Issue - meetings

The Mersey Gateway Executive Board considered the attached report:-

The Mersey Gateway Executive Board had considered a report of the Chief Executive, on the Mersey Gateway Project Budget.

On the 12^th October, 2011, the Council received from the Department for Transport and the Treasury, a Conditional Funding Offer for the Mersey Gateway Project. The offer set out the Government’s contribution to the whole-life costs of the Project.

An additional report and attachments were circulated to Members which provided the details of the offer from Government. In addition, Members received a briefing before the start of the meeting from Steve Nicholson, Mersey Gateway Project Officer, on the funding offer.

            RESOLVED: That Council

1)     accepts the Conditional Funding Offer from Government in the form received;

2)   supports the further development of the Mersey Gateway Project on the basis of

(a) the Conditional Funding Offer; and

(b) the information set out in the additional report and the attachments to  the report;

3)   Council and its Officers take all reasonable steps to maximise toll discounts for residents of Halton;

4)     delegate to the Chief Executive, in consultation with the Leader of the Council, the Portfolio Holder for Resources and the Portfolio Holder for Transportation, the power to take all reasonable steps necessary to achieve the delivery of the Mersey Gateway Project.

The Board considered a report of the Chief Executive which gave Members advise on the current budget position relating to the Mersey Gateway Project. 

The Board was advised that the Project budget was split into two distinct areas: the development cost budget for delivering the Mersey Gateway through the Procurement phase of the project up to Financial Close when a contract would be in place with the private sector (the Project Company) to design, build, finance and operate the project.

 The information updated the forecasts made in the development budget approved by the Executive Board on 25th September 2008 and the information on budget monitoring reported to the MG Executive Board since then.  A revised forecast for this period was also outlined in Table 2 in the report; and

The report also provided a summary of the expenditure incurred in relation to land acquisition to the end of quarter one 2011-12 together with the current estimate for the expenditure to be incurred under various activities.

The Board was further advised that the funding agreement with the Department for Transport (DfT) established when Mersey Gateway received Programme Entry approval in March 2006, specified that the Council was responsible for meeting all development costs up to receiving Final Funding approval for the project. The funding agreement with Ministers was being administered by the rules for delivering local major transport schemes.  

Furthermore, it was reported that originally, the Council contributions were expected to be Capital in nature.  However, there was an ongoing debate in terms of what the Audit Commission was content to accept as Capital expenditure.  As a result, a proportion of the development budget could not be treated as Capital and must be accounted for as Revenue expenditure instead.  This could partially affect the way the Council was able to utilise prudential borrowing as a funding mechanism.  Discussions were ongoing in this matter and the assessments undertaken so far indicated that revenue was unlikely to exceed 20 per cent of the total development budget with the remainder being treated as capital expenditure.

It was also reported that the Project Team had experienced  significant cost pressures since 2010:

·              The Project Team expected the Mersey Gateway to receive the necessary planning and funding approvals early in 2010 after a successful Public Inquiry.  Unfortunately, the economic crisis and subsequent Spending Review meant that the project programme suffered from a lengthy delay;

·              The situation had been exacerbated even further due to Government requests for information on various aspects of the project.  The Project Team were obliged to undertake a significant amount of further research, studies, etc in order to satisfy these queries.  This included revisions and further testing of the traffic model, revisions to the business case and a value engineering exercise.  The tasks associated with these requests were not part of the original budget forecast and required the continued mobilisation of a large project team; and

·              The Secretary of State has requested that the project costs were reduced which included moving  ...  view the full minutes text for item 6