MEETING / CABINET MEMBER: EDUCATION AND DECISION MAKER: INFRASTRUCTURE DATE: 17 JANUARY 2013 TITLE OF REPORT: Major Scheme Funding REPORT BY: Steve Burgess, Head of Transportation and Access CABINET SCRUTINY COMMITTEE FINAL CALL IN DATE: 22 MEMBER(S) ONLY JANUARY 2013 DATE DECISION MAY BE IMPLEMENTED: 23 JANUARY 2013 1. Classification Open 2. Key Decision This is not a key decision 3. Wards Affected County-wide 4. Purpose To advise Cabinet Member on government’s proposed changes to the major scheme funding programme and seek its agreement to the proposed governance arrangements outlined in this report to establish the Marches Local Transport Body. 5. Recommendation(s) THAT: The Cabinet Member a) “Agrees to the establishment of a Marches Local Transport Body. b) Authorise the Assistant Director Law, Governance and Resilience to finalise the terms of a joint committee as indicated in the report. c) Authorise the Director of Places and Communities to conclude arrangements with the Department of Transport, including the identification of an accountable body.” Further information on the subject of this report is available from Steve Burgess on Tel: (01432) 26 0968 J:\TEMPLATES\Current templates\_Formal Report Template 3Oct12.doc 6. Key Points Summary • Government consulted on the devolution of its major scheme funding programme for the next spending round period (2015-2019) earlier in 2012, signalling its intention to devolve the programme to ‘local transport bodies’. The consultation also indicated the likely move away from a bidding approach to a formula based allocation of the programme. • Herefordshire Council and the Marches LEP responded directly to the consultation. The two responses broadly welcomed the consultation proposals but raised concerns that a formula approach might reduce the level funding available to large rural areas such as that covered by the Marches. Copies of the responses are available as background papers. • Government has now published the results of the consultation and proposed next steps, confirming key elements of the consultation proposals. These include: o The need to formally establish ‘Local Transport Bodies’ based on the existing Local Enterprise Partnership geographies which will be responsible for allocating and managing the devolved major scheme funds. These, as a minimum will need to comprise the relevant local transport authorities, but may also comprise LEP representation subject to local decision. o The devolved funding will be allocated through a formula based on population size. This replaces the current allocation system which is based on appraisal of individual scheme business cases. The national programme for current spending period (2010 to 2014) is c£1.5B. Government has promised to provide indicative funding outlines for LTB areas later in October. It is anticipated for the Marches area that this will be in the region of £20M. • Guidance issued November 2012 requires the 3 transport authorities in the Marches area to confirm the following: o Details of the ‘Assurance Framework’ for the Marches Local Transport Body. This will need to clarify the local approach to governance, financial management, accountability and testing value for money. Government needs confirmation of these arrangements by the end of February 2013. o A provisional list of prioritised schemes which will need to be submitted to DfT by July 2013. Whilst these schemes will not be required to have been subject to a full major scheme business case assessment, DfT will require an assessment of economic and environmental impact and deliverability. • Whilst the devolution of the programme to local transport bodies is likely to result in savings for central government as it no longer needs to administer, manage and appraise major transport scheme proposals it does not propose to provide any additional funding to assist the local transport bodies which will be required to take over these tasks. In view of the relatively low level of funding which the Marches is due to receive as a result of a population based formula, the resourcing of the local transport body will be key issue for the Marches local transport authorities. 7. Alternative Options There are alternative options around the composition of the Local Transport Body (LTB). Formal Report Template DRAFT 3Oct12 Herefordshire and the Marches Local Enterprise Partnership (LEP) confirmed a preference during the original consultation which was that the LTB would comprise of the 3 local transport authorities with the Marches LEP being represented in an advisory capacity. The outcome of the consultation appears to allow for this arrangement to proceed, however, other options are available including the LEP having a formal voting role on the LTB or leading the LTB. Given the existing consensus amongst the Marches transport authorities and the LEP there is no justification to review this position. 8. Reasons for Recommendations To ensure that the Marches local transport authorities can continue to access funding to improve transport facilities in the area and support economic growth and sustainable development. 9. Introduction and Background The major scheme funding programme has been in place for many years and provides funding direct to local authorities for transport schemes over £5M. Government manages the programme centrally and has established a detailed process for appraisal which is set out in a web based appraisal tool called WebTAG. Typically, this programme has funded highway schemes and larger sustainable transport schemes such as new bus stations. Whilst focused on transport, the major scheme programme is separate to the local transport plan capital grant and is also separate to the Highways Agency’s capital funding. Herefordshire Council has never secured funding through this programme. Whilst it sought funding for the Rotherwas Access Road, the major scheme business case was eventually rejected by DfT and it was subsequently funded as a regeneration scheme with funding from Advantage West Midlands. Whilst securing major scheme funding can provide an area with significant external investment, the process of securing the funds is extremely resource intensive and lengthy. For smaller projects (nearer the £5M minimum threshold) or for authorities such as Herefordshire Council with limited resource/capacity, the nature of the major scheme process has proved something of a deterrent in itself. 10. Key Considerations Key Tasks Resulting from the ‘Devolving local major transport schemes: Next steps’ paper The government published ‘Guidance on Local Transport Bodies’ in November, 2012 confirming the outcome of a consultation earlier in 2012 and proposals for devolving its major scheme programme from 2015. The authorities will need to provide assurance by the end of February 2013 on governance, democratic accountability, financial management and value for money. By July 2013 they will be required to submit a provisional list of prioritised schemes which will have been subject to at least a high level appraisal and agreed by the LTB. Proposed Governance for the Marches Local Transport Body Herefordshire Council and the Marches LEP responded to the original consultation and were in agreement that the LTB should be comprised of the 3 local transport authorities. The LEP would have an advisory role in relation to the LTB and hence would not have Formal Report Template DRAFT 3Oct12 formal decision making powers. As was evidenced by the responses to the consultation, there were concerns that the future administration of the fund would need to remain subject to democratic accountability. The LEP has not finalised its own governance arrangements to the extent that any representative can be lawfully mandated to respond to funding proposals on its behalf. Some kind of corporate vehicle is perhaps the most suitable solution. Equally, for the LTB some authorities (outside of the Marches area) have proposed a corporate structure. This would potentially allow full participation for the LEP’s representative as a voting decision maker rather than a consultee/observer. The corporate structure would also potentially admit bodies such as Network Rail. However, it is suggested that at this stage a joint cabinet committee would be the most appropriate solution. This proposal has been discussed and agreed at officer level with officers of Shropshire and Telford Councils. It is proposed that the committee would: a. comprise 6 cabinet members, 2 from each authority one of which would be responsible for transport strategy and/or infrastructure. This committee would be empowered to determine the funding priorities in relation to the devolved major scheme funding programme. Over time and subject to further devolution of powers from central government, it may take on additional functions; b. invite appropriate representation from the Marches Local Enterprise Partnership to inform its decision making. At present the LEP does not have a clear constitution and this would limit its role to advisory and would preclude any voting rights. This could be reviewed if the status of the LEP changed; c. be serviced by appropriate legal/governance officials. Further consideration will be required to asses the resourcing implications of this new activity and whether or not the function might rotate between the 3 authorities or if pooled resources would assist one authority maintaining the role over a longer period; and d. be serviced by a formal technical officer group which would be established to fulfil