ports. each city region are under pressure. They link a growing catchment to growing services that are a Teesport has led in the development of port-centric distribution (e.g. for labour markets in the key urban centres across the North. Tesco and Asda) which has the potential to attract logistics activity to sites feature of rival regions in For freight, electrification of the Northern Hub routes will deliver the required with efficient low cost transport networks. Liverpool is the North’s leading W10 clearance for container traffic between Liverpool and Doncaster. Europe” container port, and the Liverpool 2 and superPORT plans envisage major The extension of gauge clearance to the Humber Ports (recently approved expansion building on the opportunities provided by the changing patterns through the Humber LEP Strategic Economic Plan) and Teesport provides the of international shipping. The Humber is the largest trading estuary in the opportunity to develop competitive intermodal services from both banks of the UK (by tonnage) and second nationally in handling roll-on roll-off freight. It Humber, Teesport and the Mersey ports across the Pennines. But rail network is experiencing strong year-on-year growth. All these developments need capacity and the provision of rail-linked distribution parks are critical, and there complementary transport access capacity measures. is competition for paths between rail freight and passenger services on the rail There is already some joint working underway in promoting the opportunity network, especially in the Manchester/Liverpool area and in Yorkshire. of increased connectivity and the benefits that might accrue. The Atlantic Looking ahead, the core problem facing the North’s railways is that Victorian Gateway initiative, spanning the LEP areas of Greater Manchester, the infrastructure, including at the key junctions in the network, requires major Liverpool City Region and Cheshire and Warrington, is a collection of assets investment to offer the higher frequencies and interconnected services that including transport infrastructures that, via their cross-boundary combination, are a feature of rival regions in Europe. Demand growth has exposed significant already represents an opportunity for growth. This includes the strategic road overcrowding problems in the North’s rail network on approaches to and at city and rail network as well as canal infrastructures, access to the Port of Liverpool centres. There is a shortage of rolling stock to be put right and an urgent need as a priority, and logistics assets in each of the three sub-regional LEP areas on to improve its quality. sites at which jobs can be created. 22 one north one north 23
Trans Pennine Maximising the Economic Benefits of HS2 Each of the core trans Pennine rail routes is under examination for HS2 is a central part of this proposition for the North. It provides the electrification. With growth in commuting from intermediate locations – such capacity and transformational connectivity needed southwards (to London, as in the Calder and Hope Valleys – electrification can help fit in a mix of Birmingham and connections to Heathrow Airport). It offers – as the Growth stopping services needed to serve such locations and faster longer distance Task Force has identified – substantial regeneration opportunities around trains. A concentrated investment in a single corridor may achieve better HS2 stations – both where new stations are built and where existing stations journey times (for instance between Leeds and Manchester) but would leave are adapted to accommodate HS2 services. Northern cities are committed to other cities no better off (Sheffield and Bradford, for example). None of the being ‘HS2 ready’. trans Pennine routes offers direct access to the North’s international gateway Early delivery of HS2 would help accelerate the economic stimulus it will airport; and because of the need to operate through congested city centres bring to the North. There would be advantages, for instance, in building the none of them offers a resilient route for rail freight. section of route linking Leeds and Sheffield early and connecting it into the While electrification of the rail routes and deployment of good quality and existing network (and stations) rather than awaiting delivery of the full ‘Y’ sufficient rolling stock is an urgent and primary aim for the next 5-10 years, it package. This would have the great benefit of freeing up the local network in is clear that in the longer term, for capacity as well as connectivity reasons, it Yorkshire which has some of the slowest services – as well as creating capacity would be right to examine a new rail-based route across the Pennines for the for speeded up long distance services such as those that operate between Page 74 Page “...HS2 is a central part of longer term. Newcastle, Leeds, Sheffield and Birmingham. this proposition for the While recognising that the Manchester – Leeds corridor is one of the most In general, HS2 as planned provides excellent interconnectivity with city important linkages between the North’s city regions, what is region networks – for instance in Liverpool, Manchester and Newcastle. In North” needed is an approach that brings benefits across the some places, the design of the second phase of HS2 can be refined to ensure whole of the North, improving connectivity Newcastle that further integrated city centre hubs are created, maximising its value between all of its cities and LEP areas. to the wider city regions it serves. Planning the best overall arrangement involves examining all of the rail service requirements together. In some h locations, existing capacity constraints might be overcome by developing new tp /2 h arrangements to reduce the number of local trains terminating in central p m 1 stations – a potentially expensive use of crucial platform capacity that could be Current rail linkages are slow 7 Leeds freed up for HS2 trains. h p HS2 will release capacity for new services, and this creates the opportunity h t p /1 1 t h to provide places such as Bradford with a much better, hourly fast connection ph/ p 60m m h 9 1 p In other 6 t with London for example, as identified in the Yorkshire Rail Study. 2 / locations – north of Crewe, for example – the phased HS2 plans create a need h ph h 1tp t p ph/ /5 47m h m to upgrade existing lines to add capacity for freight and shorten journey times Liverpool p 3 m 6 48 for the onward extension of HS2 services. The North also awaits with interest 5
7 the current studies of extending HS2 further north, as linkages with Scotland 47mp m h/4tph p are another important part of the connectivity challenge. h
/ 1 40mph/1t t ph p In order to maximise the economic benefits, HS2 must be considered as an 4 h 4m integral part of this proposition for northern connectivity. ph/ Manchester 2t ph
Speed and frequency of fast trains Sheffield 9 Yorkshire Rail Network Study, March 2012 - Metro, SYPTE and Leeds City Region 24 one north one north 25 3. The Proposition: A New Strategic Approach
Airports The Key Argument The North is well provided with growing regional airports with Newcastle, Liverpool and Leeds Bradford each handling over 3 million passengers per There is an opportunity for the North to become a stronger year. Growing airports in the North and expanding the number of routes they economic zone. There are prime examples of similar multi-city are able to offer is a key consideration. Newcastle is connected by the Tyne regions succeeding in Germany and the Netherlands. & Wear Metro and Liverpool via Liverpool South Parkway rail station, but This is principally about productivity and building on our existing a suitable rail/light rail connection to Leeds Bradford airport remains as an competitive advantage, which means the North delivering more ambition that, under this proposition, needs to be turned into a fully realised national output and tax receipts for the Exchequer. Measures that project. deliver the best growth return on investment need to be prioritised. The international gateway of Manchester Airport handles over 20 million HS2 will bring a huge connectivity benefit for the North and its passengers per year. Here, the Airport Master Plan to 2030 recognises that connections with the Midlands and London. surface access plays a crucial role in spreading the economic benefits across The evidence points to poor interconnectivity between the cities the wider North West. This needs to be broadened to address the whole of of the North. The gains that HS2 can bring would be doubled if this the North. The reason for doing so is to help create the demand for more weakness is put right. Page 75 Page direct flights and drive Manchester Airport up the international league table so When looking at the type of connectivity improvements needed, that it increasingly meets the needs of northern businesses without the need improvements are needed on both the highway and rail networks, to interchange at another European hub airport. but it is the rail network where demand is growing strongest and With the majority of people arriving by car, road access to Manchester where there is greatest scope for transformational change. Airport is a major strategic issue with the M56 forecast to be close to capacity We need to develop a new strategic investment plan across all by 2015. Journey times and frequencies by rail to Manchester Airport are modes of transport to guide national and local investment decisions poor: nearly 3 hours for Newcastle and 2h 30 minutes for Hull (both with over the next twenty years, developed through a prioritisation an interchange en route), 1h 20 minutes for Sheffield and 1h 05 minutes for process that maximises connectivity, productivity and GVA outputs. Liverpool. The scope to grow airport use will increasingly become constrained by road network capacity and so there is a need for enhanced rail connectivity (especially in an east-west direction),light rail connectivity and direct cross city One North: A Proposition for an Interconnected services to the North’s principal international gateway airport. North Robin Hood Airport Doncaster Sheffield is the international gateway to The key elements in the proposition are: Sheffield City Region for passengers and is part of the Sheffield City Region A set of highway improvements continuing the Highways Agency programme logistics hub. Over £113m is currently being invested via RGF and the Sheffield of prioritised investment in addressing pinch points and best practice City Region Growth Deal to improve its surface connectivity which will increase operational management, to which this proposition adds some investment in passenger numbers, and hence heighten its strategic significance and GVA key missing strategic links, including for enhanced port access. benefit to the north. As part of the airport strategic growth plan, further A new 125 mph trans Pennine route, connected to the HS2 lines and the investments are planned over the coming years. existing rail network, tunnelled as needed, linking the five city regions together In Summary with Manchester Airport and the ports. It will be a facility that will need to be planned for intensive use as a high-reliability all-weather central component in There are important changes taking place across the North’s transport the North’s transport system. networks, and they will bring much-needed and welcome benefits. But they Good access that enables the efficient and timely movement of large will still leave identifiable gaps in the strategic networks and elsewhere. More quantities of freight by rail, road and water covering not only ports, rail of the same, as the North grows, will not achieve the transformational change links and large distribution centres but also light commercial vehicles and in connectivity and capacity needed to re-boot the North’s economy. airports for premium logistics. 26 one north one north 27
New city region networks Inter city rail networks The intention is that this proposition should complement individual Local Newcastle Increased Highway capacity Transport Plans at the city region and local level. Managed Motorway Network Early adoption of key elements of HS2 as a key catalyst for northern city New Rail regeneration, in part to be built from the north (as well as the south) and to Route Teesport the motorway be integrated with the new trans Pennine link. network Outputs from this proposition are: An increase in commuting capacity for each city region to meet the levels Humber of growth forecast for an expanding economy, which means increasing peak Liverpool Manchester Leeds Ports capacity by: 120 - 150% for Leeds and Manchester. New 100 - 130% for Liverpool, Sheffield and Newcastle. Trans Pennine HS2 brought forward Route Transformed journey times between the five city regions and therefore for the wider North.
Page 76 Page A new east-west route serving Manchester Airport supporting its expansion HS2 brought forward and direct access from every city in the North. A European gauge freight route across the Pennines, suitable for port based logistics and unitised loads. This could also be used for Eurotunnel Sheffield style lorry shuttles. This means spending £10-15bn on: A new trans Pennine route, supporting high quality connections between the cities of the North. A programme of investment for railfreight, concentrated on port connections and rail-linked distribution centres, and taking advantage of Newcastle the new trans Pennine route which will link with the major ports estuaries and north-south rail routes; connected to a number of major rail linked distribution centres. This can help reduce industry’s trading cost base. Ensuring that South and West Yorkshire connectivity is enhanced to address 60 key gaps in the strategic networks, better linking the adjoining city regions. A new railway between Newcastle and the Darlington area, designed to save 10 minutes journey time (using the 140mph capability of the new Liverpool Manchester Leeds IEP train fleet) – a journey time saving that will be of value to East Coast services in the medium term as well as HS2 services later; this is a scheme 30 that will also free up capacity to enhance commuter rail provision between 20 20 Tees Valley, Wearside and Tyneside. 30 30 For each city region, a programme of city region rail service development, 10 helping to broaden the benefits of HS2, characterised by new rolling stock 30 operating European style cross city region networks, centred on hub stations Sheffield but also allowing for direct connections to maximise connectivity gains. 30 Manchester Airport 28 one north one north 29
City regions equipped with new European-style cross-city networks. Logistics A set of new freight and logistics terminals and increased gauge port access In order to support a strong and growing knowledge based economy the routes. northern city regions need to have good transport access, enabling the A set of highways investments to complete the national network in the North. efficient and timely movement of large quantities of freight by rail, road and water. The access must cover not only ports, rail links and large distribution Together with HS2, this will re-balance capital expenditure/capita to allow the centres but must also include light commercial vehicles and airports required North of England to secure a level of transport investment which is more in for premium logistics. keeping with its significance and its economic role. National distribution centres that are rail linked (and so allowing users to save The outcomes from this proposition are: the cost of long distance road delivery) can offer occupiers competitive advantage, A rebalancing of the national economy, with locations across the North able as can rail linked ports. In that way, the lower land and labour costs in the to attract and retain new businesses - a strengthened locational magnet for North can grow market share in the price sensitive warehousing and container investment. port market. A number of the northern ports offer the prospect of significant growth (for example the new deep sea facility – the Liverpool 2 project – is Higher levels of productivity and greater competitiveness of northern- planning to double the container handling capacity at the Port of Liverpool).
Page 77 Page based businesses, achieved by a multi-centred regional economy able to “...Higher levels of Hull and Humber Ports similarly have significant opportunities for growth with function dynamically (just as is achieved in Germany’s Rhein-Ruhr region, productivity and the UK’s largest Enterprise Zone (484 ha of land for port and renewable uses). the Netherlands’ Randstad and elsewhere). greater competitiveness To realise the potential there needs to be additional network capacity for A modern logistics network, supporting trade and industry, offering the freight, generally on routes that can offer adequate loading gauge for 2.9m of northern-based efficiencies that stem from high levels of reliability and resilience. High Cube containers (W10 loading gauge). In practice this means establishing businesses, achieved by A broadening and deepening of the economic benefits that HS2 brings to a limited network of routes that can connect northern ports and new or “...A modern logistics a dynamic multi-centred the North. existing large rail linked sites (east-west) with the principal north – south network offering the regional economy” routes. The new trans Pennine route offers this capability as well as the efficiencies that stem Elements of the Proposition Explained potential for a drive-on facility for road freight, in the style of Eurotunnel. This could offer an all-weather trans Pennine freight capability, and transform the from high levels of freight functionality of the North. Strategic Highways reliability and resilience” Transforming connectivity in the North in this way would lead to: The proposition for highways combines innovative approaches to achieving greater capacity from the network and removing strategic pinch points A 65% increase in freight train movements between the north and the south. with more transformational approaches to the use of the highway network A 60% increase in freight train movements accessing these south-bound for freight and passengers. As a minimum the proposition would secure all corridors from Manchester, Leeds and Sheffield and surrounding areas.10 programme and pipeline projects for delivery by 2019 and thereafter: HS2 Connecting up the North Manage congestion by filling in the gaps in managed motorways across the M62/M60/M56 network and on the M1 and the M6/M61 north-south HS2 creates the opportunity for: corridors. Passenger hubs – where the HS2 station is fully integrated with the local/ Remove network gaps from the North East to South Yorkshire and regional rail network and other transport modes. northwards towards Scotland. New services on the main lines where capacity is released by HS2 – in Improve highway connectivity between Sheffield and Manchester. particular to allow more trains to run from places such as Bradford/ Wakefield to London directly. The proposition needs to address strategic gaps in the network with a particular emphasis on improving reliability for freight and business and other traffic. 10 MDS Transmodal analysis 30 one north one north 31
Restructuring of services around HS2 hubs will work best where integrated stations are planned. Passengers from cities not directly served by HS2 services should be able to choose between an interchange offering a faster overall journey and a direct (if slower) service. Newcastle There is an important interface between the design of HS2 and measures that need to be taken in the North. There are three locations where this is most evident: Manchester Leeds In the case of Liverpool, there is an ambition to achieve a fast connection into the city. An upgraded or new line into Liverpool from the east could both speed up trans Pennine services to Manchester and beyond, and create a better connection for HS2. Liverpool TUNNEL Hull In Yorkshire, there is an opportunity to increase the use of the planned north-south HS2 line, by integration with the proposed new trans Pennine Freight Freight Terminal Terminal connection. If linked both southwards and northwards into the HS2 line a trans Pennine connection would bring many benefits of synergy. This would
Page 78 Page increase the value of investment in a trans Pennine link in the process and Sheffield open it up to a rich set of fast intercity services between the North West and North East and the North West and East Midlands. In the North East, capacity enhancements are required between Newcastle and Northallerton to further enable the provision of fast intercity services This might be developed in phases, but will require tunnelling and take time across the north, and to ensure that HS2 services can be operated in to build. It should allow for speeds of 125mph and our target of a 30 minute addition to existing strategic services. journey time between Manchester, Leeds and Sheffield city centres. The key to The early building of the Leeds – Sheffield section of HS2 in conjunction with a success is to ensure that the route is well connected to both the east and west new trans Pennine connection would itself provide a major increase in speed and designed to dovetail with HS2, enhancing its benefits. On the eastern side and capacity across the North. it should link into the north-south HS2 line with a delta junction arrangement to allow fast services from northern centres such as Newcastle, York and A New All-mode Trans Pennine Connection for the 21st Hull as well as centres in the Midlands and the south, such as Nottingham, Century to access the route. To the west, the line should serve Manchester Airport directly, and Liverpool/Chester as well as Manchester city centre. But we The M62 and other trans Pennine routes will become more congested in also need to see connections with the existing rail network for long distance the decades ahead; for some connections, journey times are already very railfreight. We will need to examine the case for purpose-designed terminals poor; all-weather resilience is not guaranteed; and too much of the North’s so that the corridor can offer a drive-on facility for road freight too, in the style economy is dependent on a few crucial road links. of Eurotunnel. This could offer an all-weather trans Pennine freight capability, Further electrification of trans Pennine rail routes is a crucial first step. It is long and in the longer term help transform the freight functionality of the North. overdue and will bring benefits to many parts of the northern economy and We would anticipate cost levels of £5bn+ and a target delivery date of 2030. the costs of rail franchises. Further incremental improvements in Manchester While this is a major investment, it should be realised that investments of to Leeds journey times could reduce journey times to 40 minutes by 2020. In this scale are now routinely contemplated for London and the south. The this proposition though, better connectivity between the major cities is not the alternative of route improvements will not be capable of delivering the only aim; it cannot be allowed to compromise local connectivity and freight transformational change this proposition calls for, benefitting all parts of the capacity. And journey times need to be tightened further. Hence the need for North’s geography in a balanced way. the new trans Pennine corridor. 32 one north one north 33
Newcastle and the North East Rail Links This proposition in addition embraces two ambitions for better services for Broad Timescales for Delivering the Proposition Newcastle and the North East: By 2019 To speed up and make more reliable services to London on the East Coast Northern Hub and electrification between Liverpool-Manchester-Leeds-Hull and Main Line well before HS2 Phase 2 is completed. Middlesbrough and consequent new rolling stock. To have HS2 services extend northwards from Newcastle to Edinburgh. Midland Main Line electrification. Whilst most of the constraints for the East Coast Mainline are at the southern end of the route there are improvements worth making in the North East Complete all national pipeline strategic highway schemes. that will generate faster journey times and free up capacity from Newcastle to the other four cities, Leeds, Manchester, Liverpool and Sheffield. This is By 2024 likely to mean some new route construction and a capability of supporting Further electrification including to Scarborough, Calder Valley and Hope Valley/south trans at least 140 mile/h operation; we would set a target of a 10 minute journey Pennine routes, together with new electric fleets, in addition to the well evidenced need for time improvement between York and Newcastle. This investment will free up more rolling stock generally across the North. capacity for better commuter rail provision between Tees Valley, Wearside 40 minutes journey time at most between Leeds and Manchester and improvements in Page 79 Page and Tyneside. It should be delivered by 2026 – and fits in well with the plan to services between Manchester and Sheffield. accelerate the implementation of HS2 across Yorkshire early too. Managed motorways complete across the M62/M56/M60 network and north-south on M1 Cross City Services and M6/M61. HS2 services and the inter city services using the trans Pennine link serve Network gaps from the North East to South Yorkshire and northwards towards Scotland the large cities at the core of the city regions and will transform inter-city closed. connectivity. The key to ensuring full benefit is obtained from these investments Rail/light rail connection to Leeds Bradford Airport. lies in transforming the connectivity within each city region too. Just as the North is ‘polycentric’ so too are the city regions. As the European examples show, this By 2026 means high-frequency cross-city links, offering excellent direct connections With HS2 delivered earlier as far as Crewe, provide additional capacity and capability for between services – a seamless network for the user, a tube-style facility that onward links to Manchester, Liverpool, Warrington and to both inland freight terminals and becomes the natural travel choice. Growth in city centre employment simply ports. depends on more peak rail capacity and that cannot be provided efficiently by sets of disjointed, low quality short routes. Speeded up (140 mph) and more reliable ECML and new route to serve Newcastle. New cross city services should be examined for Leeds, Liverpool (east-west), Cross city region suburban services for Leeds, Liverpool (east-west), Manchester, Sheffield, Manchester (getting more from the hub, increasing capacity), Bradford (north Bradford (north-south link such as a tram-train or similar), Newcastle provided by good –south link such as a tram-train or similar) and Newcastle (including new quality rolling stock. connections to serve Northumberland). The progressive electrification of the By 2030 network is a key to unlocking some of these opportunities. In Sheffield the need is to create connectivity between HS2 and the new trans Pennine route. For each New tunnelled trans Pennine route at 125 mph. city region, there are highways measures to consider and objectives for the rail To the west, direct connectivity with Manchester Airport, Liverpool and Manchester. network related to HS2 services, intercity services including those across the To the east connectivity with Sheffield, Leeds, Newcastle and Hull. North, city region/commuter services and freight – especially access to/from ports and freight terminals and distribution centres. Cross city services need to Recasting HS2 in Yorkshire - bring forward Leeds-Sheffield section in conjunction with new include links for all the towns and cities of the north in order to maximise the trans Pennine route value of both HS2 and the new trans Pennine link. These cross city services will In Leeds integrate HS2 into existing Leeds Station. play a central role in providing wider employment opportunities and enabling In Sheffield City Region create connectivity with a HS2 station with east-west capability. firms to access a larger labour supply. 34 one north one north 35 4. Next Steps
Benefits of Working Together on an All Modes allows changes to supply side factors such as labour force but recognises that there will still be constraints and other factors influencing the relative Strategy competitiveness of other cities and regions. The framework will need to take a Working with partners across the North and the national agencies, we pragmatic approach to ensure a real connection with land use and networks, will develop this proposition into a clear phased investment programme striking a balance between being too simplistic and overly theoretical. Adopting – a strategy driven by its economic value and its scope set to deliver the an appraisal framework that doesn’t reflect supply side constraints, whilst at economic ‘northern powerhouse’ identified in George Osborne’s Manchester first sight attractive, will probably overstate the realisable benefits from the speech of June 2014. We will use a transparent framework to develop a interventions. This second phase will subject the strategy and its elements to a clearly prioritised list of economically driven investment programmes and value for money examination and appraisal of their contribution to economic interventions to deliver our ambition. This strategic investment plan will cover growth, nationally as well as for the North. For comparison purposes, the all modes of travel and can inform national and local decision-making over appraisal should include a long-term do minimum strategy designed to keep multiple Comprehensive Spending Review periods. pace with growth. We will work with the key national transport agencies – Network Rail, the Highways Agency and HS2 Ltd to ensure that across the North and in each How the Strategy will be Delivered “...infrastructure city region the best way is found to maximise the value of each investment. This proposition has been led by the five city regions. It provides a platform Page 80 Page solutions designed There is a risk that infrastructure solutions designed around just one mode for consideration by all of the major towns and cities and Local Enterprise or one city region will result in unnecessarily expensive and poorly integrated around just one mode Partnerships of the North. The prize, once developed into a clearly prioritised outcomes. A better approach, and part of this proposition, is that the wider strategy, will be considerable. The work that was undertaken on prioritising or one city region will strategy is developed looking across all of the transport modes and across the the Northern Hub has shown what the North can achieve if it works together. result in unnecessarily North to deliver best overall value for money. This proposition requires a continuing northern voice and perspective to expensive and poorly We believe that the maximum economic benefit will be generated when the ensure it comes to fruition. It will enable the North of England to compete interventions are considered in an integrated and holistic way. New road and more effectively for future resources and strengthen the national and northern integrated outcomes” rail corridors can be examined together to ensure any adverse local impacts economy. are minimised. Whether it is coordinating HS2 with local city networks or The proposition is intended to be a constructive contribution to a debate considering hybrid rail and highway trans Pennine schemes for freight, a which needs to take place over the coming months. We are optimistic that the successful strategy can only be achieved by the national transport agencies analysis will command the respect of Government. We look forward to cross- and the city regions working together. We will also wish to examine funding party support and active Government leadership in working with ourselves, options with our partners. Network Rail, HS2 Ltd, the Highways Agency and other key partners to develop Therefore we believe there is a role for a steering group, not constrained a strategic investment plan – One North – over the coming months. to examine a single mode of transport but with the ability to draw together connectivity gains with positive economic outcomes to guide this work. “I welcome the City Regions of Leeds, Liverpool, Manchester, Newcastle Finalising the Proposition and Sheffield working together and providing a platform for all major towns and cities in the North to combine and strategically plan for The prioritisation will be driven by an assessment of how cost-effective the strengthened connectivity. Not just North-South, but also East-West different interventions are in delivering growth for the whole of the North connectivity, to deliver the growth and jobs that our regions need and and the country as a whole. Conventional approaches to calculating economic get the very best from our investment.” benefit underestimate the impact of the proposed transformational proposition since they assume fixed land use and demographic patterns and supply side Ed Balls MP, Shadow Chancellor of the Exchequer factors. They also fail to address how productivity improvements drive up net national tax receipts. The most appropriate approach will be one that ONE NORTH: AN INTERCONNECTED TRANSPORT PROPOSITION LIVERPOOL MANCHESTER LEEDS SHEFFIELD NEWCASTLE
Page 81 This page is intentionally left blank Agenda Item 6
LIVERPOOL CITY REGION COMBINED AUTHORITY
To: The Chair and Members of the Combined Authority
Meeting: 19 September 2014
Authority/Authorities Affected: All
EXEMPT/CONFIDENTIAL ITEM: No
REPORT OF THE LEAD OFFICER: TRANSPORT
HIGH SPEED RAIL DEVELOPMENT PROGRAMME: SEPTEMBER UPDATE
1. PURPOSE OF REPORT
1.1 This report sets out the work carried out as part of the High Speed Rail Development Programme since the Combined Authority last met.
2. RECOMMENDATIONS
2.1 It is recommended that the Liverpool City Region Combined Authority:
(a) note the progress made since the last meeting of this Authority; (b) welcome the establishment of the City Region‟s own campaign to secure a dedicated link to the high speed network and request that all City Region partners work closely with the Linking Liverpool campaign to secure its objectives; and (c) receive a further update at the next meeting of this Authority.
3. BACKGROUND
3.1 This Authority last received a report on the HS2 Development Programme at its June 2014 meeting. This report provides an update of activity since that meeting, recognising that this is a rapidly moving agenda.
4. HS2 STUDIES
4.1 Members will recall from the June 2014 presentation of the HS2 Economic Benefits summary that this set out the primary benefits of a dedicated high speed line serving the City Region as:
(a) an additional £550m GVA per annum increasing to £8.3bn on a 60 year basis;
Page 83 (b) additional benefits of a direct connection for freight of up to £40m per annum and £630m on a 60 year basis;
(c) an increase in employment of 14,000 jobs with the potential of a total of 26,000;
(d) uplift in City Centre residential values estimated to be in excess of £179m;
(e) an increase of 20,000 new residents requiring 10,000 homes to be constructed; and
(f) business rates uplift estimated in the order of £30m per annum.
4.2 In July 2014, the Chairs of the Combined Authority and Local Enterprise Partnership (LEP) wrote to the Secretary of State summarising the work carried out to date and enclosing copies of the Economic Benefit Study, the Long Term Rail Strategy and details of the updated City Region economic forecasts. The letter called upon the Government to request HS2 Ltd to undertake further work to review and enhance the LCR‟s current HS2 offer and offered the City Region‟s support in carrying this out.
4.3 Initial response to the work has been positive and both the Chief Executive and Director of Integrated Transport Services of Merseytravel met with the Department for Transport‟s Director General for HS2 shortly after submission to discuss the evidence base. An official response from the DfT has been received offering a meeting between Baroness Kramer and City Region representatives which is being arranged for September 2014.
4.4 Officers have also been closely involved in the development of the report One North: A Proposition for and Interconnected North which aims to radically improve east-west connectivity in the North of England. This is subject to a separate report elsewhere on the agenda.
5. STAKEHOLDER ENGAGEMENT
5.1 On 11 July 2014, the Liverpool Chamber of Commerce held a business breakfast on HS2. Merseytravel‟s Director of Integrated Transport Services gave the keynote presentation; setting out the City Region‟s position and summarising the results of the Economic Benefits study. He was joined by the Director of ResPublica Philip Blond, Mike Palin on behalf of the LEP, Louise Ellman MP and representatives of the Superport Committee and HS2 Ltd.
5.2 The audience were largely in support of the proposal and recognised the importance for the City Region of securing a dedicated connection to the new network. The meeting also recognised the importance of articulating a clear, consistent message to Government and of mobilising business support in making the case for HS2.
5.3 On 29 July 2014, the City Region launched its own campaign to press for a direct link to Liverpool. The Campaign, called High Speed Rail – Linking Liverpool, is backed by all of the constituent City Region Local Authorities, the LEP, Page 84 Merseytravel, and the Liverpool Echo which is acting at the campaign‟s media partner. To date over 10,000 people have signed the petition. The business campaign was led by the LEP, and launched on 12 August with an event on 4 September, with the long term aim of getting 10,000 business to pledge support.
5.4 Over the coming months the campaign will look to raise awareness and support for HS2 in the City Region and will engage with MPs and businesses to act as advocates for the proposals. The key objective, as with all elements of the Development Programme, is to secure a HS2 Ltd review of the City Region proposition. Full details of the campaign can be found on its website at www.highspeedrailliverpool.org
5.5 In addition to the Linking Liverpool campaign, the City Region remains an active participant in the national „Connected Cities‟ campaign along with a number of other cities in the North of England. The campaign has recently managed the launch of the One North report and is preparing a programme of activity at the three main Political Parties Conferences during September and October 2014.
6. HS2 COLLEGE
6.1 Members will be aware that in March 2014 the Government announced a consultation on the main location for the proposed HS2 College. The City Region submitted two proposals; for Parklands School in Speke and the Runcorn campus of Riverside College in Halton. Unfortunately, Government announced in June 2014 that these bids had been unsuccessful and that the shortlist of sites was Manchester, Birmingham, Derby and Doncaster. Officers have requested feedback from the Department for Business Innovation and Skills on the City Region submissions.
6.2 A final decision on the location of the college is expected in Autumn 2014, as are details of how the college will work with „spokes‟ – other providers of training located around the rest of the UK, which will support the work of the College. At that point, officers will examine the ways in which the City Region can exploit the opportunity to act as a „spoke‟ location.
7. GOVERNMENT RESPONSE TO GROWTH TASK FORCE REPORT
7.1 The Government published its response to the HS2 Growth Task Force report in July 2014 and accepted all of the recommendations in whole or in part. The City Region was disappointed that the response did not reference the work done to deliver an enhanced offer for Liverpool and confined itself only to those cities and locations which would be directly served by the HS network.
7.2 Officers queried this with the Department for Transport and were told that the focus of the response was on the HS2 plans as they stood, and did not take into account any possible changes to the scheme as a result of the consultation on the Phase Two route of HS2 which concluded earlier this year. Officers have been assured by the Growth Taskforce and DfT that the City Region‟s input, including compelling arguments for Liverpool to be better connected to the high speed network, is being fully considered alongside other responses to the consultation. The Secretary of Page 85 State for Transport will make an announcement on the Phase Two consultation by the end of the year.
7.3 Subsequent to discussions with the Department, the Minister responsible for HS2 commented on the Department‟s HS2 blog that “we are also working with places like Liverpool that will be served by HS2 services – travelling on both the dedicated HS2 line and on the existing railway – as we fully acknowledge the considerable scope that exists for HS2 to also help them deliver their regeneration and development ambitions.”
8. RESOURCE IMPLICATIONS
8.1 Financial
There are no financial implications arising as a result of the implementation of the recommendations in this report.
8.2 Human Resources
None as a direct result of this report.
8.3 Physical Assets
None as a direct result of this report.
8.4 Information Technology
None as a direct result of this report.
9. RISKS AND MITIGATION
9.1 There is a risk that the City Region is unsuccessful in achieving its objective of a dedicated high speed line for the City Region. This is being mitigated through the development of a sound economic base and the maintenance of a close working relationship between all City Region partners, DfT and HS2 Ltd.
10. EQUALITY AND DIVERSITY IMPLICATIONS
10.1 None as a direct result of this report.
11. COMMUNICATION ISSUES
11.1 Communication issues are being addressed through the delivery of the High Speed Rail – Linking Liverpool and Connected Cities campaigning initiatives.
Page 86 12. CONCLUSION
12.1 Considerable work is underway on HS2 and significant progress has been made in demonstrating the economic case for HS2 in the City Region. With this, the emphasis has now shifted to demonstrating the depth and breadth of support for high speed rail in the City Region, and communicating widely the potential economic impact of an enhanced offer both for the Liverpool City Region and nationally.
DAVID BROWN Lead Officer: Transport
Contact Officers: Darren Kirkman, Policy Development Advisor, Merseytravel, 0151 330 1107 Liz Carridge, Corporate Communications Manager, Merseytravel, 0151 330 1151
Appendices: None
Background Documents: None
Page 87 This page is intentionally left blank Agenda Item 7
LIVERPOOL CITY REGION COMBINED AUTHORITY
To: The Chair and Members of the Combined Authority
Meeting: 19 September 2014
Authority/Authorities Affected: All
EXEMPT/CONFIDENTIAL ITEM: No
REPORT OF THE EXECUTIVE DIRECTOR, LIVERPOOL CITY REGION LEP
GROWTH DEAL IMPLEMENTATION PROCESS
1. PURPOSE OF REPORT
1.1 This report summarises latest discussions with Government on progressing the Local Growth Deal including design of an Implementation Plan, proposals for monitoring and evaluation of growth deals and an indicative timeline.
2. RECOMMENDATIONS
2.1 It is recommended that the Liverpool City Region Combined Authority:
(a) note the content of the report, in particular, the requirements placed on City Region partners in terms of a monitoring and evaluation function and associated resource implications; and
(b) endorses the creation of a Task and Finish Group to finalise an Implementation Plan for the City Region Growth Deal, convened by the LEP with representation of the Employment and Skills Board and Merseytravel.
3. BACKGROUND
3.1 The Liverpool City Region LEP received a formal response to the City Region Growth Plan submission on 7 July 2014: this indicated that £232m was to be invested in the City Region but was „there to lose‟ as regards the City Region still needing to meet certain expectations. The Growth Deal sets out the Government‟s funding commitment against strategic schemes as well as new freedoms and flexibilities in local priority areas. This investment package is linked to the City Region fulfilling key achievements including private sector leverage, job creation and housing completions.
3.2 The Growth Deal also commits the City Region to:
(a) Strengthen governance – build on the successful formation of the Combined Authority. To improve operation partnership working including the Page 89 joint prioritisation of resources over the City Region, in particular the demonstration of progress in the pooling of resources for economic development and business support across the LEP area. (b) Ensure implementation and demonstrate success – track progress against milestones and agreed core metrics and outcomes in line with a monitoring and evaluation framework, a part of the LEP‟s Implementation Plan. Before April 2015 the LEP will agree an evaluation plan with Government for projects contained in the Growth Deal. (c) Communicate the ongoing output and outcomes of the deal to Government, the local community and stakeholders – report regularly and publically on progress to implement the strategic economic plan. (d) Ensure value for money – develop robust processes to guide decision- making, including an agreed assurance framework with Government, building on existing local and national frameworks.
3.3 An Implementation Plan, agreed with Government, will detail how the City Region will deliver Growth Deal schemes and additional commitments. A key element of the plan will be a monitoring and evaluation framework designed to provide progress delivery information and assessment of the effectiveness of interventions. Development of an Implementation Plan is underway in the City Region however clearly identified activities, responsibilities and resource requirements have yet to be finalised.
3.4 Government are still finalising „how‟ the Growth Deal process will work. A session outlining over-arching expectations was held in London on 19 August 2014 and is outlined here. The Department for Transport are holding a session with each LEP outlining their specific requirements on 11 September 2014.
3.5 Government policy and Growth Deal text clearly states that „the LEP‟ as a strategic body is the route by which Government will work with local areas. There is a recognition that delivery responsibilities for projects will sit with partner bodies and in particular, the formation of the Combined Authority increases Government expectation of joint working to deliver schemes going forward within the City Region. In referring to „the LEP‟ Government is referring to the Partnership of bodies in the City Region.
4. IMPLEMENTATION PLAN REQUIREMENTS
4.1 The Implementation Plan should set out how, together the LEP and Government, will make the Growth Deal operational through clearly identified activities, responsibilities and milestones, with the aim that the Growth Deal is fully ready for delivery by April 2015. The rationale behind the Implementation Plan is that it should cover:
(a) What the City Region needs to do to ensure successful delivery of the Growth Deal. (b) What the City Region needs Government to do to ensure the successful delivery of the Growth Deal.
4.2 The Implementation Plan will sit alongside a suite of products which detail the joint commitments between the City Region/LEP and Government including: Page 90
(a) A funding agreement between the Government and the accountable body acting for and on behalf of the LEP. (b) An assurance framework that establishes how the City Region/LEP will ensure value for money across the range of interventions. (c) A monitoring and evaluation plan that sets out how the Growth Deal will be measured, reported and evaluated. (d) A strategic communications plan that sets out how the City Region/LEP and Government will work together on communications activity.
4.3 Suggestions for inclusion in the Implementation Plan:
(a) Government agrees activities, the successful achievement of which, would improve the LEP areas “trust level” with Government. (b) Detail on cross-boundary schemes, where different responsibilities for a scheme will lie. (c) Detail on partnership working.
5. PIPELINE PROJECTS
5.1 Funding for projects starting from 2016/17 onwards is subject to conditions to be discussed between the LEP/City Region partners and Government over coming months. These discussions will be around project deliverability and risks given that circumstances may have changed since Growth Plans were submitted to Government. Items for discussion will include:
(a) Timescale for scheme delivery (b) Statutory planning (c) Land acquisition (d) Other funding requirements – how this fits with Government funding (e) Local challenges – ensuring the support of communities (f) Supply-chain deliverability – risk & mitigation
5.2 Agreement should be reached on the project profile taking into account these practicalities as well as affordability.
5.3 In the City Region‟s case, the pipeline projects are exclusively major transport schemes. Around 1/3 of all major transport schemes in England being delivered by Local Authorities are currently „significantly‟ behind schedule. The Department for Transport is known to be concerned that there is already insufficient delivery capacity/capability in place in Councils and that the sudden increase in funding via Growth Deals will represent a very considerable delivery risk. We can therefore expect considerable scrutiny over our City Region capability/capacity position.
6. MONITORING & EVALUATION
6.1 Monitoring and evaluating the implementation of Growth Deals schemes is seen as essential by Government. Monitoring is required by Government to understand what has been spent and what has been delivered, to inform Ministers, the public and influence future policy. Evaluation will help Government judge the effectiveness of Page 91 interventions and “what works” in different areas, potentially providing the impetus for further decentralisation.
6.2 Government has also been challenged by the National Audit Office to enhance the role of monitoring and evaluation evidence in public decision-making, to “apply lessons learned from the current range of initiatives and improve evaluation of local growth schemes in the future”.
6.3 From a City Region perspective Government will want local areas to provide evidence of their performance, as this will be needed to support requests for funding and responsibilities in future rounds of Growth Deals.
6.4 The monitoring and evaluation framework will apply to Growth Deals as a whole including competitive and pre-allocated Local Growth Fund and wider asks. LEPs have committed to collecting a set of core metrics for their Deal and providing an evaluation plan at the individual intervention level.
Monitoring 6.5 The set of core metrics covers activities, outputs and outcomes associated with the main types of interventions; however the core metrics should be supplemented with additional measures if local projects are outside this remit.
6.6 Government has proposed a regular monthly dialogue between the LEP and BIS Local Relationship Managers to chart progress against implementation milestones. LEPs are expected to report core metrics to Government on either a quarterly (inputs, outputs) or annual (outcomes) basis. For some core metrics, LEPs will need to collect baseline data before the commencement of the intervention in order to understand progress through time.
Evaluation 6.7 Evaluation plans will be locally owned and resourced; LEPs will ultimately be responsible for their delivery and implementation. It is at LEP discretion which schemes should be evaluated and to what level, this decision should be based on proportionality and value for money. The timing of evaluation reports will be dependent on individual interventions.
6.8 Government has proposed “Demonstrator Projects” for evaluation; they will be collaboration between LEPs, Government and the What Works Centre and focus on opportunities for high quality evaluation. Government will approach LEPs with identified schemes/projects of interest.
6.9 Key Considerations for Liverpool City Region:
(a) Government see the current monitoring and evaluation guidelines as “light touch”, however the “Core Metrics” they have proposed are considerable and the suggestion that they should be collected on a quarterly basis does not feel “light touch”. The general consensus of LEPs at a recent Government workshop was that the process would require significant resource. (b) There needs to be co-ordination between the Growth Deal monitoring and evaluation process and those for EUSIF, RGF etc. (c) It is currently unclear how closely this is aligned to Major Transport Scheme monitoring and evaluation requirements (which we expect DfT to require). Page 92 (d) What information systems does the City Region have in place to collect scheme delivery metrics, and what additional resource may be required? (e) What criteria will Government assess LEPs against for the next round of Growth Deals? (f) What schemes/projects would the City Region choose to evaluate? Does the City Region have scheme evidence gaps that could be filled through this process? (g) Can City Region partners provide expertise or resource? (h) Does the City Region have any schemes it would want to lobby Government on to try to guarantee a “demonstrator project”?
7. GROWTH DEAL TIMELINE
7.1 The expected timeline for this work is as follows:
(a) Draft Grant Offer Letter – end August/early September 2014 (b) Finalise Implementation Plan and Grant Offer Letters – end October 2014 (c) Local evaluation plans agreed and signed off – March/April 2015 (d) First Growth Deal funding to LEPs – April 2015 (e) First monthly progress discussion – May 2015 (f) First quarterly monitoring return – June 2015
8. WORK BEING UNDERTAKEN IN LCR
8.1 The LEP Executive have engaged with Local Authority partners and also MerseyTravel to begin to assess the „next-steps‟ in delivering the Growth Deal and putting implementation structures in place.
8.2 A proposed structure for implementation planning is as follows:
(a) Overall programme management strand – which will understand the holistic programme and report directly into the LEP Board and Combined Authority on progress. This strand will also have responsibility for the processes for financial management and funding „devolution‟ to „the LEP‟. As LEPs cannot hold funds the proposal is that the funding would be devolved to the Combined Authority (with MerseyTravel financial controls applied) – this will be led by David Brown as Head of Paid Service for the Combined Authority, with support of the Combined Authority Section 151 Officer working with Mike Palin, Executive Director for the LEP (b) Transport scheme implementation – over £180m of the funds secured through the Growth Deal are transport scheme related and these will be treated as a dedicated programme strand. Partners have committed to a shared and joint approach to delivery of these transport schemes with MerseyTravel taking overall programme management responsibility. The lead officer will be Frank Rogers, Deputy Chief Executive and Director of Integrated Transport Services. (c) Skills Capital strand - £41m of funding was secured for skills capital funding. This strand will be led by the Employment and Skills team working with the LEP Executive and other partners. There remains a lack of clarity on the
Page 93 support available from the Skills Funding Agency (SFA) on undertaking the technical elements of allocating the funding and this needs thorough consideration and may have resource implications in the immediate-term. Lead officer will be Sue Jarvis, Employment and Skills Board. (d) „Other‟ strand – in addition to the above significant elements, the Growth Deal allocated smaller amounts of funding to the LEP directly to establish a Growth Hub and elements such as the International Festival for Business in 2016. This strand will be led by the LEP Executive Director, Mike Palin.
8.3 The lead officers named above for each element will form a Task and Finish Group to finalise the implementation plan (as Government guidance is finalised).
9. RESOURCE IMPLICATIONS
9.1 Financial
Government see LEPs as responsible for collecting the core and supplementary metrics during implementation of their Growth Deals, they believe that activity and output metrics should be available from existing LEP (or scheme sponsor) management information systems.
Government is not proposing to provide additional resources to LEPs for the purpose of monitoring and evaluation activities. LEPs have been tasked with setting out how they intend to lever existing resources from within their Partnerships to deliver wider monitoring and evaluation activities in their evaluation plans.
Some LEPs have challenged Government in this regard as LEPs do not receive Government funding to undertake such work and the tasks are an additional expectation.
9.2 Human Resources
None as a direct result of this report.
9.3 Physical Assets
None as a direct result of this report.
9.4 Information Technology
None as a direct result of this report.
10. RISKS AND MITIGATION
10.1 The funding associated with future rounds of devolution is dependent upon delivery of the currently allocated funding schemes. This risk around credibility can be mitigated by ensuring that the City Region delivers the commitments in the Growth Deal.
Page 94 11. EQUALITY AND DIVERSITY IMPLICATIONS
11.1 None as a direct result of this report
12. COMMUNICATION ISSUES
12.1 None as a direct result of this report
13. CONCLUSION
13.1 The immediate task under each stand is to audit our current position relative to Government expectations and to scale the resources required to implement the schemes. It is clear that there is a need for dedicated programme management resource as well as specialist capabilities in some areas (such as transport scheme delivery) which is not readily available amongst partners and identifying resource to support such must be an immediate priority if the City Region wants to be in place to draw down the £232m or any subsequent funding.
MIKE PALIN Executive Director, Liverpool City Region LEP
Contact Officer: Mike Palin, Liverpool City Region LEP (0151 237 3899)
Appendices: None
Background Documents: None
Page 95 This page is intentionally left blank Agenda Item 8
LIVERPOOL CITY REGION COMBINED AUTHORITY
To: The Chairman and Members of the Combined Authority
Meeting: 19 September 2014
Authority/Authorities Affected: All
EXEMPT/CONFIDENTIAL ITEM: No
REPORT OF THE LEAD OFFICER: ECONOMIC DEVELOPMENT
LIVERPOOL CITY REGION INWARD INVESTMENT
1. PURPOSE OF REPORT
1.1 The purpose of this report is to seek agreement for the City Region to establish a more collaborative approach to inward investment activities.
2. RECOMMENDATIONS
2.1 It is recommended that the Liverpool City Region Combined Authority:
(a) Agree to develop a collaborative City Region approach to inward investment which will deliver a more efficient and effective service to potential investors and support the City Region’s drive for jobs and economic growth; (b) Agree the principles outlined in section 4 which establish the City Region approach for engagement with investment enquiries; (c) Agree that further work, in conjunction with the LEP, is undertaken to develop and scope other areas of an inward investment service where greater collaboration can be achieved, with progress reported to the meetings of the Combined Authority in November 2014 and January 2015; and (d) Agree that this work is led by the Lead Chief Executive for Economic Development in conjunction with the LEP and with the engagement of City Region Chief Executives.
3. RATIONALE AND CURRENT POSITION
3.1 The Liverpool City Region Combined Authority was established on 1 April 2014 and committed individual local authorities and the LEP to work more efficiently and effectively together in order to drive forward economic growth and jobs. This is a direction of travel which all partners have agreed to develop and which Government is keen to see delivered in return for further devolution of resources and powers to the City Region.
3.2 It is clear from our own review of strategic governance that greater collaboration and co-operation between ourselves and with the LEP is required across economic
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development. A key element of this is to deliver a “best in class” investment service which can provide an effective approach to securing a greater share of investment, jobs and economic growth for the City Region.
3.3 The Strategic Review of Governance for the City Region recognised that “there is a further need to signal to business and Government that the City Region has a clear, consistent and shared view, and that the City Region will act as a single, aligned strategic voice to maximise use of available resources to the benefit of the whole of the City Region, particularly with the challenges being faced around jobs and growth.”
3.4 The City Region’s Growth Deal recently submitted to Government was well received, however in making an allocation to the City Region, the Deal reinforces the need to consider more effective pooling of resources at this level. It explicitly states:
“The formation of the Combined Authority provides the Liverpool City Region with a strong foundation from which to progress. Government expects the LEP and Combined Authority to build on this success to improve operational partnership working, including the joint prioritisation of resources over the city region. In particular Government will expect to see demonstrated progress in the pooling of resources for economic development and business support across the LEP area.”
3.5 The economic development protocol, part of the Combined Authority operating agreement also signals the intention of the Combined Authority:
i. To work with the LEP to co-ordinate inward investment activity across the Liverpool City Region subject to a protocol between each of the constituent councils in relation to the sharing of information, handling of enquiries in particular in relation to how those relevant to their local area should be taken forward.
ii. For the LEP, together with the CA to lead the co-ordination of strategy and activity for place based marketing across the Liverpool City Region through working collectively with the constituent councils.
3.6 There is therefore a strong rationale for the Combined Authority to agree to collaborate more effectively in this area.
3.7 Currently, the LEP, Liverpool Vision and local authorities themselves all undertake various aspects of an inward investment or investment service. The extent will vary between individual partners and these activities are undertaken sometimes at a City Region or individual local authority level. They involve:
Responding to investment enquries from potential investors received either directly or through UK Trade and Investment (UKTI); Investment handling in terms of the property and commercial offer, a financial investment package and other requirements; Marketing activities, both place based marketing and in relation to specific products or geographies;
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Proactive investment approach, seeking and generating investment opportunities in those sectors or locations where the city region has a particular strength and offer for businesses and investors; and Aftercare of businesses and support for follow on investments.
3.8 The challenge for the Combined Authority, together with the LEP, is to focus and share these resources to deliver a more collaborative City Region approach to investment and marketing, to achieve greater levels of investment into the City Region together than can be achieved individually.
4. SCOPE AND PRINCIPLES OF COLLABORATIVE WORKING
4.1 The first phase of this approach is to recognise the current practice on handling general investment enquiries into the city region which may come from UKTI and are not initially site or local authority specific.
4.2 The LEP will continue to co-ordinate activity with UKTI, to inform and engage with UKTI to ensure it understands and promotes the City Region propositions effectively. The LEP will continue to be the single point of contact for all enquiries which are non-site specific. The LEP will co-ordinate the response to any enquiry, at an early stage and in a transparent manner with local authorities, until such a point that the investment is handed over to the appropriate local authority to manage the investment package.
4.3 At this point, the local authority will take over responsibility for the potential investment, handling this in a business focused manner. Local authorities are expert in their land, property, finance, people etc and therefore are best placed to lead at enquiry stage and responding to investment opportunities for their locality.
4.4 Once the investment is established, the relevant local authority will manage aftercare and any follow on investments in so far as they can be accommodated in their area and passing these on to the LEP should that not be the case.
4.5 This arrangement will be formalised into a protocol setting out the working relationships between partners. In doing so, it will utilise the following headline principles which should guide our approach and future working relationships:
i. The Combined Authority’s investment service will be client led and driven by the needs of each individual investment.
ii. The investment service will be managed in a clear and business driven manner that avoids duplication of resources and ensures clarity for potential investors and ourselves.
iii. The Combined Authority is committed to achieving the maximum additional investment into the City Region, whatever the specific locality choice made by any investor.
iv. An element of competition within the City Region is healthy and should incentivise partners internally to develop a portfolio of sites and an
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investment offer which is attractive to investors and adds value to the City Region offer.
v. Partners will not seek to compete independently of each other for investments in the City Region and will avoid supporting investments which displace activity from one part of the City Region to another.
vi. The LEP will continue to be the single point of contact for UKTI, working in a transparent manner and with local authorities on any enquries received.
vii. The offer made in response to investment enquiry needs to be determined at the earliest stage by the partner who will ultimately be making the investment decision to ensure clarity and streamlined decision making for the investor.
viii. Investment enquiries made directly to a local authority will be discharged by that authority unless the investment requirements cannot be met and acknowledging the points (i-iii) above.
ix. Aftercare and follow investments will be handled by the local authority in which the investment is located, acknowledging the principles outlined above in points (i-iii).
5. NEXT STEPS
5.1 Combined Authority members will be aware that the LEP Board have commissioned work looking at what an inward investment or investment service for the City Region could look like. Regeneration Directors and Chief Executives will engage with that work and report any relevant recommendations to the Combined Authority at a future meeting.
5.2 Alongside and following on from that work, each element of an inward investment or investment service will need to be defined and evaluated to see how City Region collaboration can lead to a more effective service to investors and what this would mean in practice. Those areas are set out above in section 3.7 and for clarity are:
Responding to investment enquries from potential investors received either directly or through UKTI; Investment handling in terms of the property and commercial offer, a financial investment package and other requirements; Marketing activities, both place based marketing and in relation to specific products or geographies; Proactive investment approach, seeking and generating investment opportunities in those sectors or locations where the City Region has a particular strength and offer for businesses and investors; and Aftercare of businesses and support for follow on investments.
5.3 This work will be undertaken by the Lead Chief Executive for Economic Development in conjunction with the LEP and reporting to City Region Chief Executives.
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5.4 As appropriate a progress report will be given to the Combined Authority at its meeting in November 2014 with defined proposals following on in January 2015.
6. RESOURCE IMPLICATIONS
6.1 Financial There are no immediate financial implications from this report. Further work to scope out this approach will set out any financial implications for local authorities and the LEP. The Combined Authority’s commitment to savings and efficiencies are fully acknowledged and will be achieved through this approach.
6.2 Human Resources There are no human resource issues as a result of this report.
6.3 Physical Assets None as a result of this report.
6.4 Information Technology None as a result of this report.
7. RISKS AND MITIGATION
7.1 There is a considerable reputational risk to the City Region of not implementing a collaborative and co-ordinated approach to inward investment and delivering on the Combined Authority Commitments to work more effectively together. Government has expressed it’s desire to see greater co-operation and pooling of resources at the City Region level. Not to achieve this may jeopardise future funding and devolution of powers to the City Region.
7.2 There is also a considerable risk that to continue with the un-coordinated approach currently in place, will inhibit the City Region’s ability to successfully compete for inward investments.
8. EQUALITY AND DIVERSITY IMPLICATIONS
8.1 The proposed approach to improve the collaboration of inward investment activities will have a positive impact on the City Region and its citizens. The principles that underpin this new way of working include improved partnership working and the prioritisation of resources and, at this stage in the development of the model, there are no equality implications. This will be reviewed as and when more focused activities are developed and progressed, for example, in the development of marketing and communication activities. Where potential equality and diversity impacts are identified, these will be analysed and mitigating measures will be undertaken, where possible, to minimise negative impacts on people with different protected characteristics.
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9. COMMUNICATION ISSUES
9.1 There will be the need to communicate this approach to stakeholders and to potential investors.
9.2 A clear unified approach will require issues of branding and marketing to be considered and addressed. This will be addressed by the implementation of recommendations 2.1 (c) and (d).
10. CONCLUSION
10.1 This report establishes the agreement and principles of a City Region collaborative approach to inward investment. Such an approach will better utilise the collective resources which are available across the City Region and will also result in a business focused and client led approach for potential investors.
GED FITZGERALD Lead Chief Executive: Economic Development
Contact Officer: Ged Fitzgerald, Chief Executive, Liverpool City Council 0151 225 3602
Appendices: None
Background Documents: None
Page 102 Agenda Item 9
LIVERPOOL CITY REGION COMBINED AUTHORITY
To: The Chairman and Members of the Combined Authority
Meeting: 19 September 2014
Authority/Authorities Affected: All
EXEMPT/CONFIDENTIAL ITEM: No
REPORT OF THE LEAD OFFICER: SCRUTINY
LIVERPOOL CITY REGION COMBINED AUTHORITY SCRUTINY PANEL
1. PURPOSE OF REPORT
1.1 The purpose of this report is to update the Combined Authority on arrangements being put in place to establish a Scrutiny Panel, in accordance with Part 5, Section B of the Authority’s Constitution and to ask the Authority to formally endorse the nominations made to the Scrutiny Panel by the Constituent Authorities and/or local political parties.
2. RECOMMENDATIONS
2.1 It is recommended that the Liverpool City Region Combined Authority:
(a) notes the progress being made; and (b) endorses the nominations made to the Scrutiny Panel as shown in Appendix One to the report submitted.
3. BACKGROUND
3.1 At its meeting held on 13 June 2014 the Combined Authority agreed the Scrutiny Model to be put in place in accordance with the Authority’s Constitution. It agreed that each Constituent Council should appoint two Members to the Combined Authority’s Scrutiny Panel and that in order to ensure political balance, that the two largest opposition parties within the City Region be asked to nominate a Member each to serve on the Panel.
3.2 That nomination process is now complete and attached as Appendix One to this report is a schedule which shows the Members that have been nominated to the Panel. The Combined Authority are requested to endorse that list so that arrangements can now be put in place for the Panel to meet.
3.3 It was agreed at the last meeting of the Combined Authority that North West Employers be requested to provide training to the Scrutiny Panel Members on their new roles and responsibilities. This is in the process of being organised. The Page 103 intention is to have the initial training event in September, with further events to follow. It was felt important that the first training event takes place before the first Panel Meeting, to ensure all Members are starting from the same point. Following that event in September it is then proposed to have the first formal meeting of the Scrutiny Panel in October 2014. Dates are currently being canvassed for both events.
4. RESOURCE IMPLICATIONS
4.1 Financial
There are no additional resources required, with the administration of the Scrutiny Panel being undertaken within the existing resources of the Lead Authority, and the cost of the training provided by North West Employers being met from the existing subscription paid by the Constituent Councils.
4.2 Human Resources
There are no direct issues as a result of the recommendations in this report.
4.3 Physical Assets
The recommendations within this report have no bearing on the physical assets owned by the Combined Authority or its Constituent Councils.
4.4 Information Technology
There are no direct issues as a result of the recommendations set out in this report.
5. RISKS AND MITIGATION
5.1 The risks associated with the recommendations in this report are low. Transparent and effective Scrutiny is important to the continuing credibility of the Combined Authority and will enhance and support the work of the Combined Authority.
6. EQUALITY AND DIVERSITY IMPLICATIONS
6.1 There are no equality and diversity issues associated with the recommendations in this report and therefore an equality impact assessment is not deemed necessary.
7. COMMUNICATION ISSUES
7.1 Whilst there are no direct communication issues to this report, it will be a matter for the Scrutiny Panel to determine how it wishes to ensure the engagement of stakeholders’ views in any of its work.
Page 104 8. CONCLUSION
8.1 The report asks the Combined Authority to endorse the progress being made in putting in place effective Scrutiny arrangements.
DAVID PARR Lead Officer – Scrutiny
Contact Officers: David Parr, Chief Executive, Halton Council (0151 511 6000) Ian Leivesley, Strategic Director, Policy and Resources, Halton (0151 511 6002)
Appendices: Appendix One – List of Scrutiny Panel Members
Background Documents: None.
Page 105 APPENDIX ONE
LIVERPOOL CITY REGION COMBINED AUTHORITY
SCRUTINY PANEL MEMBERS
AUTHORITY NAME (Cllrs) EMAIL
Halton Kevan Wainwright [email protected] (LAB)
Bill Woolfall [email protected] (LAB)
Knowsley Andy Moorhead [email protected] (LAB)
Marie Stuart [email protected] (LAB)
Liverpool John Coyne [email protected] (GREEN)
Patrick Hurley [email protected] (LAB)
St Helens Anthony Burns [email protected] (LAB)
Keith Roberts [email protected] (LAB)
Sefton Mark Dowd [email protected] (LAB)
Paulette Lappin [email protected] (LAB)
Wirral Anita Leech [email protected] (LAB)
Mike Sullivan [email protected] (LAB) Opposition Group Nominations X 2
Conservative John Hale [email protected] (Wirral)
Liberal Democrats Haydn Preece [email protected] (Sefton)
Page 106 Agenda Item 10
LIVERPOOL CITY REGION COMBINED AUTHORITY
To: The Chairman and Members of the Combined Authority
Meeting: 19 September 2014
Authorities Affected: All
EXEMPT/CONFIDENTIAL ITEM: No
REPORT OF THE SECTION 151 0FFICER
COMBINED AUTHORITY BUDGET MONITORING STATEMENT April 1st 2014 to June 30th 2014 (Quarter 1)
1. PURPOSE OF THE REPORT
1.1 The purpose of this report is to provide members of the Combined Authority with a budget update for the first quarter of 2014/15. This report also includes a summary Finance and Performance Monitoring Report with respect to Merseytravel and the Mersey Tunnels.
2. RECOMMENDATIONS
2.1 The Liverpool City Region Combined Authority is recommended to:
a) note the contents of the Combined Authority Budget Monitoring Statement and the associated Merseytravel Finance and Performance Monitoring Report.
3. BACKGROUND
3.1 The Combined Authority inherited the budget for transport activities that was established by the Merseyside Integrated Transport Authority (ITA) on 6 February 2014. While this budget has been re-stated to reflect the new governance arrangements from 1 April 2014, the values within the original budget remain those established by the ITA.
3.2 The Combined Authority has delegated detailed financial and performance monitoring with respect to Merseytravel’s activities to the Merseytravel Committee, however all strategic financial decisions remain with the Combined Authority.
3.3 As such, it was agreed that the Combined Authority would receive regular financial and performance monitoring information in relation to those activities conducted on its behalf by Merseytravel and also in relation to the financial performance of the Mersey Tunnels.
Page 107 3.4 The financial performance of the Combined Authority is shown in Table 1 below. Combined Authority expenditure is largely in the form of pre-determined grants to Merseytravel and capital charges inherited from the ITA.
3.5 There have, however been a number of changes that affect the operating costs of the Combined Authority. It should be noted, however that these operating costs were those originally budgeted to support the ITA and were inherited by the Combined Authority.
3.6 A fundamental review of these operating costs (shown as ‘other costs’ in the table) has identified £1.8m in costs that have passed back to Merseytravel as they are not properly costs of running the Combined Authority. These costs predominantly related to the ITA’s operational responsibilities for Mersey Tunnels.
3.7 Combined Authority income from the transport levy is fixed, however tunnel toll income for 2014/15 has benefited from an increase in tunnels usage.
3.8 As a result of this additional revenue, forecast income from tunnel tolls has been revised by £100,000 for 2014/15.
Table 1 Liverpool City Region Combined Authority Budget Monitoring Statement Quarter 1 2014/15
Revised Liverpool City Region Combined Budget Forecast Variance Authority 2014/15 2014/15 2014/15 £m £m £m
Expenditure Merseytravel Operating Grant 106.9 106.9 0 Mersey Tunnels Operating Grant 23.0 23 0 Mersey Tunnels Capital Programme 9.0 9 0 Other Costs (see note) 2.8 1 -1.8 Transport Infrastructure Grant to Districts 6.6 6.6 0 Capital Financing Costs / Debt Repayment 18.8 18.8 0 Total Expenditure 167.1 165.3 -1.8
Income Transport Levy -127.4 -127.4 0 Tunnel Tolls -41.7 -41.8 -0.1 Other Income -5.3 -5.3 0 Total Income -174.4 -174.5 -0.1 Transfer to Reserves -7.3 -9.2 -1.9 Note: Other costs are support services recharges and corporate and democratic management
3.9 As is evident from Table 1, the greatest part of the Combined Authority’s budget is used to support its executive Merseytravel in the discharge of its transport obligations for the Mersey Tunnels and its other operations. In order to gain Page 108 assurance that these resources are being used appropriately, the Combined Authority has devolved operational responsibility for monitoring financial and performance information in respect of Merseytravel to the Merseytravel Committee.
3.10 A summary of the key information considered by the Merseytravel Committee in undertaking this work is presented at Appendix One. The Merseytravel Financial and Performance report is a high-level summary report and indicates that Merseytravel are delivering on their key corporate priorities within their budget for 2014/15 at the end of Quarter 1.
3.11 Merseytravel has identified a number of efficiencies in the first quarter that have resulted in a favourable financial position against the approved budget at 30 June 2014.
3.12 Table 1 also identifies the forecast usable surplus generated by the Mersey Tunnels for 2014/15. Under the Tunnels Act (2004) this surplus is used to support the achievement of wider LTP objectives and as such will be held in reserve as part of a Combined Authority Transport Infrastructure Fund to facilitate future investment in transport infrastructure in support of economic growth.
3.13 Changes to running costs also increase the Combined Authority’s forecast surplus for 2014/15 and this will also be held in reserve for transport infrastructure investment.
4. RESOURCE IMPLICATIONS
4.1 Financial
There are no direct financial implications arising from this report, however members should note the additional tunnels tolls revenue of £100,000 that is forecast for 2014/15 as a result of an increase in tunnels usage and the re-allocation of £1.8m running costs to Merseytravel.
4.2 Human Resources
None as a direct result of this report.
4.3 Physical Assets
None as a direct result of this report.
4.4 Information Technology
None as a direct result of this report
5. RISKS AND MITIGATION
5.1 None as a direct result of this report.
Page 109 6. EQUALITY AND DIVERSITY IMPLICATIONS
6.1 None as a direct result of this report.
7. COMMUNICATION ISSUES
7.1 None as a direct result of this report.
8. CONCLUSION
8.1 Both the Liverpool City Region Combined Authority and Merseytravel as its executive body are performing within their respective budgets at the end of the first quarter of 2014/15.
8.2 Merseytravel has made significant progress on delivering its key corporate objectives on behalf of the Liverpool City Region Combined Authority.
JOHN FOGARTY Director of Resources: Merseytravel and Section 151 Officer for Liverpool City Region Combined Authority
Contact Officers: Dave Edge, Head of Finance Merseytravel (0151 330 1015) Liz Carridge, Corporate Communications Manager, Merseytravel (0151 330 1151)
Appendices: Appendix One – Detailed Quarter 1 monitoring statement
Background Papers: None
Page 110 Appendix 1 Liverpool City Region Combined Authority Financial Monitoring Report
MERSEYTRAVEL STRATEGIC FINANCE AND PERFORMANCE MONITORING REPORT
QUARTER 1 2014/15
1. INTRODUCTION
1.1 This report summarises the key financial and performance monitoring information in respect of Merseytravel and the Mersey Tunnels. It is a summary of the more detailed reporting that is received by the Merseytravel Committee.
1.2 The Liverpool City Region Combined Authority delegates detailed monitoring and scrutiny of financial and performance issues relating to Merseytravel to the Merseytravel Committee under its scheme of delegation.
2. MERSEYTRAVEL CORPORATE PLAN AND KEY OBJECTIVES
2.1 Corporate Plan Key Objectives
2.1.1 The Merseyside Integrated Transport Authority established a set of key priorities for 2014/15 within its Corporate Plan. Following the dis-establishment of the ITA, these priorities have been adopted by the City Region Combined Authority and are delegated to Merseytravel for delivery.
2.1.2 Merseytravel’s key corporate priorities for 2014/15 are:
i. to effectively manage the Combined Authority Transition;
ii. to deliver our Local Transport Plan (LTP) 3 commitments and to develop a single LTP for the LCR
iii. to embed transport in key city region developments;
iv. to improving connectivity within the City Region and our immediate boundaries;
v to improve Freight Strategy Development and implementation to support economic growth;
vi. to deliver an improved, affordable bus offer for the customer;
vii to review and develop a growth plan for integrated local rail services for 2014- 19;
viii to develop a long term integrated rail strategy for future infrastructure for the City Region;
ix to determine options for the modernisation of the Merseyrail fleet;
x. to improving performance on our directly delivered services;
xi to implement a SMART and integrated multi-modal ticketing offer;
xii to enhance customer information;
Page 111 Appendix 1 Liverpool City Region Combined Authority Financial Monitoring Report
xiii to enhance customer service, standards and skills across the network; and
xiv to offer an affordable and contemporary range of travel concessions
2.2 Overview of Performance Quarter 1
2.2.1 Progress has been made in the delivery of each of the key priorities in Quarter 1. This is demonstrated by the following significant activities in Quarter 1.
2.2.2 Quarter 1 saw the establishment of the Liverpool City Region Combined Authority as the successor body to the Merseyside Integrated Transport Authority. Merseytravel Members and Officers managed the initial transition to the Combined Authority and the associated change in governance without any impact on its services or on Merseytravel’s day-to-day operations.
2.2.3 Quarter 1 also saw the submission of the City Region Growth Deal Bid which placed transport activities at the heart of the City Region’s economic development. The Growth Fund will have significant impact on connectivity both within the City Region and particularly outside the region’s boundaries.
2.2.4 Further progress on connectivity is anticipated through our work on major strategic rail programmes, in particular Rail North and HS2. Merseytravel presented reports on both these key issues to the City Region Combined Authority in Quarter 1.
2.2.5 A 5-year Rail Growth Strategy for the Merseyrail Network has been developed with our long-term franchise holder Merseyrail Electrics. This should deliver significant benefits to customers and significantly increase patronage and revenue on the Merseyrail network;
2.2.6 In addition, work on the Draft City Region Long-Term Rail Strategy was completed in Quarter 1 which will provide a blueprint for rail investment priorities for the next 30 years. This is a key strategic document which will ensure that the rail network can continue to support and facilitate economic growth for the region for many years ahead;
2.2.7 Merseytravel launched an innovative new bus ticket for young people in May 2014 working in partnership with the major bus operators. The My Ticket product allows unlimited, multi-operator travel for those under 16 for £2 per day and was introduced using an innovative funding mechanism that limits the risk of both Merseytravel and the operators. Indications at the end of Quarter 1 are that My Ticket is very popular (20,000 tickets sold per week) and that any operator payments will be well within our budget for this scheme.
2.2.8 Further and significant progress has been made on our two, key business transformation projects for 2014/15. These projects are Smart Ticketing and Real- Time Passenger Information. Both these projects will improve the passenger experience and will also have a significant impact on the cost of our back-office functions once fully implemented.
Page 112 Appendix 1 Liverpool City Region Combined Authority Financial Monitoring Report
2.3 Priorities for Quarter 2
2.3.1 The challenge for the rest of 2014/15 is to maintain this progress. In particular, the focus of our activity in Quarter 2 will be:
i. to work with City Region partners to establish appropriate governance arrangements to manage any project and programme risks arising from the City Region Growth Fund bid;
ii. to continue to evaluate affordable options for the renewal of the Merseyrail Fleet that support the long-term rail strategy;
iii. continue working with partners across the Northern City Regions on the development of Rail North;
iv continue to support the interests of the Liverpool City Region in promoting the benefits of HS2 and in working with the One North partnership in the promotion of better East-West connectivity;
v. to maintain progress on Smart Ticketing and Real Time Customer Information projects and evaluate its impact on our back-office functions and our commercial relationships with bus operators;
vi. to work with City Region partners on a combined LTP4 across the Liverpool City Region Combined Authority; and
vii. to analyse the financial and commercial impact of the My Ticket product for young people.
2.4 Performance Risk
2.4.1 Merseytravel has a Corporate Risk Register which identifies all its key corporate risks. Based on the performance of the organisation in Quarter 1 and our knowledge of our operating environment, no revisions to this risk register have been made in Quarter 1.
2.4.2 At the end of Quarter 1, the organisation was not aware of any material risks that would impact on our ability to deliver our key corporate priorities.
3. FINANCIAL PERFORMANCE
3.1 Summary
3.1.1 Performance against budget in the first quarter was good, with a slight overall underspend on Merseytravel activities and no material overspends. Much of the savings in Quarter 1 have arisen from holding vacant posts, although a number of significant efficiencies have been identified that will have longer-term financial benefit to the organisation.
Page 113 Appendix 1 Liverpool City Region Combined Authority Financial Monitoring Report
3.1.2 In addition to this, tunnel toll revenue performed strongly in Quarter 1 through significantly increased tunnel usage. Merseytravel collects tunnel toll revenue on behalf of the City Region Combined Authority.
3.1.3 At the end of Quarter 1 the risk of any material overspend on Merseytravel Services or the Mersey Tunnels is low. This is significant, as the 2014/15 budget for Merseytravel was challenging with service budgets experiencing cuts in revenue across a number of service areas.
3.1.4 A summary of revenue expenditure against budget for Quarter 1 is presented on Page 5 below:
3.1.7 A summary of financial and performance information of key service areas is summarised below:
Page 114 Appendix 1 Liverpool City Region Combined Authority Financial Monitoring Report
Table 1 Financial Monitoring Statement for Merseytravel Quarter 1 2014/15
Internal Gross Q1 Q1 Variance Budget Recharges Budget Budget Actual Q1 2014/15 2014/15 2014/15 2014/15 2014/15 2014/15 £ooo £ooo £ooo £ooo £ooo £ooo Service Area Bus services 18522 22 18544 2638 2623 -15 Rail services -3184 1664 -1520 -230 -354 -124 Travel concessions 55669 1237 56906 12178 12236 58 Hubs 6255 2733 8988 1221 1131 -90 Mersey Ferries -736 2665 1929 -620 -708 -88
Page 115 Page Mersey Tunnels (see note) -17171 7415 -9756 -5545 -5614 -69 Democratic 1246 1667 2913 261 247 -14 ICT 3931 -3931 0 1423 1422 -1 Policy & LTP Development 1341 1800 3141 307 245 -62 Funds Management 41345 -196 41149 6395 6220 -175 Asset Management 11369 -11369 0 4097 3939 -158 Rolling Stock 3004 0 3004 375 271 -104 People, Customer & Devel’ 3714 -1285 2429 968 850 -118 Resources 2422 -2422 0 618 568 -50 Contribution from Reserves -363 0 -363 0 0 0
127364 0 127364 24086 23076 -1010
NOTE: Quarter 1 budgets and actuals are shown net of any recharges. Once recharges are applied this will reduce the level of tunnels surplus income over expenditure – please refer to Table 2 below Appendix 1 Liverpool City Region Combined Authority Financial Monitoring Report
3.2 Mersey Tunnels
3.2.1 The Mersey Tunnels are operated by Merseytravel on behalf of the Liverpool City Region Combined Authority. All tunnel toll revenue is attributable to the Liverpool City Region Combined Authority.
3.2.2 A summary of Tunnel financial performance is included at Table 2 below.
Table 2: Mersey Tunnels Financial Performance Quarter 1
EXPENDITURE Budget Q 1 Q1 Variance Budget Actual £000 £000 £000 £000 Employee Costs 4352 1087 1104 17 Energy Costs 1258 143 136 -7 Other Premises Costs 541 126 111 -15 Supplies and Services 1442 259 259 0 Capital Financing 16953 2480 2480 0 Expenditure before recharges 24546 4095 4090 -5 Asset Management 5023 1256 1256 0 Other recharges 2392 60 60 0 Total Expenditure 31961 5411 5406 -5 Income Income from Tunnel Tolls -41,391 -9,530 -9,597 -67 Other Income -327 -110 -107 3 Total Income -41,718 -9,640 -9,704 -64 Net Surplus -9757 -4,229 -4,298 -69
3.2.3 The surplus shown for Quarter 1 is before actual recharges have been applied. This has a tendency to exaggerate the reported surplus in-year. Performance at Quarter 1 indicates that overall tunnels income will be £100,000 greater than the original estimate at year-end.
3.2.4 The first-call on the reported tunnels surplus of £9.7m is applied to the financing of current and future capital investment in tunnels infrastructure. Once these costs have been considered, Tunnels Act Surplus is held in reserve by the Liverpool City Region Combined Authority for investment in future Local Transport Plan priorities within the five Merseyside District Authorities in accordance with the Tunnels Act 2004.
3.2.5 Tunnels usage in the first quarter of 2014/15 was 6.346 million vehicle journeys, which represents a 1.7% increase from 2014/15. The first quarter has also seen continuation of the trend towards automatic payments using the discounted Fast Tag system as an alternative to cash with Fast Tag journeys representing 40.3% of journeys in the first quarter (an increase of 2.75% from 2013/14).
Page 116 Appendix 1 Liverpool City Region Combined Authority Financial Monitoring Report
3.2.6 The tunnels capital programme for 2014/15 is £8.8m. This includes a number of major schemes. The largest schemes in the current programme are the Combined CCTV Control room (£1.4m), and investment in digital monitoring systems (SCADA) £1M. Both schemes commenced in the first quarter.
3.2.7 Future capital requirements currently being evaluated include the potential for major rewiring of both tunnels (phased over a number of years) and a replacement for our current toll plaza revenue collection systems.
3.3 Rail Services
3.3.1 Merseytravel acts as the franchisor for the Merseyrail Network. Merseyside is the only English region outside London that manages its local rail concession. In devolving this function to Merseytravel, the DfT provide resources in respect of franchise payments through an annual Special Rail Grant (SRG).
3.3.2 Merseytravel does not have corresponding responsibility for the Northern Rail franchise but does have a role in monitoring the standards of service provision on those lines operated by Northern within the Merseyside region.
3.3.3 Financial projections for rail services now include savings against the original budget of £0.4m which arose from the successful re-negotiation of the DfT’s contract extension with Northern. Whereas previously Merseytravel funded a number of Northern services that were extensions to the previous contract between DfT and Northern, under the new direct award, many of these are now included in the baseline contract specification.
3.3.4 A significant challenge for Quarter 2 will be negotiating the level of future SRG with the DfT for the next 5 year period. Merseytravel needs to ensure that it continues to receive sufficient SRG to undertake its functions in respect of rail, and in particular, the Merseyrail Network.
3.3.5 The Merseyrail Network continues to perform well against its benchmark group of other Train Operating Companies (TOCs). The key performance indicator published by the Office of Rail Regulation (ORR) is the Public Performance Measures (PPM), which is a weighted average of a basket of common industry indicators.
3.3.6 Merseyrail consistently perform well against the benchmark group, and their relative performance for each month within the first quarter was consistently in the top 3 of all train operators nationally.
3.3.7 Quarter 1 has seen the completion of Birkenhead North access works (£3.7m), the commencement of station improvements at Spital, and improvements to Lime street station underpass. Quarter 1 also saw the final payment for the successful Hoylake scheme which was undertaken over two financial years.
3.3.8 Major rail schemes at Newton-le-Willows, Maghull North and Halton Curve were included in the recent Growth Fund bid. Design and business case preparatory work commenced on each scheme in Quarter 1.
Page 117 Appendix 1 Liverpool City Region Combined Authority Financial Monitoring Report
3.3.9 Work has continued on the special project that is considering options for the renewal of the Merseyrail fleet of rolling stock. The focus in Quarter 1 has been to determine a revised business case for rolling stock that is affordable and that complements the Long Term Rail Strategy.
3.3.10 Progress towards the procurement stage will be conditional on meeting these requirements and, in order to ensure consistency with the long term rail strategy. As a result, project team expenditure in Quarter 1 was lower than expected, however, it is anticipated that expenditure will gather pace once more toward the end of the financial year.
3.4 Bus Services
3.4.1 Merseytravel expenditure on bus services is predominantly linked to the Supported Bus Network on Merseyside. These are directly tendered or subsidised bus services that address gaps the commercial network.
3.4.2 The budget for supported bus services was significantly reduced in 2014/15 in recognition of a number of services that were identified as no longer delivering value for money. The indications for 2014/15 are that financial projections within the budget are being met and savings targets are being delivered.
3.4.3 Patronage on the supported network has been in decline for a number of years. Patronage in the first Quarter of 2014/15 is, however broadly consistent with patterns of patronage in the first quarter of 2013/14 and 2012/13 and overall patronage, on the much larger commercial network.
3.4.3 Patronage trends on the Supported Bus Network are shown in Tables 5a and 5b below:
Table 5a Patronage on Supported Bus: 5 Year Trends
Table 5 b Patronage Trends on Supported and Commercial Bus Network
Page 118 Appendix 1 Liverpool City Region Combined Authority Financial Monitoring Report
3.4.4 It is also important to note that patronage by itself is not an indicator of performance on the supported network, where connectivity for isolated communities and groups is the key determinant of whether financial support is available to supplement the commercial network.
3.4.5 That said, reducing expenditure on the supported bus network by working with commercial operators is a key strand within our medium term financial strategy. It is important that the network delivers value for money and we are committed to changing the network to one that is less reliant on our direct financial intervention.
3.4.6 There are some major capital schemes for bus within our overall capital programme. The majority of bus schemes are funded from a successful Better Bus Area grant award of £3.4m. These schemes are very much partnership schemes, involving local authority partners and commercial operators.
3.5 Hubs and Travel Centres
3.5.1 Merseytravel Hubs and Travel Centres underspent at the end of Quarter 1 largely as a result of efficiency measures relating to changes in working patterns and also changes to premises budgets.
3.5.2 There is a £0.7m capital programme for hubs in 2014/15, of which the largest element is Queen Square road works refurbishment in Liverpool City Centre (£0.5m)
3.5.3 Queen Square works will cause city centre disruption, and have been programmed for late 2014 to avoid the City’s summer programme of events.
3.6 Concessionary Travel Scheme
3.6.1 Payments to commercial operators under the concessionary travel scheme are subject to fixed deals in 2014/15 and as such, annual expenditure will be in line with the approved budget.
3.6.2 2014/15 represents the last year of all fixed deals for concessionary travel and a significant challenge for 2014/15 will be to renegotiate commercial terms against a background of diminishing resources. Accurate Smart ticketing information will be crucial in informing these negotiations.
Page 119 Appendix 1 Liverpool City Region Combined Authority Financial Monitoring Report
3.6.3 A review of the Concessionary Travel scheme is a key priority for Merseytravel in 2014/15.
3.7 Mersey Ferries
3.7.1 The financial projection for the Mersey Ferries at the end of Quarter 1 is broadly in line with original budget estimates. A significant exception to this is in employee costs, where additional annual savings of £75,000 are anticipated as a result of changes in working patterns introduced in 2013/14.
3.7.2 The Mersey Ferries operate three distinct services:
Commuter Service River Explorer Services Manchester Ship Canal and other Charter Services
Table 6: Mersey Ferries Patronage by Service
Annual Quarter 1 Quarter 1 Variance Function Target 2013/14 2014/15 Previous Year
River Explorer Patronage 463,000 127,467 133,824 5.0% Commuter Patronage 157,500 45,882 33,973 -26.0% Total Mersey Ferries Patronage 620,500 173,349 167,797 -3.2% Manchester Ship Canal Cruises 19,686 5,096 6,100 19.7%
3.7.3 As the table shows, patronage on the commuter services declined significantly in quarter 1. Increased patronage on the more popular River Explorer services and Ship Canal cruise almost offsets this in terms of numbers but should more-than offset this in terms of revenue.
3.7.4 Revenue per passenger on the leisure element of Ferries operations is much greater than on the commuter service and the River Explorer service is our most important service financially.
3.7.5 The trend away from the commuter service towards leisure services is part of a long- term trend in Ferries operations and the overall reduction in patronage in Quarter 1 is not seen as a significant risk to overall financial performance.
3.7.6 As with all tourist attractions, however it is activity in the second quarter that will determine the financial performance for the year. The Mersey Ferries have been working with partners in the wider tourism economy to ensure that they benefit from the International Festival for Business, the Open Golf and particularly the return of the Giants which each offer significant commercial opportunities in Quarter 2.
Page 120 Appendix 1 Liverpool City Region Combined Authority Financial Monitoring Report
3.7.7 The Mersey Ferries are structured as a separate company from Merseytravel, limited by guarantee. They are a wholly owned subsidiary, however as a company limited by guarantee, they cannot sustain operational losses. As a result, Merseytravel provides the Ferries with an operational grant each year that allows the company to break-even.
3.7.8 This payment effectively subsidises the losses incurred by Mersey Ferries in operating its year-round commuter service. The commuter service is a key strategic public transport activity rather than a visitor attraction. The level of subsidy forecast to be paid to Mersey Ferries in 2014/15 is £2.5m.
3.7.9 This has reduced over recent years as a result of significant reductions in operational costs, in particular reducing the operational fleet from three vessels to two. A reduced fleet has also meant less pressure on capital expenditure.
3.7.10 The safe operation of the Mersey Ferries requires significant and sustained capital investment in both the vessels themselves and each of the three landing stages. This is provided for within a £1.3 m capital programme. Strengthening the Seacombe landing stage following the extreme high tide experienced in December 2013 accounts for £0.6m of this programme and is programmed for delivery over the autumn period.
3.7.11 Future capital requirements will be informed by a planned ‘dry-dock’ inspection of the Woodside pontoon scheduled for later this year.
3.8 Visitor Attractions
3.8.1 Financial projections for our visitor attractions at the end of Quarter 1 were broadly in line with the budget. However, it should be stressed that summer months are key to financial performance. Financial performance at the end of the second quarter will be crucial.
3.8.2 Visitors to the U boat attraction at Woodside in the first quarter were slightly down on the same period in 2013.14. Spaceport visitors were more significantly reduced compared to 2013/14. While this reduction is significant, it was anticipated in our financial forecast and reflects changes in the exhibition on offer at Spaceport this year.
3.8.3 In contrast, the Beatles Story performed strongly in Quarter 1, with 64,000 visitors. While this was slightly down from the equivalent period in 2013/14, significant cost reduction measures introduced by The Beatles Story mean that the projected surplus for 2014/15 is £565,000.
3.9 Other Costs
3.9.1 A number of underspends were identified at the end of quarter 1 across Asset Management and other support services. These were predominantly associated with slippage on vacant posts following restructures in a number of areas in 2013/14.
Page 121 Appendix 1 Liverpool City Region Combined Authority Financial Monitoring Report
3.9.2 A review of Support Services will be undertaken in the second and third quarter of 2014/15 as part of the organisation’s Medium Term Financial Strategy.
3.10 Treasury Management Activity
3.10.1 Merseytravel’s Treasury Management activity in the first quarter was in line with its overall treasury management policy and strategy. There was no new borrowing in 2014/15 and interest earned in the first quarter was slightly ahead of target. This is through a combination of higher-than-anticipated cash balances and better performing investments.
4. CONCLUSION
4.1 Financial and Performance monitoring at the end of Quarter 1 indicates that significant progress has been made across all our corporate priorities and that this has been achieved within the financial targets established in the 2014/15 budget.
4.2 Tolls revenue from the Mersey Tunnels has increased at a rate that is greater than expectations, however income and patronage across other services is slightly reduced. Income from the second quarter is, however fundamental to determining overall financial performance and there is no indication at the end of Quarter 1 that overall income targets will not be achieved this year.
5.3 At the end of Quarter 1 we assess both the risk of material financial overspending and of not delivering our corporate priorities to be low.
END
Page 122 Agenda Item 11
LIVERPOOL CITY REGION COMBINED AUTHORITY
To: The Chair and Members of the Combined Authority
Meeting: 19 September 2014
Authority/Authorities Affected: All
EXEMPT/CONFIDENTIAL ITEM: No
REPORT OF THE SECTION 151 OFFICER
MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY FINAL ACCOUNTS 2013/14
1. PURPOSE OF THE REPORT
This report sets out the results of KPMG’s audit of Merseyside Integrated Transport Authority accounts for 2013/14 in the attached ISA 260 statement, and recommends the final accounts for approval.
2. RECOMMENDATIONS
2.1 It is recommended that the Liverpool City Region Combined Authority:
(a) Considers the report on the final accounts of Merseyside Integrated Transport Authority as attached at Appendix One; and (b) Approve the final accounts of the Merseyside Integrated Transport Authority.
3. BACKGROUND
3.1 The Authority will be aware the Accounts and Audit Regulations 2011, as amended by SI 2011 No 817, now requires that the full set of accounts for the Merseyside Integrated Transport Authority (MITA) no longer need to be approved by Members prior to audit. Instead, they must be certified by the Chief Financial Officer no later than 30 June. The Director of Resources of Merseytravel signed the accounts within the statutory deadline.
3.2 The audit of the accounts by KPMG took place between July and September 2014. Upon completion, the external Auditor reports on their findings arising from the audit process. The report is shown as Appendix One and Appendix Two shows the audited accounts.
Page 123 4. RESOURCE IMPLICATIONS
4.1 Spending against revised budgets for 2013/14 showed underspending of £5.3m. The main areas of variances of spending against budget are shown in the following table:
2013/14 Variances against Revised Revenue Estimates
Bus Rail Travel Funds Policy/LTP Mersey Services Services Hubs Concessions Mangmt Tunnels Develpmnt Ferries DRCM Total
. £m £m £m £m £m £m £m £m Reduction in debt charges - - - - -0.7 - - - - -0.7 Contributions to/(from) Reserves/ - - - - 5.3 - - - 5.3 Variances on operational expenditure -0.1 -3.8 -2.3 0.2 0.8 -0.7 -0.6 -0.2 -0.2 -6.9 Tunnels Act 2004 Transfer - - - - -2.4 2.4 - - - - Tunnels Capital Programme Underspend (RCCO) ------0.8 - - - -0.8 (Increased)/ Reduced Income -0.7 4.2 - - 0.5 -0.9 - - - 3.1 Total (under)/ overspend -0.8 0.4 -2.3 0.2 3.5 - -0.6 -0.2 -0.2 -
4.1.1 The Capital Programme for Levy services out turned at £13.2m, against an approved budget of £20.6m. This underspending was a result of lower than expected estimates on some schemes, and slippage of schemes into 2014/15. Where possible, resources have also been reprofiled to match these ongoing commitments.
4.1.2 Mersey Tunnels capital spending also resulted in an underspending of £800k. This together with higher than budgeted income and further operational underspending allowed a greater than expected Tunnels Act transfer of an additional £2.4m.
4.2 Human Resources
None as a direct result of this report
4.3 Physical Assets
None as a direct result of this report
4.4 Information Technology
None as a direct result of this report
Page 124 5. RISKS AND MITIGATION
5.1 There are no risks arising from recommendations in this report.
6. EQUALITY AND DIVERSITY IMPLICATIONS
6.1 There are no equality and diversity implications arising as a direct result of this report.
7. COMMUNICATION ISSUES
7.1 The accounts will be made available for inspection on Merseytravel’s website.
8. CONCLUSION
8.1 The audit of the final accounts for MITA has now been completed and the accounts received an unqualified opinion from our auditors. The external auditors will attend the meeting to answer questions on their audit review.
JOHN FOGARTY Director of Resources: Merseytravel and Section 151 Officer for Liverpool City Region Combined Authority
Contact Officers: Dave Edge, Head of Finance Merseytravel, 0151 330 1015 Liz Carridge, Corporate Communications Manager Merseytravel, 0151 330 1151
Appendices: Appendix One – MITA ISA 260 Report from KPMG Appendix Two – MITA Draft final accounts
Background Documents: 2013/14 Budget
Page 125 This page is intentionally left blank Report to those charged with governance (ISA 127 Page 260) 2013/14
Merseyside Integrated Transport Authority
19 September 2014 Contents
The contacts at KPMG in connection with this Report sections Page report are: ■ Introduction 2 John Prentice Director ■ Headlines 3 KPMG LLP (UK) ■ Financial statements 4 Tel: 0113 231 3935 [email protected] ■ VFM conclusion 8 Page 128 Page Ian Warwick Appendices Manager 1. Follow-up of prior year recommendations 10 KPMG LLP (UK)
Tel: 0113 231 3611 2. Declaration of independence and objectivity 17 [email protected]
Gwyn Williams Assistant Manager KPMG LLP (UK)
Tel: 0161 246 4936 This report is addressed to the Authority and has been prepared for the sole use of the Authority. We take no responsibility to any member of staff acting in their [email protected] individual capacities, or to third parties. The Audit Commission has issued a document entitled Statement of Responsibilities of Auditors and Audited Bodies. This summarises where the responsibilities of auditors begin and end and what is expected from the audited body. We draw your attention to this document which is available on the Audit Commission’s website at www.auditcommission.gov.uk. External auditors do not act as a substitute for the audited body’s own responsibility for putting in place proper arrangements to ensure that public 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. If you have any concerns or are dissatisfied with any part of KPMG’s work, in the first instance you should contact John Prentice, the appointed engagement lead to the Authority, who will try to resolve your complaint. If you are dissatisfied with your response please contact Trevor Rees on 0161 246 4000, or by email to [email protected], who is the national contact partner for all of KPMG’s work with the Audit Commission. After this, if you are still dissatisfied with how your complaint has been handled you can access the Audit Commission’s complaints procedure. Put your complaint in writing to the Complaints Unit Manager, Audit Commission, 3rd Floor, Fry Building, 2 Marsham Street, London, SW1P 4DF or by email to [email protected]. Their telephone number is 0303 4448 330.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 1 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Section one Introduction
This document summarises: Scope of this report VFM conclusion
■ the key issues identified This report summarises the key findings arising from: Our External Audit Plan 2013/14 explained our risk-based approach to VFM work, which follows guidance provided by the Audit Commission. during our audit of the ■ our audit work at Merseyside Integrated Transport Authority (the We have now completed our work to support our 2013/14 VFM financial statements for Authority) in relation to the Authority’s 2013/14 financial conclusion. This included: the year ended 31 March statements; and 2014 for the Authority; ■ assessing the potential VFM risks and identifying the residual audit ■ the work to support our 2013/14 conclusion on the Authority’s and risks for our VFM conclusion; and arrangements to secure economy, efficiency and effectiveness in ■ our assessment of the its use of resources (VFM conclusion). ■ considering the results of any relevant work by the Authority and Authority’s arrangements other inspectorates and review agencies in relation to these risk to secure value for areas. money. Financial statements Structure of this report Page 129 Page Our External Audit Plan 2013/14, presented to you in February 2014, This report is structured as follows: set out the four stages of our financial statements audit process. ■ Section 2 summarises the headline messages. Control Substantive Planning Completion ■ Section 3 sets out our key findings from our audit work in relation to Evaluation Procedures the 2013/14 financial statements. ■ Section 4 outlines our key findings from our work on the VFM This report focuses on the second and third stages of the process: conclusion. control evaluation and substantive procedures. Our on site work for No new recommendations are made for 2013/14. However, we have these took place during March 2014 (interim audit) and July-August also reviewed your progress in implementing prior year 2014 (year end audit). recommendations and this is detailed in Appendix 1. We are now in the final phase of the audit, the completion stage. Some Acknowledgements aspects of this stage are also discharged through this report. We would like to take this opportunity to thank officers and Members for their continuing help and co-operation throughout our audit work.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 2 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Section two Headlines
This table summarises the Proposed audit We anticipate issuing an unqualified audit opinion on the Authority’s financial statements by 30 September 2014. We headline messages. opinion will also report that the wording of your Annual Governance Statement accords with our understanding. Sections three and four of Audit adjustments Our audit has identified one audit adjustment with a total value of £11,945k. The impact of this adjustment is to: this report provide further ■ Decrease ‘Other LAs’ short-term creditors as at 31 March 2014 by £11,945k; and details on each area. ■ Increase ‘Central Government Bodies’ short-term creditors as at 31 March 2014 by £11,945k. The adjustment was appropriately made by the Authority. We did not identify any uncorrected audit misstatements.
Key financial We review risks to the financial statements on an ongoing basis. We identified no significant risks specific to the Page 130 Page statements audit Authority during 2013/14 with respect to the financial statements. risks
Accounts production We have noted an improvement in the quality of the accounts and the supporting working papers. Officers dealt and audit process efficiently with audit queries and the audit process has been completed within the planned timescales. The Authority has implemented the majority of the recommendations in our ISA 260 Report 2012/13 relating to the financial statements. See Appendix 1 for details.
Control environment The Authority’s organisational control environment is effective overall, and we have not identified any significant weaknesses in controls over key financial systems. However, minor control deficiencies initially identified in 2012/13 were identified again for 2013/14, and recommendations relating to these are detailed in Appendix 1.
Completion At the date of this report our audit of the financial statements is complete other than closing procedures. Before we can issue our opinion we require a signed management representations letter. We confirm that we have complied with requirements on objectivity and independence in relation to this year’s audit of the Authority’s financial statements.
VFM conclusion and We have concluded that the Authority has made proper arrangements to secure economy, efficiency and risk areas effectiveness in its use of resources. Good progress has been made against the recommendations from the 2012/13 audit, as detailed in Appendix 1. We have made no new recommendations relating to our VFM conclusion for 2013/14. We therefore anticipate issuing an unqualified VFM conclusion by 30 September 2014.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 3 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Section three Proposed opinion and audit differences
Our audit has identified one Proposed audit opinion We have reviewed the Annual Governance Statement and confirmed that: audit adjustment. We anticipate issuing an unqualified audit opinion on the Authority’s This adjustment has been financial statements following approval of the Statement of Accounts ■ it complies with Delivering Good Governance in Local Government: by the Combined Authority on 19 September 2014. A Framework published by CIPFA/SOLACE; and made by management, with no impact on the total Audit differences ■ it is not misleading or inconsistent with other information we are aware of from our audit of the financial statements. current liabilities. In accordance with ISA 260 we are required to report uncorrected We anticipate issuing an audit differences to you. We also report any material misstatements Explanatory Foreword which have been corrected and which we believe should be unqualified audit opinion in We have reviewed the Authority’s explanatory foreword and can communicated to you to help you meet your governance confirm it is not inconsistent with the financial information contained in relation to the Authority’s responsibilities. the audited financial statements. financial statements by 30 Our audit identified one audit difference. This has been adjusted in the September 2014. final version of the financial statements. Page 131 Page The wording of your Annual The impact of this adjustment is to: Governance Statement ■ Decrease ‘Other LAs’ short-term creditors as at 31 March 2014 by accords with our £11,945k; and understanding. ■ Increase ‘Central Government Bodies’ short-term creditors as at 31 March 2014 by £11,945k.
In addition, a small number of presentational adjustments were required to ensure that the accounts are fully compliant with the Code of Practice on Local Authority Accounting in the United Kingdom 2013/14 (the Code). The Authority has addressed these. The net impact on the General Fund as a result of audit adjustments is nil.
Annual Governance Statement
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 4 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Section three Key financial statements audit risks
We have worked with In our External Audit Plan 2013/14, presented to you in February, we Additionally, we considered the risk of management override of informed you that we had not identified any significant risks that are controls, which is a standard risk for all organisations. officers throughout the year specific to the Authority. Our controls testing and substantive procedures, including over journal to discuss specific risk We did, however, identify other areas of audit focus. We have now entries, accounting estimates and significant transactions that are areas. The Authority completed our testing of these areas and set out our evaluation outside the normal course of business, or are otherwise unusual, did addressed the issues following our substantive work. not identify any issues. appropriately. The table below sets out our detailed findings.
Areas of audit focus Issue Findings
Page 132 Page The 2012/13 audit identified a number of control As part of our interim visit in March 2014 we undertook weaknesses that we initially reported to the follow up procedures on all control areas where Authority in September 2013. Control deficiencies were identified in 2012/13 to verify the Prior year weaknesses increase the risk of material extent to which action had been undertaken by the control misstatement within the financial statements. Authority to address the issues. issues Weaknesses were identified in the following We found the controls around bank reconciliations to be areas: operating effectively. - Bank reconciliations; However, issues were again identified in relation to - Journal authorisations; and journal controls. - Outdated financial regulations. Our work also confirmed that the financial regulations have not been subjected to review since 2011. For further details, see Appendix 1.
During the 2012/13 audit, our Prepared by Client We have noted a significant improvement in the quality (PBC) listing set out our working paper of the accounts and the supporting working papers. requirements for the audit. The quality of Officers dealt efficiently with audit queries and the audit Audit working papers provided in 2012/13 was preparedness process has been completed within the planned variable. timescales. Officers resolved the majority of the audit queries For further details, see page 6. in 2012/13 in a reasonable time. In some cases, however, we experienced delays which led to the completion of the fieldwork remotely in the weeks following the site visit, which ended on 12 July 2013. © 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 5 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Section three Accounts production and audit process
We have noted an Accounts production and audit process Element Commentary improvement in the quality ISA 260 requires us to communicate to you our views about the Group audit To gain assurance over the Authority’s group of the accounts and the significant qualitative aspects of the Authority’s accounting practices and financial reporting. We also assessed the Authority’s process for accounts, we drew on our work as auditors of the supporting working papers. preparing the accounts and its support for an efficient audit. financial statements of Merseyside Passenger Transport Executive. Officers dealt efficiently with We considered the following criteria: There are no specific matters to report pertaining audit queries and the audit to the group audit. Element Commentary process will be completed Findings from the audit of Merseyside Passenger within the planned Accounting The Authority has in place an effective financial Transport Executive are reported to you in a practices and reporting process. timescales. separate ISA 260 report. financial We consider that accounting practices are reporting
The 133 Page Authority has appropriate. Prior year recommendations implemented the majority of Completeness We received a complete set of draft accounts on As part of our audit we have specifically followed up the Authority's the recommendations from of draft 25 June 2014. progress in addressing the recommendations in last year’s ISA 260 our ISA 260 Report 2012/13. accounts This was in line with our expectation and ahead of report. the national deadline for submission of the pre- The Authority has implemented the majority of the recommendations in audit financial statements. our ISA 260 Report 2012/13. Quality of Our Prepared by Client (PBC) listing, which we Appendix 1 provides further details. supporting issued in May 2014, set out our working paper working requirements for the audit. papers The quality of working papers provided was good and met the expected standards.
Response to Officers resolved audit queries in a reasonable audit queries time. No significant delays were experienced.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 6 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Section three Completion
We confirm that we have Declaration of independence and objectivity ■ matters specifically required by other auditing standards to be communicated to those charged with governance (eg significant complied with requirements As part of the finalisation process we are required to provide you with deficiencies in internal control; issues relating to fraud, compliance representations concerning our independence. on objectivity and with laws and regulations, subsequent events, non disclosure, independence in relation to In relation to the audit of the financial statements of Merseyside related party transactions, public interest reporting, Integrated Transport Authority for the year ending 31 March 2014, we questions/objections, opening balances etc). this year’s audit of the confirm that there were no relationships between KPMG LLP and There are no others matters which we wish to draw to your attention in Authority’s financial Merseyside Integrated Transport Authority, its directors and senior addition to those highlighted in this report or our previous reports management and its affiliates that we consider may reasonably be statements. relating to the audit of the Authority’s 2013/14 financial statements. thought to bear on the objectivity and independence of the audit Before we can issue our engagement lead and audit staff. We also confirm that we have complied with Ethical Standards and the Audit Commission’s
opinion 134 Page we require a signed requirements in relation to independence and objectivity. management We have provided a detailed declaration in Appendix 3 in accordance representations letter. with ISA 260. Once we have finalised our Management representations opinions and conclusions You are required to provide us with representations on specific matters we will prepare our Annual such as your financial standing and whether the transactions within the accounts are legal and unaffected by fraud. We have provided a Audit Letter and close our template to the Director of Resources for presentation to the Audit audit. Committee. We require a signed copy of your management representations before we issue our audit opinion. Other matters ISA 260 requires us to communicate to you by exception ‘audit matters of governance interest that arise from the audit of the financial statements’ which include: ■ significant difficulties encountered during the audit; ■ significant matters arising from the audit that were discussed, or subject to correspondence with management; ■ other matters, if arising from the audit that, in the auditor's professional judgement, are significant to the oversight of the financial reporting process; and
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 7 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Section four – VFM conclusion VFM conclusion
Our VFM conclusion Background Conclusion considers how the Authority Auditors are required to give their statutory VFM conclusion based on criteria specified by the Audit Commission. For 2013/14, auditors of secures economy, efficiency ConclusionVFM criterion Met these bodies will continue to meet their VFM duty by: and effectiveness in line with We have concluded that the Executive has made proper arrangements • reviewing the annual governance statement (AGS); AGS criteria specified by the to secure economy, efficiency and effectiveness in its use of resources. Audit Commission. • reviewing the results of the work of the Commission and other Reviewing the results of the work of relevant relevant regulatory bodies or inspectorates, to consider whether there regulatory bodies We have concluded that the is any impact on the auditor’s responsibilities at the audited body; and Undertaking risk based work Authority has made proper • undertaking other local risk-based work as appropriate, or any work arrangements to secure mandated by the Commission. We reported our initial risk assessment in our audit plan. The key area was to follow up our detailed findings from 2012/13 which were economy, efficiency and We follow a risk based approach to target audit effort on the areas of reported to the September 2013 Audit Committee. You have made Page 135 Page greatest audit risk. We consider the arrangements put in place by the effectiveness in its use of good progress and expect to implement all recommendations during Authority to mitigate these risks and plan our work accordingly. resources. Significant 2014/15. More details are set out overleaf and in Appendix 1. The key elements of the VFM audit approach are summarised in the governance issues relating diagram below. to previous years have been addressed during the year. VFM audit risk No further work required assessment Assessment of VFM conclusion residual audit risk Assessment of work by Conclude on Audit Commission & other arrangements Identification of review agencies to secure specific VFM VFM audit work (if Financial any) Specific local risk based statements and work other audit work
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 8 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Section four Specific VFM risks
Work completed Key findings We identified one specific In line with the risk-based approach set out on the previous page, and Below we set out the findings in respect of the area where we have VFM risk, as previously in our External Audit Plan we have: identified a residual audit risk for our VFM conclusion. communicated to you in our ■ assessed the Authority’s key business risks which are relevant to Other than a follow-up of previous year recommendations, we External Audit Plan 2013/14 our VFM conclusion; concluded that we did not need to carry out additional work. in February 2014. ■ identified the residual audit risks for our VFM conclusion, taking In all cases we are satisfied account of work undertaken in previous years or as part of our financial statements audit; and that external or internal ■ considered the results of relevant work by the Authority, scrutiny provides sufficient inspectorates and review agencies in relation to these risk areas.
assurance 136 Page that the Authority’s current arrangements in relation to these risk areas are adequate. Key VFM risk Risk description and link to VFM conclusion Assessment
Issues in relation to governance arrangements During 2013/14 we performed follow-up work to verify were identified by the 2012/13 Peer Review. the extent of the progress made in implementing the action plan. Governance The Authority has in place an action plan which arrangements outlines the measures to be implemented to Specifically, we reviewed progress made against address the recommendations made by the Peer implementing the recommendations made by KPMG in review. September 2013. During the 2012/13 audit we assessed the extent We found that good progress had been made in relation to which the Authority had made progress to all recommendations made. against the action plan. For specific details, see Appendix 1. Due to the extensive nature of the action plan there remained some actions to be implemented during 2013/14. This is relevant to both the financial resilience and economy, efficiency and effectiveness criteria of the VFM conclusion.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 9 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Appendices Appendix 1: Follow up of prior year recommendations
Priority rating for recommendations The Authority has not Priority one: issues that are Priority two: issues that have an Priority three: issues that would, if implemented all of the fundamental and material to your important effect on internal controls corrected, improve the internal control recommendations in our ISA system of internal control. We believe but do not need immediate action. in general but are not vital to the that these issues might mean that you You may still meet a system objective overall system. These are generally 260 Report 2012/13. do not meet a system objective or in full or in part or reduce (mitigate) a issues of best practice that we feel reduce (mitigate) a risk. risk adequately but the weakness would benefit you if you introduced We note good progress but remains in the system. them. re-iterate the importance of This appendix summarises the progress made to implement the Number of recommendations that were: implementing the recommendations identified in our ISA 260 Report 2012/13 and re- outstanding iterates any recommendations still outstanding. Included in original report 12 recommendations. Implemented in year or superseded 7
Page 137 Page Remain outstanding (re-iterated below) 5
No. Risk Issue and recommendation Status as at September 2014
1 Journals Partly Implemented Although the access rights to the Open Accounts system that is It is clear that the controls around journals have been required for a user to be able to post journals is restricted to strengthened: Finance staff, there is no segregation of duties in place: there is ■ We verified that journals with a value greater than no approval of journals prior to their posting. £100,000 are reviewed en masse on a monthly The Head of Accounting reviews all journals over £100,000 on a basis, as evidenced by email confirmation. monthly basis. However, this step is not formally documented, and there is no management sign-off to evidence review. ■ All journals raised on one randomly-chosen day per month are also subjected to management review. Recommendation Again, this is evidenced by email confirmation. Management should strengthen the controls around journals by However, we remain of the view that the risk of introducing a process by which all journals require approval by an inappropriate and / or fraudulent journals being posted appropriate line manager. could be mitigated further were all journals to be We recommend that, if possible, this control be an automated subjected to review. We recommend that, if possible, control in-built into the Open Accounts system. this control be an automated control in-built into the Open Accounts system.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 10 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Appendices Appendix 1: Follow up of prior year recommendations
No. Risk Issue and recommendation Status as at September 2014 The Authority has not implemented all of the 2 Bank Reconciliation Implemented recommendations in our ISA The main bank reconciliation is a monthly control. However, Our review of monthly bank reconciliations performed 260 Report 2012/13. KPMG found that the main bank reconciliation was not in the year to date confirmed that they have been performed from month 3 to month 9. performed and reviewed in a timely manner, as We note good progress but For the reconciliations that were completed, no evidence of evidenced by management signature. re-iterate the importance of management review sign-off was made available. implementing the There is a clear risk that bank reconciliations are not being outstanding performed accurately, and in a timely manner, and are not being reviewed by management.
recommendations. 138 Page Recommendation We recommend that management tighten this control with immediate effect, to ensure that the monthly bank reconciliation is performed accurately and in a timely manner. A senior finance manager should review the bank reconciliation on a monthly basis. This should be evidenced through a hard- copy sign off.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 11 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Appendices Appendix 1: Follow up of prior year recommendations
No. Risk Issue and recommendation Status as at September 2014 The Authority has not implemented all of the 3 General IT Controls Partly implemented recommendations in our ISA A number of control deficiencies relating to IT were identified by ■ Superusers – the position has not changed, and 260 Report 2012/13. the Audit Commission during 2011/12. During the interim work there has been no curtailment in superuser access conducted as part of the 2012/13 audit, KPMG has identified the to Open Accounts. This is because management We note good progress but following IT control weaknesses which indicate that the Audit deem that the access levels are required for the re-iterate the importance of Commission’s recommendations have not been fully three members of the FIS team. This is implemented: implementing the reasonable. However, and as per the original recommendation, ‘superusers’ should still be outstanding ■ There are currently three ‘superusers’ of the Open Accounts system. Given that all three are members of the Finance subjected to some curtailments in access rights, recommendations. Systems Administrators team, it is reasonable that they be especially in relation to purchase transactions. given ‘superuser’, or administrator, access. However, there ■ Password – we understand that the Open Page 139 Page should still be some restrictions to their access. Currently, Accounts password format cannot be strengthened they are able to complete a purchase transaction from start in the current version. Management informed to finish (ie set up a new supplier, self-approve a purchase KPMG that this will be addressed as part of the order, and set up payment). upgrade of the system. ■ There is currently no alpha-numeric requirement for Furthermore, we understand that there are plans passwords neither for Open Accounts nor the general IT afoot to switch on mandatory complex passwords network. within Active Directory which will mean that all ■ There is no stand-alone, comprehensive IT Security Policy. Network users would need to satisfy the minimum Rather, this forms a part of the wider-reaching IT Usage password guidelines as previously recommended. Policy. This is expected to be complete by October 2014. ■ The testing of backups and disaster recovery plans are not ■ Security policy – the revised Acceptable Usage currently formalised. Policy is currently under consultation and is due for presentation to the Audit and Governance Committee.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 12 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Appendices Appendix 1: Follow up of prior year recommendations
No. Risk Issue and recommendation Status as at September 2014 The Authority has not implemented all of the 4 Control weaknesses Partly implemented recommendations in our ISA Steps should be taken to address the four IT control ■ Backup testing – the new IT structure is now in 260 Report 2012/13. weaknesses identified to ensure that the IT controls environment place and a new Operations Manager has been is sufficiently robust: appointed. There is in place a process of We note good progress but ■ The access rights of the current ‘superusers’ of Open implementing a new appliance-based backup re-iterate the importance of Accounts should be curtailed to ensure that no one user is solution which will simplify both backup and implementing the able to process a purchase transaction from beginning to restoration processes. This will allow management end without approval; to plan and carry out disaster recovery tests. outstanding However, due to the delay in forming the new ■ The passwords for both Open Accounts and the general IT recommendations. 140 Page teams and implementing the new backup solution, network should be strengthened by the introduction of an disaster recovery tests are not expected to begin alpha-numeric criteria; until 2014/15. ■ Management should look to ensure that a comprehensive, stand-alone IT Security Policy is developed and implemented throughout both the Authority and the Executive; and ■ The ICT department should bring into place a formalised system of periodic testing of the integrity of backups and disaster recovery plans.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 13 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Appendices Appendix 1: Follow up of prior year recommendations
No. Risk Issue and recommendation Status as at September 2014 The Authority has not implemented all of the 5 Financial Regulations Implemented recommendations in our ISA The Financial Regulations that cover the processes for both the Our review confirmed that the Financial Regulations 260 Report 2012/13. Authority and the Executive were last reviewed in May 2011. were updated during 2013/14 and were approved by A lack of annual review means there is a risk that the document MITA during its August 2013 meeting. We note good progress but is not up to date. There is a risk that financial processes are not re-iterate the importance of underlined by current, robust regulations. implementing the Recommendation outstanding Management should ensure that the Financial Regulations that recommendations. cover both the Authority and the Executive are reviewed and updated as necessary on an annual basis. Page 141 Page 6 Audit preparedness Implemented Our Prepared by Client (PBC) listing, which we issued in May Our Prepared by Client (PBC) listing, which we issued 2013, set out our working paper requirements for the audit. in May 2014, set out our working paper requirements for the audit. The quality of working papers provided was variable. The quality of working papers provided was good and Officers resolved the majority of audit queries in a reasonable met the expected standards. time. Officers resolved audit queries in a reasonable time. In some cases, however, we experienced delays which led to the completion of the field work remotely in the weeks following No significant delays were experienced. the site visit, which ended on 12 July.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 14 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Appendices Appendix 1: Follow up of prior year recommendations
No. Risk Issue and recommendation Status as at September 2014 The Authority has not implemented all of the Partly implemented 7 (VFM) The Audit and Governance Committee should be given The Audit & Governance Committee was developing recommendations in our ISA whatever support is required to enable it to develop and become this role but was decommissioned with the 260 Report 2012/13. fully effective. In particular, Members need to provide establishment of the Combined Authority. The 2014/15 appropriate challenge, either directly or with the assistance of structure sees many of the functions of the previous We note good progress but Non Executive Directors. A&G Committee being fulfilled by the Audit & re-iterate the importance of Governance Sub-Committee of Merseytravel Committee, with the LCRCA Audit Committee due to be implementing the established late in 2014. A review of the effectiveness outstanding of the Audit & Governance Sub-Committee will be carried out in during 2014/15, in accordance with recommendations. 142 Page CIPFA Guidance. A bespoke Audit Committee training and development day for Members of both Committees is currently being determined and agreed, which will be delivered by a CIPFA trainer in late 2014. Implemented 8 (VFM) Internal Audit should be strengthened and arrangements The new Head of Internal Audit commenced in April made permanent. 2014. Specialist IT Audit services (50 audit days) were procured from Salford Internal Audit Services (14/15) to enable long term use of resources to be reviewed in conjunction with the Merseytravel Support Services Review. There is one fte vacancy at present; it is anticipated that this will be filled at the conclusion of the service review, subject to the review outcome.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 15 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Appendices Appendix 1: Follow up of prior year recommendations
No. Risk Issue and recommendation Status as at September 2014 The Authority has not implemented all of the Partly implemented 9 (VFM) Risk management procedures need to be fully developed The Risk and Primary Assurance Group has been recommendations in our ISA in line with current plans. properly established and is now attended by the newly 260 Report 2012/13. appointed Head of Internal Audit. Meetings are scheduled on a bi-monthly basis and chaired by the We note good progress but Director of Resources. The risk register is currently re-iterate the importance of under review and revision. The Risk Management Strategy and Policy are also under review in implementing the conjunction with this. Development of an appropriate outstanding Risk Management System is currently ongoing. recommendations. Implemented 10 (VFM) Internal Audit should carry out a full investigation into the Completed. Audit investigation did not identify Beatles Memorabilia valuation and the Executive should take
Page 143 Page fraudulent activity and a formal Report was not issued appropriate action. as a result of the audit findings. Partly implemented 11 (VFM) The Audit and Governance Committee should periodically Provision exists within the Internal Audit Plan for a review the registers of interests, gifts and hospitality. review of the Register of Interests, Gifts and Hospitality. A review has been undertaken in accordance with the 2014/15 Audit Plan. Significant findings or key issues will be reported to the October meeting of the Audit & Governance Sub- Committee, if appropriate, in accordance with current reporting arrangements. Internal Audit are responsible for the review and update of the Gifts and Hospitality Policy, which was last reviewed and updated in October 2013, and will be subject to review in October 2014. When a conflict arises during a meeting the relevant officer(s) Partly implemented 12 should declare this interest and take appropriate action. Completed with immediate effect, and ongoing.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 16 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Appendices Appendix 2: Declaration of independence and objectivity
The Code of Audit Practice Requirements ■ The total amount of fees that the auditor and the auditor’s network firms have charged to the client and its affiliates for the provision of requires us to exercise our Auditors appointed by the Audit Commission must comply with the services during the reporting period, analysed into appropriate Code of Audit Practice (the ‘Code) which states that: professional judgement and categories, for example, statutory audit services, further audit act independently of both “Auditors and their staff should exercise their professional judgement services, tax advisory services and other non-audit services. For and act independently of both the Commission and the audited body. each category, the amounts of any future services which have the Commission and the Auditors, or any firm with which an auditor is associated, should not been contracted or where a written proposal has been submitted Authority. carry out work for an audited body that does not relate directly to the are separately disclosed. We do this in our Annual Audit Letter. discharge of auditors’ functions, if it would impair the auditors’ Appointed auditors are also required to confirm in writing that they independence or might give rise to a reasonable perception that their have complied with Ethical Standards and that, in the auditor’s independence could be impaired.” professional judgement, the auditor is independent and the auditor’s
Page 144 Page In considering issues of independence and objectivity we consider objectivity is not compromised, or otherwise declare that the auditor relevant professional, regulatory and legal requirements and guidance, has concerns that the auditor’s objectivity and independence may be including the provisions of the Code, the detailed provisions of the compromised and explaining the actions which necessarily follow from Statement of Independence included within the Audit Commission’s this. These matters should be discussed with the Audit Committee. Standing Guidance for Local Government Auditors (Audit Commission Ethical Standards require us to communicate to those charged with Guidance) and the requirements of APB Ethical Standard 1 Integrity, governance in writing at least annually all significant facts and matters, Objectivity and Independence (Ethical Standards). including those related to the provision of non-audit services and the The Code states that, in carrying out their audit of the financial safeguards put in place that, in our professional judgement, may statements, auditors should comply with auditing standards currently in reasonably be thought to bear on our independence and the objectivity force, and as may be amended from time to time. Audit Commission of the Engagement Lead and the audit team. Guidance requires appointed auditors to follow the provisions of ISA (UK &I) 260 Communication of Audit Matters with Those Charged with Governance’ that are applicable to the audit of listed companies. This General procedures to safeguard independence and objectivity means that the appointed auditor must disclose in writing: KPMG's reputation is built, in great part, upon the conduct of our ■ Details of all relationships between the auditor and the client, its professionals and their ability to deliver objective and independent directors and senior management and its affiliates, including all advice and opinions. That integrity and objectivity underpins the work services provided by the audit firm and its network to the client, its that KPMG performs and is important to the regulatory environments in directors and senior management and its affiliates, that the auditor which we operate. All partners and staff have an obligation to maintain considers may reasonably be thought to bear on the auditor’s the relevant level of required independence and to identify and objectivity and independence. evaluate circumstances and relationships that may impair that independence. ■ The related safeguards that are in place.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 17 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Appendices Appendix 2: Declaration of independence and objectivity (continued)
We confirm that we have Acting as an auditor places specific obligations on the firm, partners and staff in order to demonstrate the firm's required independence. complied with requirements KPMG's policies and procedures regarding independence matters are on objectivity and detailed in the Ethics and Independence Manual (the Manual). The independence in relation to Manual sets out the overriding principles and summarises the policies and regulations which all partners and staff must adhere to in the area this year’s audit of the of professional conduct and in dealings with clients and others. Authority’s financial KPMG is committed to ensuring that all partners and staff are aware of statements. these principles. To facilitate this, a hard copy of the Manual is provided to everyone annually. The Manual is divided into two parts. Part 1 sets out KPMG's ethics and independence policies which partners and staff must observe both in relation to their personal dealings and in relation to the professional services they provide. Part
Page 145 Page 2 of the Manual summarises the key risk management policies which partners and staff are required to follow when providing such services. All partners and staff must understand the personal responsibilities they have towards complying with the policies outlined in the Manual and follow them at all times. To acknowledge understanding of and adherence to the policies set out in the Manual, all partners and staff are required to submit an annual ethics and independence confirmation. Failure to follow these policies can result in disciplinary action. Auditor declaration In relation to the audit of the financial statements of Merseyside Integrated Transport Authority for the financial year ending 31 March 2014, we confirm that there were no relationships between KPMG LLP and Merseyside Integrated Transport Authority, its directors and senior management and its affiliates that we consider may reasonably be thought to bear on the objectivity and independence of the audit engagement lead and audit staff. We also confirm that we have complied with Ethical Standards and the Audit Commission’s requirements in relation to independence and objectivity.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a 18 Swiss entity. All rights reserved. This document is confidential and its circulation and use are restricted. KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative, a Swiss entity. Page 146 Page
© 2014 KPMG LLP, a UK public limited partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks or trademarks of KPMG International Cooperative (KPMG International). 26/08/2014 APPENDIX C
Merseyside Integrated Transport Authority (MITA)
Statement of Accounts For the year ended 31 March 2014
Page1 147 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY
Explanatory Foreword ...... 3
Statement of Responsibilities for the Statement of Accounts...... 10
Annual Governance Statement ...... 11
Independent Auditors’ Report to Merseyside Integrated Transport Authority ...... 16
MITA Comprehensive Income and Expenditure Statement for the year ended 31 March 2014...... 18
Group Comprehensive Income and Expenditure Statement for the year ended 31 March 2014 ...... 19
Balance Sheet as at 31 March 2014 ...... 20
Movement in Reserves Statements for the year ended 31 March 2014 ...... 21
Cash Flow Statement for the year ended 31 March 2014 ...... 25
Notes to the Accounts ...... 26
Page 1482 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY EXPLANATORY FOREWORD TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
This set of accounts reflect the financial position of the ITA and the ITA Group at 31 March 2014.
The Authority's accounts for the year ended 31 March 2014 are set out on pages 17 to 70. They consist of the:-
(a) Comprehensive Income and Expenditure Statement - the Authority's main revenue account covering income and expenditure on all Authority services;
(b) Group Comprehensive Income & Expenditure
(c) Balance Sheet - which sets out the financial position of the Authority and Group on 31 March 2014;
(d) Movement in Reserves statements;
(e) Statement of Cash Flows - which summarises the outflows of cash arising from transactions with third parties for revenue and capital purposes; and
(f) Notes, comprising a summary of significant accounting policies and other explanatory information.
Group Accounts are now required by the Code of Practice on Local Authority Accounting in the United Kingdom. The Code requires the Authority to treat the Merseyside Passenger Transport Executive as if it were a subsidiary company.
These accounts are supported by the Statement of Accounting Policies and the Annual Governance Statement.
Principal Activities
The direct principal activity of the Authority is the operation of the Mersey Tunnels, and the servicing of Transport and Tunnels Infrastructure debt. In addition, it sets the policies for its subsidiary the MPTE to administer the following services on its behalf:-
(a) Provision and operation of bus stations, interchanges, bus stops and shelters and other customer facilities;
(b) Production of timetable and route information on all services;
(c) Provision and operation of a commuter and leisure ferry service on the River Mersey along with various other leisure attractions to strengthen the local river front economy;
(d) Administration of the local rail network through rail franchises;
(e) Provision and operation of the local national concessionary travel schemes along with provision of a suite of prepaid travel tickets for public transport;
(f) Provision of supported bus services in addition to the commercial network.
The Medium Term Financial Strategy had identified the need to ensure that the ITA and Executive had sufficient working balances and reserves in order to meet potential challenges in the future.
Careful consideration is given to the determining of reserve categories. Where reserves are earmarked this is done to ensure that the Authority is able to anticipate or meet any financial shocks. The Authority’s reserves can be released to off-set expenditure, but only as an alternative to service reduction, however, once reserves are used, in the current environment, replacement will be extremely difficult.
Page3 149
Key Performance Indicators and Business Review
The financial results of the Authority and the Group (comprising of the Authority, and the Merseyside Passenger Transport Executive and subsidiaries) are shown on pages 18 to 70.
The Authority’s management accounts for budgeting purposes, is based on the income and expenditure of the general reserve and shows a surplus for the year of £0k (2012/13 £0k). This basis differs from that shown in the financial statements. The MITA Group position shows a surplus of £276k (2012/13 deficit £7k). The Un/Useable reserves of the Authority at the year-end were £115m (2012/13 £80m). The Group reserves were £208m (2012/13 £163m).
Service Provision
During the year net expenditure of £127.4m (funded by the Levy) was incurred for the provision of transport services consisting of rail, ferries, tunnels, supported bus services and concessionary travel arrangements for the elderly, disabled and children. With the exception of the Authority’s direct services (the Mersey Tunnels and Servicing of £0.2bn Tunnels and Transport Infrastructure debts), all other transport services are secured through the Executive which is financed by Authority grants.
Income and Expenditure of General Reserve
A simplified revenue management accounts outturn summary is given below for the general reserve of both the Authority and the Group position:-
2012/13 2013/14 MITA Original Revised Actual Accounts Estimate Estimate Actual £000 % £000 £000 £000 %
Gross Expenditure
37,709 15 Tunnels 34,006 31,596 40,207 15 25,605 10 Transport Infrastructure 31,941 37,051 25,335 10 MITA Grant (including Special Rail and 74 190,072 75 197,647 200,574 198,910 Concessionary Travel Grants) 896 0 Corporate & Democratic Core 1,614 1,728 1,729 1 254,282 100 265,208 270,949 266,181 100
Funded by - 37,709 15 Service Income (Tunnel Tolls etc.) 44,564 44,976 40,207 15 89,209 35 Direct Grants 93,280 98,609 98,610 37 - - Use of Reserves - - - 0 126,918 50 Sub Total 137,844 143,585 138,817 52 Balance to be met by levies upon 127,364 50 127,364 127,364 127,364 48 Merseyside District Councils
254,282 100 Total Funding 265,208 270,949 266,181 100
This and the following table are only intended to show spending against approved budgets. They differ from the CIES in that the CIES shows the accounting cost in the year of providing services in accordance with generally accepted accounting practice, rather than the amount to be funded from the Levy. The Levy (local taxation) is raised to cover expenditure in accordance with regulations which may differ from the accounting cost. The taxation position is shown in the MIRS.
Page 4150 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY EXPLANATORY FOREWORD TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
2012/13 2013/14 Actual Group Accounts Original Revised Actual Estimate Estimate
£000 % £000 £000 £000 %
Gross Expenditure
37,709 11 Tunnels 34,006 31,596 40,207 11 58,722 17 Transport Infrastructure/Funding 43,946 51,023 65,085 18 4,360 1 Corporate & Democratic Core 3,224 3,453 3,094 1 12,141 3 Mersey Ferries 11,197 10,616 10,091 3 28,118 8 Bus Services 30,201 29,198 29,425 8 107,524 32 Rail Services 114,119 119,364 115,522 33 81,828 23 Travel Concessions 83,935 81,108 82,461 23 8,196 2 Hubs 10,989 10,934 8,679 2 65 0 GSM/RTIG - - - 0 7,328 2 People & Customer Development 6,449 5,525 5,363 1 3,354 1 LTP & Policy Development 3,809 3,820 3,586 1 349,345 100 341,875 346,637 363,513 101 Funded by - 132,765 38 Service Income 120,998 120,664 137,815 38 89,209 26 Direct Grants 93,280 98,609 98,610 27 - 0 Other Grants - - - 0 7 0 Use of General Reserves 233 - (276) 0 221,981 64 Sub Total 214,511 219,273 236,149 65 Balance to be met by levies upon 127,364 36 127,364 127,364 127,364 35 Merseyside District Councils
349,345 100 Total Funding 341,875 346,637 363,513 100
Cash flow
Although base rate continues to be at historically low levels, interest of £1.1m was earned during 2013/14 (£1.4 2012/13) through prudent short term deposits of surplus monies. The ITA continues to benefit from surplus PTE monies being on- lent to the ITA interest free, to permit bulk placements on the money market thereby maximising investment opportunities and returns to Merseytravel.
Pension surplus/deficit
The ITA participates in a defined benefit pension scheme administered on its behalf by the Merseyside Pension Fund (MPF). Pension costs have been charged to the Comprehensive Income and Expenditure Statement (CIES) in line with IAS19, then reversed out, applying the statutory override provided by Regulation 7A(2) of the Accounts and Audit Regulation’s 2011. For a fuller explanation of the ITA’s pension deficit please refer to Note 31.
Page5 151 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY EXPLANATORY FOREWORD TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
Future planned development
The ITA continues to support the development of a fully integrated transport system, with our District partners, for Merseyside through the latest Local Transport Plan (LTP3 2011-2015). Information on LTP3 can be found on the Merseytravel website. Preliminary work has started on the development of LTP4, which will now also encompass Halton Borough Council.
Mersey Tunnels Fixed Asset Valuation
The ITA has a policy of revaluing the Mersey Tunnel fixed assets. The first valuation was carried for the 2003/4 accounting year, and the latest revaluation was carried out in March 2014.
The March 2014 revaluation was undertaken by District Valuers Service, experts in public sector asset valuations. The valuation certificates for the properties are supplied for the purpose of “implementing the recommendations of CIPFA with regard to the valuation of capital assets held by Public Authorities”. The Code of Practice on Local Authority Accounting (The Code) states Infrastructure assets should be measured at historical cost, and defines this to be the carrying amount of the assets as at April 2007, adjusted for subsequent depreciation or impairment.
Revenue Financing
The Authority receives direct revenue support from the five Merseyside District Councils through levying procedures. Central Government contributed towards this support through the RSG Settlement; by providing Special Rail Grant to specifically prevent the extra costs of rail privatisation falling upon the council taxpayer.
Capital Programme
In 2013/14 the Authority provided Capital grants to the Executive of £12.9m (£8.9m, 2012/13 ) along with direct capital investment on the Mersey Tunnels totalling £8.6m (2012/13 £7.5m). Details of some of the largest schemes are as follows:-
ITA Schemes
(a) Mersey Tunnels projects including Replacement of High mast lighting £1.3m, Kingsway tunnel resurfacing £3.1m, Fire alarm system upgrade £0.4m, specialist vehicle procurement £0.5m, Phone system renewal £0.DfT4m, and other works to the tunnels fabric, plant and machinery.
ITA Group Schemes
(b) Support to District highway improvements of £3.3m.
(c) Substantial progress in Merseytravel’s visionary programme to improve integrated public transport along major corridors and centres in Merseyside.
(d) Investment in upgrading bus facilities via DfT Better bus grant of £1.6m
(e) Access improvements to the park and ride site at Birkenhead North of £2.8m
The ITA and its Group liabilities can be funded from its own internal resources and expected external grants and contributions. The Authority is currently formulating an ambitious plan to replace the existing rolling stock on the Merseyrail franchise. This scheme is currently in development, and as such the full cost and financing of the project are still under discussion, and are not shown as commitments.
Page 1526 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY EXPLANATORY FOREWORD TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
Capital Financing/Borrowing
During the year, the Capital Programme was financed as follows:
2013/14 ITA Group £000's £000's
Capital Expenditure 8,619.2 21,792.6 Financed by :- Lease Incentive - - Grants/Contributions 53.7 9,664.0 Renewals fund / tolls 8,565.5 8,565.5 Reserves 3,563.1 8,619.2 21,792.6
The Capital Financing Requirement at 31 March 2014 was £236.9m (31/3/13 £247.2m). Actual external debt at 31 March 2014 was £235.4m, (31/3/13 £246.8m).
Tunnels Repair and Renewal Reserve
The Medium Term Financial Strategy has expressed the intention that the Tunnels Repair and Renewal Reserve be maintained at a level of £2.5m or above. This Reserve stood at £5.8m as at 31 March 2014. (31/3/12 £7.3m)
Principal Risks and Uncertainties
Principal risks and uncertainties facing the Authority’s reserves were as follows:-
(i) Compliance Risk
If Merseytravel has to utilise scarce reserves and working balances in order to mitigate against over- spending or shortfalls in revenue generation, then there is the risk of failing to achieve the ITA’s financial objectives.
(ii) Energy Shocks
Typical risks here include further increases in fuel cost which will have a direct impact upon the cost basis of Mersey Tunnels, Ferries and the supported bus network. Conversely, high petrol costs could impact the organisation in a number of ways, e.g. greater use of concessionary travel (and hence cost) or a slight downturn in discretionary travel traffic.
(iii) Population Demographics
The impact of the post-war baby boom will result in more people being eligible for concessionary travel, even allowing for the recent changes in eligibility. The arrangements with the major bus operators and Merseyrail are on the basis that all eligible persons will have access to a local concession until they reach the age for the national concession. These arrangements have a cap and collar arrangement to insulate the ITA from costs that the PTE could be exposed to.
(iv) Industry Consolidation/Transition
It is possible that further consolidation of bus operators could take place. There is no intelligence to suggest that this is happening either with the big operators or indeed with the smaller operators who predominantly provide contracts to Merseytravel. The risk with consolidation is that the supply side can result in fewer operators, resulting in less price competition for tenders.
Page7 153 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY EXPLANATORY FOREWORD TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
(v) Consumer Demand Shifts
A prolonged period of recession, as the country is now suffering, will impact upon consumer choice especially with regards to discretionary spending rather than ‘routine’ commuter expenditure. Conversely, discretionary spend could increase if the economy improves.
(vi) Global Financial Shocks
The consequences of shocks affecting interest rates; currency rates; unemployment and economic growth.
Currently the impact of any new public sector measures that the Government might bring in during 2013/14 and beyond cannot be accurately assessed.
Political and Charitable Donations
For 2013/14, Merseytravel adopted Mencap as its chosen charity organisation, and made a donation of £2k, in addition to fund raising activities carried out by staff. There were no political donations made by Merseytravel during 2013/14.
Future Developments
Regarding future developments the following are planned:-
(a) New and Improved Facilities programmed for 2014/15:
• To continue to renew the Mersey Tunnels through a £9m refurbishment programme • Commence refurbishment works at Kirkby bus station • Enhance bus service routes through the use of Better Bus Fund grants and LSTF funding
(b) Over the next 3-5 years: • Enhance access at many stations • Development proposals to extend the network initially to Headbolt Lane, Kirkby and Wrexham • Develop proposals to reopen the Halton Curve to introduce a service between Lime Street, Liverpool South Parkway, Runcorn and Chester and development proposals to replace the existing rolling stock. • To continue the renewal of the Mersey Tunnels assets.
Safe and Secure Network
• Increase CCTV on bus and rail services and continue to work with partners to reduce the number of incidents on the transport network.
Better Services
• Help protect the environment by reducing carbon emissions and operating sustainably. • Use the new powers of the Local Transport Act to improve and more fully integrate the transport network. • Work with our bus and rail operator colleagues to improve the reliability of transport information.
Value for Money • Continue to develop service efficiencies and operate responsibility. • Keep supported bus fares at the current level for as long as possible. • Work with bus and rail operators to improve the reliability of transport information. • Support economic regeneration partnerships and initiatives.
Page 1548 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY EXPLANATORY FOREWORD TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
Research and Development
For the normally accepted definition of a company’s R&D, there were no research and development activities during 2013/14 by the Merseytravel group.
Trade Payables
Provision has been made for known liabilities, goods received and work carried out as at 31 March 2014. Generally the Authority aims to pay all of its undisputed creditors within 30 days.
Within Merseytravel’s Performance Plan a “payment within 30 days” target of 100% has been set, against which the actual performance was 96.7 %. This compares to a performance of 96.1% of undisputed creditors paid within 30 days during the year 2012/13
Directors of the Authority
The Directors of the Authority who held offices during 2013/14 were as follows:
D Brown Chief Executive (appointed 27/5/13) E Chandler Director of Corporate Development F Rogers Director of Customer Services/Deputy Chief Executive J Fogarty Director of Resources (appointed 1/4/13)
D Brown J Fogarty Chief Executive Director of Resources
Page9 155 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY STATEMENT OF RESPONSIBILITIES FOR THE STATEMENT OF ACCOUNTS
The Authority's Responsibilities
The Merseyside Integrated Transport Authority is required 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 Merseyside Integrated Transport Authority, that officer is the Director of Resources;
• manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets; and
• approve the Statement of Accounts.
Responsibilities of the Director of Resources
The Director of Resources is responsible for the preparation of the Merseyside Integrated Transport 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”). The Statement of Accounts is required to present fairly the financial position of the Merseyside Integrated Transport Authority at the accounting date and its income and expenditure for the year end 31 March 2014.
In preparing this statement of accounts, the Director of Resources has:-
• selected suitable accounting policies and then applied them consistently;
• made judgements and estimates that are reasonable and prudent.
• complied with the local authority Code
The Director of Resources has also:-
• kept proper accounting records which are up to date;
• taken reasonable steps for the prevention and detection of fraud and other irregularities.
Responsible Financial Officer's Certificate
I hereby certify that the Statement of Accounts present a true and fair view of the financial position of the Merseyside Integrated Transport Authority as at 31 March 2014 and its income and expenditure for the year ended 31 March 2014. The Statement of Accounts was authorised for issue by the Director of Resources on 30 September 2014. Events taking place after the Balance Sheet date have been considered up to the date of issue.
J Fogarty Director of Resources
30 September 2014
Page 10156 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY ANNUAL GOVERNANCE STATEMENT FOR THE YEAR ENDED 31 MARCH 2014
Scope of responsibility
The Merseyside Integrated Transport Authority (the Authority) was responsible for ensuring that its business was conducted in accordance with the law and proper standards’ that public money was safeguarded and properly accounted for, and used economically, efficiently and effectively during 2013/14.
The Merseyside Integrated Transport Authority ceased to exist on 31st March 2014 and its responsibilities were transferred to the Liverpool City Region Combined Authority. As a result, this annual governance statement represents the position during the final year of account for the Merseyside Integrated Transport Authority.
The Legal Framework that supported the Authority was governed by various statutory provisions, the main ones being:
The Transport Act 1968 The County of Merseyside Act 1980 The Mersey Tunnels Act 2004 The Transport Act 1983 The Transport Act 1985 The Transport Act 2000 The Railways Act 2005 EU Regulation on Public Passenger Transport Services by Rail and By Road (1370/2007) The Local Government Finance Act 1972 The Local Government Act 1999
Many of the functions of The Authority were discharged by Merseyside Passenger Transport Executive (the Executive), which is a separate statutory body that is controlled by, and was accountable to The Authority. The Executive will continue beyond 2013/14 and will be accountable to the Combined Authority.
The Executive is subject to its own annual Statement of Accounts, however its governance framework reflects that of the Authority and as such, issues relating to the Executive are considered within this governance statement where appropriate.
The Authority also had a duty under the Local Government Act 1999 to make arrangements to secure continuous improvement in the way in which its functions were exercised, having regard to a combination of economy, efficiency and effectiveness.
In discharging this overall responsibility, the Authority was responsible for putting in place proper arrangements for the governance of its affairs. This included facilitating the effective exercise of its functions, and making appropriate arrangements for the management of risk.
The Authority approved and adopted a governance framework which is consistent with the principles of the CIPFA/SOLACE Framework Delivering Good Governance in Local Government. A copy of the authority’s constitution and other policies related to the governance framework is published through our website at www.merseytravel.gov.uk .
The constitutional framework was fundamentally reviewed during 2013/14 in order to improve governance.
This statement explains how the Authority complied with the code and also met the requirements of the Accounts and Audit (England) Regulations 2011, regulation 4(3), which requires all relevant bodies to prepare an annual governance statement.
The purpose of the governance framework
The governance framework comprises the systems and processes, culture and values by which the Authority was directed and controlled in its activities. It was the mechanism through which it was accountable to, engaged with and led its stakeholders. It enabled the Authority to monitor the achievement of its strategic objectives and to consider whether those objectives led to the delivery of appropriate services and value for money.
Page11 157 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY ANNUAL GOVERNANCE STATEMENT FOR THE YEAR ENDED 31 MARCH 2014 (continued)
The system of internal control was a significant part of that framework and was designed to manage risk to a reasonable level. Any system of internal control cannot eliminate all risk of failure to achieve policies, aims and objectives but the arrangements put in place at Merseyside Integrated Transport Authority were intended to provide a reasonable - but not absolute - assurance of effectiveness.
The system of internal control was based on an on-going process designed to identify and prioritise the risks to the achievement of the Authority’s policies, aims and objectives. It also sought to evaluate the likelihood and potential impact of those risks being realised, and to manage those risks efficiently, effectively and economically.
The governance framework that was in place at the Authority for the year ended 31 March 2014 changed significantly during the year. Significant improvements were made during 2013/14 including the establishment of an Audit and Governance Committee within a fundamental review of the organisation’s constitutional framework.
The governance framework
The governance framework itself was based around the organisation’s Corporate Plan. This document established the key priorities for the Authority and was determined following consultation with passengers and other key stakeholders within Merseyside and beyond.
The Corporate Plan for 2013/14 set the template for all of the organisation’s activities and represented the articulation of its priorities and values.
The Corporate Plan was supported by Directorate Plans and Service Plans and was underpinned by a budget and staffing structures that ensured that resources were available to meet those corporate objectives. A performance management system ensured that high-quality services were delivered effectively and efficiently. This was achieved through the translation of overall objectives into individual performance plans and by monitoring and measuring outcomes against key targets.
Training and development was an important aspect of the overall performance management framework and the organisation maintained a training and development programme linked to corporate priorities. That included both officers and elected members.
The Authority revised its procedure rules, standing orders, scheme of delegation and financial regulations during 2013/14. These revisions improved and clarified how decisions were taken and where authority lies. The revised constitution also better reflected the organisation’s ethical standards.
There were three statutory officers with legal responsibilities for assurance and governance. These were the Head of Paid Service (Chief Executive), the Chief Financial Officer (Director of Resources) and the Monitoring Officer (Head of Legal and Member Services).
Both the Head of Paid Service and the Chief Financial Officer were new appointments in 2013/14. In addition to these appointments, the Authority also appointed a new Head of Internal Audit during 2013/14 to complete its governance team.
The Chief Financial Officer was the designated Section 151 Officer and complies with the CIPFA Statement on the Role of the Chief Financial Officer in Local Government (2010).
Further assurance was provided through the maintenance of an Internal Audit function. Internal Audit reviewed the internal control framework across the organisation, based on a formal risk assessment, and presented recommendations where internal control weaknesses were identified. The work of our external auditors is also a key element of the assurance framework.
The effectiveness of the Internal Audit service was greatly improved during 2013/14 through the establishment of an Audit and Governance Committee.
The organisation also maintained a register of key corporate risks and has risk management practices and processes in place as part of the overall governance framework. These arrangements were also reviewed during 2013/14.
Page 12158 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY ANNUAL GOVERNANCE STATEMENT FOR THE YEAR ENDED 31 MARCH 2014 (continued)
Review of the effectiveness of the governance framework
The Authority was responsible for conducting, at least annually, a review of the effectiveness of its governance framework including the system of internal control. The effectiveness review is informed by the work of Internal Audit and those key officers within The Authority and The Executive with responsibility for the development and maintenance of the governance environment.
The assessment of the effectiveness of the control framework was also informed by our external auditors and other review agencies and inspectorates.
Well-publicised concerns raised from a number of sources prompted the Authority to seek a formal Peer Review of its governance arrangements in the summer of 2012. This was conducted by a team of senior professionals from the five Merseyside District Councils, and was led by the Chief Executives of Liverpool City Council and St Helens Council.
The Peer Review highlighted some significant governance concerns and presented the Authority with a detailed action plan to assist the organisation in improving its arrangements. This action plan was accepted in full and its contents were incorporated in the Annual Governance Statement for 2012/13 and corresponding improvement plan.
The 2012/13 Annual Governance Statement identified a number of key areas for improvement and addressing these has been a key corporate priority in 2013/14.
Changes to the constitution, and the establishment of a transparent electronic decision making system for delegated decisions addressed the concerns raised regarding the effectiveness of decision making processes highlighted in the 2012/13 accounts.
Risk Management arrangements were identified as an outstanding governance issue in the 2012/13 accounts. The Authority’s risk management arrangements have been significantly improved. The Corporate Risk Register was fundamentally changed in 2013/14 to more accurately and openly reflect the organisation’s key risks. These changes were undertaken at the highest level and overseen by the new Audit and Governance Committee, who are now becoming more active in seeking assurance in respect of the risk management framework.
Internal Audit was also highlighted as an area for improvement in the 2012/13 accounts and significant improvements have been made in this area. The service benefitted from a much higher profile in 2013/14 than was previously the case, and systems and procedures were established to underline the statutory responsibilities and unambiguous rights of access for the Internal Audit service.
The effectiveness of Internal Audit was also greatly strengthened by the establishment of an Audit and Governance Committee and the appointment, late in the year, of a new Chief Internal Auditor.
The 2012/13 Annual Governance Statement identified Performance Management as a significant governance issue and this has been an area of significant improvement in 2013/14. The Corporate Plan is a more robust and focussed document and performance reporting is now linked to financial reporting.
The Authority also greatly improved the Performance Management Framework in 2013/14 through the establishment of a formal Scrutiny function which oversees our own performance, and that of our key commercial partners as part of its terms of reference.
As a result, the governance framework that was in place on 31st March 2014 was much more robust than in previous years. The organisation was able to demonstrate a much greater understanding of the principles and practice of good governance within a much-improved internal control framework.
At the end of 2013/14 there remained some work to be done to ensure that these improvements, and the underlying changes in the organisation’s attitude to corporate governance and risk, were embedded throughout the organisation. This work will continue and will be undertaken by Merseytravel and the Merseytravel Committee on behalf of the Liverpool City Region Combined Authority.
The challenges that remain are summarised in the section below.
Page13 159 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY ANNUAL GOVERNANCE STATEMENT FOR THE YEAR ENDED 31 MARCH 2014 (continued)
Significant governance issues
Value for Money
A number of high-profile issues came to light in the 2012/13 period of account where the organisation had failed in its duty to secure value for money for the taxpayer. There were no such issues identified in 2013/14 and improvements to the overall governance framework and the transparency of decision-making ensured that value for money was a consideration in all decisions made in 2013/14.
That said, the organisation retains a financial legacy from a number of decisions taken in previous years that continue to have an impact on financial performance.
The most notable of these is the cost of the Mann Island office accommodation, where Merseytravel is the primary tenant despite only occupying around 28% of the building.
Significant efforts have been made in 2013/14 to secure additional tenants and the organisation has been successful in letting a further floor to an external tenant. The facilities in Mann Island are now also being used as a regional resource.
A number of efficiency measures in 2013/14, including better procurement enabled the organisation to identify £8m savings in the year. This in turn, enabled the organisation freeze the transport levy requirement for 2014/15 for the fourth successive year.
That said, anticipated fiscal tightening in the period to come will mean that Merseytravel and the Merseytravel Committee of the Liverpool City Region Combined Authority will need to focus increasingly on achieving value for money in order to deliver its core transport objectives within the context of decreasing resources.
Contract Monitoring
As a result of concerns raised by Internal Audit in 2012/13, the organisation commissioned a review of its relationship with its rail franchise holder, Merseyrail Electrics. This review highlighted a number of concerns regarding the effectiveness of our contract monitoring arrangements which were each addressed during 2013/14.
It should be noted that these concerns related to our arrangements rather than any particular event of failure on the part of the franchise holder. The Merseyrail Franchise continued to perform strongly in 2013/14 both operationally and financially. A further concern raised by this review is related to risk, and our ability to step in and act as the operator of last resort should the franchise fail in any way. While this risk remains low in terms of likelihood, we have taken steps to formalise these arrangements, and to establish a financial reserve sufficient to sustain the operation of the railway should the train operator cease to fulfil its obligations.
Internal Audit
Whilst our Internal Audit arrangements were greatly strengthened in 2013/14 there remained some outstanding areas for improvement at year-end. These are detailed in the Head of Internal Audit’s Annual Report and form the focus priorities for the section in the coming year.
During 2013/14, the organisation commissioned an external IT Audit provider to undertake a comprehensive IT Governance and Audit Needs Assessment, which will inform the 2014/15 IT Audit Plan. This engagement will not only enable effective, specialist IT audit delivery during the year, but also ensure that robust information governance arrangements are embedded and provide assurance that statutory obligations are being met in respect of information management and security.
The Public Sector Internal Audit Standards (PSIAS) came into effect from April 2013 and have superseded the 2006 CIPFA Code of Practice for Internal Audit in the United Kingdom. Compliance with these Standards is mandatory. Any areas that require action or improvement that have been identified through self-assessment will be addressed, in order that the organisation can demonstrate that it is compliant with the Standards and the associated Code of Ethics and Quality Assurance and Improvement Programme.
Page 14160 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY ANNUAL GOVERNANCE STATEMENT FOR THE YEAR ENDED 31 MARCH 2014 (continued)
SUMMARY
2013/14 was a pivotal year for both the Authority and the Executive, with significant changes in both the committee structure and in the management and leadership of the organisation. It was a year in which some significant value for money issues forced the organisation to examine its overall governance framework.
An honest, impartial appraisal of the governance framework was conducted on our behalf by colleagues from within the Merseyside group of local authorities. The organisation subjected itself to this Peer Review in order to identify and redress the governance issues that led to the organisation incurring significant costs through a number of ventures in previous years.
The Audit and Governance Committee will now act as the body charged with governance and will oversee the effectiveness of the governance framework and the changes that have been made in 2013/14. The Authority now also has a Scrutiny Committee to provide effective challenge particularly around value for money and the effectiveness of service delivery.
We propose over the coming year to take steps to address those matters identified above and to further enhance our governance arrangements. We are satisfied that these steps will address the need for improvements that were identified in our review of effectiveness and we will monitor their implementation and operation through our Audit and Governance Committee and as part of our next annual review.
Signed: ______
Cllr Liam Robinson: Chair of Merseyside Integrated Transport Authority
Signed: ______
David Brown: Chief Executive, Merseyside Integrated Transport Authority
Page15 161 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY
To be inserted upon completion of audit
Page 16162 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY
Page17 163 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT FOR THE YEAR ENDED 31 MARCH 2014
The Comprehensive Income and Expenditure Statement show the costs of the Authority’s services, Mersey Tunnels, provision for operating Mersey Ferries (via the Mersey Ferries Ltd subsidiary company), socially necessary bus services, local Merseyrail Electrics and Northern Rail (City Line) train services, the operation of a very comprehensive season and day ticket scheme as well as the provision of statutory and discretionary concessionary travel schemes.
In addition, these tables summarise the key sources of income and financial support the Authority receives. Crucial to these are the Special Rail Grant that funds local rail services and the Levy received from the Merseyside District Councils. This Levy is approved by the ITA at its February budget meeting. A grant is paid to the MPTE to provide services the ITA deem socially necessary. The ITA grant is a product of its levy on the five district councils and is the net sum after those costs borne by the ITA have been accounted for.
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 grant income. The Authority receives grant income to cover expenditure in accordance with regulations; this may be different from the accounting cost. The reserves position is shown in the Movement in Reserves Statement.
2012/13 2013/14 Restated
Net Net Net Gross Gross Gross Gross Notes Expenditure Income Expenditure Expenditure MITA Expenditure Income Expenditure £000 £000 £000 £000 £000 £000 £000
220,819 40,997 179,822 179,841 Highways & Transport Services 237,499 44,230 193,269 896 - 896 896 Corporate & Democratic core 2,190 461 1,729 24 10 14 14 Non distributed costs 1,243 16 1,227 221,739 41,007 180,732 180,751 Cost of Services 240,932 44,707 196,225 5
17,170 3,975 13,195 13,515 Financing & Investment income 14,437 1,535 12,902 - 230,387 (230,387) (230,387) Taxation & non specific grant income - 239,530 (239,530)
238,909 275,369 (36,460) (36,121) (Surplus)/deficit on Provision of Services 255,369 285,772 (30,403)
- - - - Impairment of investments ------2,767 Remeasurements (liabilities & assets) - 4,284 (4,284) Actuarial (gains)/losses on pension 3,106 - 3,106 - assets/liabilities - - -
3,106 - 3,106 2,767 Other comprehensive income & expenditure - 4,284 (4,284)
242,015 275,369 (33,354) (33,354) Total Comprehensive Income & Expenditure 255,369 290,056 (34,687)
Further analysis of the CIES can be found within the segmental reporting analysis contained within Note 5.
The restated column for 2012/13 restates the CIES after incorporation of the changes introduced by the adoption of IAS 19 re Pensions. For further details regarding the Executive’s pension deficit please refer to Note 31.
Page 18164 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT FOR THE YEAR ENDED 31 MARCH 2014
2012/13 2013/14 Restated Gross Gross Net Net GROUP Gross Gross Net Notes Expenditure Income Expenditure Expenditure Expenditure Income Expenditure
£000 £000 £000 £000 £000 £000 £000
272,267 187,985 84,282 84,282 Highways & Transport Services 283,227 200,138 83,089 896 - 896 896 Corporate & Democratic core 2,190 461 1,729 3,106 - 3,106 3,274 Non distributed costs 5,125 16 5,109 276,269 187,985 88,284 88,452 Cost of Services 290,542 200,615 89,927 5
27,614 13,006 14,608 16,232 Financing & Investment income 17,325 1,583 15,742 - 141,440 (141,440) (141,440) Taxation & non specific Grant income - 142,464 (142,464) 303,883 342,431 (38,548) (36,756) (Surplus)/deficit on Provision of Services 307,867 344,662 (36,795)
1,295 - 1,295 1,295 Impairment of investments - - - 12,855 Remeasurements (liabilities & assets) - 7,606 (7,606) 14,647 - 14,647 - Actuarial (gains)/losses on pension assets/liabilities - - - 15,942 - 15,942 14,150 Other comprehensive income & expenditure - 7,606 (7,606)
319,825 342,431 (22,606) (22,606) Total Comprehensive Income & Expenditure 307,867 352,268 (44,401)
(Surplus)/deficit attributable to: (22,606) MITA (44,401) - Minority interests - (22,606) - Total (Surplus)/deficit (44,401)
Further analysis of the CIES can be found within the segmental reporting analysis contained within Note 5.
The restated column for 2012/13 restates the CIES after incorporation of the changes introduced by the adoption of IAS 19 re Pensions. For further details regarding the Executive’s pension deficit please refer to Note 31.
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 is useable 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. This category of reserves includes reserves that hold unrealised gains and losses (for example the Revaluation Reserve), where amounts would only become available to provide services if the assets are sold; and reserves that hold timing difference shown in the Movement in Reserves Statement line ‘Adjustment between accounting basis and funding basis under regulations’.
Internal Loans on the face of the Balance Sheet relate to surplus MPTE monies on lent to the ITA, interest free, to allow maximisation of funds to be invested short term on the money market. These are reversed upon consolidation.
Page19 165 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY BALANCE SHEET AS AT 31 MARCH 2014
As at As at
31/03/2013 31/03/2014 Note Authority Group Authority Group No. £000 £000 £000 £000 NON-CURRENT ASSETS
Property, Plant & Equipment: 4,843 4,843 Freehold Property 5,864 5,864 5,536 6,181 Leasehold Property 5,339 5,953 1,348 28,628 Vehicles, Plant, Furniture & Equipment, 1,630 29,508 272,404 350,318 Infrastructure Assets 276,409 352,946 - 893 Assets Under Construction - 893 74 593 Surplus Assets 74 593 284,205 391,456 Total PPE 289,316 395,757 15 450 835 Heritage assets 450 835 16 - 1,695 Intangible Assets: - 1,695 19 - - Investments - - 20 3,785 818 Long Term Debtors 3,657 798 24 288,440 394,804 TOTAL NON-CURRENT ASSETS 293,423 399,085
CURRENT ASSETS 90,225 90,225 Short-term investments 118,774 118,774 21 - - Assets Held for Sale - - 22 615 1,072 Inventories 622 1,038 23 9,494 24,698 Short Term Debtors 5,125 24,973 24 31,130 58,241 Cash and cash equivalents 261 36,170 25 131,464 174,236 TOTAL CURRENT ASSETS 124,782 180,955
419,904 569,040 TOTAL ASSETS 418,205 580,040
CURRENT LIABILITIES (11,379) (11,379) Short Term Borrowing (11,099) (11,099) 29 (67,403) (62,085) Short Term Creditors (45,334) (44,638) 26 (228) (467) Provisions (39) (600) 27 (79,010) (73,931) TOTAL CURRENT LIABILITIES (56,472) (56,337) 52,454 100,305 NET CURRENT ASSETS 68,310 124,618
NON-CURRENT LIABILITIES - (168) Long Term Creditors - (168) (605) (3,313) Provisions (1,993) (4,185) 27 (235,398) (235,398) Long Term Borrowing (224,299) (224,299) 29 (15,324) (83,968) Pension Liability (11,537) (78,738) 31 (9,101) (9,108) Other Long Term Liabilities (8,751) (8,759) (260,428) (331,955) TOTAL NON CURRENT LIABILITIES (246,580) (316,149) 80,466 163,154 NET ASSETS 115,153 207,554
FUNDS BALANCES & RESERVES
63,461 108,654 Useable Reserves 78,806 132,935 30 17,005 54,502 Unusable Reserves 36,347 74,622 30 - (2) Minority Interest - (2) 80,466 163,154 TOTAL RESERVES 115,153 207,555
The notes from page 26 onwards form part of these accounts.
Director Director 30 September 2014 30 September 2014
Page 20166 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY MOVEMENT IN RESERVES STATEMENT FOR THE YEAR ENDED 31 MARCH 2014
This statement shows the movement in the year on different reserves held by the Authority, analysed in to “useable” reserves (i.e. those that can be applied to fund expenditure or reduce the charge to local taxpayers, through the Levy) 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. The “Net Increase/Decrease before Transfers to Earmarked Reserves” line shows the statutory General Fund balance before any discretionary transfer to or from earmarked reserves.
Capital Total Pension Revaluation Deferred Financial Adjustment Total Group 2012/13 Revenue Earmarked Useable Reserve Reserve Capital Instruments Account Unusable Minority Total Reserves Reserve Reserves (Note 30) (Note 30) Grants (Note 30) (Note 30) Reserves Interest Reserves £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Bal b/f 1st April 2012 1,725 84,419 86,144 (70,315) 5,779 102,887 49 16,793 55,193 (789) 140,548 Movement in Reserves during 2012/13: - Surplus on the provision of services 36,756 - 36,756 ------36,756 Impairment of investments (1,295) (1,295) - (1,295) Remeasurements (liabilites & assets) (12,855) - - - - (12,855) (12,855)
Page 167 Page - - - Total comprehensive income & expenditure 35,461 - 35,461 (12,855) - - - - (12,855) - 22,606
Pensions charged to CIES (Note 31) 7,025 - 7,025 (7,025) - - - - (7,025) - Employers contribution (6,227) - (6,227) 6,227 - - - - 6,227 - Grants applied MITA revenue from capital ------Capital grants applied to PPE - (5,230) (5,230) - - 5,230 - - 5,230 - Release from reserves re depreciation 8,683 - 8,683 - (1,536) (4,057) - (3,090) (8,683) - Premiums/discounts re extinguished loans 13 - 13 - - - (13) - (13) - Capital expenditure charged to general fund (7,500) - (7,500) - - - - 7,500 7,500 - Statutory provision for financing charged to General fund (10,728) - (10,728) - - - - 10,728 10,728 - Disposal of assets held for sale - 1,800 1,800 - - (1,800) - - (1,800) - Adjustments between accounting basis and funding basis under regulations (Note 4) (8,734) (3,430) (12,164) (798) (1,536) (627) (13) 15,138 12,164 - - Net increase/(decrease) before transfers to earmarked funds 26,727 (3,430) 23,297 (13,653) (1,536) (627) (13) 15,138 (691) - 22,606 Transfers to/from earmarked funds Transfers to earmarked reserves (25,748) 24,961 (787) ------787 - Released from reserves ------Total transfers to/from earmarked funds (25,748) 24,961 (787) ------787 - Increase/(Decrease) in year 979 21,531 22,510 (13,653) (1,536) (627) (13) 15,138 (691) 787 22,606 Balance 31 March 2013 carried forward 2,704 105,950 108,654 (83,968) 4,243 102,260 36 31,931 54,502 (2) 163,154
21 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY MOVEMENT IN RESERVES STATEMENT FOR THE YEAR ENDED 31 MARCH 2014
Total Capital Useable Pension Revaluation Deferred Financial Adjustment Total Group 2013/14 Revenue Earmarked Reserves Reserve Reserve Capital Instruments Account Unusable Minority Total Reserves Reserve £000 (Note 30) (Note 30) Grants (Note 30) (Note 30) Reserves Interests Reserves £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Bal b/f 1st April 2013 2,704 105,950 108,654 (83,968) 4,243 102,260 36 31,931 54,502 (2) 163,154 Movement in Reserves during 2013/14: Surplus on the provision of services 36,795 - 36,795 ------36,795 Impairment of investments ------Remeasurements (liabilites & assets) - - - 7,606 - - - - 7,606 - 7,606
Total comprehensive income & expenditure 36,795 - 36,795 7,606 - - - - 7,606 - 44,401
Page 168 Page Pensions charged to CIES (note 31) 8,443 - 8,443 (8,443) - - - - (8,443) - - Employers contribution (6,067) - (6,067) 6,067 - - - - 6,067 - - Capital grants applied to PPE - (4,270) (4,270) - - 4,270 - - 4,270 - - Release from reserves re depreciation 8,235 - 8,235 - (403) (4,546) - (3,286) (8,235) - - Premiums/discounts re extinguished loans 14 - 14 - - - (14) - (14) - - Capital expenditure charged to general fund (8,609) - (8,609) - - - - 8,609 8,609 - - Statutory provision for financing charged to General fund (10,260) - (10,260) - - - - 10,260 10,260 - - Disposal of assets held for sale ------Adjustments between accounting basis and funding basis (8,244) (4,270) (12,514) (2,376) (403) (276) (14) 15,583 12,514 - - under regulations (Note 4) Net increase/(decrease) before transfers to earmarked funds 28,551 (4,270) 24,281 5,230 (403) (276) (14) 15,583 20,120 - 44,401 Transfers to/from earmarked funds Transfers to earmarked reserves ------Total transfers to/from earmarked funds ------Increase/(Decrease) in year 28,551 (4,270) 24,281 5,230 (403) (276) (14) 15,583 20,120 - 44,401 Balance 31 March 2014 carried forward 31,255 101,680 132,935 (78,738) 3,840 101,984 22 47,514 74,622 (2) 207,555
22 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY MOVEMENT IN RESERVES STATEMENT FOR THE YEAR ENDED 31 MARCH 2014
Capital Total Pension Revaluation Financial Adjustment Total MITA 2012/13 Revenue Earmarked Useable Reserve Reserve Instruments Account Unusable Total Reserves Reserve Reserves (Note 30) (Note 30) (Note 30) (Note 30) Reserves Reserves
£000 £000 £000 £000 £000 £000 £000s £000 £000
Bal b/f 1st April 2012 1,142 40,975 42,117 (12,242) 395 49 16,793 4,995 47,112 Movement in Reserves during 2012/13: Surplus on the provision of services 36,121 - 36,121 - - - - - 36,121 Remeasurements (liabilites & assets) - - - (2,767) - - - (2,767) (2,767) Total comprehensive income & expenditure 36,121 - 36,121 (2,767) - - - (2,767) 33,354
Pensions charged to CIES (note 31) 999 - 999 (999) - - - (999) - Employers contribution (684) - (684) 684 - - - 684 - Page 169 Page Release from reserves re depreciation 3,123 - 3,123 - (33) - (3,090) (3,123) - Premiums/discounts re extinguished loans 13 - 13 - - (13) . (13) - Capital expenditure charged to general fund (7,500) - (7,500) - - - 7,500 7,500 - Statutory provision for financing charged to General fund (10,728) - (10,728) - - - 10,728 10,728 - Capital grants received 8,900 8,900 - - - (8,900) (8,900) - Grants applied (8,900) (8,900) - - - 8,900 8,900 - Adjustments between accounting basis and funding basis (14,777) - (14,777) (315) (33) (13) 15,138 14,777 - under regulations (Note 4)
Net increase/(decrease) before transfers to earmarked funds 21,344 - 21,344 (3,082) (33) (13) 15,138 12,010 33,354 Transfers to/from earmarked funds Transfers to earmarked reserves (21,344) 21,344 ------Released from reserves ------Total transfers to/from earmarked funds (21,344) 21,344 ------Increase/(Decrease) in year - 21,344 21,344 (3,082) (33) (13) 15,138 12,010 33,354 Balance 31 March 2013 carried forward 1,142 62,319 63,461 (15,324) 362 36 31,931 17,005 80,466
23 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY MOVEMENT IN RESERVES STATEMENT FOR THE YEAR ENDED 31 MARCH 2014
Capital Total Pension Revaluation Financial Adjustment Total MITA 2013/14 Revenue Earmarked Useable Reserve Reserve Instruments Account Unusable Total Reserves Reserve Reserves (Note 30) (Note 30) (Note 30) (Note 30) Reserves Reserves £000 £000 £000 £000 £000 £000 £000 £000 £000
Bal b/f 1st April 2013 1,142 62,319 63,461 (15,324) 362 36 31,931 17,005 80,466 Movement in Reserves during 2013/14: Surplus on the provision of services 30,403 - 30,403 - - - - - 30,403 Remeasurements (liabilites & assets) - - - 4,284 - - - 4,284 4,284 Total comprehensive income & expenditure 30,403 - 30,403 4,284 - - - 4,284 34,687 ------Pensions charged to CIES (note 31) 1,201 - 1,201 (1,201) - - - (1,201) -
Page 170 Page Employers contribution (704) - (704) 704 - - - 704 - Release from reserves re depreciation 3,300 - 3,300 - (14) - (3,286) (3,300) - Premiums/discounts re extinguished loans 14 - 14 - . (14) - (14) - Capital expenditure charged to general fund (8,609) - (8,609) - - - 8,609 8,609 - Statutory provision for financing charged to General fund (10,260) - (10,260) - - - 10,260 10,260 - Capital grants received 12,910 12,910 - - - (12,910) (12,910) - Grants applied (12,910) (12,910) - - - 12,910 12,910 - Adjustments between accounting basis and funding basis under (15,058) - (15,058) (497) (14) (14) 15,583 15,058 - regulations (Note 4) Net increase/(decrease) before transfers to earmarked funds 15,345 - 15,345 3,787 (14) (14) 15,583 19,342 34,687 Transfers to/from earmarked funds Transfers to earmarked reserves (15,345) 15,345 ------Total transfers to/from earmarked funds (15,345) 15,345 ------Increase/(Decrease) in year - 15,345 15,345 3,787 (14) (14) 15,583 19,342 34,687
Balance 31 March 2014 carried forward 1,142 77,664 78,806 (11,537) 348 22 47,514 36,347 115,153
The notes from page 26 onwards form part of these accounts.
24 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2014
The Cash flow statement shows the changes in cash and cash equivalents of the Authority during the reporting period. The statement shows how the Authority generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of the extent to which the operations of the Authority are funded by way of grant income or from the recipients of services provided by the Authority. Investing activities represent the extent to which cash outflows have been made for resources which are intended to contribute to the Authority’s future service delivery. Cash flows arising from financing activities are useful in predicting claims on future cash flows by providers of capital (i.e. borrowing) to the Authority.
2013 2014 Note No Authority Group Authority Group £000 £000 £000 £000 Operating Activities (36,460) (38,548) Net (Surplus)/Deficit on the provision of services (30,403) (36,795)
Adjustments to net surplus or deficit on the provision of services for non cash movements
(3,526) (11,039) Depreciation and impairment of property, plant and (3,508) (8,655) equipment 218 4,326 (Increase)/Decrease in trade and other receivables (4,369) 275 207 101 (Increase)/Decrease in inventories 7 (33) (16,755) (22,714) Increase/(Decrease) in trade and other payables 15,647 18,725 33 526 Movement in Provisions (1,199) (1,005)
Adjustments for items included in the net surplus or deficit on the provision of services that are investing and financing activities:
Difference between pension contributions paid and the - - - - amounts recognised in the income statement 24 994 Transfer from pension reserve (497) (2,376) - - Gain on sale of property plant and equipment - - - (21) Gain/Loss on available-for-sale assets - - - - Revaluation of Non Current assets - -
(56,259) (66,375) Net cash flow from operating activities (24,322) (29,864) 25
Investing Activities 7,696 13,029 Purchase of property, plant and equipment and 7,714 12,050 intangible assets - (1,779) Proceeds from sale of assets held for sale (23) (23) 42,988 42,988 Purchase of short term and long term investments 28,549 28,549 - - Loans Advanced - - (123) (19) Loans Repaid (128) (20) 50,561 54,219 Net cash flows from investing activities 36,112 40,556
Financing Activities (3,200) - Internal loan from PTE - - - - Repayment of internal loan to PTE 7,700 - 11,282 11,282 Repayment of short term and long term borrowing 11,379 11,379 8,082 11,282 Net cash flows from financing activities 19,079 11,379
Net (increase)/decrease in cash and cash 2,384 (874) 30,869 22,071 equivalents (33,514) (57,367) Cash and cash equivalents as at 1 April (31,130) (58,241)
(31,130) (58,241) Cash and cash equivalents as at 31 March (261) (36,170)
Page25 171 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 1. Summary of Significant Accounting Policies
The accounts have been prepared in accordance with the Accounts and Audit Regulations 2011, and the Code of Practice on Local Authority Accounting in the United Kingdom 2013/14 (The Code).
The financial statements were authorised for issue by the directors on Monday 30 June 2014. The Director of Resources (Section 151 Officer) has on 30 June 2014, authorised that this Statement of Accounts should be issued for distribution. This is the date up to which events after the balance sheet date have been considered.
Basis of Preparation
The consolidated financial statements have been prepared on a historical cost basis modified by the revaluation of certain categories of non-current assets and financial instruments.
Compliance with the IFRS-based Code
The Authority’s Statement of Accounts has been prepared in accordance with The Code. Where sufficient detail is not provided in The Code, MITA makes reference to International Financial Reporting Standards in order to account for certain transactions.
Group Accounts and Basis of Consolidation
The consolidated financial statements comprise the accounts of the Authority, Merseyside Passenger Transport Executive and its subsidiary and associated undertakings as at 31 March 2014, which are listed in note 20.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. They are fully consolidated from the date that Authority obtains control, until the date that such control ceases. Uniform accounting policies as set out below are used in the preparation of the group accounts.
Intra-group transactions during the year and balances as at the end of the year are eliminated in the group accounts.
Interests in subsidiaries and unlisted equity interests
The Authority’s interests in its subsidiaries and unlisted equity interests are all held through MPTE.
The initial fair value of the Group’s unlisted equity interests is based on cost. As the fair value of the equity interest cannot be measured reliably at the end of each year, the cost is estimated at its initial fair value and subsequently reduced by any impairment loss.
Income and expenditure
Grant and other funding income is recognised where there is reasonable assurance that the income will be received and all attached conditions have been complied with.
Expenditure and income is accounted for in the period it takes place, not when cash is received or paid. Income and Expenditure excludes VAT as all VAT collected is payable to HM Revenue & Customs and all VAT paid is recoverable from it.
Government Grants and Contributions
Where the acquisition of a piece of property plant and equipment is financed either wholly or in part by a government grant or other contribution, the amount of the grant or contribution is recognised in full in the income and expenditure statement. Subsequently, depreciation is charged on the asset to which it relates.
The Department for Transport provides a Special Rail Grant to the Authority to prevent the extra costs of rail privatisation falling upon the Council Taxpayer. This grant is paid to the Executive to finance liabilities arising from two rail franchise agreements made in accordance with the Railways Act 1993.
Page 26172 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 1 Summary of Significant Accounting Policies (continued)
Lease Income
Rentals receivable under operating leases are credited to income as they arise. Any premiums or incentives within the lease are recognised within income on an equal basis over the term of the lease.
Lease expenditure
Rentals paid under operating leases are charged to expenditure on a straight line basis over the term of the lease. Lease incentives are recognised over the lease term on a straight line basis. See Note 34 for fuller details on Authority and Group leases.
Accounting for the costs of the Carbon Reduction Commitment scheme (CRC)
The Authority is required to participate in the CRC energy efficiency scheme. This scheme is currently in its introductory phase, which lasts until 31 March 2014. The Authority is required to purchase and surrender allowances, currently retrospectively, on the basis of emissions (i.e. carbon dioxide produced) as energy is used. As emissions occur a liability and an expense are recognised. This liability is discharged by surrendering allowances. The liability is measured as the best estimate, normally at the current market price of the number of allowances required to meet any additional liability at the reporting date. The cost (estimated at £120k) is recognised and reported in the cost of services, and is apportioned to services on the basis of energy consumption.
Property, Plant and Equipment
Recognition: Expenditure on the acquisition, creation or enhancement of Property, Plant and Equipment is capitalised on an accruals basis, provided that it is probable that future economic benefits or service potential associated with the asset flow to the Executive or Group and the cost of the item can be measured reliably. General repair and maintenance costs are recognised in the statement of comprehensive income and expenditure in the period in which they are incurred. Measurement: Assets are initially measured at cost comprising the purchase price, 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 and the initial estimate of the costs of dismantling and disposal of the asset where considered material.
Subsequently assets are carried in the Balance Sheet using the following measurement bases:
Infrastructure and assets under construction are measured at depreciated historical cost as required by the code; such costs may include the costs of replacing significant portions of the asset, upon which the portion being replaced is immediately derecognised. The Mersey Tunnels are classified as infrastructure. Non-operational assets and assets that are surplus to requirements are included in the balance sheet at the lower of net current replacement cost and net realisable value. In the case of investment properties, this is normally open market value; All other classes of property, plant and equipment are measured at fair value. If there is no market-based evidence of fair value because of the specialist nature of the asset, the fair value is estimated using a depreciated replacement cost approach.
The majority of fixed assets with a value of £7,500 (i.e. de-minimis threshold for capitalisation purposes) or more were valued, during a quinquennial valuation, as at 31 March 2009. A further valuation for insurance purposes was carried out in March 2014.
Surpluses arising on the valuation of fixed assets are credited to the fixed asset revaluation reserve. Subsequent revaluations of fixed assets are planned at five yearly intervals, although material changes to asset valuations will be adjusted in the interim period, as they occur. The directors are not aware of any material changes to the asset values since the date of revaluation.
Componentisation: The major components of the Group’s assets have been identified and are depreciated separately. Assets with comparable useful economic lives are categorised together and are subject to a consistent method of depreciation.
Page27 173 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 1 Summary of Significant Accounting Policies (continued)
Depreciation: Depreciation is provided on all assets with finite useful lives by the systematic allocation of their depreciable amounts over their useful lives using the reducing balance method. That portion of depreciation related to any revaluation gain is transferred from the Revaluation Reserve to the Capital Adjustment Account.
Impairment: Annual reviews are made of the estimated remaining life and current carrying amount of assets, ensuring that significant assets are reviewed annually and other assets are reviewed at least every three years. Adjustments to the carrying amount, or remaining useful life, are made where necessary. See impairment of non-financial assets below
Disposals: An item of property, plant and equipment is derecognised upon disposal, replacement or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition (calculated as the difference between the net disposal proceeds and the carrying amount) is included in the income statement in the year the item is derecognised, offset by the write-back of any related unamortised grant funding that has been received.
Capital expenditure and capital financing
Capital project grants are recognised as income in the period in which they are received. Expenditure is classified as assets under construction. Upon the assets becoming available for use, the expenditure is categorised to the appropriate class of property, plant and equipment and depreciated from the following month. In the event that capital expenditure does not directly result in an operational asset, the costs are recognised within the Statement of Income and Expenditure as Revenue Expenditure Funded from Capital.
Heritage Assets – FRS30
These assets are intended to be preserved in trust for future generations because of their cultural, environmental or historical associations. The Authority holds heritage assets at their valuation based upon an external valuation in March 2014 by the District Valuers Service (see Note 16).
Assets held for sale
Non-current assets are classified as held for sale, and measured at the lower of carrying amount and fair value less costs to sell, if their value will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition, and management is committed to the sale, which is expected to complete within one year.
Property, plant and equipment classified as held for sale are not depreciated.
The Authority holds no assets that meet these criteria as at 31 March 2014.
Page 28174 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
1 Summary of Significant Accounting Policies (continued)
Impairment of non-financial assets
The Authority assesses each year whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Authority estimates the asset's recoverable amount, which is the higher of its fair value less costs to sell, and its value in use. It is determined for an individual asset, unless it doesn’t generate cash inflows independently from other assets.
Where the carrying amount of an asset exceeds its recoverable amount, the asset is impaired down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted at a rate reflecting the Authority’s current assessment of its average borrowing rates. In determining fair value less costs to sell, an appropriate valuation model is used. The calculations are reviewed where possible against other available indicators.
Impairment losses are recognised in the Income and Expenditure Statement in those expense categories consistent with the function of the asset, except for property previously revalued where the revaluation was taken to reserves. In this case the impairment is also recognised in reserves up to the amount of any previous revaluation.
An assessment is also made each year whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been previously recognised. Such reversal is recognised in the Income and Expenditure Statement unless the asset is carried at re valued amount, in which case the reversal is treated as a revaluation increase.
Goodwill
Business combinations have been accounted for under IFRS 3 using the purchase method. Any excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised in the Statement of Financial Position as goodwill and is not amortised.
After initial recognition, goodwill is stated at cost less any accumulated impairment losses, with the carrying value being reviewed for impairment, at least annually and whenever events or changes in circumstances indicate that the carrying value may be impaired.
For the purpose of impairment testing, goodwill is allocated to the related cash-generating units monitored by management, usually at operating segment level or, if smaller, statutory company level. Where the recoverable amount of the cash-generating unit is less than its carrying amount, including goodwill, an impairment loss is recognised in the income statement.
The carrying amount of goodwill allocated to a cash-generating unit is taken into account when determining the gain or loss on disposal of the unit, or of an operation within it.
The Authority has taken advantage of the option under the first time adoption provision of The Code to use the brought forward value of goodwill as at 1 April 2009 as an appropriate approximation of fair value.
Inventories
Inventories are carried at the lower of cost (including costs incurred in bringing the inventory to its present location, such as freight) and net realisable value, determined on a first in first out basis.
Page29 175 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 1 Summary of Significant Accounting Policies (continued)
Financial Assets
Financial assets are classified at initial recognition as loans, cash and cash equivalents (short term deposits) or receivables in accordance with IAS 39 (The Code Chapter 7.3), and recognised at cost. The Authority has not designated any financial assets as at fair value through profit or loss. The Authority’s financial assets include cash, short-term deposits, trade and other receivables. Financial assets are derecognised when the appropriate cash flows have been received, or when the rights to receive cash flows from the asset have expired.
Subsequent measurement depends on their classification as follows:-
Cash and cash equivalents: cash and short term deposits in the Statement of Financial Position comprise of cash at bank and in hand and short-term deposits with an initial maturity of 90 days or less. For the purpose of the consolidated cash flow statement, cash and cash equivalents are as defined above, net of outstanding bank overdrafts.
Loans and deposits: Consist of non-derivative financial assets with fixed or determinable payments not quoted in an active market. Such assets are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in the Income and Expenditure Statement when the assets are amortised, derecognised or impaired.
Trade and other receivables: recognised and carried at invoice or contract value less an allowance for any amounts which may not be collectable. Should an amount become uncollectable, it is written off to the income statement in the period in which it is recognised.
Impairment of financial assets: the Authority assesses at each period end whether there is any evidence that a financial asset, or group of assets, is impaired. Financial assets are impaired if, and only if, there is objective evidence of one or more events that will negatively impact future expected cash flows, and the impact can be reliably estimated. Objective evidence may be that a debtor is experiencing financial difficulty to the extent that cash flows are, or are likely to be, negatively impacted. If such objective evidence exists, then the financial asset is impaired to the extent of the present value of estimated cash flow shortfall. The amount of the allowance for impairment is recorded separately to the asset, and written off against income.
Financial Liabilities
Financial liabilities are classified at initial recognition as loans and borrowings in accordance with IAS 39 (The Code Chapter 7.2), and recognised at cost. The Authority has not designated any financial liabilities as at fair value through profit or loss. The Authority’s financial liabilities include short term creditors, loans and other payables, and bank overdraft. Financial liabilities are derecognised when the appropriate cash flow obligations have been discharged, expired or otherwise cancelled.
Subsequent measurement depends on their classification as follows:
Loans and borrowings: non-derivative financial liabilities with fixed or determinable payments not quoted in an active market. This includes residual debt inherited on restructuring of local government in Merseyside. Such interest-bearing liabilities are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in the Income and Expenditure Statement when the liabilities are amortised, derecognised or impaired.
Trade and other payables: recognised and carried at invoice or contract value. Should an amount become non-payable, it is written back to the Statement of Income and Expenditure in the period in which it is recognised.
Finance leases: refer to other information below.
Offsetting of Financial Assets and Liabilities
Financial assets and liabilities are offset, and the net amount reported in the Balance Sheet, if and only if there is an enforceable legal right to offset, and there is an intention to settle on a net basis in order to realise the assets and discharge the liabilities simultaneously.
Page 30176 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 1 Summary of Significant Accounting Policies (continued)
Debtors Receivables are considered both individually and collectively for impairment and provision is made for all overdue receivables. Where the actual amount has not yet been determined, the amount due has been estimated on the basis of the latest available information.
Provisions, contingent liabilities and contingent assets
Provisions are recognised when the Authority has a present, legal or constructive obligation as a result of a past event which makes it probable that a transfer of economic benefits will be required to settle the obligation and a reliable estimate can be made of its amount.
Where the Authority expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset only if the reimbursement is highly probable.
The expense relating to any provision is recognised in the income statement net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a rate reflecting the Authority’s current assessment of its average borrowing rates.
A contingent asset arises where an event has taken place that gives a possible asset whose existence will only be confirmed by the occurrence of future uncertain events, not wholly within the control of the Executive. Contingent assets are not recognised in the balance sheet, but disclosed in a note to the accounts where it is probable that there will be an economic benefit or service potential.
A contingent liability arises where an event has taken place that gives rise to a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Executive. Contingent liabilities are not recognised in the balance sheet but disclosed in a note to the accounts.
Pensions
The Authority participates in a defined benefit pension scheme, the assets of which are held separately in an independently administered fund. The funds are valued every three years by a professionally qualified independent actuary.
The employees of the Authority are members of a Local Government Superannuation Scheme: The Merseyside Pension Fund.
The accounting policy in this area has changed as a result of the Code’s adoption of the 2011 amendments to IAS 19 and IAS 1. This change requires the recognition within the financial statements of a number of new classes of components of defined benefit costs – net interest on the net defined benefit liability (asset) and re measurement of the net defined liability (asset): and where there is a material impact, new definitions of recognition criteria for termination benefits. Therefore, our reporting reflects the enhanced disclosure. The Authority concludes that there is no material impact of the revised accounting treatment.
The cost of providing benefits under the defined benefit plans is determined using the projected unit credit method, which attributes entitlement to benefits to the current period (to determine current service cost) and to the current and prior periods (to determine the present value of defined benefit obligation) and is based on actuarial advice. Past service costs are recognised in profit or loss on a straight-line basis over the vesting period or immediately if the benefits have vested.
When a settlement (eliminating all obligations for benefits already accrued) or a curtailment (reducing future obligations as a result of a material reduction in the scheme membership or a reduction in future entitlement) occurs, the obligation and related plan assets are re measured using current actuarial assumptions and the resultant gain or loss recognised in the income statement during the period in which the settlement or curtailment occurs.
The interest element of the defined benefit cost represents the change in present value of scheme obligations resulting from the passage of time and is determined by applying the discount rate to the
Page31 177 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 1 Summary of Significant Accounting Policies (continued)
opening present value of the benefit obligation, taking into account material changes in the obligation during the year. The expected return on plan assets is based on an assessment made at the beginning of the year of long-term market returns on scheme assets, adjusted for the effect on the fair value of plan assets of contributions received and benefits paid during the year. The difference between the expected return on plan assets and the interest cost is recognised in the income statement as other finance revenue or cost.
Remeasurements of both assets and liabilities are recognised in full in other comprehensive income in the period in which they occur.
Pension costs have been charged to the CIES in line with IAS 19 (The Code Chapter 6.4) (Employee Benefits). The effect of transfers in the movement in reserves is that the general fund is charged with the employers contributions with the balance between this and the amount charged to the CIES being charged or credited to the Pension Reserve. For fuller information regarding Pensions please refer to Note 31.
Revenue Expenditure Funded from Capital under Statute
These charges represent expenditure which is capital in nature but which does not represent property plant and equipment and therefore written off in the year. They principally comprise works carried out on land and buildings in which the group does not have an interest (e.g. signage and bus stops).
Charges shown in the Authority’s accounts represent capital grants for such works to the Executive.
Prudential borrowing
A significant proportion of capital expenditure is financed by borrowing. Provision for the redemption of debt is made in accordance with the Minimum Revenue Provision (MRP) requirements under the Local Government Act 2003. The Authority has resolved to limit its debt repayment to the MRP level, calculated as 4% of the Authority’s Capital Financing Requirement, and to re-borrow any additional contractual repayments.
Supported borrowing is used to partly finance capital expenditure and to reduce contractual repayments to minimum revenue provision level requirements under the Local Government Act 2003.
The Authority has resolved that the annual charges arising from prudential borrowing should not be charged to Local Council Tax and are therefore met from sources other than the approved levy. Efforts are made each year to ensure that a budgetary savings programme is in place to at least offset the cost of prudential borrowing.
Mersey Tunnels are charged with depreciation representing a capital charge for all plant used in the provision of services.
Amounts set aside from revenue for the repayment of external loans, to finance capital expenditure or as transfers to other earmarked reserves are disclosed separately as movements within the MIRS.
Revaluation Reserve and Capital Adjustment Account
Revaluation decreases are written off to the Revaluation Reserve only where there is a positive balance on the reserve in relation to the specific asset against which the decrease can be applied. Where there is no such balance or the decrease exceeds the balance the difference is charged to the Income and Expenditure account. As legislation does not permit revaluation losses to be charged to the General Fund, the charge is reversed by crediting the General Fund balance and debiting the Capital Adjustment Account.
Capital Receipts
Capital receipts, which are receipts from the disposal of capital assets, are generally utilised in the year in which they are received. The useable part of the capital receipts is used to finance new capital expenditure.
Page 32178 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 1 Summary of Significant Accounting Policies (continued)
Overhead and Support Service Allocation In line with best practice, charges for the cost of central support services are fully charged or apportioned to those that benefit from the supply of service, using time recording and other methods. A proportion of these costs are recharged to the Authority by the Executive.
Prior Period Adjustments, Changes in Accounting Policy and Estimates and Errors Prior period adjustments may arise as a result in a change in accounting policies or to correct a material error. Changes in accounting estimates are accounted for prospectively, i.e. in the current and future years by the change and do not give rise to a prior period adjustment.
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, or other events and conditions on the Authority’s financial position or financial performance.
Where a change is made, it is applied retrospectively (unless stated otherwise) by adjusting opening balances and comparative amounts for the prior period as if the new policy had always been applied. Material errors discovered in the prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period.
Reserves Reserves are classified as Useable (identified and maintained for specific future purpose), or Unuseable (retained to manage the accounting processes for non -current assets and retirement and employee benefits) and do not represent useable resources for the Authority.
Tunnels Surplus/Deficit
The Tunnels Act 2004 permits the Authority to raise tolls in line with the RPI Index. Should a surplus arise, powers exist that allow the Authority to utilise those surpluses by transferring monies into the Authority’s General Fund for LTP purposes.
Events after the Balance Sheet Date Events after the balance sheet date are those events, favourable and unfavourable, that occur between the end of the reporting period and the date when the statement of accounts are authorised for issue. Two types of event can be identified: Those that existed at the end of the reporting period – the accounts are amended to reflect these events Those that arose after the end of the reporting period – the accounts are not amended to include these, but should they have a material effect upon the accounts, disclosure is made in the accounts as to their nature and estimated financial impact
Exceptional Items When items of income and expense are material, their nature and amount is disclosed separately, either on the face of the CIES or in the notes to the accounts, depending on how significant the items are to an understanding of the Authority’s financial performance.
2. Accounting standards that have been issued but have not yet been adopted
The following accounting standards have been issued but not yet adopted:
IFRS13 – Fair Value Measurement IFRS10 – Consolidated Financial Statements issued In May 2011 has minimal impact upon the financial statements IFRS 11 – Joint Arrangements issued in May 2011 has minimal impact upon the financial statements IFRS 12 – Disclosure of Interests in Other Entities issued in May 2011 has minimal impact upon the financial statements IAS 27 Separate Financial Statements amended in May 2011 has minimal impact upon the financial statements IAS 28 Investments in Associates and Joint Ventures as amended n May 2011 has minimal impact upon the financial statements
Page33 179 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 IAS 32 Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities as amended December 2011 has minimal impact upon the financial statements
3. Significant accounting judgements, estimates and assumptions
The preparation of the Authority’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities at the reporting date.
Judgements
In the process of applying the Authority’s accounting policies, management has made the following judgements which have the most significant effect on the amounts recognised in the consolidated financial statements:
Operating leases: the Authority has various commercial property leases to let out property units to third parties. The Authority has determined that, based on an evaluation of the lease terms and Conditions, that it retains all the significant risks and rewards of ownership and so accounts for the leases as operating leases.
Estimates and Assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the period end, that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are listed below.
Property revaluation: The Authority measures some other assets at re valued amounts with any changes being recognised within reserves. Periodically, external surveyors are used and the last independent survey was carried out at March 2014. Between independent surveys, reviews are carried out by internal but qualified staff. Such valuations and any attached estimates are subject to some sensitivity.
IT Asset Valuations and Depreciation: depreciated historical cost is used as a proxy for fair value due to the relatively short useful economic life of IT assets.
Pension benefits: the cost of defined benefit pension plans is determined using independent actuarial valuation, involving the use of assumptions about discount rates, returns on assets, future salary increases, mortality rates and future pension increases. Such assumptions are reviewed at each period end and determined jointly between the pension fund management and the actuaries.
Provision for Bad Debts: debts are provided for as follows:-
• 100% for any debts over 12 months old • Any debts where information indicates recoverability is in doubt.
Provisions: Provisions set out in note 18 are based on management’s best estimate of the amount and timing of liabilities. .
Page 34180 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 4. 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: 2013/14 General Other Unusable Total Group Fund Usable Reserves Reserves Balance Reserve £000s £000s £000s £000s Adjustments primarily involving the Capital Adjustment Account: Reversal of items debited or credited to the Income and Expenditure Statement: Charge for depreciation and impairment of non-current assets (8,235) - 8,235 - Capital grants and contributions applied 13,556 - (13,556) - Revenue Expenditure Funded from Capital under Statute (13,556) - 13,556 - Amounts of non-current assets written off on disposal or sales as part of the gain/loss on disposal. - - - Capital Grants applied to PPE - 4,270 (4,270) - Insertion of items not debited or credited to the income and Expenditure Statement: - Adjustments primarily involving CIES - Statutory provision for the financing of capital investment 10,260 - (10,260) - Capital expenditure charged against the General Fund 8,609 - (8,609) - Adjustments primarily involving the Pensions Reserve - Pension costs charged to CIES (Note 31) (8,443) - 8,443 - Employer’s pensions contributions and direct payments 6,067 (6,067) - Adjustments primarily involving the Financial Instruments Adjustment Account: - Amount by which finance costs charged to the Income and Expenditure statement are different from finance costs chargeable in the year in accordance with statutory requirements (14) - 14 - Total Adjustments 8,244 4,270 (12,514) -
2012/13 General Other Unusable Total Group Fund Usable Reserves Reserves Balance Reserves £000s £000s £000s £000s Adjustments primarily involving the Capital Adjustment Account Reversal of items debited or credited to the Income and Expenditure Statement: Charge for depreciation and impairment of non-current assets (8,683) - 8,683 - Capital grants and contributions applied 13,814 - (13,814) - Revenue Expenditure Funded from Capital under Statute (13,814) 13,814 - Capital Grants applied to PPE - - - Amounts of non-current assets written off on disposal or sales as part (1,800) 1,800 - of the gain/loss on disposal. Capital Grants applied to PPE 5,230 (5,230) - Insertion of items not debited or credited to the income and - Expenditure Statement: Adjustments primarily involving the CIES - Statutory provision for the financing of capital investment 10,728 - (10,728) - Capital expenditure charged against the General Fund 7,500 - (7,500) - Adjustments primarily involving the Pensions Reserve - Pension costs charged to CIES (Note 31) (7,025) - 7,025 - Employer’s pensions contributions and direct payments 6,227 - (6,227) - Adjustments primarily involving the Financial Instruments Adjustment - Account Amount by which finance costs charged to the Income and Expenditure statement are different from finance costs chargeable in the year in (13) - 13 - accordance with statutory requirements Total Adjustments 8,734 3,430 (12,164) -
Page35 181 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 4 Adjustments between accounting basis and funding basis under regulations (continued) 2013/14
Authority General Other Unusable Total Fund Usable Reserves Reserves Balance Reserve £000s £000s £000s £000s Adjustments primarily involving the Capital Adjustment Account: Reversal of items debited or credited to the Income and Expenditure Statement: Charge for depreciation and impairment of non-current assets (3,286) - 3,286 - Revaluation losses on Property, Plant and Equipment - (14) 14 - Capital grants and contributions applied 12,910 - (12,910) - Revenue Expenditure Funded from Capital under Statute (12,910) - 12,910 - Insertion of items not debited or credited to the income and Expenditure Statement: - Adjustments primarily involving CIES: - Statutory provision for the financing of capital investment 10,260 - (10,260) - Capital expenditure charged against the General Fund 8,609 - (8,609) - Adjustments primarily involving the Pensions Reserve - Pension costs charged to CIES (Note 31) (1,201) - 1,201 - Employer’s pensions contributions and direct payments 704 (704) - Adjustments primarily involving the Financial Instruments Adjustment Account: - Amount by which finance costs charged to the Income and Expenditure statement are different from finance costs chargeable in the year in accordance with statutory requirements (14) - 14 - Total Adjustments 15,072 (14) (15,058) -
2012/13
Authority General Fund Other Usable Unusable Total Balance Reserve Reserves Reserves
£000s £000s £000s £000s Adjustments primarily involving the Capital Adjustment Account Reversal of items debited or credited to the Income and Expenditure Statement: Charge for depreciation and impairment of non-current assets (3,090) - 3,090 - Revaluation losses on Property, Plant and Equipment (33) 33 Capital grants and contributions applied 8,900 - (8,900) - Revenue Expenditure Funded from Capital under Statute (8,900) 8,900 - Insertion of items not debited or credited to the income and Expenditure Statement: - Adjustments primarily involving CIES - Statutory provision for the financing of capital investment 10,728 - (10,728) - Capital expenditure charged against the General Fund 7,500 - (7,500) - Adjustments primarily involving the Pensions Reserve - Pension cost charged to CIES (Note 31) (999) - 999 - Employer’s pensions contributions and direct payments 684 (684) - Adjustments primarily involving the Financial Instruments Adjustment Account - Amount by which finance costs charged to the Income and Expenditure statement are different from finance costs chargeable in the year in accordance with statutory requirements (13) - 13 -
Total Adjustments 14,810 (33) (14,777) -
Page 36182 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 5. Amounts Reported for Resource Allocation Decisions (Segmental Reporting)
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 for Local Authorities. However, decisions about resource allocation are taken by the Authority on the basis of budget reports analysed across business areas. These reports are prepared on a different basis from the accounting policies used in the financial statements.
For management purposes, the Authority is organised into business units based on operational areas and has the following reportable segments in the table below.
No operating segments have been aggregated to form the reportable operating segments. Segment revenue, segment expense and segment result include transfers between business segments. Those transfers are eliminated in consolidation.
The income and expenditure of the Authority’s principle reporting packs for management for the year is as follows:
2012/13 2013/14 Restated Exp Income Net Net MITA Exp Income Net £’000 £’000 £’000 £’000 £’000 £’000 £’000
37,025 37,709 (684) (684) Mersey Tunnels 39,503 40,207 (704) 3,288 3,288 - - Headquarters 4,281 4,281 - (1,640) 9,317 (10,957) (11,345) Funds Management 1,852 13,141 (11,289) (9,317) (9,317) - - Inter-Dept Charges (13,399) (13,399) - (7,509) - (7,509) (7,509) Capital expenditure charged to Mersey Tunnels (7,119) - (7,119) - - - 407 Pensions current service /curtailment costs 561 561 190,072 - 190,072 190,072 Grant to PTE; Revenue Support 198,910 - 198,910 8,900 - 8,900 8,900 Grant to PTE; Capital 12,910 - 12,910 220,819 40,997 179,822 179,841 Highways & Transportation 237,499 44,230 193,269
896 - 896 896 Corporate and Democratic Core 2,190 461 1,729 896 - 896 896 Corporate & Democratic Core 2,190 461 1,729 - - - 9 Pensions -Admin expenses 11 - 11 24 10 14 14 Transfer to Provisions 1,232 16 1,216
24 10 14 14 Non Distributed costs 1,243 16 1,227
221,739 41,007 180,732 180,751 Cost of Services 240,932 44,707 196,225
- - - 583 Pensions – net interest costs 629 - 629 2,425 2,162 263 - Pensions – return on assets /interest costs - - - 14,745 1,813 12,932 12,932 Interest receivable and payable 13,808 1,535 12,273
17,170 3,975 13,195 13,515 Financing & Investment Income 14,437 1,535 12,902 - 13,814 (13,814) (13,814) Other income - 13,556 (13,556) - - - - Use of reserves - - - - 127,364 (127,364) (127,364) Levy - 127,364 (127,364) - 89,209 (89,209) (89,209) SRG - 98,610 (98,610) - 230,387 (230,387) (230,387) Taxation & Non specific Grant Income - 239,530 (239,530)
238,909 275,369 (36,460) (36,121) (Surplus)/Deficit on Provision of Services 255,369 285,772 (30,403)
The restated column for 2012/13 restates the CIES after incorporation of the changes introduced by the adoption of IAS 19 re Pensions. For further details regarding the Executives pension deficit, please refer to Note 31.
Page37 183 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
5 Amounts Reported for Resource Allocation Decisions (Segmental Reporting) (continued)
2012/13 2013/14 Restated Exp Income Net Net GROUP Exp Income Net £’000 £’000 £’000 £’000 £’000 £’000 £’000
37,025 37,709 (684) (684) Mersey Tunnels 39,503 40,207 (704) 28,118 9,111 19,007 19,007 Bus Services 29,425 10,528 18,897 109,731 108,376 1,355 1,355 Rail Services 117,356 117,690 (334) 81,828 26,528 55,300 55,300 Concessionary Travel 82,461 26,689 55,772 7,999 1,712 6,287 6,287 Hubs 8,652 2,304 6,348 11,905 8,420 3,485 3,485 MFL Group 9,883 8,603 1,280 5,799 9,417 (3,618) (3,618) Funds Management 10,425 13,241 (2,816) (39,356) (39,356) - - Inter Dept Charges (42,946) (42,946) - - - - 3,652 Pensions current service /curtailment costs 4,945 - 4,945 (7,509) - (7,509) (7,509) Capital expenditure charged to Mersey Tunnels (7,119) - (7,119) 36,727 26,068 10,659 7,007 Other Services 30,642 23,822 6,820 272,267 187,985 84,282 84,282 Highways & Transportation 283,227 200,138 83,089
896 - 896 896 Corporate and democratic core 2,190 461 1,729 896 - 896 896 Corporate & Democratic Core 2,190 461 1,729
200 - 200 200 Transfer to Provisions 1,407 16 1,391 2,906 - 2,906 3,074 Pensions special contributions 3,718 - 3,718
3,106 - 3,106 3,274 Non Distributed costs 5,125 16 5,109
276,269 187,985 88,284 88,452 Cost of Services 290,542 200,615 89,927
12,861 11,193 1,668 - Pensions – return on assets /interest costs - - -
3,292 Pensions – net interest costs 3,400 - 3,400 14,745 1,813 12,932 12,932 External interest 13,808 1,583 12,225 8 - 8 8 Taxation & Non specific Grant Income 117 - 117 27,614 13,006 14,608 16,232 Financing & Investment Income 17,325 1,583 15,742 - 13,814 (13,814) (13,814) Other income - 13,556 (13,556) - 262 (262) (262) Grants - 1,544 (1,544) - - - - Use of reserves - - - 127,364 (127,364) (127,364) Levy - 127,364 (127,364) - 141,440 (141,440) (141,440) Taxation & Non specific Grant Income - 142,464 (142,464)
303,883 342,431 (38,548) (36,756) (Surplus)/Deficit on Provision of Services 307,867 344,662 (36,795)
The restated column for 2012/13 restates the CIES after incorporation of the changes introduced by the adoption of IAS 19 re Pensions. For further details regarding the Executives pension deficit, please refer to Note 31.
Page 38184 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 5 Amounts Reported for Resource Allocation Decisions (Segmental Reporting) (continued)
(a) Analysis of 2014 principal directorates
Group 2014 Inter departmental Cost of Prepaid and Ferry and charges, Non services Mersey Bus Rail concessionary tourism Other Total depreciation distributed reported in Tunnels services services travel services Services segments and pensions costs CIES
£000's £000's £000's £000's £000's £000's £000's £000's £000's £000's Fees charges and service income 40,207 10,528 19,080 26,689 7,903 39,844 144,251 ( 42,946) - 101,305 Government grant income - - 98,610 - - - 98,610 - - 98,610 Other grant income - - - - 700 - 700 - - 700 Total income 40,207 10,528 117,690 26,689 8,603 39,844 243,561 ( 42,946) - 200,615
Franchises and operators - 24,508 97,188 80,961 - 202,657 202,657 Support services 6,638 1,920 8,076 1,500 1,616 19,750 19,750 Depreciation and impairment ------8,226 8,226 Pension costs ------3,718 3,718 Other expenses 32,865 2,997 12,092 - 8,267 56,870 113,091 ( 58,291) 1,391 56,191 Total expenditure 39,503 29,425 117,356 82,461 9,883 56,870 335,498 ( 50,065) 5,109 290,542
Surplus/(Deficit) - cost of services 704 ( 18,897) 334 ( 55,772) ( 1,280) ( 17,026) ( 91,937) 7,119 ( 5,109) ( 89,927)
(b) Analysis of 2013 principal directorates
Group 2013 Inter departmental Cost of Prepaid and Ferry and charges, Non services Mersey Bus Rail concessionary tourism Other Total depreciation distributed reported in Tunnels services services travel services Services segments and pensions costs CIES
£000's £000's £000's £000's £000's £000's £000's £000's £000's £000's Fees charges and service income 37,709 9,111 19,174 26,528 7,720 37,197 137,439 ( 39,356) - 98,083 Government grant income - - 89,202 - - - 89,202 - - 89,202 Other grant income - - - - 700 - 700 - - 700 Total income 37,709 9,111 108,376 26,528 8,420 37,197 227,341 ( 39,356) - 187,985
Franchises and operators - 24,683 87,837 77,695 - - 190,215 - - 190,215 Support services 7,187 3,435 9,898 4,133 1,077 - 25,730 - - 25,730 Depreciation and impairment ------12,055 - 12,055 Pension costs ------3,074 3,074 Other expenses 29,838 - 11,996 - 10,828 51,421 104,083 ( 58,920) 200 45,363 Total expenditure 37,025 28,118 109,731 81,828 11,905 51,421 320,028 ( 46,865) 3,274 276,437
Surplus/(Deficit) - cost of services 684 ( 19,007) ( 1,355) ( 55,300) ( 3,485) ( 14,224) ( 92,687) 7,509 ( 3,274) ( 88,452)
6. Mersey Tunnels
The Mersey Tunnels Act 2004 permits any operating surplus to be utilised by the Authority to achieve public transport policies in its local transport plan. In 2013/14, £10.2m (2012/13 £6.4m) was transferred into the Authority’s General Fund and a Tunnels Reserve and Renewals Fund balance of £5.8m remained as at 31 March 2014 (31 March 2013 £7.3m).
Prior to the Tunnel operations becoming self-financing, the Tunnels deficit was funded by the Authority Levy. Over several years levy funding reached £28m. Following consultation, the Authority approved an annual contribution for 21 years of £3.6m from the surplus towards the levy.
Page39 185 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 7. Surplus (deficit) on the Provision of Services
The surplus (deficit) for the year has been stated after the following have been charged/(credited):
Group Authority 2014 2013 2014 2013 £000’s £000’s £000’s £000’s Credits: Levy income 127,364 127,364 127,364 127,364 Grant income - Revenue: Rail services – Special Rail Grant 98,610 89,209 98,610 89,209 EU Revenue Grant - 262 262 98,610 89,471 98,610 89,471 Capital Grants and Contributions income Dept for Transport - LTP and Congestion Grant 6,581 6,483 6,581 6,483 Dept for Transport - Clean Bus Technology 819 - 819 - Dept for Transport - Better Bus & Area Grant 953 4,184 953 4,184 ERDF - Objective 1 grants 4,282 2,802 4,282 2,802 Dept for Transport - LSTF Grant 87 100 87 100 Partner Grant 33 37 33 37 Other grants - 148 - 148 Capital Contributions 801 60 801 60 13,556 13,814 13,556 13,814
Charges Depreciation of property, plant and equipment 8,643 11,055 3,497 3,526 (including impairment) Operating leases - minimum lease payments 12,139 12,193 - - Auditors' remuneration * see Note 8 75 65 35 65 Pension costs 8,443 5,233 1,201 660 Publicity costs 7 7 -
* This is the net position after accruals, and includes audit fees for the Executive’s subsidiary companies.
Levy income arises from levies on the Council Tax for five Boroughs in Merseyside.
The Special Railway Grant is received from the Department of Transport to ensure the costs of Rail privatisation do not fall upon the Council tax payer
The Local Government Act 1986 Section 5(1) requires the Authority to maintain a separate publicity account. A more detailed account is available on request.
8. Auditor’s Remuneration
Audit fees for the audit of the Authority’s accounts by KPMG are estimated to be £35k, which includes grant certification work (2012/13: £65k)
Authority 2014 2013 Audit fees in respect of:- £000 £000 Fees payable for external audit services carried out by the 47 62 appointed auditor 3 Grant certification work 0
Page 40186 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
9. Staff costs and headcount
Group Authority 2014 2013 2013 2012 The number of persons employed by the Authority (expressed No. No. No. No. as whole time equivalents) at the year end was: Operations 512 517 112 112 Catering/Retail 44 44 0 0 Management and Admin 280 297 4 5 Total 836 858 116 117
£000's £000's £000's £000's The aggregate payroll cost for employees during the year was:- Salaries and Wages 22,099 22,313 3,989 4,039 National Insurance 1,670 1,774 326 329 Superannuation 2,347 2,420 444 454 26,116 26,507 4,759 4,822
The number of Authority’s employees, other than the Directors listed below, receiving more than £50,000 remuneration for the year (excluding pension contributions) were as follows:
Group Authority 2014 2013 2014 2013
£50,000 to £54,999 12 9 3 1 £55,000 to £59,999 2 7 - - £60,000 to £64,999 2 4 - - £65,000 to £69,999 0 1 - - £70,000 to £74,999 0 2 - - £75,000 to £79,999 1 2 - - £80,000 to £84,999 1 1 - - £90,000 to £94,999 0 - - - £105,000 to £109,999 1 1 - -
Remuneration paid to the Authority’s senior employees is as follows:
Pension Total Post Title Year Salary Allowances Contributions Remuneration £ £ £ £
2014 127,309 1,717 15,929 144,955 Chief Executive/Director General 2013 77,367 61,132 12,696 151,195 2014 92,154 - 11,519 103,673 Director of Resources 2013 - - - 0
Director of Integrated Transport (& 2014 126,462 1,954 15,885 144,301 Deputy Chief Executive) 2013 77,367 35,849 10,524 123,740 2014 104,188 628 13,102 117,918 Director of Corporate Development 2013 99,185 9,100 13,536 121,821 2014 0 0 0 0 Director of Customer Services 2013 103,156 14,342 14,529 132,027
The previous CX/DG, and the Director of Customer services resigned their posts 31 December 2012. The current CX/DG was appointed 27 May 2013. The interim period from January 2013 until 26 May
Page41 187 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 9. Staff costs and headcount (continued)
2013 saw the Director of Integrated Transport fill this role on a temporary basis. This post holder was subsequently confirmed as the Deputy CX/DG. A restructuring of the management team during 2013 saw the deletion of the Director of Customer services posts, with these duties being allocated to the remaining directorates. The current Director of Resources was appointed 1 April 2013. For 2013 this post was filled by the previous CX/DG until their resignation, and then by an officer on secondment from St Helens until 31 March 2013.
The numbers of exit packages with total cost per band and total cost of compulsory and other redundancies are set out in the tables below:
Number of compulsory Number of other Total number of exit Total cost of exit MITA redundancies agreed departures packages packages in each band Exit package cost band 2012/13 2013/14 2012/13 2013/14 2012/13 2013/14 2012/13 2013/14 £ £000 £000 0 - 20,000 0 0 0 0 0 0 0 0 20,001 - 40,000 0 0 2 0 0 0 0 0 40,001 - 60,000 0 0 0 1 0 1 0 55 60,001 - 80,000 0 0 0 0 0 0 0 0 80,001 - 100,000 0 0 0 0 0 0 0 0 100,001 - 150,000 0 0 0 0 0 0 0 0 Total 0 0 2 1 0 1 0 55
Group Number of compulsory Number of other agreed Total number of exit Total cost of exit packages redundancies departures packages in each band Exit package cost band 2012/13 2013/14 2012/13 2013/14 2012/13 2013/14 2012/13 2013/14 £ £000 £000 0 - 20,000 0 0 51 14 2 14 19 147 20,001 - 40,000 0 0 4 13 2 13 57 355 40,001 - 60,000 0 0 2 11 1 11 45 546 60,001 - 80,000 0 0 0 0 0 0 0 0 80,001 - 100,000 0 0 0 0 0 0 0 0 100,001 - 150,000 0 0 0 0 0 0 0 0 Total 0 0 57 38 5 38 121 1048
10. Members’ allowances
Total expenses and allowances paid to Members were £170k (2012/13 - £187k). This includes travelling and subsistence costs. Full details of allowances paid, are reported on the Authority’s website.
Page 42188 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 11. Rail Concession income and expenditure
Merseyrail Electrics 2002 Ltd (a Serco and Abellio joint venture) has a franchise agreement with the group, through MPTE, to operate rail services (Merseyrail Electrics). The agreement provides that any profits from the operation of these services above a predefined threshold be shared by Merseyrail Electrics 2002 Ltd and MPTE.
Group Highways and Transport services income includes £5,251k (2012/13 £5,457k) representing income accrued under the agreement. Of this, £1,834k has been spent in the year (2012/13 £2,207k) to secure improvements to passenger services and is charged to Highways and Transport Services Expenditure.
The total balance remaining as at 31 March 2014 is £11.5m (31/03/13 £8.1m). This has been included in Group short term debtors and Group useable reserves at the balance sheet date.
12. Finance Costs – Interest Payable
Group Authority 2014 2013 2014 2013 £000’s £000’s £000’s £000’s On loans 13,999 14,740 13,778 14,732 Interest cost on pension scheme 12,345 12,861 2,334 2,425 Amortisation of premium on early repayment of loans 17 13 17 13 Other - - - - 26,361 27,614 16,129 17,170
13. Finance Income
Surplus monies from the Executive were lent to the Authority; interest free, to permit bulk placements on to the money markets. Finance income comprises:
Group Authority 2014 2013 2014 2013 £000’s £000’s £000’s £000’s From short-term loans and deposits 1,141 1,412 1,141 1,412 On pension scheme assets 8,945 - 1,705 - Other interest receivable 633 401 394 401 10,719 1,813 3,240 1,813
14. Tax on Income
Corporation tax chargeable against interest received and rental income in the year at a rate of 23% for 2013/14 and 24% for 2012/13.
Taxation of £48k (2012/13 £8k) in the consolidated income and expenditure statement represent taxation paid by the employer for certain employee benefits deemed by HMRC to be taxable, together with corporation tax payments for the PTE group.
Page43 189 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
15. Property, Plant and Equipment
Group Total
Assets Assets
Freehold Freehold Property Property
Leasehold Leasehold Equipment
Community Community
Construction
Furniture and and Furniture
AssetsUnder
Infrastructure
Vehicles, Plant, Plant, Vehicles, Assets Surplus
£000 £000 £000 £000 £000 £000 £000 £000 Cost or valuation: At 1 April 2012 4,377 6,786 37,121 372,025 - 893 599 421,801 - Additions 1,152 - 4,617 7,010 - - - 12,779 Transfers from Capital Projects ------Disposals ------Assets reclassified ------Revaluation ------19 19 At 31 March 2013 5,529 6,786 41,738 379,035 - 893 618 434,599 Page 190 Page
Additions 1,164 8 4,153 7,397 - - - 12,722 Reclassifications/Disposals - - (13) 247 - - - 234 Donations ------Disposals - - (12) - - - - (12) Assets reclassified ------
At 31 March 2014 6,693 6,794 45,866 386,679 - 893 618 447,543
Depreciation and impairment:
At 1 April 2012 571 172 8,087 22,627 - 631 - 32,088 Depreciation 115 433 3,250 4,855 - - - 8,653 Reclassifications - - - 631 - (631) - - Impairment losses recognised in the Surplus/Deficit - - 1,773 604 - - 25 2,402 on the Provision of Services Disposals ------At 31 March 2013 686 605 13,110 28,717 - - 25 43,143
Depreciation 143 236 3,248 5,016 - - - 8,643 Impairment losses recognised in the Surplus/Deficit ------on the Provision of Services At 31 March 2014 829 841 16,358 33,733 - - 25 51,786 Net Book Value: At 1 April 2012 3,806 6,614 29,034 349,398 - 262 599 389,713 At 31 March 2013 4,843 6,181 28,628 350,318 - 893 593 391,456 At 31 March 2014 5,864 5,953 29,508 352,946 - 893 593 395,757 44 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 15 Property, Plant and Equipment (continued)
£000 £000
MITA Total
Assets Assets
Surplus Surplus
Property
Property
Freehold Freehold
Vehicles, Vehicles,
Leasehold Leasehold
Operational Operational Community
Construction Construction
Infrastructure
Assets Under
and Equipment Equipment and Plant, Furniture Furniture Plant, £000 £000 £000 £000 £000 £000 £000 £000 Cost or valuation: At 1 April 2012 4,041 5,930 1,621 286,209 - - 74 297,875
Additions 1,152 - 413 5,944 - - - 7,509 Assets reclassified to/from assets held for sale ------
At 31 March 2013 5,193 5,930 2,034 292,153 - - 74 305,384
Additions 1,164 - 450 7,005 - - - 8,619 Transfers from Capital Projects ------Page 191 Page Disposals - - (11) - - - (11) - At 31 March 2014 6,357 5,930 2,473 299,158 - - 74 313,992
Depreciation and impairment:
At 1 April 2012 235 - 478 16,940 - - - 17,653 Depreciation 115 394 159 2,809 - - - 3,477 Impairment losses recognised in the Surplus/Deficit - - 49 - - - 49 on the Provision of Services At 31 March 2013 350 394 686 19,749 - - - 21,179
Depreciation 143 197 157 3,000 - - - 3,497 Impairment losses recognised in the Surplus/Deficit ------on the Provision of Services At 31 March 2014 493 591 843 22,749 - - - 24,676 Net Book Value: At 1 April 2012 3,806 5,930 1,143 269,269 - - 74 280,222 At 31 March 2013 4,843 5,536 1,348 272,404 - - 74 284,205 At 31 March 2014 5,864 5,339 1,630 276,409 - - 74 289,316
The Directors have reviewed Property Plant and Equipment for any indicators of impairment, and are not aware of any material change in the value of these assets.
45 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 15 Property, Plant and Equipment (continued)
Valuation of property, plant and equipment
The Authority carries out regular revaluations of all Property, Plant and Equipment required to be measured at fair value every five years. These revaluations exclude infrastructure assets that are required to be carried at depreciated historical cost. Valuations of land and buildings were carried out by the independent valuers from the District Valuers Office in accordance with the methodologies and bases for estimation set out in the professional standards of the Royal Institution of Chartered Surveyors. Valuations of vehicles, plant, furniture and equipment are based on current prices where there is an active second hand market or latest list prices adjusted for the condition of the asset.
Ian Carruthers BSc, MRICS, of the District Valuers Service, carried out the last valuation as at 31 March 2014. This work was performed as part of the Executives preparation for the introduction of the accounting implications of the Local Authority Accounting Panel (LAAP) 100. Consequently, values were not used in the final accounts.
The majority of properties regarded by the Authority as operational were valued on the basis of depreciated replacement cost as market value could not be assessed. Plant and machinery is included in the valuation of the buildings.
The cumulative revaluation surplus held in the Authority’s revaluation reserve at 31 March 2014 is set out in note 30.
The cumulative revaluation surplus held in the Authority’s revaluation reserve at 31 March 2014 was £362k and there was no upward movement during the year. The consolidated position at 31 March 2014 is £3,853k (2012/13 £4,243k). There were no upward movements within the year.
Infrastructure assets are held at depreciated historical cost.
Depreciation is calculated, from the month that an asset becomes operational, on all property, plant and equipment with a finite useful life using the reducing balance method over the following asset lives, which were provided by the District Valuers as part of his asset valuation exercise:-
Years Infrastructure Assets 5-120 Freehold Property 30-40 Leasehold property 23 Vehicles, Plant, Furniture & Equipment 4-20
16. Heritage Assets
Authority Subsidiaries Group Statues Statues Statues £000’s £000’s £000’s At 1 April 2012 450 385 835 Additions - - - At 31 March 2013 450 385 835 Additions - - - At 31 March 2014 450 385 835
The Authority’s assets comprise two statues on display at the Liverpool entrance to the Queensway tunnel and two sculptures on display at the entrance to Georges’ Dock building.
The Beatles Story also owns a statue in commemoration of John Lennon which is on display at the Liverpool Echo Arena entrance. The asset was re valued by a suitably qualified practitioner at 31 March 2012 and was found to have increased in value, and this increase has been taken to the Group Revaluation reserve. No further valuation has been undertaken during 2013/14.
Page 46192 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
17. Capital Expenditure and MRP Borrowing
Capital expenditure and MRP borrowing amounting to £21.5m and £0m respectively were financed as follows: 2013/14 2012/13 Capital MRP Authority Total Total Outlay Borrowing Expenditure £000 £000 £000 £000 Property Plant & Equipment 7,119 - 7,119 7,509 Leasehold Improvements - - - - REFCUS - Capital Grants made to the MPTE for 12,910 - 12,910 8,900 Infrastructure etc Reborrowing Principal repaid in excess of MRP - 1,119 1,119 554 20,029 1,119 21,148 16,963 Financing (Under)/overcover financed brought forward at 1 April - (4,529) (4,529) (3,975) Capital Grants and contributions 12,910 - 12,910 8,900 Capital Receipts Applied 23 - 23 9 Tunnels Repairs and Renewals Fund 7,096 - 7,096 7,500 Leasehold Incentive arrangement* - - - - (Over)/under financed carried forward at 31 March - 5,648 5,648 4,529 20,029 1,119 21,148 16,963
Revenue Expenditure Funded from Capital under Statute (REFCUS) represents charges to the Comprehensive Income and Expenditure Statement for capital grants to MPTE which are used by it to fund its capital expenditure.
18. Analysis of capital grants/contributions received during the year
Group MITA 2014 2013 2014 2013 £000 £000 £000 £000 Capital grants and contributions 13,556 13,814 13,556 13,814 Less: amounts not yet applied ( 646) ( 4,914) ( 646) ( 4,914) 12,910 8,900 12,910 8,900 Other Capital receipts Disposal of assets 23 1,809 23 9 Less: amounts not yet applied - ( 1,800) - - 23 9 23 9 Total 12,933 8,909 12,933 8,909
Page47 193 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
19. Intangible assets
The Authority Group has intangible assets as a result of goodwill arising on the purchase of Gemtex Ltd and The Beatles Story by its subsidiary company Mersey Ferries Ltd.
Goodwill on 2013/14 Goodwill on 2012/13 Licenses Licenses Consolidation Total Consolidation Total
£000’s £000’s £000’s £000’s £000’s £000’s Cost or valuation: Opening balance: Gross carrying amount 2,803 20 2,823 2,803 20 2,823 Accumulated amortisation ( 1,108) ( 20) ( 1,128) ( 1,108) ( 17) ( 1,125) Opening net carrying amount 1,695 - 1,695 1,695 3 1,698
Amortisation and impairment: Amortisation - - - - ( 3) ( 3) Net carrying amount at end of year 1,695 - 1,695 1,695 - 1,695 - - Comprising: Gross carrying amount 2,803 20 2,823 2,803 20 2,823 Accumulated amortisation ( 1,108) ( 20) ( 1,128) ( 1,108) ( 20) ( 1,128) 1,695 - 1,695 1,695 - 1,695
The Beatles Story is amortising licences over the life of the licences.
Goodwill of £2.8m relates to the acquisition by Mersey Ferries Limited of The Beatles Story. For impairment testing purposes, this goodwill has been allocated to the wholly owned subsidiary, which forms part of the Mersey Ferries Group. This represents the lowest level within the Authority at which goodwill is monitored for internal management purposes.
The Authority has performed its annual impairment test as at 31 March 2014. The recoverable amount of The Beatles Story is determined on a value in use basis using cash flow projections based on financial budgets approved by the board for the next 5 years. The discount rate applied to the cash flows is 6.0% as per Treasury Green Book recommendation (2013: 6%). The growth rate used to extrapolate the cash flows beyond the 2015/16 year period is 3% for expenditure and 1% for income growth. (2012/13 3% for both income and expenditure), which is consistent with expected growth rates over previous years in this business area. Some sensitivity analysis was then applied to these assumptions resulting in little change to the original values. The resultant calculation showed the value of implied goodwill was consistent with that shown in the group balance sheet and no impairment was required for 2013/14.
20. Investments
% equity % equity Nature of the interest interest Name Immediate parent Group holding business 2014 2013 Merseyside Passenger Company limited by Passenger Mersey Ferries Ltd N/A N/A Transport Executive guarantee Transport 25 £1 Ord. Shares Merseyside Passenger Transport Merseyside Passenger 375 £1 5% Non Cumulative Leasing 100 100 Service Ltd Transport Executive Pref shares Real Time Merseyside Passenger Real Time Information Group Limited 1 £1 Ord Shares Information 100 100 Transport Executive systems Merseyside Passenger 17,648 - 10p Global Smart Media Ltd Smartcard 87.9 87.9 Transport Executive Ord Shares Merseyside Passenger Accrington Technologies Ltd 500 £1 Ord Shares Smartcard 50.1 50.1 Transport Executive The Beatles Story Ltd Mersey Ferries Ltd 290,000 £1 Ord Shares Tourism 100 100
All companies are incorporated in the United Kingdom.
Page 48194 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 20. Investments (continued)
Dormant companies
The Authority has no directly owned subsidiaries. However, the PTE does - Merseytravel Ltd is a wholly owned subsidiary that was dormant in the year ended 31 March 2014. Merseytravel Facilities Management Ltd and Liverpool South Parkway Ltd were both dissolved during the year ended 31 March 2014.
Spaceport Ltd and U534 Ltd ceased trading on 31/3/13. They were formally dissolved on 5/11/13 and their operations assets and liabilities transferred into Mersey Ferries Ltd
Livesmart ceased trading in January 2013. The company was dissolved on 10/9/13.
Group:
The Group Investment is the estimated cost, less any impairment, of the Executive’s investment in £256,068 Ordinary £1 shares Smart Transactions Group Ltd (11.52% of its equity), through its subsidiary GSM. As Smart Transactions Group has incurred losses in the last two years for which accounts are available, the investment is considered impaired and is carried at £Nil in the financial statements.
2014 2013 2012 Group £000s £000s £000s
Equity investment held at cost 0 0 1,294
21. Short Term Investments
Amounts represent investments with UK banking institutions for periods between 91 and 364 days. Investments of 90 days or less are shown as Cash and Cash Equivalents, please refer to note 25.
22. Assets held for sale
Group Authority 2014 2013 2014 2013 £000’s £000’s £000’s £000’s Balance outstanding at the start of the year - 1,800 - - Assets newly classified as held for sale: Former MPTE Headquarters building - - - - Assets sold - ( 1,800) - - Balance outstanding at the year end - - - -
The Executive’s former headquarters building at 24 Hatton Garden was reclassified as an asset held for sale in the year ended 31 March 2012. The sale of the building during 2012/13 generated a receipt of £1,800k, which was reduced by commission/insurance charges to £1,779k.
Profit on disposal of property, plant and equipment
The reported gain or loss on disposal is calculated as the net sales proceeds less the net carrying value of the assets comprising both the carrying value of the assets sold and any unamortised grant outstanding. For 2013/14 this is nil. For 2012/13, this was a £21k loss relating to the sale of Hatton Garden.
Page49 195 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
23. Inventories
Reconciliation Group Authority 2014 2013 2014 2013 £000 £000 £000 £000 Balance outstanding at the start of the year 1,072 972 615 408 Purchases Recognised as an expense in the year (34) 100 7 207 Written off in the year Balance outstanding at the year end 1,038 1,072 622 615
Analysis Group Authority 2014 2013 2014 2013 £000 £000 £000 £000 General stores and consumables 544 453 413 409 Retail stock 285 404 - - Fast Tags 193 191 193 191 Fuel 16 15 16 15 Uniforms - 9 - Total 1,038 1,072 622 615
24. Short and long term debtors
a) Amounts falling due within one year:
Group Authority 2014 2013 2014 2013 £000 £000 £000 £000 Central Govt bodies * 2,319 7,134 110 4,793 Other Local Authorities 496 301 26 - NHS bodies 31 83 - - Other bodies 22,078 17,180 4,989 4,701 Public Corporations and trading funds 49 - - -
Total current trade and other receivables 24,973 24,698 5,125 9,494
* Under a group registration scheme, VAT recoverable by the Executive of £1,999k (2012/13 £2,070k) has been consolidated and is included in Central Govt. bodies for the Group.
Trade receivables are non-interest bearing and are generally on terms of 30 days or less. They are shown net of a provision for impairment. For terms and conditions pertaining to related parties, refer to note 33. At 31 March 2014, Group trade receivables had a nominal value of £1,211k (2013: £1,897k). Movements in the provision for impairment of receivables were as follows:
Page 50196 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 24. Short and long term debtors (continued)
Bad debt provision Group Authority 2014 2013 2014 2013 £000 £000 £000 £000 Opening provision 52 94 1 1 Charge for the year 258 10 - 2 Amounts written off - (52) - (2) Unused amounts reversed - - - -
Closing provision 310 52 1 1
As at 31 March 2014, the aged analysis of trade receivables was as follows:
Overdue but not impaired Neither overdue nor 29-50 days 51-90 days 91-185 days >186 days impaired Total £000 £000 £000 £000 £000 £000 Group 31-Mar-14 1,036 773 81 88 94 0 31-Mar-13 1,845 1193 155 259 80 158 MITA 31-Mar-14 7 4 - 1 1 1
31-Mar-13 15 9 - - 5 1
b) Amounts falling due after more than one year: Group Authority 2014 2013 2014 2013 £000 £000 £000 £000 Other receivables 798 818 3,657 3,785 Total 798 818 3,657 3,785
The Authority has a long term loan to the Executive which was used to fund the purchase of the Beatles Story. It is repayable in annual instalments and will expire in 2032/33. Principal repayments in 2013/14 were £122k (2012/13 £117k). It is extinguished upon consolidation. The other receivables are assessed as recoverable and no impairment is required.
25. Cash and cash equivalents
Group Authority 2014 2013 2014 2013 £000 £000 £000 £000 Cash and bank current account 12,140 27,916 (23,769) 805 Short term deposits with banks and building societies 24,030 30,325 24,030 30,325 Total 36,170 58,241 261 31,130
The Authority holds the Executive’s cash balances of £35,909k (2012/13 £43,500k) for investment purposes. The Executive deposits its surplus cash funds with the Authority for periods between one day and three months depending on the immediate cash requirements of the respective entities.
Page51 197 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
26. Short Term Creditors
Group Authority 2014 2013 2014 2013 £000 £000 £000 £000 Creditors due within 1 year: Central Government Bodies 13,497 34,197 12,095 30,625 Other Local Authorities 3,633 2,016 2,111 163 NHS Bodies - 60 - - Public Corporations 85 - - - Other Entities and Individuals 27,423 25,812 31,128 36,615 44,638 62,085 45,334 67,403
£21,700k (2013 £29,400k) held by the Authority and invested on behalf of the MPTE is included in “Other Entities and Individuals” for the Authority.
PWLB debt charges of £11.4m (2013 £10.3m) and Local Sustainable Transport Grant funding for Minor and Major elements of £11.9m (2012/13 £20.2m) received in advance is included in Central Government Bodies.
Trade payables are generally on terms of 30 days or less. The group policy is to pay within 30 days. Actual performance is as follows:
Authority 2013/14 2012/13 Total number of invoices paid 17,015 18,154 Invoices paid within 30 days 16,455 17,453 Actual proportion paid within 30 days 96.7% 96.1%
Target 100% 100%
Page 52198 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
27. Provisions
Provisions are established to meet liabilities or losses which are likely or certain to be incurred, but the amounts or timings are uncertain. Provisions during the year may be analysed as follows:
Group Authority 2014 2013 2014 2013 Provisions £000 £000 £000 £000 Short term 600 467 39 228 Long term 4,185 3,313 1,993 605 4,785 3,780 2,032 833
Govt Contractual Employment Capital Contracted Taxation/ Group Total Initiatives Obligations Related Expenditure Maintenance Leases £000 £000 £000 £000 £000 £000 £000 At 1 April 2013 3,780 200 1,029 1,309 299 938 5 Arising during the year 1,645 - 384 21 1,240 - - Utilised during the year (640) - (90) (526) - (19) (5) At 31 March 2014 4,785 200 1,323 804 1,539 919 -
MITA Govt Contractual Employment Capital Contracted Taxation/ Total Initiatives Obligations Related Expenditure Maintenance Leases £000 £000 £000 £000 £000 £000 £000 At 1 April 2013 833 200 86 248 299 - - Arising during the year 1,261 - - 21 1,240 - - Utilised during the year (62) - (25) (37) - - - At 31 March 2014 2,032 200 61 232 1,539 - -
Significant provisions for both ITA and Group relate to:
Government initiatives relates to the purchase of “carbon credits”; Contractual obligations relate to the Merseytram project and insurance claims; Employment related, are principally annual leave entitlements outstanding at the year end, pension obligations and job evaluation/harmonisation provisions; Capital expenditure relates to possible claw back of ERDF grant; Contracted maintenance relates to works previously thought to be rechargeable to a third party, and dredging costs; Taxation issues relate to a tax liability with The Beatles Story.
New Group provisions established in the year have been raised as follows:
Provision for dilapidation costs of a former leased office building
During the year the employee related provision was utilised to fund back pay claims, and resulting increases in pension payments re retiring staff.
28. Contingent Assets and Liabilities
The Authority has no contingent assets or liabilities. For the ITA group, commercial negotiations are in process relating to disputed costs. The information usually required by IAS 37 Provisions, Contingent Liabilities and Contingent Assets is not disclosed on the grounds that it can be expected to prejudice seriously the outcome of these negotiations.
Page53 199 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
29. Financial Instruments
Set out below is a comparison by class of the carrying amounts in the Statement of Financial Position of the Authority’s financial assets and financial liabilities:
MITA Carrying Amount Fair Value 2014 2013 2014 2013 Loans & Receivables £000 £000 £000 £000 Financial Assets: Long term loans and receivables 3,663 3,785 3,663 3,785 Current loans and receivables 122 122 122 122 Current financial assets carried at contract amounts 4,705 9,156 4,705 9,156 Long-term debtor - - - - Short term investments 118,774 90,225 118,774 90,225 Cash & cash equivalents 261 31,130 261 31,130
Financial Liabilities: Current trade payables 19,128 33,981 19,128 33,981 Amounts deposited from MPTE 21,700 29,400 21,700 29,400 Interest bearing loans and borrowings measured at amortised cost: Fixed rate borrowings - due within one year 11,099 11,379 11,099 11,379 Fixed rate borrowings - due after one year 224,299 235,398 296,348 336,262
Group Carrying Amount Fair Value 2014 2013 2014 2013 Financial Assets: £000 £000 £000 £000
Equity investments held at cost - - - - Loans & Receivables Current loans and receivables 34 34 34 34 Current financial assets carried at contract amounts 22,963 22,693 22,963 22,693 Long-term debtor 799 818 799 818 Short term investments 118,774 90,225 118,774 90,225 Cash & cash equivalents 36,170 58,241 36,170 58,241
Financial Liabilities: Current trade payables 39,870 57,777 39,870 57,777 Interest bearing loans and borrowings measured at amortised cost: Fixed rate borrowings - due within one year 11,099 11,379 11,099 11,379 Fixed rate borrowings - due after one year 224,299 235,398 296,348 336,262
Analysis of borrowing repayable Authority Total Outstanding Range of Interest Rates Payable at 31 March 2014 2013 Source of Loan £000 £000 Public Works Loan Board Variable Rates - - Public Works Loan Board 4.3% to 7.6% average rates 207,567 215,969 Department of Transport 11.8% 369 1,058 Wirral MBC 6.8% 27,462 29,750 235,398 246,777 An analysis of loans by maturity is: Maturing in - - within one year 11,099 11,379 - 1 to 2 years 10,773 11,099 - 2 to 5 years 32,296 32,421 - 5 to 10 years 50,804 52,258 - More than 10 years 130,426 139,620 235,398 246,777
Page 54200 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
29. Financial Instruments (continued)
Fair Values of Assets and Liabilities
Financial liabilities, financial assets represented by loans and receivables and long term debtors and creditors are carried in the Statement of Financial Position at amortised cost.
The purpose of the fair value disclosure is primarily to provide a comparison with the carrying value, which includes accrued interest as at the balance sheet date; therefore accrued interest is included in the fair value calculation.
For loans and borrowings, fair value is determined by calculating the Net Present Value of future cash flows, thus estimating the value of future payments in today's terms. The discount rate used should be equal to the current rate for a similar loan from a comparable lender. This will be the market rate applicable on the date of valuation for a loan with the same outstanding period to maturity
The discount rates used for the evaluation were obtained by MITA from the Public Works Loan Board and the fair value of borrowing through the PWLB has been calculated by reference to the premature repayment set of rates in force on 31 March 2013 and 31 March 2014 respectively. For both years, the respective interest rates have been used as a discounting factor applied to future cash flows of the undischarged balance of the loans at 31 March 2013 and 2014. A similar calculation has been done for the fair value of the Department for Transport Loans and Wirral MBC loans using the national loans rates at 31 March 2013 and 2014 as discount factors.
Other assumptions used, which do not have a material effect on the fair value evaluation are:
• Interest is calculated using a 365 day basis • Interest is paid on the maturity date • No adjustment has been made to the interest value and date, where a relevant date occurs on a non-working day • Estimated ranges of interest rates at 31 March 2014 of 4.3% to 11.8% • No early repayment or impairment is recognised • The fair value of trade and other receivables is taken to be the invoiced or billed amount
No loans were taken out during 2013/14 and there are no loans are secured against the Authority’s assets. The fair values of the following classes of financial instruments approximate their carrying amounts due to the short term maturities of these instruments:
• Trade receivables • Trade payables and accruals for expenditure recognised • Cash and short term deposits • Receivables from, and deposits with MPTE • Amounts due from group undertakings
The amounts recognised in the Income and Expenditure Statement and Statement of Other Comprehensive Income can be summarised as follows: 2014 2013 £000 £000 Financial Liabilities Financial Liabilities Financial Assets: Loans Financial Assets: Loans Group & Authority measured at amortised measured at amortised and Receivables and Receivables cost cost Authority Group Authority Group Authority Group Authority Group Interest expense (13,808) (13,808) ------Impairment losses (bad debts) - - - - - (1) (51) Total expense in Surplus of Deficit on the Provision of Services (13,808) (13,808) - - - - (1) (51) Interest Income 1,535 1,583 - - - - Total income in Surplus or Deficit on the Provision of Services - - 1,535 1,583 - - - - Amounts recycled to the Surplus or Deficit on the Provision of Services ------after impairment Surplus or deficit arising on revaluation of financial assets in Other ------Comprehensive Income and Expenditure Net gain/(loss) for the year (13,808) (13,808) 1,535 1,583 - - (1) (51)
Page55 201 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 29. Financial Instruments (continued)
Risk Factors
The Authority’s activities expose it to a variety of financial risks. The key risks as are:-
Credit risk - the possibility that other parties might fail to pay amounts due to the Authority; Liquidity risk - the possibility that the Authority might not have funds available to meet its commitments to make payments; and Market risk - the possibility that financial loss might arise for the Authority as a result of changes in such measures as interest rates.
The Authority’s 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. Risk management is carried out by the Resources Directorate, under policies approved by the Authority in its Treasury Management Strategy.
Credit risk
Credit risk arises from deposits with banks and financial institutions, as well as credit exposures to the Authority’s customers. The risk is minimised through the Treasury Management Strategy. Deposits are not made with banks and financial institutions unless they are rated independently with a minimum score of P1 and A3 (Moody’s) and/or F1 and A (Fitch’s), with weightings of the total amounted deposited in the highest rated categories. The Authority has a policy of spreading its surplus balances over several institutions.
The following analysis summarises the Authority’s potential maximum exposure to credit risk on the other financial assets, based on experience of default and un-collectability over the last five financial years, adjusted to reflect current market conditions: Estimated Estimated Historical maximum maximum experience exposure to exposure to adjusted for default and default and Historical market uncollectability uncollectability Amount at 31 Experience of conditions at 31 as at 31 March as at 31 March March 2014 default % March 2014 2014 2013 Group Trade receivables 1,211 25 901 901 1,845 External loans receivable 128 - 128 128 148 Group loans receivable - - - - - 1,029 1,993 Authority Trade receivables 8 6 7 7 15 External loans receivable - - - - - Group loans receivable 3,663 - 3,663 3,663 3,785 3,670 3,800
Page 56202 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 29. Financial Instruments (continued)
Liquidity risk
As the Authority has ready access to borrowings from the Public Works Loans Board, there is no significant risk that it will be unable to raise finance to meet its commitments. There is a future risk that the Authority will be bound to replenish a proportion of its borrowings at a time of unfavourable interest rates, however this risk is several decades in the future and will be significantly covered by Minimum Revenue Provision (MRP) balances. Details of the maturity of debt are given earlier in this note.
Market risk
Interest rate risk: The Authority is exposed to marginal risk in terms of its exposure to interest rate movements on its borrowings and investments.
Borrowings are not carried at fair value, so nominal gains and losses on fixed rate borrowings would not impact on the CIES or MIRS. However, changes in interest payable and receivable on variable rate borrowings and investments will be posted to the CIES or MIRS. Movements in the fair value of fixed rate investments will be reflected in the MIRS.
Price risk: The Authority does not generally invest in equity shares but the Group Accounts do reflect shareholdings in a number of subsidiaries.
As the shareholdings have arisen in the acquisition of specific interests, the Group is not in a position to limit its exposure to price movements by diversifying its portfolio.
Foreign exchange risk: The Authority has no financial assets or liabilities, denominated in foreign currencies and thus has no exposure to loss arising from movements in exchange rates.
In all cases, the carrying value of financial instruments is a reasonable approximation to fair value.
Hedging Instruments
The Authority holds no financial instruments that could be classified as hedging instruments.
30. Reserves
(a) Useable Reserves
Group Authority 2014 2013 2014 2013 £000s £000s £000s £000s General Fund 3,496 2,704 1,142 1,142 Tunnels Reserve 5,756 7,257 5,756 7,257 Earmarked reserves - Operational 89,362 67,837 53,807 36,367 Earmarked reserves - Development 32,228 28,763 18,101 18,695 Useable Capital Receipts 2,093 2,093 - - Total Usable Reserves 132,935 108,654 78,806 63,461
Operational reserves are service related and have been created to support revenue spending. Development reserves are primarily “capital” related ones and exist to support the ITA’s capital programme. These latter reserves are under severe pressure due to the Government’s decision to reduce the ITA’s LTP grant during LTP3.
It is the Authority’s policy that the Tunnels Reserve and Renewals Fund shall not be less than £2.5m. In the event that funds fall below the £2.5m threshold, budgetary provision in the following year will be made to restore the level to £2.5m. Budgets for 2013/14 assumed £1.5m would be transferred from the fund to part finance the Tunnels capital programme. This left a balance of £5.8m available as at 31 March 2014 for future years.
Page57 203 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 30. Reserves (continued)
(b) Unuseable Reserves
Group Authority 2014 2013 2014 2013 £000s £000s £000s £000s Pension Reserve (78,738) (83,968) (11,537) (15,324) Revaluation Reserve 3,840 4,243 348 362 Capital Adjustment Account 47,514 31,931 47,514 31,931 Financial Instruments adj account 22 36 22 36 Deferred Capital Grants 101,984 102,260 - - Total Unusable Reserves 74,622 54,502 36,347 17,005
(c) 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 employers 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.
Group Authority Restated Restated 2014 2013 2013 2014 2013 2013 £000 £000 £000 £000 £000 £000 Balance at 1 April (83,968) (70,315) (70,315) (15,324) (12,242) (12,242) Actuarial (gains)/losses - - (14,647) - - (3,106)
Remeasurements assets and liabilities 7,606 (12,855) - 4,284 (2,767) -
Reversal of items relating to retirement benefits debited or credited to the Surplus or Deficit on the Provision of (8,443) (7,025) (5,233) (1,201) (999) (660) Services Employers Pension Contributions and direct payments to 6,067 6,227 6,227 704 684 684 pensioners in the year Balance at 31 March (78,738) (83,968) (83,968) (11,537) (15,324) (15,324)
Page 58204 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 30. Reserves (continued)
(d) 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 • Disposed of and the gains are realised.
Group Authority 2014 2013 2014 2013 £000 £000 £000 £000 Balance at 1 April 4,243 5,779 362 395 Upward revaluation of assets - - - Downward revaluation and impairment losses not charged (403) (1,503) (14) - to the surplus/deficit on the provision of services Difference between fair value depreciation and historical - (33) - (33) cost depreciation Balance at 31 March 3,840 4,243 348 362
(e) Capital Adjustment Account
The Capital Adjustment Account absorbs timing differences arising from the different arrangements for accounting for the consumption of non-current assets and for financing the 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 amortisation are charged to the 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 gains on donated assets that have yet to be consumed by the Authority.
Group Authority 2014 2013 2014 2013 £000 £000 £000 £000 Balance at 1 April 31,931 16,793 31,931 16,793 Reversal of items relating to capital expenditure debited or (3,300) (3,123) (3,300) (3,123) credited to the Income and Expenditure Statement: Revenue funded from capital under statute (12,910) (8,900) (12,910) (8,900) Amounts written out to the Revaluation Reserve 14 33 14 33 Net written out amount of the cost of non-current assets 15,735 4,803 15,735 4,803 consumed in the year Capital financing applied in the year: Capital grants and contributions credited to the Income and Expenditure Statement that have been applied to 12,910 8,900 12,910 8,900 capital financing Statutory provision for the financing of capital investment 10,260 10,728 10,260 10,728 charges against the General Fund Capital expenditure charged against the General Fund 8,609 7,500 8,609 7,500 Balance at 31 March 47,514 31,931 47,514 31,931
Page59 205 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 30. Reserves (continued)
(f) Financial Instruments Adjustment Account
The Financial Instruments Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for income and expenses relating to certain financial instruments and for trading losses or benefiting from gains per statutory provisions.
Group Authority 2014 2013 2014 2013 £000 £000 £000 £000 Balance at 1 April 36 49 36 49 Proportion of premiums incurred in previous financial years to be charged against the General Fund in (14) (13) (14) (13) accordance with statutory requirements Balance at 31 March 22 36 22 36
(g) Deferred Capital Grants
Deferred Capital Grants £000’s Balance at 1 April 2013 102,260 Revaluation reserve depreciation charge 390 Grants received MITA - Grants received European Union - Grants Applied:
Property plant and equipment 4,036 Deferred charges 234 Re EU schemes - Transfer from Capital reserves - Use of capital receipts - Released to Revenue:- - Disposal of PPE - Revaluation reserve adjustment - Depreciation/Impairment charge ( 4,936) Balance at 31 March 2014 101,984
Page 60206 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 31. Pension Costs
As part of the terms and conditions of employment of its officers and other employees, the Authority offers retirement benefits. The Merseyside Pension Fund administers, on the Authority's behalf, a Local Government Superannuation Scheme that provides for the cost of meeting the future pension liabilities of the Authority's workforce. This is a funded defined benefit final salary scheme, meaning that the Authority and employees pay contributions into a fund calculated at a level intended to balance the pension liabilities with investment assets. The contribution rate is determined by the Fund's actuary based on triennial actuarial valuations, the last of which was carried out as at 31 March 2013 by Mercers, a firm of Actuaries specializing in Pensions. Under Pension Fund regulations contribution rates are set to meet the estimated overall liabilities of the Fund.
The Authority paid an employer's contribution of £704k (2013 - £684k) to the Pension Fund, representing 13% (2013 – 13%) of pensionable pay. The contribution rate is determined by the Fund's actuary based on triennial actuarial valuations, the next review being effective from 1 April 2014. Under Pension Fund regulations contribution rates are set to meet the overall liabilities of the Fund.
Transactions relating to retirement benefits
The cost of retirement benefits in the net cost of services is recognised when the cost is earned by an employee, rather than when the benefit is eventually paid as pension. However, the charge made against the levy is based on the cash payable in the year, so the real cost of retirement benefits is reversed out in the Statement of Movement in the General Fund Balance. The following transactions have been made in the CIES and Pension Reserve during the year:-
(i) Income and expenditure statement Group Authority Restated Restated 2014 2013 2013 2014 2013 2013 £000s £000s £000s £000s £000s £000s Income and Expenditure Statement: Net cost of services: Current service cost 4,529 3,652 3,563 491 407 397 Administration expenses 98 81 - 11 9 - Settlements and Curtailments ** 416 - - 70 - - Financing and Investment Income and Expenditure: Net Interest cost 3,400 3,292 - 629 583 263
Total Post Employment Benefit Charged to the Surplus or Deficit on the 8,443 7,025 3,563 1,201 999 660 Provision of Services
Other Post Employment Benefit Charged to the Comprehensive Income and Expenditure Statement Actuarial (gains)/losses - 28,808 14,647 - 5,841 3,106
Remeasurements -Liabilities Experience (gain)/loss (4,435) - (2,718) -
Remeasurements - (Gain)/Loss financial assumptions (9,518) - (1,740) -
Remeasurements - (Gain)/Loss on demographic assumptions 1,343 - 184 -
Remeasurements (assets) 5,004 (15,953) - (10) (3,074) -
Total Post Employment Benefits Charged to the Comprehensive (7,606) 12,855 14,647 (4,284) 2,767 3,106 Income and Expenditure Statement
Movement in Reserves Statement: Reversal of net charges made to the Surplus or Deficit for the Provision 5,230 (13,653) (13,653) 3,787 (3,082) (3,082) of Services for post employment benefits in accordance with the Code Total Post Employment Benefits Charged in the year to the Movement 5,230 (13,653) (13,653) 3,787 (3,082) (3,082) in Reserves Statement
Summary of amounts charged to Reserves and Income and Expenditure Statement: Employer’s contributions payable to the scheme 6,067 6,227 6,227 704 684 684 Retirement benefits payable to pensioners 13,418 13,248 13,248 2,385 2,660 2,660
Page61 207 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 ** Effects of transfer of staff to the Executive for pension purposes.
31. Pension Costs (continued)
(ii) General Fund Balance
Group Authority Restated Restated 2014 2013 2013 2014 2013 2013 £000s £000s £000s £000s £000s Actual amount charged against the General Fund Balance for pensions in the year: Employer’s contributions 6,067 6,227 6,227 704 684 684
(iii) Reconciliation of present value of the scheme’s liabilities
Group Authority Restated Restated 2014 2013 2013 2014 2013 2013 £000s £000s £000s £000s £000s £000s Benefit obligations at 1 April 299,975 266,663 266,663 56,687 50,536 50,536 Current service cost 4,529 3,652 3,565 491 407 397 Interest on pension liabilities 12,345 12,774 12,861 2,334 2,415 2,425 Member contributions 1,287 1,327 1,326 149 148 148 Actuarial (gains)/losses - - 28,808 - - 5,841 Remeasurements (12,610) 28,807 - (4,274) 5,841 - Curtailments 416 - - 70 - - Settlements ------Benefits/transfers paid (13,418) (13,248) (13,248) (2,385) (2,660) (2,660)
Benefit obligations at 31 March 292,524 299,975 299,975 53,072 56,687 56,687
(iv) Reconciliation of the fair value of the scheme’s assets
Group Authority Restated Restated 2014 2013 2013 2014 2013 2013 £000s £000s £000s £000s £000s £000s Fair value of plan assets at 1 April 216,007 196,348 196,348 41,363 38,294 38,294 Expected return on plan assets - - 11,193 - - 2,162 Interest on plan assets 8,945 9,482 - 1,705 1,832 - Actuarial (gains)/losses - - 14,161 - - 2,735 Remeasurements (5,004) 15,953 - 10 3,074 - Adminstration expenses (98) (81) - (11) (9) - Settlements ------Employer contributions 6,067 6,227 6,227 704 684 684 Member contributions 1,287 1,326 1,326 149 148 148 Benefits/transfers paid (13,418) (13,248) (13,248) (2,385) (2,660) (2,660) Fair value of plan assets at 31 March 213,786 216,007 216,007 41,535 41,363 41,363
The expected return on scheme assets is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields at the date of the Statement of Financial Position. Expected returns on equity investments reflect long-term real rates of return experienced in the respective markets.
The actual return on plan assets for the Authority in the year was £2.0m (2012/13 £4.9m), for the Group £10.5m (2012/13 £25.3m).
Page 62208 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
31. Pension Costs (continued)
(v) Scheme history
Authority 2009/10 2010/11 2011/12 2012/13 2013/14 £000's £000's £000's £000's £000's Present value of scheme liabilities (70,570) (64,891) (50,536) (56,687) (53,072) Fair value of scheme assets 52,930 54,660 38,294 41,363 41,535 Surplus/(deficit) in the scheme (17,640) (10,231) (12,242) (15,324) (11,537)
Group 2009/10 2010/11 2011/12 2012/13 2013/14 £000's £000's £000's £000's £000's Present value of scheme liabilities (213,244) (276,191) (266,663) (299,975) (292,524) Fair value of scheme assets 154,435 200,402 196,348 216,007 213,786 Surplus/(deficit) in the scheme (58,809) (75,789) (70,315) (83,968) (78,738)
Statutory arrangements for funding the above deficits mean that the financial position of the Authority remains healthy (i.e. the deficit on the Merseyside Pension Scheme will be made good by increased contributions over the remaining working life of employees as assessed by the Scheme Actuary).
(vi) Pension contributions for 2014/15
The total contributions expected to be made to the Scheme by the Authority in the year to 31 March 2015:
£’000 Fixed Contribution 392 11.5% of Pensionable Pay (£2.2m) 253 Unfunded Pension Liabilities 33 ------678 =====
Page63 209 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 31. Pension Costs (continued)
Basis for estimating assets and liabilities
Liabilities have been assessed on an actuarial basis by Mercer Ltd, an independent firm of actuaries, using the projected unit method, which is an estimate of the pensions that will be payable in future years dependent on assumptions about mortality rates, salary levels, etc. It is based on the latest full valuation of the scheme as at 31 March 2013. The principal assumptions used by the actuary were:-
(i) Expected rate of return on assets in the scheme:
Group and Authority 2013/14 2012/13 Split of Split of Expected Assets Expected Assets Rate of between Rate of between Return on Investment Return on Investment Assets Categories Assets Categories % % % % Equity investments 7.0 56.9 7.0 60.6 Government bonds 3.4 13.7 2.8 15.7 Other bonds 4.3 2.6 3.9 3.6 Property 6.2 8.0 5.7 8.3 Cash/liquidity 0.5 2.7 0.5 2.3 Other N/A 16.1 6.8 9.5 100.0 100.0
(ii) Other assumptions
Group Authority 2013/14 2012/13 2013/14 2012/13 Mortality assumptions: Longevity at 65 for current pensioners Men (years) 22.3 21.8 22.3 21.8 Women (years) 25.2 24.7 25.2 24.7 Longevity at 65 for future pensioners Men (years) 24.7 23.7 24.7 23.7 Women (years) 28 26.6 28.0 26.6 Rate of Inflation (CPI) 2.40% 2.40% 2.40% 2.40% Rate of increase in salaries 3.90% 3.90% 3.90% 3.90% Rate of increase in pensions 2.40% 2.40% 2.40% 2.40% Rate for discounting scheme/liabilities 4.40% 4.20% 4.40% 4.20% N/A 50%-max N/A 50% - max Take-up of option to convert annual pension into retirement lump sum N/A 50% 3/80 N/A 50% - 3/80
Page 64210 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 31. Pension Costs (continued)
History of gains and losses
Group 2009/10 2010/11 2011/12 2012/13 2013/14 £000 % £000 % £000 % £000 % £000 %
Analysis of Actuarial gains/losses over 5 years:
Differences betw een the expected and actual return on assets (41,406) (21) 8,448 4 8,027 4 (14,161) (7) N/A Changes in demographic and financial assumptions used to estimate scheme liabilities 56,944 (21) (14,910) (6) 7,996 3 28,808 10 N/A
Total 15,538 (6,462) 16,023 14,647 - Discount Rate 6% 7% 6%
Authority 2009/10 2010/11 2011/12 2012/13 2013/14 £000 % £000 % £000 % £000 % £000 % Analysis of Actuarial gains/losses over 5 years Differences betw een the expected and actual return on assets (10,869) (21) 578 1 2,164 -6 2,735 7 N/A Changes in demographic and financial assumptions used to estimate scheme liabilities 15,802 (22) (4,889) (8) 2,219 4 (5,841) 10 N/A
Total 4,933 (4,311) 4,383 (3,106) - Discount Rate 7% 7% 9% 6%
The actuary carried out average age of the membership investigations as part of the 2013 actuarial valuation. Assumptions made in these figures are derived from the 2013 valuation exercise.
Compensatory added year’s benefits which are recharged to the Authority have been included in the liabilities for the purpose of IAS 19 calculations.
Pension Fund Sensitivity Analysis as at 31 March 2014:
Central Sensitivity 1 Sensitivity 2 Sensitivity 3 Sensitivity 4 Authority +0.1% pa discount +0.1% inflation +.01% pay 1 yr increase life rate growth expectancy £ooo's £ooo's £ooo's £ooo's £ooo's Disclosure item Liabilites 53,072 52,262 53,894 53,214 54,166 Assets (41,535) (41,535) (41,535) (41,535) (41,535) Deficit/(Surplus) 11,537 10,727 12,359 11,679 12,631
Projected service cost for next year 402 392 413 402 412 Projected net interest costs for next year 493 467 530 500 542
Central Sensitivity 1 Sensitivity 2 Sensitivity 3 Sensitivity 4 Group +0.1% pa discount +0.1% inflation +.01% pay 1 yr increase life rate growth expectancy £ooo's £ooo's £ooo's £ooo's £ooo's Disclosure item Liabilites 292,614 287,938 297,182 293,539 298,412 Assets (213,786) (213,786) (213,786) (213,786) (213,786) Deficit/(Surplus) 78,828 74,152 83,396 79,753 84,626
Projected service cost for next year 4,105 4,012 4,203 4,105 4,200 Projected net interest costs for next year 3,329 3,198 3,552 3,392 3,607
Page65 211 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 31. Pension Costs (continued)
Detailed Asset Breakdown as at 31st March 2014 Authority Asset category Sub-category Quoted 31/3/2013 % 31/3/2014 % £ooo £ooo Equities UK Quoted Y 10482 24 10980 26 Global quoted Y 13071 32 12647 30 Bonds UK Government Y 2102 5 1752 4 UK Corporate Y 1013 2 1096 3 UK Index linked Y 4569 11 3953 10 Property UK Direct N 2038 5 2028 5 Property Managed - (UK quoted) Y 239 1 256 1 Property Managed - (UK unquoted) N 636 2 657 2 Property Managed - (Global) N 361 1 390 1 Alternatives Private equity -(UK quoted) Y 36 0 30 0 Private equity -(UK unquoted) N 1051 3 1068 3 Private equity - (Global unquoted) N 1081 3 1007 2 Hedge funds - (UK quoted) Y 111 0 117 0 Hedge funds - (UK unquoted) N 1624 4 1700 4 Hedge funds - (Global unquoted) N 77 0 62 0 Infrastructure - (Global quoted) Y 161 0 126 0 Infrastructure - (UK unquoted) N 230 1 376 1 Infrastructure - (Global unquoted) N 247 1 330 1 Opportunies - (UK quoted) Y 555 1 606 1 Opportunies - (UK unquoted) N 336 1 579 1 Opportunies - (Global quoted) Y 324 1 357 1 Opportunies - (Global unquoted) N 205 0 315 1 Cash Cash instruments Y 814 2 1103 3
41363 100 41535 100
Group Asset category Sub-category Quoted 31/3/2013 % 31/3/2014 % £ooo £ooo Equities UK Quoted Y 54743 24 56512 26 Global quoted Y 68258 32 65095 30 Bonds UK Government Y 10976 5 9019 4 UK Corporate Y 5291 2 5641 3 UK Index linked Y 23862 11 20347 10 Property UK Direct N 10642 5 10438 5 Property Managed - (UK quoted) Y 1247 1 1318 1 Property Managed - (UK unquoted) N 3323 2 3383 2 Property Managed - (Global) N 1885 1 2006 1 Alternatives Private equity -(UK quoted) Y 187 0 154 0 Private equity -(UK unquoted) N 5488 3 5496 3 Private equity - (Global unquoted) N 5644 3 5185 2 Hedge funds - (UK quoted) Y 580 0 604 0 Hedge funds - (UK unquoted) N 8479 4 8752 4 Hedge funds - (Global unquoted) N 402 0 320 0 Infrastructure - (Global quoted) Y 841 0 648 0 Infrastructure - (UK unquoted) N 1203 1 1936 1 Infrastructure - (Global unquoted) N 1289 1 1698 1 Opportunies - (UK quoted) Y 2898 1 3119 1 Opportunies - (UK unquoted) N 1754 1 2981 1 Opportunies - (Global quoted) Y 1693 1 1838 1 Opportunies - (Global unquoted) N 1071 0 1620 1 Cash Cash instruments Y 4251 2 5676 3
216007 100 213786 100
Page 66212 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014
32. Prudential Borrowing
The Authority is required under the Local Government Act 2003 and the Prudential Code for Capital Finance in Local Authorities, (developed by CIPFA) to monitor its performance against a framework of indicators. These indicators set limits of performance, affordability, prudence and sustainability and are comparable to the estimated indicators approved by the Authority at its meeting on 6 February 2014:-
2012/13 2013/14 2013/14 Group Position Actual Revised Actual Estimate £m £m £m Capital Expenditure Transport - Other 13.1 22.7 13.3 Tunnels 7.6 9.4 8.6 Programme Slippage - -2.1 - 20.7 30.0 21.9
Ratio of Financing Costs to net Revenue Stream 18.9% 17.5% 17.9%
Capital Financing Requirement (Including Transferred Debts) 247.2 236.9 236.9
33. Related party disclosures
The Authority is required to disclose material transactions with related parties – bodies or individuals that have the potential to control or influence the Authority or to be controlled or influenced by the Authority. The directors regard the following as related parties:
(a) Directors and Authority members
Merseytravel directors have a dual role as chief officers of both the Executive and Authority and in some instances are also directors of the Executive’s subsidiary companies. All directors’ emoluments and member allowances are met in full by the Authority.
All members have at least two roles under the Local Government Act 1985 in that they represent both the District Councils and the Integrated Transport Authority. Several members also represent certain other bodies including the Local Government Association, ITA Special Interest Group, Mersey Dee Alliance, North West LA’s Employers Organisation, North West Rail Forum, West Coast Rail Campaign, North of England Regional Consortium (including North West Regional Association, North West Partnership & North West Regional Chamber), Merseyside Strategic Transportation & Planning Committee, Travel Safe Board, Local Enterprise Partnership, City Region Board and Mersey Ferries Ltd. It is deemed that there is no conflict of interest.
Transactions with the above external bodies may include grants or contributions with specific conditions and requirements imposed upon the Authority. The majority of these will follow statutory or other Government guidance. Members set the levy in consultation with District Councils. The Levy funds the balance of service costs not covered by income or grant and for 2013/14 £127,364k (2012/13 £127,364k) was paid by the District Councils. Members also set the Tolls for Mersey Tunnels after consultation.
Details of directors emoluments are set out in note 9 and details of Member’s allowances are set out in note 10.
Page67 213 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 33. Related party disclosures (continued)
(b) Directors to the Executive’s Subsidiary Companies
Note 20 shows the Authority’s subsidiary companies. Some of the Authority’s directors are also directors to the companies, with remuneration payable by the Authority. The Objectives of the subsidiary companies are compatible with those of the Authority. Four members of the Authority acted as directors of Mersey Ferries Limited during different periods during 2013/14. These directors received no remuneration (2012/13 £10k) from the Subsidiary Company.
(c) Subsidiary Companies
The Authority controls its subsidiaries, as set out in note 20. As the Authority operates one bank account, an inter-company debt exists between the Authority and the Executive of £35,617k (2012/13 £26,810k). In addition the following were the transactions during the year and balances at the year end with the Executive: Transactions during year Balances at 31 March Expenditure Receivable Income from Payable to with from £000 £000 £000 £000 MPTE (grant-related) 2014 - 211,820 MPTE (grant-related) 2013 - 198,972 MPTE (short term deposits) 2014 21,700 MPTE (short term deposits) 2013 - 29,400
Further details of the Authority’s relationship with, and the grants paid to MPTE are contained within the Explanatory Forward on page 3 of the accounts. Outstanding balances as at 31 March are unsecured, interest free and settlement occurs in cash. There have been no guarantees provided or received. No impairment of receivables has occurred during the year.
(d) European Union
Participation in fuel and energy saving projects, and part funding for infrastructure projects generate various grants for the Authority’s subsidiary the Executive. There are minor controlling influences upon the Executive in that certain procedural requirements have to be met to ensure benefits can be claimed and received.
(e) Merseyside Pension Fund
The Merseyside Pension Fund, which is administered by Wirral Council, is considered a related party. Full details of transactions with the Pension fund are set out in note 31. At 31 March 2013, there was £68k payable to the pension fund via Wirral Council (2012 - £69k).
(f) UK government
In 2013/14 the Authority received:
Strategic Rail Grant of £98,610k (2012/13 £89,209k) Local Transport Plan (LTP) Grant funding of £6.6m (2012/13 £6.5m) Better Bus Area Grant of £153k, of which £63k was utilised during the year Clean Bus grant of £819k, of which £571k was utilised
The Authority was appointed as the Accountable Body for the Merseyside Local Sustainable Transport Funding (LSTF) for both major/minor schemes and received £24.8m on behalf of the LSTF partnership. In 2012/13 £4.5m was disbursed to partners (with the Authority receiving £0.5m of that amount). In 2013/14 a further £7.1m was disbursed (Authority £1.1m). The unspent balance of funding (£13.2m) is included as a creditor within the balance sheet.
(j) PWLB/DfT – the Authority has a substantial Loans portfolio with both bodies and details of the transactions and balances are set out in note 29.
Page 68214 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 34. Commitments
Capital Commitments
As at 31 March 2014 the Authority was contractually committed to further capital works which amounted to approximately £3.5m (2012/13 £2.8m). Major contracts included the following schemes:-
Group Authority Group Authority 2014 2014 2014 2014 £000 £000 £000 £000 Budget Budget Committed Committed Mersey Tunnels 8,799 8,799 3,519 3,519 Electric charging posts 680 - 680 - Lime st subway 260 - 260 - Highways grant 6,600 - 6,600 - Wirral P&R 787 - 787 - Ferries Improvements 148 - 148 - Hoylake station 220 - 220 - Other Schemes 12,120 - 433 - Total Capital Commitments 29,614 8,799 12,647 3,519
Authority Lease commitments
The Authority entered into a 30 year non-cancellable operating lease for its new headquarters building at Mann Island. The Authority received an incentive from the developer of £9m which equates to a 3 year rent free period, and which was used to finance the cost of bringing the building to a Category B fit out and also to finance the purchase of ICT and furniture. The incentive is being amortised over the life of the lease with the deferred credit at 31 March 2014 of £9,101k (2013 - £9,451k) shown in the balance sheet as Other Long Term Liabilities, £8,751k and £350k included within current liabilities.
A rent guarantee incentive of £3m was also secured in 2011/12 to compensate the Authority for vacant floors (floors 3-5) for which rental is being paid. This rental guarantee continues to be drawn down if floors are vacant up to a limit of 5 years. Any balance unused will be split equally between the Authority and the developer of Mann Island, Countrywide Neptune.
The Authority has no assets held under finance leases.
Group Lease Commitments
Total commitments payable by the group under non-cancellable operating leases are as follows:
Group Authority 2014 2013 2014 2013 £000 £000 £000 £000
Operating leases which will expire:
Within 1 year 14,929 14,973 2,790 2,781 Within 2 to 5 years 56,539 23,289 11,160 11,124 Over 5 years 64,170 66,744 64,170 66,744
Page69 215 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2014 The Authority will receive sublease income in respect of the above properties of £219k per annum (£3,285k in total) under non-cancellable property subleases.
The Authority through its Grant to the PTE also funds the Executive’s subsidiary company MPTS, which has two operating, leases, one for the rental of Beetham Court for office accommodation and another for the operating rental of the Merseyrail Rolling Stock. The latter has a back to back lease with Merseyrail Electrics who fully reimburse the cost of this lease. In the unlikely event that Merseyrail Electrics default in its payment the Authority through the Executive would guarantee the lease payments to the Lessor, Angel Trains, until a replacement franchise operator was appointed. Future minimum payments receivable under non -cancellable operating leases are:
The Executive relocated its headquarters to Mann Island in March 2012, transferring staff previously based at Beetham Court and Hatton Garden. The lease for Beetham Court expired in May 2013.
The lease with Angel Trains expires in May 2015. However, negotiations have recently finalised to extend this lease until new rolling stock becomes available or the existing fleet undergoes a major refurbishment. The lease costs in the above table reflect the existing position of expiry in December 2018.
Lessor
Through its subsidiary the Executive, the Authority holds several operating leases with third parties. These are for interchange sites and ferry terminals in the Merseyside area. These non -cancellable leases have remaining terms of between 2 and 17 years.
Future minimum payments receivable under non-cancellable operating leases are:
Group Authority 2014 2013 2014 2013 £000’s £000’s £000’s £000’s
Operating leases which will expire:
Within 1 year 645 413 - - Within 2 to 5 years 2,569 1,626 - - Over 5 years 9,371 3,295 - -
Departure charges and facility fees charged to bus operators for the use of the Executive’s bus stations are not included in the above table. For 2013/14, the Executive received £1,068k (2012/13 £1,032k) for these fee.
35. Post balance sheet events
The Authority has considered events after the date of the Statement of Financial Position up to the time of the authorisation of the Statement of Accounts. The figures in the financial statements have been adjusted in all material
There have been no significant events since 31 March 2014 that are relevant to an understanding of the Authority’s financial position.
Page 70216 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY GLOSSARY OF FINANCIAL TERMS ACCOUNTING POLICIES The rules and practices adopted by the authority that determine how the transactions and events are reflected in the accounts.
ACCRUALS Amounts included in the accounts for income or expenditure relation to the financial year but not received or paid as at 31st March.
BALANCES (OR RESERVES) These represent accumulated funds available to the authority. Some balances (reserves) may be earmarked for specific purposes for funding future defined initiatives or meeting identified risks or liabilities. There are a number of unuseable reserves which are used for technical
CAPITAL EXPENDITURE Payments for the acquisition, construction, enhancement or replacement of assets such as land, buildings, roads, and computer Equipment.
CAPITAL ADJUSTMENT ACCOUNT A reserve set aside from revenue resources or capital receipts to fund capital expenditure or the repayment of external loans and certain other capital financing transactions.
CAPITAL RECEIPTS Income received from the sale of land, buildings or equipment.
CENTRAL SUPPORT SERVICES Support provided to front line services by the administrative and professional officers, including financial, legal, personnel, computer, property and general administrative support.
COMMUNITY ASSETS The class of Fixed Assets held by an authority in perpetuity that have no determinable useful life and may have restriction on their disposal, such as parks and open spaces, historical buildings, works of art, etc.
CONTINGENT ASSET An asset arising from past events, where its existence can only be confirmed by one or more uncertain future events not wholly within the control of the Council.
CONTINGENT LIABILITY A contingent liability is either:
• A possible obligation arising from a past event whose existence will be confirmed by the occurrence of one or more uncertain future events not wholly within the control of the Council (e.g. the outcome of a court case); or • A present obligation arising from past events where it is not probable that there will be an associated cost or the amount of the obligation cannot be accurately measured.
CORPORATE AND DEMOCRATIC CORE This comprises all activities which local authorities engage in specifically because they are elected, multi- purpose organisations. 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. It includes cost relating to the corporate management and democratic representation.
CREDITORS Amounts owed by the Council for goods and services received but not paid for as at 31st March.
DEBTORS Amounts owed to the Council for goods and services provided but where the associated income was not received as at 31st March.
DEFINED BENEFIT SCHEME A pension or other retirement benefit scheme other than a defined contribution scheme. Usually, the scheme rules define the benefits independently of the contributions payable, and the benefits are not directly related to the investments of the scheme.
Page71 217 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY GLOSSARY OF FINANCIAL TERMS
DEFERRED CAPITAL INCOME Deferred Capital Income comprises amounts derived from sales of assets which will be received in instalments over agreed periods of time. They arise principally from mortgages on sales of council houses, which form the main part of mortgages under loans for purchase and improvement of property.
DEFINED CONTRIBUTION SCHEME A pension or other retirement benefit scheme into which an employee pays regular fixed contributions as an amount or as a percentage of pay and will have no legal or constructive obligation to pay further contributions if the scheme does not have sufficient assets to pay all employee benefits relating to the employee service in the current and prior periods.
DEPRECIATION A measure of the cost of the economic benefits of the tangible fixed asset consumed during the period.
DIRECT SERVICE ORGANISATION A unit operating within the Council's responsibility that has won work in open competition with private firms to deliver certain services to residents.
EXCEPTIONAL ITEMS Material items which derive from events or transactions that fall within the ordinary activities of the Council, which need to be disclosed separately by virtue of their size or incidence to give a fair representation in the account.
FINANCE LEASE A lease that substantially transfers the risks and rewards of a fixed asset to the lessee. With a Finance Lease, the present value of the lease payments would equate to substantially the all of the fair value of the leased asset.
FIXED ASSETS Tangible assets that yield benefit to the Council and the services it provides for a period of more than one year.
GENERAL FUND The account to which the cost of providing the Council Services is charged that are paid for from Council Tax and Government Grants (excluding the Housing Revenue Account).
IMPAIRMENT A reduction in the recoverable amount of a fixed asset, below its carrying value (e.g. obsolescence, damage or adverse change in statutory environment).
COMPREHENSIVE INCOME AND EXPENDITURE STATEMENT A new statement from 2010-11, which details the total income received, expenditure incurred by the authority during a year in line with IFRS reporting as introduced by the new Code.
INFRASTRUCTURE ASSETS A class of assets whose life is of indefinite length and which are not usually capable of being sold such as highways and footpaths.
INTANGIBLE FIXED ASSETS 'Non-financial' fixed assets that do not have physical substance but are identifiable and are controlled by the authority through custody or legal rights. Purchased intangibles, such as software licences, are capitalised at cost whilst internally developed intangibles are only capitalised where there is a readily ascertainable market value for them.
LONG TERM DEBTORS These debtors represent the capital income still to be received, for example, from the sale of an asset or the granting of a mortgage or a loan.
MINIMUM REVENUE PROVISION The minimum amount that the Council must charge to the income and expenditure account to provide for the repayment of debt.
Page 72218 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY GLOSSARY OF FINANCIAL TERMS
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 REALISABLE VALUE The amount at which an asset could be sold after the deduction of any direct selling costs.
NON-DISTRIBUTED COSTS Non-distributed costs are defined as comprising:
• retirement benefit costs (past service costs, settlements and curtailments) (NB: Current service pension costs is included in the total costs of services) • the costs associated with unused shares of IT facilities • the costs of shares of other long-term unused but unrealisable assets.
NON-OPERATIONAL ASSETS Fixed assets held by a local authority but not directly occupied, used or consumed in the delivery of services. Examples of non-operational assets are investment properties and assets that are surplus to requirements, pending sale or redevelopment.
OPERATING LEASE A lease other than a finance lease. This is a method of financing assets which allows the Council to use, but not own the asset and therefore is not capital expenditure. A third party purchases the asset on behalf of the Council, who then pays the lessor an annual rental over the useful life of the asset.
OPERATIONAL ASSETS Fixed assets held and occupied, used or consumed by the local authority, in the direct delivery of those services for which it has either a statutory or discretionary responsibility.
PAST SERVICE COST For a defined benefit scheme, the increase in the value of benefits payable that were earned in prior years arising because of improvements to retirement benefits.
POST BALANCE SHEET EVENTS These events, both favourable and unfavourable, are which occur between the balance sheet date and the date on which the statement of accounts are finally signed by the Chief Operating Officer.
PRIOR YEAR ADJUSTMENT A material adjustment applicable to prior years arising from changes in accounting policies or correction of fundamental errors.
PROVISIONS A liability that is of uncertain timing or amount which is to be settled by transfer of economic benefits.
PRUDENTIAL CODE Since 1 April 2004, local authorities have been subject to a self-regulatory "prudential system" of capital controls. This gives authorities freedom to determine how much of their capital investment they can afford to fund by borrowing. The objectives of the code are to ensure that local authority's capital investment plans are affordable, prudent and sustainable, with Councils being required to set specific Prudential indicators.
RELATED PARTIES Two or more parties are related parties when at any time during the financial period:
• one party has direct or indirect control of the other party; or • the parties are subject to common control from the same source; or • one party has influence over the financial and operational policies of the other party, to an extent that the other party might be inhibited from pursuing at all times its own separate
Page73 219 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY GLOSSARY OF FINANCIAL TERMS interests; or • the parties, in entering a transaction, are subject to influence from the same source, to such an extent that one of the parties to the transaction has subordinated its own separate interests.
Advice from CIPFA is that related parties to a local authority include Central Government, bodies precepting or levying demands on the Council Tax, members and chief officers of the authority and its pension fund.
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. Examples of related party transactions include:
• the purchase, sale, lease, rental or hire of assets between related parties; • the provision by a pension fund to a related party of assets of loans, irrespective of any direct economic benefit to the pension fund; • the provision of services to a related party, including the provision of pension fund administration services; • transactions with individuals who are related parties of an authority or a pension fund, except those applicable to other members of the community or the pension fund, such as Council Tax, rents and payments of benefits.
RESERVES An amount set aside for a specific purpose in one year and carried forward to meet future obligations.
REVENUE EXPENDITURE Day to day payments on the running of Council services including salaries, wages, contract payments, supplies and capital financing costs.
REVENUE EXPENDITURE FUNDED FROM CAPITAL UNDER STATUTE Legislation in England & Wales allows some expenditure to be classified as capital for funding purposes when it does not result in the expenditure being carried on the Balance Sheet as a fixed asset. Examples include works on property owned by other parties, renovation grants and capital grants to other organisations.
ADJUSTMENTS BETWEEN ACCOUNTING BASIS AND FUNDING BASIS This note effectively replaces the statement of movement on General Fund balances and presents all adjustments made to the CIES to deflect unnecessary impact on the general fund reserve and therefore council tax payer.
THE CODE (FORMERLY STATEMENT OF RECOMMENDED PRACTICE (SoRP)) The new Code was issued in 2010 and incorporates new guidance in line with IFRS, IPSAS and UK GAAP Accounting Standards. It sets out the proper accounting practice to be adopted for the Statement of Accounts to ensure they 'present fairly' the financial position of the Council. The Code and former SoRP has statutory status via the provision of the Local Government Act 2003.
MOVEMENT IN RESERVES STATEMENT This new financial statement presents the movement in useable and unuseable reserves (the councils total reserve balances).
Page 74220 MERSEYSIDE INTEGRATED TRANSPORT AUTHORITY GLOSSARY
Glossary of Acronyms used in these Accounts
(M)ITA (Merseyside) Integrated Transport Authority (M)PTE (Merseyside) Passenger Transport Executive APR Annual Performance Review ATL Accrington Technologies Ltd CIES Comprehensive Income and Expenditure Statement CIPFA Chartered Institute of Public Finance Accountants CODE CIPFA/LASAAC Code of Practice on Local Authority Accounting in United Kingdom CPI Consumer Price Index DfT Department for Transport MPF Merseyside Pension Fund DRCM Democratic Representation and Corporate Management EMU Economic and Monetary Union ENCTS English National Concessionary Travel Scheme EPOS Electronic Point of Sale FAR Fixed Assets Register FRAB Financial Reporting Advisory Board (HM Treasury) RCCO Revenue contributions to Capital Outlay GRN Goods received note GSML Global Smart Media Ltd I&E a/c Income and Expenditure Account IAS International Accounting Standards IFRS International Financial Reporting Standard IT Information Technology ITSO Integrated Transport Smartcard Organisation JVC Joint Venture Company LGPS Local Government Pension Scheme LSP Liverpool South Parkway LSTF Local Sustainable Transport Fund LTP Local Transport Plan MEL Merseyrail Electrics Ltd MFL Mersey Ferries Ltd MIRS Movement in Reserves Statement MRP Minimum Revenue Provision OTOF One Team, One Family (Organisation Development Initiative) PTEG Passenger Transport Executives Group PWLB Public Works Loan Board REFCUS Revenue Expenditure Funded from Capital Under Statute RPI Retail Price Index SNR Serco Ned Rail SOLACE Society of Local Authority Chief Executives SRG Special Rail Grant TBS The Beatles Story TWA Transport and Works Act VFM Value For Money
Page75 221 Appendix A PAGES NOT FORMING PART OF THE AUDITED ACCOUNTS Mersey Tunnels Revenue Account For the year ended 31 March 2014
2012/13 2013/14 £ooo £ooo Operating Expenditure
4,300 Employees 4,303 1,410 Premises 1,392 1,207 Supplies & Services 1,311 147 Transport 149 7,187 Central Support Services 6,638
14,251 Total Operating Expenditure 13,793
Asset Financing
5,941 Capital Charges 5,508 7,500 Revenue Contributions to Capital Outlay 8,565 3,663 Levy Repayment 3,663 - Transfers to/(from) Repairs & Renewals Fund -1,500
17,104 Total Asset Financing 16,236
31,355 Total Expenditure 30,029
Income
37,360 Toll Income 39,865 349 Fees and Other Charges 342 - Release of provision - 37,709 Total Income 40,207
-6,354 (Surplus)/Deficit before charging -10,178
6,354 Tunnels Act 2004 10,178
0 Total Deficit 0
Page 76222 Appendix A PAGES NOT FORMING PART OF THE AUDITED ACCOUNTS Mersey Tunnels Balance Sheet as at 31 March 2014
As at As at 31/03/2013 31/03/2014 Tunnels Tunnels £ooo £ooo NON-CURRENT ASSETS Property, Plant & Equipment: 2,555 Freehold Property 3,206 - Leasehold Property - 1,347 Vehicles, Plant, Furniture & Equipment, Vessels 1,641 272,404 Infrastructure Assets 276,408 450 Community Assets 450 74 Surplus Assets 74 276,830 Total PPE 281,779 - Investments - - Long Term Debtors - 276,830 TOTAL NON-CURRENT ASSETS 281,779
CURRENT ASSETS 615 Inventories 622 225 Short Term Debtors 264 5 Rechargeable accounts 5 36,027 Cash and cash equivalents 33,116 36,872 TOTAL CURRENT ASSETS 34,007
313,702 TOTAL ASSETS 315,786
CURRENT LIABILITIES (1,811) Deferred Liabilities -repayable within 12 months (1,811) (3,083) Internal loan - repayable within 12 months (3,361)
(900) Long Term Borrowing - repayable within 12 months (870)
(6,686) Short Term Creditors (7,504) (28) Provisions (39) (12,508) TOTAL CURRENT LIABILITIES (13,585) 24,364 NET CURRENT ASSETS 20,422
NON-CURRENT LIABILITIES (127) Long Term Creditors - (220) Provisions (193) (21,733) Deferred Liabilities (19,922) (3,361) Internal loan - (21,665) Long Term Borrowing (20,879) - Other Long Term Liabilities - (47,106) TOTAL NON CURRENT LIABILITIES (40,994) 254,088 NET ASSETS 261,207
FUNDS BALANCES & RESERVES 7,256 Useable Reserves - Repairs and Renewals Fund 5,756 291 Unusable Reserves - Revaluation reserve 291 246,541 Unusable Reserves - Capital Adjustment Account 255,160
254,088 TOTAL RESERVES 261,207
This balance sheet is a memorandum item only and consequently does not include transactions relating to IAS 19 (Pensions)
Page77 223 This page is intentionally left blank Agenda Item 12
LIVERPOOL CITY REGION COMBINED AUTHORITY
To: The Chair and Members of the Combined Authority
Meeting: 19 September 2014
Authority/Authorities Affected: All
EXEMPT/CONFIDENTIAL ITEM: No
REPORT OF THE CHAIR OF THE COMBINED AUTHORITY
ASSOCIATE MEMBERSHIP OF THE COMBINED AUTHORITY
1. PURPOSE OF REPORT
1.1 Since the Liverpool City Region (LCR) Combined Authority was established, a number of positive discussions have been taking place with neighbouring authorities including Warrington and West Lancashire, to explore opportunities for them to become associate members of the LCR Combined Authority. This report updates members on latest developments and asks for their approval for officers to progress formal arrangements for associate membership.
2. RECOMMENDATIONS
2.1 It is recommended that the Liverpool City Region Combined Authority:
a) Notes the latest positive discussions for joint strategic working with neighbouring local authorities; b) Agrees that, upon application, the Head of Paid Service, in consultation, with the Chair and Vice Chair of the Combined Authority, be given delegated powers to accept adjacent authority associate membership of the LCR Combined Authority on the terms referred to in this report; and c) Requests the Monitoring Officer to prepare amendments to the Constitution to allow associate membership of the Combined Authority.
3. BACKGROUND
3.1 During the consultation phase of the Liverpool City Region Strategic Governance Review in Summer 2013, a number of neighbouring authorities expressed an interest in becoming associate members of the Liverpool City Region Combined Authority.
3.2 Since then, discussions have progressed about an associate membership model with those neighbouring authorities, with the intention of reporting progress into the Combined Authority September 2014 meeting.
Page 225 3.3 Associate member status would offer a number of positive entitlements to the relevant partner, but clearly not all of those that come with full membership of the Combined Authority. The benefits of associate membership could include:
Attendance at Combined Authority Board meetings by the Leader (or nominated substitute) but without voting rights; Taking a shared strategic approach in the development of significant policy areas e.g. Rail North, Atlantic Gateway, future growth bids; Joint working on issues such as employment and skills through involvement in relevant officer working groups; Delivery of shared action plans e.g. Freight and Logistics; and Shared communication and lobbying activities – for example on the issue of greater devolved powers
3.4 Discussions have taken place to develop opportunities for associate membership, where such an arrangement is considered mutually beneficial to the City Region and to the particular local authority in question.
3.5 These discussions reflect the value of greater co-operation on strategic issues or policy development that have cross border/wider travel to work area implications across the wider functional economic area. (See map set out in Appendix One).
3.6 A number of very positive discussions have also been taking place in relation to closer working across the wider region on strategic transport linkages.
3.7 In recognition of the strong work undertaken by the LEP, and the fact that economic interactions cross Local Authority boundaries, the LEP often engages with adjacent local authorities where there is common economic interest. For example, key sites in West Lancashire and Cheshire West and Chester that form part of the wider SUPERPORT base are included and promoted through the LEPs activities. West Lancashire Council, in recognition of the economic opportunities, became a Corporate Member of the LEP earlier this year.
4. RESOURCE IMPLICATIONS
4.1 Financial There are no additional costs to the Combined Authority arising from the recommendations in this report. Becoming an associate member of the Combined Authority would come at no cost to the applicant; although the applicant might choose to make contributions to joint work underway within the City Region or become a Corporate Member of the LEP. . 4.2 Legal The appropriate amendments to the Constitution will be prepared for consideration by the Combined Authority at a future meeting.
4.3 Human Resources There are no direct issues arising from this report
4.4 Physical Assets There are no direct issues arising from this report Page 226
4.5 Information Technology There are no direct issues arising from this report
5. RISKS AND MITIGATION
5.1 No direct risks arising from this report
6. EQUALITY AND DIVERSITY IMPLICATIONS
6.1 There are no negative implications arising from the recommendations in this report.
7. COMMUNICATION ISSUES
7.1 Discussions with potential Associate Members will be continued and reported back to future meetings of the Combined Authority.
8. CONCLUSION
8.1 This report outlines some of the positive reasons why associate membership would be mutually beneficial. It sets out several areas where greater strategic co-operation on policy and practical outcomes would help the Liverpool City Region to play a stronger role in the development of sub-regional and regional issues.
CLLR PHIL DAVIES Chair of the Combined Authority
Contact Officer: Graham Burgess, Chief Executive, Wirral Council Tel 0151 691 8589
Appendices: Appendix One: map demonstrating the wider functional economic area
Background Documents: None
Page 227
Appendix 1: Liverpool City Combined Authority and neighbouring authorities
Page 228 Agenda Item 13
LIVERPOOL CITY REGION COMBINED AUTHORITY
To: The Chair and Members of the Combined Authority
Meeting: 19 September 2014
Authority/Authorities Affected: All
EXEMPT/CONFIDENTIAL ITEM: No
REPORT OF THE CHAIR OF THE COMBINED AUTHORITY
THE ROLE OF THE COMBINED AUTHORITY IN DRIVING A NORTHERN DEVOLUTION AGENDA
1. PURPOSE OF REPORT
1.1. Since the Liverpool City Region Combined Authority was established, a number of external discussions have been taking place with other Northern Combined Authorities (CAs) and the Local Government Association (LGA), in relation to how we can collectively build the case for greater devolved political and financial powers, share learning, and build the case for the North.
1.2. This report updates members on latest discussions, and sets out a number of proposed actions for the Combined Authority in taking this agenda forward.
2. RECOMMENDATIONS
2.1. It is recommended that the Liverpool City Region Combined Authority:
a) Notes the latest positive discussions for joint working across the Combined Authorities on the devolution agenda; b) Agrees that the Combined Authority continues to further develop a number of specific asks in relation to increased devolved powers and responsibilities and an agenda for the North; and c) Ensure that this work is aligned with other relevant bodies, especially Core Cities, to share learning and best practice.
3. BACKGROUND
3.1. The LCR Combined Authority has been leading a number of discussions with colleagues from the Local Government Association (LGA) and the other 5 Combined Authorities. Recent sessions include:
The LGA annual conference held in early July included a City Region marketing and exhibition stand which generated significant interest and discussion from other colleagues. A reception was held at the exhibition with representatives
Page 229 from all of the other CAs to discuss how we can collectively develop a strong case for greater devolution of powers from Whitehall; and A roundtable discussion jointly hosted with the Municipal Journal to discuss the potential for increased Northern devolution.
3.2. A number of follow up sessions are now being set up in order to:
a) Develop a very strong and specific rationale for those specific policy themes which should be the focus for joint work; and b) Agree how we can use this to lobby and influence emerging political policy in the pre-election period.
4. KEY ISSUES
4.1. There is an increasing level of national debate and discussion around the need for greater devolution of budgets, resources and political powers from Whitehall. Within the context of the imminent Scottish referendum, and with emerging political policy from all mainstream Parties indicating an appetite for some extent of devolution, there is a unique role for the new Combined Authorities in contributing to the debate. The recent Lord Adonis’ review suggests that Combined Authorities, working with LEPs, are better placed to tackle entrenched problems of poor skills, infrastructure and economic development.
4.2. One of the key drivers for the Combined Authority is to secure greater influence over key levers and resources affecting local growth, including freedoms, flexibilities and funding from Government.
4.3. We now have 5 Combined Authorities based around the largest cities of the North – in the Liverpool City Region, Sheffield, Greater Manchester, the North East and West Yorkshire. In addition, the Tees Valley authorities are developing their proposal to become a Combined Authority, and have also expressed positive support for the Northern devolution agenda. The case for increased devolved powers includes a discussion about the unique and significant contribution of the Northern economies in generating UK growth, and to consider what additional powers the Combined Authorities may need to deliver on this. Recent discussions with partners are centred on the value of having a clear and unified voice to jointly articulate our priorities, and ensure they are driven through.
4.4. The Combined Authority also acknowledges the existing positive developments on this agenda, including the recent launch of One North.
4.5. As part of the discussion, the Chair of the Combined Authority has developed a short paper in order to help stimulate a debate around the issues, and to help inform what specific actions we may wish to focus on: this is attached as Appendix One. Partners are invited to comment on the paper.
5. RESOURCE IMPLICATIONS
5.1. Financial There are no direct issues arising from this report Page 230
5.2. Legal There are no direct issues arising from this report
5.3. Human Resources There are no direct issues arising from this report
5.4. Physical Assets There are no direct issues arising from this report
5.5. Information Technology There are no direct issues arising from this report
6. RISKS AND MITIGATION
6.1. There is a risk that the opportunities associated with potential Northern devolution are not captured. This will be mitigated through working collaboratively with other Combined Authorities on concerted communication of the opportunities for devolution and commensurate outputs.
7. EQUALITY AND DIVERSITY IMPLICATIONS
7.1. There are no negative implications
8. COMMUNICATION ISSUES
8.1. None directly arising as a result of this report
9. CONCLUSION
9.1. This report updates members on some of the recent discussions taking place in relation to the devolution agenda. It proposes a number of key actions that the Combined Authority can take to build on these discussions.
CLLR PHIL DAVIES Chair of the Combined Authority
Contact Officer: Graham Burgess, Chief Executive, Wirral Council Tel 0151 691 8589
Appendices: Appendix One: ‘Best Together’ Cllr Phil Davies’ discussion paper on Northern Devolution
Background Documents: None Page 231 This page is intentionally left blank
Best Together An Agenda for England’s Northern City Regions
This discussion paper sets out an argument for English political and economic balancing with the northern combined authorities at its heart. It identifies the key issues for joint working, national as well as northern benefits, and, if the argument is accepted, the next steps.
The political landscape grows ever more complex at a time when strong and clear leadership has never been more important. Combined Authorities, LEPs, Core Cities, directly elected Mayors – the list goes on – must decide how to make sense of how we can best work together to deliver for the residents and businesses we serve.
We must seek to unite the North – where it makes sense to do so – to work together to harness our significant economic assets to create a powerhouse for growth that can be truly globally competitive. Our challenge is to ensure that we do not lose sight of the important role our locally and democratically elected representatives have to play as leaders of their distinct and diverse local communities – places and people who define our identity.
Effective rebalancing must embrace not just economic outcomes – but crucially political power. Fifteen million people deserve to be heard and are entitled to request the same powers of local determination as residents of Scotland and Wales.
This paper is intended to provoke discussion, I do not pretend that it contains all the right solutions. I believe that the time is not just right for this important debate, it is our duty to set an agenda for the North that we can take to Government to demand fairness and equality of opportunity when future national policy is decided.
I look forward to hearing your views and contributions.
Cllr Phil Davies Leader of Wirral Council and Chair of Liverpool City Region Combined Authority
Page 233 1 Political Balance
1.1 The UK’s economy is highly unbalanced. We have the worst regional disparities in the developed world. Monaco aside, property prices in London are the highest in the world. Rebalancing the economy is crucial to our future; in particular a resilient manufacturing sector and culture must develop, to reduce overdependence on financial services. The North’s city regions are crucial to this goal. The UK remains the world’s sixth biggest manufacturing poweri and the northern city regions account for a significant proportion of manufacturing output.
1.2 Effective rebalancing must go beyond business. Without a redistribution of political power, the North will have little leverage in competing for national resources, little media influence, and be unable to rebuild a distinctively pro manufacturing culture.
1.3, The Northern regions account for 28% of England population (just over 15 million people). Compared with other parts of the UK have weak political institutions. Scotland, Wales and Northern Ireland have devolved administrations, responsible for substantial decision making – especially in Scotland. London has a directly elected and well resourced metropolitan Mayor. Even the outer South East has stronger political institutions; for the most part it has retained its elected County councils.
1.4 In the North the former metropolitan county councils were lost in 1986. In the North West, Cheshire, the most prosperous county, also lost its county council in 2009. For the great majority there is no democratic political institution between them and Westminster, apart from their local council.
‘Effective rebalancing must go beyond business. Without a redistribution of political power, the North will have little leverage in competing for resources’
1.5 Abolition of the Regional Development Agencies, Government Offices and Regional Assemblies in 2012 further reduced the North’s strategic capacity, and perhaps its visibility to London based decision takers. The severe spending cuts imposed on northern city councils have amplified the problem. Increasingly councils are short of staff, short of resources, and short of talent. In relative terms the North is disenfranchised, and unless there is a resounding ‘no’ vote, the Scottish independence referendum will significantly accentuate northern weakness.
2 Page 234
2 Common Concerns
2.1 The new combined authorities are a first step in the right direction. Now created for all the big city regions – Leeds, Liverpool, Manchester, Newcastle and Sheffield – these are not directly elected authorities but they do bring together the leaders of all the relevant district councils in a strategic body which has statutory status. They bring the promise of more powerful and effective strategic leadership and action.
2.2 The question is whether the combined authorities could achieve more working in isolation or working together. Geography suggests that they could work together. Leeds, Manchester and Liverpool are little more than 60 miles apart; so too are Liverpool, Manchester and Sheffield. Newcastle is more isolated, but still less than 1.5 hours by train to Leeds.
2.3 At least seven strategic issues might benefit from a common front, and from a distinct policy framework better adapted to the needs of northern city regions:
Connecting the north
2.4 Government remains committed to HS2, reducing journey times from the north to London and tackling capacity problems, especially in the south of England. But little or no thought has been given to how wider rail connections across the North should be plugged into the HS2 network, nor to the need for better east - west connections between the North’s city regions.
2.5 The Northern Hub has achieved modest levels of investment in east-west connections, especially in central Manchester. Rail electrification between Liverpool and Leeds is now committed or in progress. This seems to have been a fortuitous decision in Whitehall – no one seems to have argued strongly for it, and there is no clarity on whether there will be fast new trains or station upgrades. Yet higher speed rail connections between Liverpool, Manchester, Leeds and Sheffield could bring together the high level labour markets of these city regions, generating agglomeration economies and critical mass, perhaps reducing the Liverpool-Leeds journey time to only 50 minutesii. Sir David Higgins, Chairman of HS2, drew attention to this issue in a recent speechiii. If the North’s cities had been a coherent lobby it could have been on the agenda from the outset.
‘Higher speed rail connections between Liverpool, Manchester, Leeds and Sheffield could bring together high level labour markets, generating agglomeration economies and critical mass’
2.6 In April 2014 the government announced sweeping changes to the way England’s major roads and motorways are managed and developed, transforming the Highways Agency into a government owned companyiv. The new company will be supported by stable ‘locked in’ funding within a longer
3 Page 235 term planning and budgetary framework. Government has committed £24bilion to upgrade the strategic road network between 2010 and 2021.
2.7 It will be vital to ensure that the new company’s plans take into account the special needs of the northern city regions. A collective voice could produce more efficient outcomes for the company (and for government) as well as better- aligned investments for the city regions. Motorway building transformed northern economic geography in the 1960s and 1970s – not least because local government led it powerfully, with Lancashire county council in the vanguardv.
‘Motorway building transformed northern economic geography – not least because local government led it powerfully’
Corporate restructuring
2.8 The recent attempted takeover of Astra Zeneca, the UK pharmaceuticals company, by Pfizer, a US competitor, attracted huge media and political attention, including hearings of a Select Committee of the House of Commonsvi. The concern was that a takeover could lead to serious long-term losses in the UK’s science base and in its industrial capacity. In the event the take over was resisted and did not proceed.
2.9 An earlier decision by Astra Zeneca to shrink and relocate the whole of its biggest UK R and D facility from Alderley Park , near Manchester, to Cambridge, attracted much less attention. Yet its impact on the North’s science base and on its industrial capacity will be equally, if not more, serious. There was little organized lobbying to retain even part of this critical facility; it was a done deal.
Public research
2.10 Although definitive evidence is difficult to find, it is widely known that public sector research, especially in government research institutes, is heavily biased towards the south of Englandvii. This poses a significant problem for our national manufacturing base as knowledge transfer occurs most easily through informal personal contact and networks within a specific placeviii.
2.11 Cambridge is a case in point. The growth of high technology firms in Cambridge over the last 50 years reflects research excellence, high levels of investment in the university and the siting of national research institutes such as the Medical Research Council. From one perspective the ‘Cambridge Phenomenon’ is a great national success story; from another it is a lost opportunityix. Cambridge has generated innovative research based companies, but there is no volume production to speak of. It location, remote from the UK’s manufacturing base in the North and Midlands means that there is little knowledge transfer to the rest of the UK. Instead brilliant researchers and companies sell their ideas and services to international industry, or indeed are bought out by it.
4 Page 236 ‘Cambridge has generated innovative research based companies, but there is no volume production. Its location, remote from the UK’s manufacturing base in the North and Midlands means there is little knowledge transfer’
2.12 The case for a strategic build up of research in and around the northern research universities should be articulated. There is already a rich resource of world class research and innovation – including, for example, the Liverpool City Region significant science assets such as Sci Tech Daresbury and Wirral, birthplace of Unilever global Research.
Deploying resources
2.13 Key questions are whether existing public sector financial resources as well as public land might be deployed more effectively across the Northern city regions and whether a higher degree of fiscal independence might lead to better and more cost effective outcomes than control by central government departments in Whitehall. A key part of this discussion is the need to physically relocate government departments to the regions, to be closer to and more accurately reflect the interests of their localities.
Local government is northern England has lost more than political significance: it now operates in one of the most centralized financial regimes in the world, a system that can militate against innovation, flexibility and efficiency. Britain’s cities now receive only 17% of their revenues from local taxes; on average, cities in OECD countries receive 55% of their income from local taxesx. A more decentralized approach, especially in areas like tackling unemployment, low skills and economic inactivity, might bring better outcomes and potentially a direct financial return to individual localities. At present, if local authorities took an initiative in getting the workless into work, financial savings, in the costs of health care and social welfare, would accrue to national not local budgets.
2.14 A recent report from the Smith Institute shows how by setting up a Municipal Investment Corporation, linked to the proposed British Investment Bank, house building, infrastructure and private investment can be mobilised in new ways. The report argues that funds raised by these corporations should not be classified as public borrowing, providing a vehicle for stable pension investment and incomexi. Other countries have used such instruments to deliver quality urban development in France (Caisse de Depots), Germany (KfW) and the Netherlands (BNG). Despite different financial and political systems, these three countries (along with others in Scandinavia and in many other parts of the world) all see the value of some form of state investment bank. KfW and BNG are rated amongst the most secure banks in the world.
2.15 A northern investment fund or corporation, which would need to operate at the city region level, needs careful examination. It could bring greater flexibility in the use of EU finance, better quality housing development, more
5 Page 237 influence and control over economic programmes, and potentially provide a new competitor in the retail banking market.
Planning and housing
2.16 Scotland and Wales have their own national planning policies, reflecting the different circumstances which apply. England has a ‘one size fits all’ approach, which does not take into account huge variations in economic, historic, political and market context.
2.17 Much of the pressure to abolish the regional planning system in England (which occurred in in the first year of the coalition government) came from southern planning authorities, under pressure to accept development. They resented the housing targets and quotas imposed on them - as they saw it – by a regional plan. The agenda for neighborhood plans, which gives local communities a much increased say in resisting development, emerged largely in the south of England; as did the vague ‘duty to cooperate’, replacing strategic plans, which is widely regarded as a retrograde step. Northern authorities, many of which wanted to attract more, not less, development, were generally comfortable with strategic plans and concerned by the lack of stability and confidence engendered by their sudden withdrawal.
2.18 There may be a case for reviewing the operation of the English planning and housing system to identify approaches which might work much more efficiently and effectively in the northern city regions, whilst taking into account their particular needs. One possibility might be to take control of events by preparing a ‘Framework for Planning Cooperation’ (FPC) for each city region. In effect this would be an advisory city region strategy for housing, planning and development, informing the contents of the statutory local plans and the public inquiries into these plans, thus discharging the duty to cooperate. An FPC could reduce the scope for disagreement, thus reducing the need for the Planning Inspectorate and the Secretary of State to override local plans. It would sit alongside and be congruent with the LEPs economic strategy, whilst informing and influencing and the strategies of the Highways Agency, Network Rail, HS2, the utility companies and the city regional transport bodies. Prepared by a small part time seconded team from the authorities in the CA, an FPC could bring coherence to land use, infrastructure and economic planning, whilst saving time and reducing conflict.
‘One possibility might be to take control of events by preparing a ‘Framework for Planning Cooperation’ for each city region’
Knowledge sharing
2.19 There is no escaping public spending cuts. Sink or swim is the ethos, and the case for intelligent and more efficient application of available resources is overwhelming. This will mean innovation, shared services and new approaches, and selling effective new ideas to government Ministers and departments. There
6 Page 238 must be case for sharing these new ideas and approaches across the north. A mechanism is needed for doing this.
Image and identity
2.20 Despite the transformational impact of 30 or more years of regeneration, especially in city centres, the North’s external image as an area blighted by old industry and deprivation remains a barrier. The northern city regions are different, because of topography, a shared industrial past and inherited urban fabric. But there is another side to the negative story. The North has five National Parks to the South East’s two; as well as has several World Heritage Sites.
2.21 Scotland and Wales use their heritage and environmental assets to help forge their external image and national identity. They do this through their devolved administrations and national agencies like Historic Scotland and Cadw. There is no one to do this for the North and its cities; how many people could name its World Heritage Sites?xii
2.22 The rural areas play a very important role in shaping the image of northern city regions, in providing for their recreational needs, and in supporting the tourism sector, but it is not clear who is driving their strategic agenda. There is clearly a need for the cities to have a voice, so that a coherent picture is brought together.
‘Scotland and Wales use their heritage and environmental assets to help forge their external image and national identity’
2.23 There is one other sense in which the Northern cities need to forge an identity. It is about creating strategic leadership, fostering long-term thinking and instilling hope and confidence rather a sense of abandonment. This is a political task for all the city regions, separately and together. It includes cultural and arts policy, as well as the conventional economic agenda.
7 Page 239 3 Governance Options
3.1 If the case for political rebalancing is accepted, there are, broadly speaking, three distinct options, which could be seen as stages in an evolution:
3.2 First a Northern Conference to share information and thinking: this could be held perhaps two or three times a year. It would promote a dialogue between the cities, and with government and the EU, led by a loose consortium. Rather than establishing a new bureaucracy, the conference and related work streams could be serviced by specific combined authorities for identified tasks and topics, as suggested in Section 4 below.
3.3 Second a Northern Forum, with an advisory rather than decision making role, bringing together a wide range of representatives from business, the universities, the voluntary sector and local government
3.4 Third a Council for Northern City Regions, with some decision making powers and collective support from the combined authorities. This would consist solely of elected representatives, including where appropriate city mayors. It would have formalized relationships with others including government, the devolved administrations, the Scottish Government (should Scotland become independent) and the EU. It would not be an immediate option.
3.5 The first option outlined above is recommended as the basis for making progress, whilst securing wide buy in, without the need for additional costs.
‘Rather than establishing a new bureaucracy, work streams could be serviced by specific combined authorities for identified tasks’
8 Page 240 4 Next Steps 4.1 If the logic of collective action set out above is accepted, what are the next steps for practical action? These might be divided as tasks between the five combined authorities, reporting to a Northern Conference as outlined in Section 3. These are tasks not ‘asks’: they are things the city regions can do to demonstrate their capability rather than cap in hand requests for government assistance.
4.2 Suggested tasks are set out below in relation to the seven issues outlined above:
Connecting the north
TASK 1
Commission an outline feasibility study into the costs and benefits of a step change in east west northern rail connections
TASK 2
Identify agreed priorities for investment by the Highways Agency across the northern city regions
Corporate restructuring
TASK 3
Establish a standing northern city regions group, to anticipate as well as respond to major restructuring decisions which might affect the north
Public research
TASK 4
Establish the facts on the distribution within England of national government (i.e. non-university or private sector) research expenditure
TASK 5
Identify sharp priorities key strengthening high-level research within and around the city regions’ research universities (initially one per city region)
Deploying resources
TASK 6
Establish the city regions’ key public sector landholdings and consider the benefits (and risks) of ring fencing the proceeds of disposals within the North
9 Page 241 TASK 7
Investigate the potential for more cost effective use of funds deployed by the Department for Work and Pensions and NHS to tackle the problems of households and individuals without work
TASK 8
Set out the basis for a Northern City Region investment fund or corporation, modelled on German, French and Dutch experience, focused on housing, SME and infrastructure investments, with support from EU funds and expertise
Planning and housing
TASK 9
Identify the areas where specific housing and planning policies could be developed reflecting the particular needs and circumstances of the northern city regions
TASK 10
Agree the basis for preparing a Framework for Planning Cooperation for each CA, as the basis for discharging collectively the duty to cooperate in preparing statutory local plans, whilst bringing coherence to city region economic, land use, transport and utility plans
Knowledge sharing
TASK 11
Establish a standing group of Northern City Regions and northern universities to identify and research new approaches to delivering public services with greater efficiency and at lower cost
Image and identity
TASK 12
Identify the opportunities for better and more coherent marketing and development of northern cultural and environmental assets (including rural assets) to forge a stronger image and a positive northern identity, including the potential for an organized rapid response to unfair and unbalanced media reporting of northern issues.
10 Page 242 5 National Benefits
5.1 This paper has been couched in terms of Northern issues and needs. But the national benefits of political rebalancing would be real. A more balanced and efficient polity would help to support the national effort needed to rebuild a resilient manufacturing base. Better-organized and coordinated Northern city regions could fuel a process of rebalanced growth, which would take some of the pressure off southern regions and London. London’s growth impulse is a great national asset, but especially in terms of housing availability and costs, it threatens to become unsustainable. Young professional families are being priced out of the London housing market.
‘The pressure for Scottish independence makes the question impossible to ignore. Power sharing is no longer an issue just for Northern Ireland’
5.2 Most of all political rebalancing could prove to be a unifying force in UK politics, something that supports national cohesion through more decentralized political institutions. The pressure for Scottish independence makes the question impossible to ignore. Power sharing is no longer an issue just for Northern Ireland.
Notes and references i Sir Alan Rudge: Closing the Trade Gap, 2013, in Rebalancing the British Economy, ed. Tristram Hunt, Civitas. Manufacturing provides nearly half of UK
11 Page 243
exports and three quarters of our R and D. However we ranked fourth in the world in the early 1990s ii See Professor Sir Peter Hall et al: High Speed North – Building a Trans Pennine Mega City, Town and Country Planning, April 2014 iii In March 2014 Sir David Higgins said: ’For some areas in the North… the bigger problem is connectivity – journey times are too slow. The key to improving these, particularly east to west, is to integrate HS2 into the existing network to improve connectivity between Liverpool, Manchester and Leeds’. iv https://www.gov.uk/government/news/green-light-for-highways-agency- reform-gives-better-deal-for-taxpayers v Sir Peter Baldwin, The Circumstances of Formation of Official Policy Towards Motorways and the Execution of the Motorway Programme, 2004, in Baldwin P and Baldwin R, The Motorway Achievement Vol 1, 2004 vi House of Commons Business Innovation and Skills Committee, 13 May 2014 vii SQW: Manchester City Region’s Competitive Strengths, 2011. The consultants reported they found it difficult to locate information on the regional distribution of non-university research viii Segal Quince and Partners: The Cambridge Phenomenon, 1985. A striking feature in Cambridge was the movement of key individuals from one company to another, directly transferring knowledge ix ‘Massachusetts runs the risk of turning into Cambridge England; we’ll have isolated clusters of the very best university research and a small number of R and D firms but not downstream production…we’ll create all the new ideas but others will get too much of the benefit’ Professor Michael Best, University of Massachusetts Lowell Centre for Industrial Competiveness, ,2004 x Centre for Cities, Cities Outlook 2014, London: Centre for Cities xi Nicholas Falk, Funding Housing and Local Growth: How a British Investment Bank Can Help, 2014, London: The Smith Institute xii They are Hadrians Wall, Liverpool, Saltaire, Durham, and Studley Royal, including Fountains Abbey
12 Page 244 Agenda Item 14a
Merseytravel Committee
Merseytravel Committee
26 June 2014
Present: Councillor L Robinson, Chair Councillor M Quinn, Deputy Chair
Councillors R Abbey, D Barrington, J Calvert, A Carr, J Dodd, S Foulkes, G Friel, J Fulham, H Howard, S Kermode, K McGlashan, M Norris, M Rasmussen, L Rowlands, M Sharp, J Stockton, J Williams and J Wolfson
28. Appointment of Chair
The Chief Executive opened the meeting and called for nominations for Chair of the Committee for the ensuing year
Motion by Councillor M Rasmussen seconded by Councillor M Quinn.
That Councillor L Robinson be appointed Chair for the ensuing year.
The Motion was then put, carried and it was Resolved Accordingly.
29. Appointment of Deputy Chair
Motion by Councillor L Robinson seconded by Councillor J Stockton.
That Councillor M Quinn be appointed Deputy Chair for the ensuing year.
The Motion was then put, carried and it was Resolved Accordingly.
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30. Declarations of Interest
No Declarations of Interest were made.
31. Minutes of the Last Meeting
Resolved that the minutes of the Committee held on 4 June 2014 be approved as a correct record.
32. Combined Authority Constitution and Committee Terms of Reference 2014 - 2015
The Committee considered a report of the Chief Executive concerning the Combined Authority Constitution and Committee Terms of Reference 2014 – 2015.
Resolved that:-
a) the responsibility for functions as set out in Part 3 of the Combined Authority Constitution and those delegated to the Merseytravel Committee, be noted;
b) the meetings procedure rules as set out in Part 5 Section A of the Combined Authority Constitution, be noted;
c) the Code of Conduct for Members as set out in Part 7 of the Combined Authority Constitution, be noted; and
d) Councillors A Carr and L Robinson be nominated to sit on the Combined Authority‟s Audit Committee.
33. Merseytravel Committee Membership 2014 - 2015
The Committee considered a report of the Chief Executive concerning Merseytravel Committee Membership 2014 – 2015.
Resolved that:-
a) the content of the report be noted;
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b) a welcome be extended to the new Members Councillor D Barrington (Liverpool), Councillor H Howard (Halton) and Councillor J Williams (Wirral); and
c) the Committee‟s appreciation to those Members Councillor J Salter, Councillor H Todd, Councillor B Woolfall who have been replaced, for their support and contribution to the Transport agenda and the work of the Committee, be recorded
34. Appointment of Sub Committees 2014-2015
The Committee considered,
a) a report of the Chief Executive regarding the appointment, power and duties, political composition of the previous Sub-Committees for 2014;
b) the structure of Sub-committees required together with terms of reference and the appointment of Members to each Sub-Committee; and
c) the mechanisms for the appointment of Members and the Chair and Deputy Chair of the Sub- Committees.
The leader of the Opposition informed the Head of Legal and Democratic Services that the group had reformed and had amended its name to Merseytravel Good Governance
Motion by the Chair seconded by Councillor G Friel.
„That
A) Sub-Committees
a) the General Purpose Sub-Committee be reappointed with the Terms of Reference as outlined in the Appendix to the report;
b) the Audit and Governance Sub-Committee be re- appointed with the Terms of Reference as outlined in the Appendix to the report; and
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c) the Performance and Review Sub-Committee be reappointed with the Terms of Reference as outlined in the Appendix to the report;
B) Composition of Sub-Committees
a) the Sub-Committees be comprised as follows:-
General Purposes 10 Seats Audit and Governance 10 seats Performance and Review 10 Seats
b) allocation of seats to each political Group of the Sub-Committee be as follows:-
i) General Purposes 10 Seats 9 Labour 1 Opposition
ii) Audit and Governance 10 seats 9 Labour 1 Opposition
iii) Performance and Review 10 Seats 9 Labour 1 Opposition
C) Lead Members be appointed for the following areas:-
Bus:- Cllr R Abbey;
Rail:- Cllr M Sharp;
Tunnels, Ferries and Visitor Cllr G Friel; Economy:-
Strategy and Finance:- Cllr M Quinn;
Organisational Development:- Cllr M Rasmussen;
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Customer and Corporate Cllr M Norris. Social Responsibility:-
D) Appointment of Chairs and Deputy Chairs of the Sub-Committees
the following Members be appointed as Chairs and Deputy Chairs to the Sub-Committees:-
Sub- Chair Deputy Chair Committee
General Cllr L Robinson Cllr M Quinn Purposes
Audit and Cllr A Carr Cllr S Foulkes Governance
Performance Cllr K McGlashan Cllr J Stockton and Review
The Motion was then put, carried and it was Resolved Accordingly.
35. Committee and Sub Committees Draft Cycle of Meetings 2014 - 2015
The Committee considered a report of the Chief Executive regarding a proposed Draft Cycle of Meetings, for the Committee and Sub-Committees, in 2014 – 2015.
Resolved that
a) The Cycle of meetings, to be held in the Authority Chamber No1 Mann Island Liverpool, outlined below be approved viz:-
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2014 2015
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Audit and Monday Governance 14 22 20 24 5 2 23 12:30pm Sub- Committee
Performance Monday and Review 14 22 20 24 5 2 23 2.30pm Sub- Committee
General Thursday Purposes 10 25 16 27 8 19 26 2.00pm Sub- Committee
Merseytravel Thursday Committee 25 4 2 6 11 15 5 16 4 2.30pm
Fri
Combined Authority 19 21 23 6 20
;and
b) attendance at the workshops on Transport related issues be agreed as an approved duty.
36. Appointment to Outside Bodies and Spokespersons
The Committee considered a report of the Chief Executive regarding Appointments to Outside Bodies and District Spokespersons which had been delegated to the Committee from the Combined Authority.
Motion by the Chair seconded by Councillor S Foulkes.
„That the appointment to outside bodies for 2014/15 be as follows:-
a) City Regions Transport Special Interest Group
The Chair and Deputy Chair of the Committee and One Opposition Group Member (or nominee) – Councillors L Robinson, M Quinn and L Rowlands.
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b) Customer Forums
Liverpool - Chair, Labour Member - Cllr L Robinson Knowsley - Chair, Labour Member - Cllr K McGlashan Wirral - Chair, Labour Member - Cllr R Abbey St Helens - Chair, Labour Member - Cllr M Quinn Sefton - Chair, Labour Member - Cllr S Kermode c) West Coast Rail Campaign
Lead Member Rail - Councillor M Sharp d) North Western Local Authorities „Employers‟ Organisation
Lead Member Organisational Development – Councillor M Rasmussen. e) Mersey Ferries Limited
One Labour Group Member and One Opposition Group Member as Observers.- Councillors G Friel and L Rowlands. f) TravelSafe Board
Two Labour Group Members and One Opposition Group Member.- Councillors M Rasmussen, K McGlashan and L Rowlands. g) Beatles Story Board
Two Labour Group Members and One Opposition Group Member as Observers – Councillors J Williams, G Friel and L Rowlands. h) Mersey Dee Alliance
Two Labour Group Members and One Opposition Group Member – Councillors M Sharp, R Abbey and J Dodd. i) LEP Advisory Council
The Chair of the Committee – Councillor L Robinson.
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j) Merseytravel Committee Spokespersons to Districts:-
to answer questions in Council Meetings for the forthcoming year.
Halton - Councillor J Stockton Knowsley - Councillor K McGlashan Liverpool - Councillor L Robinson Sefton - Councillor G Friel St Helens - Councillor M Quinn Wirral - Councillor R Abbey
(k) that the Combined Authority Appointments of the 13 June 2014 to the Association of Local Transport ,Chair of the Merseytravel Committee, and New Local European Union Programme Sub-Committee, Chair of Merseytravel, be noted
The Motion was then put, carried and Resolved Accordingly.
37. Annual Reporting to DfT on LSTF Performance 2013-14
The Committee considered a report of the Director of Integrated Transport Services regarding the Annual reporting to the Department for Transport on the delivery of the Local Sustainable Transport Fund (LSTF) project across Merseyside in the 2013/14.
Officers advised the Committee that the Merseytravel led Local Sustainable Transport Fund project “Working with Employers – Employment in the Transport Sector” had won the Best Practice Award for Education and Excellence in Passenger Transport category from the North West Chartered Institute of Logistics and Transport (CILT). The project would now be put forward for the CILT National Finals.
Councillor K McGlashan thanked the officers for their report and commented that last year he did raise the issue of Members being informed early of any under spend to ensure that Merseytravel Members could offer support and raise matters within their own Districts.
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Councillor L Robinson supported the suggested approach of flagging up schemes and highlighting issues to ensure delivery.
Councillor S Foulkes commented with regard to delivery there needed to be an awareness of what was happening in the Districts and the resource challenges that they had to face. It may require the Chief Executive, David Brown and Councillor L Robinson to meet with District colleagues to have discussions around the balance to be made in recognition of the importance of delivering against the funding stream with ever decreasing staffing resources.
Officers confirmed that Merseytravel did have regular meetings with District partners, had offered support and had, in some instances, actually stepped in.
Councillor R Abbey confirmed that support had been offered when there were struggles in the past and always would be and emphasised how important it was to deliver the programme on time and on budget.
Councillor M Rasmussen supported the comments made, but felt when selling the importance to the Districts that reference should be made to the NEETs in Knowsley, with 75 sixteen to twenty-four year olds securing long term employment, as that alone was enough of a success story.
Officers confirmed that all the partners worked together supporting each other.
Councillor M Quinn also supported all that had been said but felt that elected Members should also be recognised as partners and be provided with feedback. It was recognised that District officers were under a lot of pressure but so were Merseytravel. What had been bid for should be followed through if not then early notice should be given to allow for alternative action.
Councillor L Rowlands welcomed the opportunity to be briefed on the projects and commented that he found the report very helpful.
Resolved that:- a) the content of the report, which would form the basis of the annual Local Sustainable Transport
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Fund report to the Department for Transport, be noted;
b) delegated authority be granted to the Chief Executive, in consultation with the Chair, Deputy Chair and Leader of the Opposition Group to complete the progress report template for the Department for Transport ahead of the deadline of 27 June 2014;
c) the good overall performance across the programme during 2013/14 and the variance in spend across individual funding bid themes and the measures that are set out in the report to seek to address them be noted; and
d) the intention of Merseytravel (acting on behalf of the Combined Authority as the accountable body) to instigate re-profiling activities during 2014/15 if significant underspend occurs, to support maximum performance of the overall programme, be noted.
38. Ultra-Low Emission Vehicles Funding Announcement
The Committee considered a report of the Director of Integrated Transport Services regarding the Government Ultra-Low Emission Vehicles Funding Announcement.
Councillor A Carr drew the Committees attention to paragraph 4.3 of the report and enquired if the physical assets would be assets of Merseytravel, or would they be passed to the private operator.
Officers confirmed that the funding by Government was only part, as the Government wanted private sector involvement, and therefore match funding was required.
Councillor J Stockton commented on the timescales involved which he considered to be lengthy, and informed the Committee that Halton currently had 10 suitable vehicles.
Officers reported that Government had recognised the slow take up and believed it would be a long process to convert to low emission vehicles.
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Councillor R Abbey commented that the initiative was really just a change of name and built upon the Better Bus Area Fund and hybrid vehicle initiatives, he felt that the national figure may dilute the work done and that could be done locally working with the operators.
Councillor G Friel welcomed the move to reduce carbon, but he felt it also reflected the failure by Government to get passengers on to public transport. He felt for it to be successful it should be a joint approach to get more public transport usage, car sharing schemes and thus carbon reduction.
Councillor L Robinson thanked the officers for being so proactive and moving so quickly to such tight timescales.
Resolved that:-
a) the content of the report be noted; and
b) the development of Liverpool City Region working groups to prepare bids around the various themes be approved.
39. Clean Vehicle Technology Fund – Approval for Submission of Bid
The Committee considered a report of the Director of Integrated Transport Services regarding Clean Vehicle Technology Fund and Approval for Submission of a Bid.
Councillor L Robinson sought and received confirmation that the bid, for the Clean technology fund, was currently over sub-scribed so if any proposals were withdrawn there were others that could be included and that work was continuing on the final submission and updates would be circulated to Members.
Councillor G Friel welcomed the report but raised some concerns with regard to the emissions from sea vessels which he felt may be being overlooked, and commented that there was a piece of work to be done in the future to look at their impact.
Officers confirmed that currently the Department for Transport were concentrating on the Road users, however that did not preclude sea vessels in the future and the City Scheme may include the vessels and
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Ferries. Offices also confirmed that the air quality in the Mersey Tunnels was regularly monitored and reported on a quarterly basis.
Councillor M Quinn enquired and received confirmation from officers that the Operator were aware of the saving to be made from their investment, through the better operation of their vehicle and increased fuel economy via the use of „Ad Blue‟.
Councillor M Quinn expressed concern that if there were costs the operators would pass them on to the passengers.
Councillor L Robinson requested officers to look into the costs; what savings could be made and the benefits to operators with a view to informing any discussions going forward.
Councillor L Rowlands drew the Committees‟ attention to paragraph 4.1.3 of the report and sought and received confirmation that the proposed letter of intent was robust and part of the normal partnership working and that the letter was fit for purpose.
Resolved that:-
a) the submission of a bid to the Clean Vehicle Technology Fund by the Friday 25 July 2014 deadline be approved; and
b) further updates on the progress and outcome of the bid be reported in due course.
40. Smart Ticketing Update Report June 2014
The Committee considered a report of the Director of Corporate Development regarding the Smart Ticketing Update Report for June 2014. (Councillor Fulham Left the meeting 3.25pm)
Councillor R Abbey thanked the officers for the report and commented that it was a large stride in taking the project forward, however he was not surprised that the bus operators wished to protect their profits however the scheme must continue to move forward and the operators must be on board therefore the encouragement must continue.
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Councillor G Friel commented with regard to the concessionary travel that it was important, during these financially challenging times that each journey was qualified and the payments only reflected what journeys were being taken
The Director of Corporate Development reported that there had been discussions with operator regarding the practice of accepting the passes being „Flashed‟ to drivers, to speed boarding, rather than registering them properly. There needed to be acceptance of all that it was important that accurate smartcard data was collected and that driver and customer behaviour was key in this process.
In response to Councillor G Friel it was also reported that contactless payment was not within the current programme scope, where it had been introduced in other areas there had been some technical challenges i.e. reading wrong card elements. It was recognised that new technologies were continually emerging however the main concern was to ensure, working with the Operators, that the current technology and scheme was being operated correctly, whilst endeavouring to future proof to meet developing technologies.
Councillor M Sharp thanked the officers for the report and commented that it was vital that Smartcard went ahead, especially project 2, the transition of saveaways on to smartcards was a critical stage of implementation. He sought and received assurance from the Director of Corporate Development that it would be pursued robustly with Operators to reach a solution.
Councillor A Carr commented that he felt it was inevitable that the operators would come on board with the project and enquired if such cards would be available to be update online.
The Director of Corporate development reported that currently the project provided for top up via a „Paypoint‟ which were well distributed across the conurbation. Project 3 would pick up retail and payment as part of the strategy work when reviewing the zonal structure, ticketing and prepayments
Councillor K McGlashan commented that it was in the interest of the Operators to work with Officers, to provide
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the best options for their customers and financially with the links to the Bus Service Operator Grants (BSOG).
Officers confirmed that they would be adopting the best commercial business approach in any discussions.
Councillor L Robinson thanked the Officers for the great work they had undertaken to get the Walrus initiative moving, it would need support from all to reach its full potential. The regular report was very useful as it was open and honestly reflected the progress of the project and highlighted any issues such as the lack of proper registering of the concessionary pass. The Operator have made reference to wanting to working in partnership and it was disappointing to hear of their resistance to the first commercial stage of the process. All available leverage should be used to bring them back on board to accept multimodal and multi-operator tickets in smart format linked to BSOG. Officers need to know that they have the full support and backing of the Committee to move on with the project and that the operator need to step up and work in partnership.
Resolved that the contents of the report and the progress to date be noted.
------The Chair indicated that the follow item be taken as a matter of urgency as a delay of one committee cycle would not be in the best interest of the efficient operation of the service. ------
41. Use of Digital Technology
Councillor J Stockton made reference to the savings that Halton Borough Council had made embracing digital technology and enquired if more of the information provided could be electronic.
It was acknowledged that not all members had the same provision from their District and currently there was an issue with the „Good Application‟ that was being investigated by the supplier however the comments could be taken on-board.
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Resolved that Officers be tasked with investigating the promotion and support of further usage of digital technology.
CHAIR
Page 259 This page is intentionally left blank Agenda Item 14b
Merseytravel Committee
Merseytravel Committee
25 July 2014
Present: Councillor L Robinson, Chair Councillor M Quinn, Deputy Chair
Councillors R Abbey, D Barrington, J Calvert, A Carr, J Dodd, S Foulkes, H Howard, S Kermode, K McGlashan, M Norris, M Rasmussen, L Rowlands, M Sharp, J Stockton, J Williams and J Wolfson
------
Apologies for absence were submitted from Councillors G Friel and J Fulham
------
42. Declarations of Interest
No Declarations of Interest were made.
43. Minutes of the Last Meeting
Resolved that the minutes of the Committee held on 26 June 2014 be approved as a correct record.
44. Audit and Governance Sub- Committee
Resolved that the minutes of the Audit and Governance Sub-Committee held on 14 July 2014 be approved insofar as they require the approval of this Committee.
45. Equality Scheme
The Committee considered a report of the Director of Corporate Development concerning an update on the Equality Scheme of Merseytravel.
The Transport Policy Co-ordinator, Suzanne Cain, explained the background to the report and the key issues behind the Public Sector Equality Duty (PSED) of Merseytravel. The 2014 Equality Scheme revisits the first Merseytravel Equality Scheme made in 2011 and retains
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the key priority areas but updates the detail underpinning them. The approach to Equality Impact Assessments and to Communications and Stakeholder Engagement were currently being reviewed with the intention of being presented to the Committee in the near future. The responsibility for equalities and legislative compliance for the PSED was to be “mainstreamed” throughout the organisation. An Equality Impact Assessment had indicated that the potential impact of the Equality Scheme would be positive.
Councillor Rasmussen believed this was an excellent report which correctly demonstrated that equality was the responsibility of everyone in the organisation. She did however record her disappointment that the Government had removed the “socio-economic disadvantage” category from the list of protected characteristics as she strongly believed that this should be the tenth such characteristic.
Councillor Howard complimented the report author on the website link in the report working correctly as often, in his experience, this did not happen with similar reports and he also suggested that the reference in the list of protected characteristics regarding “race” should be to “ethnic” not “ethic”. He referred to Section 4.4 in the Equality Scheme which deals with delivering equality through procurement and he asked what the position would be if a supplier did not demonstrate a particularly favourable approach to equality. The Director of Integrated Transport Services, Frank Rogers, responded that this would not constitute a scored element in the procurement assessment although it did need to be included to avoid legal challenge and to encourage the appropriate behaviour.
Finally, Councillor Robinson referred to the protected characteristic of Sex and suggested it should indicate reference to gender of the individual rather than “the fact they are male or female”. Also with regard to the Sexual Orientation characteristic he believed the definition should be “the attraction a person feels towards another person irrespective of their gender”.
Resolved that:- a) the Equality Scheme appended to the report be approved; and
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b) the approach to public consultation as outlined in paragraph 3.6 of the report, be approved
46. Development of a Transport Strategy for the Liverpool City Region
The Committee considered a report of the Director of Integrated Transport Services concerning the development of a Transport Strategy for the Liverpool City Region with particular regard to the incorporation of the existing Merseyside and Halton Local Transport Plans into a single plan for the Liverpool City Region.
The Head of Policy and Local Transport Plan Delivery, Carole Carroll, summarised the key issues in the report and referred to the presentation made to the Members Workshop about this matter prior to this meeting. The report was focused on the delivery and implementation of the Liverpool City Region Transport Strategy and an explanation was given of how the development of the strategy was being managed with a series of workshops with partners leading to the creation of a more succinct and usable document which linked the City Region transport element into the other key themes.
Councillor Stockton asked how close was the synergy between the two Local Transport Plans and also how the aligning of the two Plans might benefit the HS2 proposals. Carole Carroll replied that there had been considerable partnership work in putting together the report and indeed the Project Director was Mick Noone of Halton Council. Director of Integrated Transport Services, Frank Rogers, added that the intention in the development of LTP 3 had always been to provide a united approach to the future development of the transport needs of the City Region. With regard to the second question, Carole Carroll suggested that the process at this stage was more about aligning the respective transport strategies than anything related to HS2. Councillor Stockton also asked about the need to attract targeted funding and Frank Rogers said one important element of the Combined Authority was the ability to generate additional funding.
Councillor Abbey said the report and the prior workshop had been helpful and it was clear the intention to align the Plans had been in evidence for some time but now the
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focus must be on showing the Government that the alignment would be delivered in a quality fashion which merited appropriate future funding.
Resolved that:-
a) the content of the report and the work to date be noted; and
b) the recommended approach towards the incorporation of the existing Merseyside and Halton Local Transport Plans into a single plan for the Liverpool City Region as outlined in the report, be approved.
47. Smart Ticketing Update Report July 2014
The Committee considered a report of the Director of Corporate Development concerning the progress, risks and issues with the delivery of the Merseytravel Smart Ticketing Programme.
Gary Ennis, the Head of Information Technology explained that the report which was the third in a series of reports on Smart Ticketing contained progress summaries and RAG (Red/Amber/Green) ratings for the overall programme (Amber) as well as for the components of Concessionary Reimbursement (Green), Smart Enabled Saveaway (Red) and Smarter Ticketing (Green). He spoke in particular about the issues related to the red status for the Smart Enabled Saveaway Project and the concerns of Arriva and Stagecoach about the Governance model for the scheme.
Liz Chandler, the Director of Corporate Development, then updated the Committee on the current position relating to the present lack of resource from Stagecoach for implementing the Smart Enabled Saveaway and she advised of the meeting which had been held the previous day with the Managing Director of Stagecoach UK Bus to address this issue. The outcome of the meeting was to continue discussions to try to resolve the issue and to include the Managing Director of Arriva. The timescales for implementing a solution were extremely tight but everything possible would be done to meet the October deadline.
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Gary Ennis then said that this issue had not stopped progress elsewhere being made and the options for the retail delivery of Smart Enabled Saveaway had been assessed and the key messages for such delivery including the charging of £1 for the Walrus Card, an introductory promotional offer and a larger retail network had been established.
Councillor McGlashan referred to the scrutiny review process on fares which had recently taken place with partners and he recalled that Stagecoach had been in favour of multi modal ticketing then and asked why their position had changed. Liz Chandler agreed they had given a commitment on this but their view was that the Saveaway product should not be launched ahead of the rest of the smart ticketing programme.
In response to a question from Councillor Abbey about pre-launch publicity for the new product, Liz Chandler said that the marketing plan had been slightly delayed but should be ready to be implemented from September ahead of the planned October launch. It would be a pro- active campaign utilising social as well as traditional media and would include a two month free trial.
Councillor Carr commented on the importance of Stagecoach being part of the Scheme or suffering the risk of losing their share of the Saveaway market. Finally Councillor Robinson concluded the discussion by saying there was concern about the delay and he urged all parties, including Stagecoach, to seek a workable solution to the remaining issues so that the timescales for the autumn launch could be met. He asked for an update to the next meeting
Resolved that the contents of the report and the progress made to date be noted.
48. Liverpool John Lennon Airport Surface Access Delivery Plan July 2014
The Committee considered a report of the Director of Corporate Development concerning the Liverpool John Lennon Airport Surface Access Delivery Plan July 2014.
Peter Sandman, Customer and Business Development Manager explained the work which had been ongoing for the last ten months to improve surface access to
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Liverpool John Lennon Airport. The studies had looked at all the key issues and had produced a short to medium term delivery plan to attempt to improve the transport connections to and from the airport. Peter set out the key priority areas of integrated marketing, an enhanced customer experience, the improvement of research and intelligence and the improvement of passenger transport services and infrastructure. In the longer term, he said the intention was to develop a full Surface Access strategy for the Airport. Regular reports would be provided to Members.
Councillor McGlashan believed this was an excellent report but said that in his view if the intention was to “grow the local market” in the face of competition from other airports, some of the current practices such as paying to drop off passengers of or charging for trolleys would not help with that aim. He also pointed out that the express 500 bus service had originally been an initiative of Merseytravel and not Arriva. In his opinion more care needed to be taken to integrate services so that they better fitted passenger needs. Peter Sandman accepted this point and said there was now regular dialogue with the airport on all such customer service issues and views such as this were part of the feedback process.
It was asked by Councillor Rasmussen if issues related to the 86A service to the airport could be fed back to Arriva as she had witnessed instances of passengers on this service being concerned about being late to check in and also of unsecured luggage being dislodged and causing injury. Peter Sandman was aware of this and other issues regarding the 86A and other services and all that was possible was being done to raise the quality, reliability and speed of such services.
Councillor Stockton concurred with the view that this was a helpful report but he did think more could be done to improve directional signposting in the vicinity of the airport and he asked if social media and apps could be developed to help with this issue. It was agreed by Peter Sandman that this was possible and work on the development of journey planner apps was ongoing. A joint action plan was in place to improve the information at bus stops and overall to provide smarter marketing of services.
In the view of Councillor Carr, the overall running of the airport was good apart from the issues previously raised
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particularly with regard to charging for services but he did suggest that there could be opportunities for the airport arising from the continuing growth of the Liverpool Cruise Liner terminal.
Councillor Robinson concluded the discussion by agreeing the report contained much good work and saying that there was much that could still be done to make the airport increasingly user friendly with improved reliability of services which integrated with customer needs, less delays, better reliability and top class customer service. Peter Sandman agreed that first impressions were so often vital to visitors and much work was being done to ensure that airport and operator staff met the highest of customer standards. It should be noted in this respect that 500 members of the airport staff had received WorldHost training from Merseylearn.
Resolved that:-
a) the contents of the report and the progress made to date be noted; and
b) the Liverpool John Lennon Airport short term surface access delivery plan and the priorities for improving marketing, the customer experience, research and improving transport connectivity over the short term as set out in Appendix 1 to the report be approved.
49. Transpennine and Northern Rail Franchise Consultation
The Committee considered a report of the Chief Executive concerning the Transpennine and Northern Rail Franchise consultation exercise.
The Chief Executive, David Brown, advised the meeting of the main points about the consultation which were identified in the report. The Department for Transport and Rail North had recently commenced the consultation exercise intended to gather views of stakeholders on the future of the Northern and the Transpennine Express rail franchises which are currently due to expire in February 2016. It was seeking to explore a range of issues such as service patterns, levels and frequencies, capacity, fares, rolling stock and station quality, destinations, how city centres were serviced and how resources should be best
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utilised. The aim would be to make strong representations for new franchises that produced not only fast train services of excellent quality but also improved Stations of high standard that could serve as hubs of their communities. The intention was to generate a high quality of response as much as a high quantity and to seek the views of as many stakeholders as possible to inform the development of the service specification.
Councillor Carr commented that the capacity and quality of Rolling Stock would be in his opinion the key issue in the consultation. David Brown replied that Rail North were seeking to bring better trains into the system and the different ways to get new investment into Rolling Stock while reducing costs would be explored.
Councillor Robinson anticipated that the final consultation response would incorporate a broad range of views from many stakeholders.
Resolved that:-
a) the report and the process undertaken on the consultation to date be noted;
b) Officers continue to work with Rail North and the Department for Transport on the development of the franchises; and
c) the Chief Executive, in consultation with the Chair of the Merseytravel Committee and the Lead Member for Rail, be authorised to approve and submit the final consultation response.
50. Votes of Thanks - Chair's Communications
The Chair indicated that he wished to consider the following matters as Chair’s Communications.
(a) at the request of Councillor Steve Foulkes, a vote of thanks was extended from the Committee to all the Merseytravel and Operator staff who had through their diligence and hard work contributed to making the transportation to and from the British Open Golf Tournament held during July at the Royal Liverpool Golf Course in Hoylake, work so efficiently and effectively thus greatly enhancing
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the experience of the many visitors to Merseyside and their perceptions of the area; and
(b) at the request of Councillor Ron Abbey, a vote of thanks was also extended from the Committee to all staff who had contributed to the outstanding success so far of the “My Ticket” initiative which had provided young people between the ages of 5 and 15 with daily bus travel for only £2 and which therefore had encouraged the much greater mobility of young people across the region..
CHAIR
Page 269 This page is intentionally left blank Agenda Item 14c
Merseytravel Committee
Merseytravel Committee
4 September 2014
Present: Councillor L Robinson, Chair Councillor M Quinn, Deputy Chair
Councillors R Abbey, D Barrington, J Calvert, A Carr, S Foulkes, G Friel, H Howard, S Kermode, K McGlashan, M Norris, M Rasmussen, L Rowlands, M Sharp, J Stockton, J Williams and J Wolfson
Apologies for absence were submitted by Councillors J Dodd and J Fulham
51. Declarations of Interest
No Declarations of Interest were made.
52. Minutes of the Last Meeting
Resolved that the minutes of the Committee held on 25 July 2014 be approved as a correct record.
53. Chairs Announcements
The Chair informed Members that Liz Chandler (the Director of Corporate Development) had recently broken her wrist and that Mick Noone (Operational Director – Policy, Planning and Transportation, Halton) had also been taken ill on holiday requiring an operation. The Committee wished to place on record its best wishes to both for speedy recoveries.
The Chair also inform the meeting that a member of the general public Mr Andrew Davies had submitted a number of questions relating to the Long Term Rail Strategy and it was agreed that the appropriate responses to the questions be given to Mr Davies, with all Members being provided with a copy, outside the meeting.
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54. Long Term Rail Strategy
The Committee considered a report of the Lead Officer for Transport regarding the Long Term Rail Strategy for the Liverpool City Region.
Councillor K McGlashan thanked the Officers for an excellent report but enquired why, in light of the Northern Rail and Transpennine franchise, there appeared to be a change of approach by Government away from the ‘mutual co-operative’ model with any surplus being held in a central reinvestment pot.
The Director of Integrated Transport Services reported that the Committee report addressed strategic development, rather than any franchising arrangements and their commercial aspects, as the intention of the strategy was to improve rail provision within the City Region.
The Lead Officer for Transport commented that the Government had carried out a review of franchising procedure following the West Coast Mainline procurement challenge and had changed the franchising process. They had replaced it with a more partnership approach, based on a hybrid risk/reward model to which Rail North were looking to take a greater role in and would continue to negotiate for any surplus to stay in the North.
The Co-operative Mutual model was not being considered at the moment.
Councillor G Friel commented that it was a good report and enquired about Maghull North, if it could proceed without any additional contributions.
The Director of Integrated Transport Services informed the meeting that Maghull North was one of the schemes within the Growth Plan along with Halton Curve and Newton-le-Willows and 2 schemes in Knowsley all being considered provisionally but awaiting full business cases. Officers were meeting with Department for Transport representatives next week to discuss the Growth Plan. Submission of planning applications would follow as part of the process in due course. The development of the business case was the next stage and Officers were not anticipating any problems.
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Councillor H Howard raised concern at the omission of any reference to Halton in paragraph 3.1,’potential development along the routes’ of the strategy as Halton residents need to know they were part of the system.
Officers acknowledged the need and agreed to reference Halton within the last sentence in the paragraph and also in paragraph 4.1 at point 16 in the table.
Councillor H Howard also drew attention to Ditton Station be referenced as a station to be opened up, which was to be welcomed, as it would open up Halton Curve to the residents of Widnes. However it was not visible in the indicative timeline of Rail Strategy Enhancements part of the report.
The Director of Integrated Transport Services confirmed that clarification would be made to the strategy to show that Halton was a consideration. With regard to the opening of stations the papers were not saying categorically that it would be within the next five years, some projects may come online earlier, others later, and some were more readily deliverable. Ditton Station was referenced as it was deliverable over the 30 year life time of the strategy. The timeline reflected stations that where there was known funding available and which were currently were linked to connectivity.
Councillor J Stockton thanked the Officers for the assurances with regard to Halton and commented that with the projected 40% increase, over the next 40/50 years, on motorway traffic to prevent future gridlock it was important that there was a strategy to take freight off the road and onto rail. There had long been under investment in the rail network and investment was required to move forward. He also enquired as to who was leading on drawing up the business case for Halton Curves as he felt there needed to be a reference to Beechwood Station (Halton).
The Director of Integrated Transport Services reported that the importance of the projected increase of freight had been recognised and not only by Rail North. Merseytravel where drawing up the business case for Halton Curve and the GRIP 3 Study was with Northern Rail, there was also an AECON demand study being undertaken and an outline business case was anticipated by May 2015. It was the intention to have the full
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business case with funding secured by April 2016. The inclusion of the Beechwood Stations, both Halton and Wirral, within the strategy was confirmed.
Councillor A Carr enquired with regard to Maghull North Station, if an infrastructure levy was still a requirement and with reference to growth numbers anticipated for Merseyrail was there a provision for recognising a fall in numbers if the rolling stock performance, in recognition of its age, began to fail. Passengers often vote with their feet and if performance dropped they would likely look for alternative modes of transport.
Officers confirmed that as with all schemes a 10% local contribution was anticipated and that the provision fell to Merseytravel for Maghull North as fund provider. If alternative funding became available then the position would be reviewed.
With regard to the Merseyrail performance levels, it was to be noted that performance of the stock was improving however it was acknowledged that given the fleet age it was unlikely to go on forever hence the need for the rolling stock project.
There was to be a review of the Strategy early in 2015 to reflect the Northern Ports Study outcomes and a station ‘framework’ criteria was being developed.
Councillor S Foulkes made reference to a publication by the Wrexham- Birkenhead Rail Users Association which presented further information from another perspective which he felt both Members and Officers should be in receipt of.
Councillor L Robinson confirmed that all members should have had sight of the publication.
Councillor G Friel commented on proposals for Bootle Branch line and that previously they had been led to believe that lines accommodating both freight and passenger were not ideal. He was also aware that Peel Holdings were to present proposals by the end of December and that there may be opportunities for freight movements that should not be missed. He also commented that he felt Members would benefit from a presentation on freight.
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Officers confirmed that the output from the Ports Study was expected this calendar year and would be picked up in the review; passenger and freight usage happened on many lines with freight mainly transported at night and that Bootle was one of the options for opening access to the port together with Edge Hill.
Councillor R Abbey enquired that as work was ongoing with the Government with regard to the Wrexham-Bidston line if the route could be extended to Birkenhead as it would provide better connectivity and provide a possible 7 minute service for passengers.
The Director of Integrated Transport Services reported that with regard to the final destination of the route the aspiration was to link Wrexham with Liverpool City Centre however if was felt appropriate to take an incremental approach and build up the service.
Councillor R Abbey sought and received confirmation that the current key barriers to the expansion to Birkenhead, using diesel trains, were timetable interventions, advancement of other project and that other priorities had been identified.
Councillor L Robinson commented that he echoed much of what had been said and genuinely felt that the Strategy was a pretty exciting document. The region was in a good strategic place in the long term to meet the future demand and improve the network to stimulate further economic growth to the Liverpool City Region. He wished to commend all those involved. The document was practical and had been created as a living, breathing strategy which would be continually reviewed and stand the area in good stead. It was forward looking and a strategic view for the future which only a privileged few had.
Resolved that:- a) the content of the report be noted; and b) the Strategy be submitted to the Liverpool City Region Combined Authority for approval ______
Councillor M Sharp left the meeting at this juncture.
______
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55. House of Lords Inquiry into the Economic Case for High Speed Rail
The Committee considered a report of the Lead Officer for Transport regarding the House of Lords Inquiry into the Economic Case for High Speed Rail.
Councillor L Robinson thanked Officers for the submission which he felt in six pages demonstrated their benefits of High Speed 2 to Britain and especially the Liverpool City Region. The greater the benefit to the Liverpool City Region then the greater benefit to the national economy. The report and submission was a succinct and accessible and would help inform the House of Lords Inquiry.
Resolved that:-
(a) the content of the report be noted; and
(b) the response contained in Appendix One as final, subject to comments raised by Members at the meeting, be approved.
56. High Speed Rail Development Programme: September Update
The Committee considered an update report of the Lead Officer for Transport regarding High Speed Rail Development Programme for September.
Councillor K McGlashan thanked the Officers for their report and asked when the Secretary of State’s announcement with regard to the Phase Two consultation would be. Officers confirmed it was expected before the end of the calendar year.
Councillor J Stockton enquired as to how robust the figures relating to the High Speed 2 Economic Benefits Summary outlined in paragraph 4.1 of the report were.
Officers reported that the work had been carried out by Steers Davies Gleave and developed using the Local Enterprise Partnerships own forecasts for growth and a model using various modelling scenarios, the outcomes of the study could be shared if required.
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Resolved that:-
a) the progress made since the Merseytravel Committee on the 4 June 2014 be noted;
b) the establishment of the City Region’s own campaign to secure a dedicated link to the high speed network and request that all City Region partners work closely with the Linking Liverpool campaign to secure its objectives be welcomed;
c) further updates as the work stream develops be requested of officers; and
d) the report be submitted to the Liverpool City Region Combined Authority for consideration.
57. One North Report: A Proposition for an Interconnected North
The Committee considered a report of the Lead Officer for Transport regarding the publication of One North Report: A Proposition for an Interconnected North.
Councillor L Robinson welcomed the report and commented he felt it was the most exciting time for the North for a long time. The Region has come together well to improve connections especially across the North. There were practical, and realistic, types of technology already in place. The proposed budget was similar to the one used for Cross Rail, however One North would serve a much larger population, as a comparison if the North Region was in the European Union as a state it would be the 8th largest.
There was a need to support and develop the project to be a position to strongly argue that it was the next national infrastructure project after High Speed 2.
Resolved that:-
a) The content of the report be noted and the publication of the One North proposition be welcomed;
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b) the City Region contribution to the development of a strategic investment plan for the proposals be noted;
c) officers be instructed to continue to work positively with public and private sector partners in the refinement of the detailed proposals; and,
d) report be submitted to the Combined Authority for approval.
58. 2014-15 Quarter 1 Financial Reporting on Local Sustainable Transport Fund (LSTF) and LSTF 2015/16 Funding Bid Update
The Committee considered a report of the Lead Officer Transport concerning the 2014-15 Quarter 1, Financial Reporting on Local Sustainable Transport Fund (LSTF) and LSTF 2015/16 Funding Bid Update.
Councillor M Quinn commented that upon receipt of the report she had raised the matter with her district officers to be informed that the situation with regard to the schemes was different. She expressed concern that there was a lack of narrative within the report, which provides more than the snap shot of the period being reported, and gave an explanation of the development or projected timeline for delivery. Such a narrative would enable Members to have more clarity and be able to raise issues more appropriately.
Member briefings would not overcome the public perceptions on reading such reports.
Officers accepted the comments and confirmed that they were reporting within a set period and some schemes had different spending profiles or were still in development, rather than delivery. It was agreed that future reports would contain additional information regarding the scheme ‘profile to date’ to provide a more ‘real time’ reflection of the various schemes status.
Councillor G Friel endorsed Councillor M Quinn’s comments and that the report had caused some concerns at district level meetings. It was acknowledged that the report was factual for that period however it could have a negative effect on confidence and reputation. A less stark report, in relation to schemes meeting target and
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presenting any appropriate mitigation may be more informative.
Councillor R Abbey accepted that the officers were reporting a snapshot in time but felt more explanation was required as readers may not have an understanding of the bigger picture, or the variety of reasons which influence projects, and with the document being in the public domain may raise unnecessary alarm. He commented that there may be areas where delivery was not as it should be but the report needed to be more robust.
The Director of Integrated Transport Services acknowledged the concerns, that the report was not reflecting spending to date and that Members could not see the forecasting. The Local Sustainable Transport Fund team were reliant on information from the delivery teams and the reporting was based on payment so there would be a time lag. Therefore the proposed extra information should provide more clarity for Members when considering future reports.
Councillor J Stockton asked what feedback had been received from the Department for Transport (DfT) as to why the LSTF Revenue Fund bid had been unsuccessful to help any future submissions.
The Director of Integrated Transport Services reported that the belief was that the bid failed to satisfactorily demonstrate value for money in the programme. However, there had been no official feedback and a meeting with the DfT had been requested. The bid submission had been prior to the creation of the Combined Authority and there was a less consistent approach. The LSTF Board had met and were now developing a more co-ordinated commissioning approach to delivery with programme in recognition of the current underspend, due to the optimum basis, and the need to emphasise value for money.
Councillor G Friel commented that as now all under the Liverpool City Region Combined Authority umbrella it should be possible to react to any skills shortages within the Districts through co-operation and support via a centralised body for co-ordination.
Officers had recognised and were looking to address the skill/resource issues, the funding availability had had an
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impact and an outline of the skills gap was being prepared. If a scheme provided value for money then it would be supported and would benefit from the City Region’s resource as a whole and be back-filled.
Resolved that:-
a) the content of the report be noted;
b) the maximum performance of the overall programme be welcomed, and the intention of Merseytravel, acting on behalf of the Combined Authority as the accountable body, to instigate re- profiling activities during 2014/15 if significant underspend occurs be noted; and
c) the Local Sustainable Transport Fund 2015/16 funding unsuccessful bid result and the resulting contingency plan to deliver key transport revenue services across the Liverpool City Region be noted . ______
Councillor S Foulkes left the meeting at this juncture.
______
59. Smart Ticketing Programme Update Report August 2014
The Committee considered a report of the Lead Officer for Transport regarding an update on the Merseytravel Smart Ticketing Programme.
Officers reported that the status of Project 1 ‘Concessionary Reimbursement’ had changed since the time of writing the report and was now amber in light of the continuing discussions with Operators. The Lead Officer for Transport reported that with regard to Project 2, Smart Enabling Saveaway it was challenging for the proposed launch date in late October to be met. Operators had raised considerable concerns with regard to the ticket choice as they would prefer the ‘SOLO’ as product of choice, there was disappointment that they had only now raised the matter. Officers believed that the adoption of the SOLO ticket would lead to confusion for the passenger.
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Operators had concerns regarding governance and Stagecoach had technical support concerns. Stagecoach had made reference to the scheme they had operating with Go-ahead in Oxford which they wished to develop as a national template and had offered an invitation to Officers and Members to view how it was working in Oxford.
A meeting had been facilitated by the Department for Transport (DfT) with Baroness Kramer and the DfT are fully supportive of the Merseytravel approach and wish to see the Operators come on board. Operators have offered a way forward but the formal correspondence was awaited.
Councillor R Abbey drew the meeting’s attention to the concerns raised under the project as a ‘Red herring’ thrown into the process and suggested that Members were willing to look at every model and if they felt the need would adopt changes as appropriate. However Operators have been fully aware of the process, they wished to work as partners and now had to show commitment to that partnership. In future there may be a requirement to work even closer, as there may be changes in legislation and there was an opportunity with this project to provide jointly better transport for all. The Operators received a lot of financial support from Government and government should use their influence to greater effect on behalf of the passenger.
Councillor R Abbey wished to commend all the Officers involved for the work being carried out.
Councillor K McGlashan commented that he was saddened by the Operators actions in light of their comments/participation in a scrutiny exercise regarding ticketing. It had been well acknowledged, even by the Government, that deregulation had been a failure, apart from London, across the country with negative effect on the industry. Working together would encourage passenger use and put money into the Operators’ pockets through income growth. If re-regulation was brought in then there would be little choice for Operators, everyone had to keep trying, Officers and Operators alike, to provide the best service for the public’s sake.
The Lead Officer for Transport commented that officers had found the challenges frustrating, they appreciate
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Member support and the Lead Officer for the project had been the Director of Corporate Development.
Councillor L Robinson wished to echo all the comments raised and add his thanks to the team involved in appreciation of their hard work. The Officers had 100% support from the Members for the job being done. DfT officials had supported the approach, Baroness Kramer also, so there was support and acknowledgement at the highest level for what the organisation was trying to achieve. It was disappointing that the Operators had been dragging their feet and that it had taken a high level meeting to move forward, when all that was wanted was put a ticket on a smartcard. There was no great plan to take over ticketing schemes but to make transport use easier to the benefit of the passenger and the Operators.
Councillor L Robinson also commented that he felt personally ‘let down’, he acknowledged the unofficial proposal from Operators, which officers would distil and report back, however there was a need to continue with what was proposed months ago and achieve the objective and provide a practical, realistic, level playing field and the best service to the passenger.
Resolved that the content of the report and progress made to date be noted.
______
Councillor L Rowlands left the meeting at this juncture.
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60. Strategic River Crossings - Transport Committee Inquiry
The Committee considered a report of the Lead Officer for Transport regarding a response to the Transport Committee inquiry on Strategic River Crossings.
Councillor R Abbey commented that he was comfortable with the delegation, however he would like to see included into the response that the Authority in its various guises had consistently requested of all Governments over the years that the Mersey Tunnel road crossings be taken into the national road network.
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Merseytravel Committee
Resolved that:- a) the content of the report be noted; b) the embryonic response set out within the Appendix to the report be approved; and c) the Lead Director for Transport, in consultation with the Chair and Deputy Chair of the Merseytravel Committee and Lead Member for Tunnels and Ferries, be given delegated authority to complete and submit the final response to the Transport Select Committee by the submission date of 22 September 2014.
CHAIR
Page 283 This page is intentionally left blank Agenda Item 15 FOR INFORMATION ONLY LIVERPOOL CITY REGION COMBINED AUTHORITY
To: The Chair and Members of the Combined Authority
Meeting: 19 September 2014
Authority/Authorities Affected: All
EXEMPT/CONFIDENTIAL ITEM: No
REPORT OF THE HEAD OF THE SECRETARIAT
IMPLEMENTATION OF LIVERPOOL CITY REGION DEAL
1. PURPOSE OF REPORT
1.1 The purpose of this report is to provide an update on the implementation of the Liverpool City Region Deal.
2. RECOMMENDATIONS
2.1 It is recommended that the Liverpool City Region Combined Authority:
(a) Welcome the update on the implementation of the Liverpool City Region Deal; (b) Note the actions in place to progress the areas of concern identified; and (c) Commends the Mayor of Liverpool, Liverpool City Council, Liverpool Vision and partners for their excellent work in delivering the International Festival for Business 2014.
3. BACKGROUND
3.1 Liverpool City Region agreed a City Region Deal with Government in July 2012, which was formally signed off in September 2012. This covered asks and offers in a number of areas which, if delivered, would deliver accelerated economic growth and job creation.
3.2 Delivery leads were identified for each of the themes who were given responsibility for implementation of actions within the City Region and seeking progress with Government. Detailed action plans have been developed and are being delivered with owners for each action. In total, 137 actions were identified and the progress of them at the current time is as follows:
Page 285 FOR INFORMATION ONLY Theme Complete On Track Behind Schedule International Festival for 11 0 0 Business Accelerating investment in 23 10 3 low carbon River Mersey Task Force 2 3 2 Jobs and skills 20 0 3 Improving transport 15 9 15 connectivity Science and Knowledge 7 2 0 Assets Investment Framework 5 5 1 Total 66 38 33
3.3 This rate of completion of actions is healthy, and is to be expected from an implementation plan that was agreed in Summer 2012. The outstanding actions that in the main did not secure progress from Government are:
Finalise pilot model for Payment by Results in Adult Skills: the revised version was submitted to the Minister of State in August 2013 and it was subsequently agreed not to progress with this pilot. Work has continued with colleagues in Department for Business, Innovation and Skills who are looking at revised options for the model: this action was picked up as part of the City Region’s Growth Deal. Our ask that Department for Work and Pensions formally recognise the Employment and Skills Board as the single voice and strategic lead for employment and skills: DWP were unwilling to do this. This will be picked up again through discussions with Government on the Growth Deal freedoms and flexibilities. Our ask that Department for Work and Pensions commissioning team reach agreement with the City Region over future commissioning geography and timescales: the Department for Work and Pensions were unwilling to do this. This will be picked up again through discussions with Government on the Growth Deal freedoms and flexibilities. Engagement through the Merseyside Bus Board: this is currently in abeyance and the need for it will be reviewed as part of the further governance developments within the City Region.
3.4 The Low Carbon regulatory pilot scheme has faced delays as a result of private sector applications not coming through as quickly as might have been expected. However, the approach that the regulatory pilot proposed has been broadly adopted nationally: this is a positive outcome from the Deal process. There are two actions within Low Carbon linked to Capital Allowance and Customs warehousing which are similarly linked to private sector applications which are not forthcoming at the current time.
3.5 The City Region Deal secured the support and funding from Government for the International Festival for Business. The Festival saw 75,000 delegates from 88 countries attend 424 registered events in 139 venues, and was judged to be an outstanding success: this has led to support being confirmed for a further Festival in 2016. The overall target for the International Festival for Business was to see a Page 286 FOR INFORMATION ONLY positive economic impact of £100m by 2019, and the event is on track to achieve this. The Combined Authority is recommended to commend the Mayor of Liverpool, Liverpool City Council, Liverpool Vision and all partners (including all Councils and the Local Enterprise Partnership) for their excellent work in delivering it.
4. RESOURCE IMPLICATIONS
4.1 Financial There are no direct issues arising from this report.
4.2 Human Resources There are no direct issues arising from this report
4.3 Physical Assets There are no direct issues arising from this report
4.4 Information Technology There are no direct issues arising from this report
5. RISKS AND MITIGATION
5.1 No direct risks arising from this report
6. EQUALITY AND DIVERSITY IMPLICATIONS
6.1 There are no negative implications
7. COMMUNICATION ISSUES
7.1 None
8. CONCLUSION
8.1 This report has provided an update on the implementation of the Liverpool City Region Deal actions.
SHEENA RAMSEY Head of the Secretariat
Contact Officer: Sue Jarvis, Knowsley Council (0151 443 3559)
Appendices: None
Background Documents: None Page 287 This page is intentionally left blank