Cheshire & Warrington Local Enterprise Partnership

Cheshire & Warrington Local Enterprise Partnership

Performance and Investment Committee

Title: Programme Manager Update Report / Agenda item:6
Prepared by: Rachel Brosnahan / Date of Report: 21st February 2018

1. Executive Summary

Overall the LGF projects within the LGF programme continue to make good progress. Warrington West Station and Crewe Green Roundabout projects have both now started on site. The M62 j8 road improvements are substantially complete with the project due to fully complete by the end of April one the landscaping works have been carried out. The learning hub at Reaseheath is now complete and the other projects on site are progressing in line with programme.

There has been quite significant slippage on some projects such as Sydney Road Bridge and Winsford Industrial land which means we’re likely to finish the financial year at £15m-16m total LGF spent for 17/18. While this is disappointing, its against a combined profile for LGF 1/2/3 of £18.27m. The LGF 1/2 profile for the year is £7.9 and we will have achieved £14m+ on the LGF 1/2 projects so can show that we’ve been able to eat in to the funding carried over last year.

Cheshire Green Employment park project is going well, with the first phase complete. Another two GPF applications are currently being considered.

1. Local Growth Fund 1/2 Updates
2. Sydney Road Bridge

The issue of paying Scottish Power(SP) for the cable diversion works was discussed at the last project board. SP had previously indicated that they would want paying in advance of completion of the works and this had been factored into the spend profile for the year. SP no longer require paying in advance and the project Senior Responsible Officer (SRO) isn’t comfortable doing so now it isn’t required.

The final business case was due to be presented for approval at the March meeting but has been pushed back to August due to delays with Network Rail approvals. The LEP’s conditional offer of funding has now expired. The SRO has been requested to write to the LEP to explain the delays and confirm the revised timings. It is suggested that this is considered an updated conditional offer letter is issued, giving until August to finalise and submit the final business case.

2.2.Crewe Green Roundabout

Work has now started on site. Unfortunately there has already been two accidents in the roadworks but CEC have a dedicated web page with information about the works and are due to appoint someone to liaise directly with the public for the duration of the works.

There will be no further funding claimed on the project this year due to the four month delay caused by the site assembly issues and due to the other public grant funding secured which needs to be spent this year.

2.3.Warrington Centre Park Link

There has been some very positive news for the project; WBC have been successful in their Housing Infrastructure Fund (HIF) bid and have secured £3.686m. This means that the scheme is fully funded and they can proceed with the compulsory purchase of land required. However, there has also been positive movement in this respect and a verbal agreement has been reached with the key land owner. It is hoped this will be confirmed in a legal agreement over the coming weeks.

2.4.Warrington West Station

Sod cutting event held on the 29th January and was well attended.

Site clearance and levelling work has been carried out. Network Rail approvals not yet all in place which has caused programme to be pushed back 6 months. This is being challenged as the station building and car park works should be unaffected by the track works delays

Land transfer from David Wilson homes still not completed but this is largely down to the delays with Land Registry.

Due to the various delays with components of the project, the project is now £900k down on the spend profile for the year.

2.5.Life Sciences Fund

The fund has recently invested ina dental diagnostic software company alongside Mercia Fund Managers, part of NPIF. No further drawdowns are expected this quarter. Business plan still not agreed.

2.6.Reaseheath College projects

Work is progressing well on all four of the Reaseheath projects. The Learning Hub is now complete.

We’ve been approached to provide LGF in conjunction with ERDF towards a new an Eco Centre at Reaseheath. While we do have £5m skills capital funding available we have made it clear that there will be an open call process in due course based on the priorities that have emerged from the skills and education plan.

2.7.Ellesmere Port Central Development Zone

Work is progressing on developing the project albeit slowly. Brief for the masterplanning work should now have been issued. The masterplan brief includes a review of the public realm, the existing bus station and the underused assets in the town centre. It is expected that the first phase of the masterplanning work will take 2-3 months, with the supplementary planning guidance taking longer.

The business case is being refreshed in house with input from Perfect Circle, using the one that was produced by Arcadis in 2016 based on a five case model. It is expected that this will be finished by the middle of March and will then be appraised prior to submission to the LEP in early April.

2.8.Poynton Relief Road

Work is continuing on the CPO process. A public inquiry is expected before spring. The estimated costs of the scheme are escalating and are now £18m over the original budget. CEC are working on a funding strategy to consider how this increased cost can be managed and funded.

2.9.Congleton Bypass

Tenders due back 23/02/2018. They expect the business case to be ready for submission to DfT and the LEP in May.

Information has been provided to the planning inspector on revised air quality information. CEC are continuing to lobby for an urgent decision on the orders by end of March 2018 to allow the project to remain on programme.

2.10.Thornton Energy Demonstrator

John Adlen to provide update on wider site development at the meeting.

2.11.Ellesmere Port and West Cheshire College

Work has continued developing the designs for the main works which will be carried out over the summer. The new access barriers have been installed.

1. LGF3 update
2. Crewe High Speed Ready Heart

Peveril Securities have been appointed to develop out the Royal Arcade following a procurement process. The Council is continuing with site assembly and will shortlyadvertise notices for the appropriation of land and for the proposed disposal of public open space at Royal Arcade.

Consultation process has been completed for Crewe Market. The resulting actions have created an additional cost pressure for interim arrangements. Procurement of long-term market operator to commence by end of February.

3.2.Unlocking Winsford Industrial Expansion Land

Work is continuing developing the masterplan. The planning application is due to be submitted at the end of the quarter. Highway modelling stage is nearly complete.

The council has requested legal advice to review state aid implications of including Tiger Trailers scheme more fully within the scope of the LGF bid. Tiger Trailers have secured planning consent for their new unit and site preparation works have begun - SPEN will not be able to begin diversion works until other highway closures in the area are completed, the programme will still be within time tolerances.

A further £100k has slipped from the profile in just one month. In July the profile as provided by CWAC staff for the year was £1m of spend in 17/18, the likely outturn is now likely to be less than £360k.

3.3.Tarvin Road

The outline business case is being appraised and will be submitted to the LEP at the beginning of March. It is expected that the appraisal should pick up areas of the business case that need working on.

3.4.Joint Cheshire and Warrington Sustainable Travel Access Fund

The applications have been reviewed. Discussions have been held with two local authorities about whether they can sensibly reduce their proposed schemes down to a level which would enable the LEP to grant each local authority £1.666m each. LTB are going to review the applications, then subject to their endorsement the list will be presented to P&I. If P&I approve the high-levelapplications, then each local authority will be invited to work up their proposals and submit a short form business case and appraisal for approval.

1. Transport Projects
2. A500

Traffic modelling work is still ongoing. Middlemoss Roundabout will need to be enlarged. The option with the greatest land take will be used for the planning application. Both the planning application and Outline Business case are due to be completed in June.

4.2.Middlewich Bypass

Works is progressing through design phase and towards submission of planning application in June18. Environmental site surveys progress on site and Planning Performance Agreement is in preparation for exchange with CEC. Traffic modelling, engineering design and consultation/Comms work is proceeding in preparation for Preferred Route consultation in Spring 18.

1. Growing Places Fund (GPF) Update
2. Cheshire Green

The project is progressing well, with the roundabout works now complete. The completion of this phase is expected to increase the value of the land and therefore continues to provide appropriate security for the GPF loan.

5.2.Further applications

Heads of terms have been drawn up for the sub-station project. Approval of the loan is likely to be sought from P&I in April.

An application from a property management company for grant funding towards the cost of a new build has been received and is under consideration.

1. Finance

There has been slippage on a number of projects just in the last month. It looks like Warrington East will only achieve £1.2m of spend against a profile of £1.6m and the delays with getting work started on Warrington West station has meant they’re likely to claim £800k less than profiled this year. The delays with Sydney Road bridge has reduced the amount of spend expected this year by £1.5mand the provision of the grant from NPIF for Crewe Green roundabout has meant LGF has had to be pushed back to 18/19. We’ve also had significant slippage on Winsford Industrial Estate and delays with contracting Tarvin Road and Ellesmere Port One Estate have also impacted.

One potential option to increase LGF spend this year is to substitute CEC funding on the Life Sciences Fund with LGF as has been done in previous years. This would mean an additional £1.376m could be spent this year and would bring the total LGF invested in the Life Sciences Fund to £7.85m of the £10m committed.

We will be paying all but 5% of the LGF grant on the M62 j8 projects and Reaseheath projects this years as they’re profiled to complete in q1 18/19 as agreed at the last P&I.

Key to achieving next year’s profile of £26.4m is to get the remaining LGF 3 projects contracted and on site. The LGF 1&2 projects should achieve good levels of spend as they’ll all be on site apart from the significant exception of Ellesmere Port One Estate. This will be need to be discussed following the presentation at the meeting.

1. Outputs

BEIS are still waiting for clarification of what impact sites can be counted on LGF projects. Therefore for now, the outputs achieved at Omega have been taken out of the figures below, but the houses already built around the site of Warrington West Station are included.

Outputs / BEIS Target / Contracted on projects / Achieved to date / Percentage achieved
New Commercial Floorspace (sqm) / 178,885 / 363 / 0%
Renovated Commercial Floorspace (sqm) / 791 / 487 / 62%
Businesses receiving investment / 58 / 16 / 28%
Jobs created / 12000 / 22,935 / 116 / 1%
Private sector Leverage / 280 / 291 / 9 / 3%
Public Sector Leverage / 48 / 12 / 25%
New homes completed / 5000 / 9,217 / 2,217 / 24%
New home starts / 8,092 / 0 / 0%
GVA / 40.3 / 6.45 / 16%
Space occupied at Alderley Park (sqft) / 200000 / 10113 / 5%
Learners benefitting / 471 / 0 / 0%

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1. Risks

The top five operational and programme risks are shown below.

RISK REF / RISK SCENARIO / FUTURE CONTROLS / MITIGATION MEASURES / Residual risk rating
RISK / IMPACT / IMPACT {1-5} / LIKELIHOOD {1-5} / TOTAL
20 / Current political landscape and lack of clear support for LEPs from opposition creates risks to delivery of economic development projects in Cheshire and Warrington. May take significant time to transfer delivery to another body. / LEP potentially would have to be wound up and delivery of projects and realisation of benefits could be delayed. / Promote the LEP achievements and its effectiveness at delivering regeneration. / 5 / 3 / 15
23 / BREXIT reduces funding available to the LEP to invest through loss of the EU Programme / scaling back of team and reduction in impact the LEP activities can have on the sub-region. / Continue to promote the benefits of the LEP as a regeneration vehicle and look at other funding opportunities and alliances. / 4 / 3 / 12
34 / Loss of key staff / Causes continuity issues, loss of knowledge and reduction in delivery capability while new staff and employed and get up to speed. Unable to carry out key tasks. E.g. counter sign payments and contracts. / Have adequate approved delegation limits and signatories. Make sure staff don't operate in a vacuum and that key tasks are understood by at least one other member of staff. / 4 / 3 / 12
38 / Key stakeholders become disengaged / Loss of relationships and potential influence and support for the LEP activities / Review and update stakeholder management plan. Establish a communications committee / 4 / 3 / 12
48 / Criticism of credit card transactions / Reputational damage to the company and questions over transparency of process and impropriety could be raised. / Clear policy on the purchase of Alcohol and corporate entertainment. Add notes to credit card statements with details of event attended and who was present when there are transactions for hospitality. / 3 / 4 / 12

Programme Risk register

RISK SCENARIO / FUTURE CONTROLS / MITIGATION MEASURES / FUTURE RISK RATING
RISK / IMPACT / IMPACT {1-5} / LIKELIHOOD {1-5} / TOTAL
Delivery of the projects to meet financial and output targets in a timely manner are adversely affected by changes to factors such as partner staffing resources, capacity or skills, planning or environmental issues, construction related factors, or financial issues, which could result in delays to projects and/or the programme success given the sensitivity of the programme on a small number of key projects. / Projects and/or programme does not deliver cost or quality requirements on time and fails to achieve the targeted outputs and outcomes within the Growth Deal timeframe.
Potential to damage relationships with the LEP.
Reputation of the LEP as able to deliver bids submitted to Government is negatively affected.
DCLG could potentially take back flexibilities given to manage the LGF Programme.
Could affect the award of future funding to the LEP. / Look at revising the offer letter to put stiffer penalties in place for non achievement of outputs. / 4 / 3 / 12
Overall programme performance impacted by poor performance of the Major transport Projects / LGF programme does not realise its economic growth targets due to nature of focus of Department of Transport objectives versus LGF outputs/outcomes. Achievement of the aims and objectives of the programme adversely affected by any significant issue or risk in any one of the projects.
Reputation of CWLEP to deliver is adversely affected due to the scale of the transport scheme projects. / - Agreement with DfT and grant recipients on monitoring and reporting requirements against LGF targets.
- Work with DfT to understand the funding conditions and any conditions/clawback if the non-transport outputs are not achieved.
- Explore to tie in stronger penalties to non-achievement of outputs to the funding offer. / 4 / 3 / 12
Lack of suitable projects and/or appropriate match funding to form ESIF programme pipeline to meet eligible criteria including meeting cross cutting thematic objectives and revised Treasury deadline of March 2018 for final project submissions. Flexibility or delay in decisions to use of LGF3 as match. Lack of partner support to deploy remaining funds and sources of match funding particularly under the European Social Fund. / ESIF programme does not meet its outputs/outcomes which could result in loss of funding for the sub region. Damage to LEP reputation and credibility both locally and nationally as well as with Government which could impact on consideration for future funding rounds i.e. the future prosperity fund.
Loss of funding to the Sub Region to support delivery of growth, jobs and businesses in Cheshire and Warrington and delivery of SEP. / Consider more long term staffing arrangements. / 4 / 3 / 12
Failure to implement the seven recommendations of the ABR Review of FE has a detrimental effect on the delivery of FE skills provision across Cheshire and Warrington.. / The benefits to employers, learners, the colleges and the economy more generally will not be achieved. / The Strategic Forum will work to achieve the political buy-in to the implementation / 3 / 3 / 9
Ellesmere Port Estate project significantly delayed and or reduced in scale / Would need to find another project to take up spend, which will get increasingly harder as time passes. / Potentially need to find new "off the shelf" project that could achieve spend and necessary outputs within LGF timescales / 3 / 3 / 9
Fragility of current government means that there is a risk the government could change and lead to a change in policy regarding LEPs. / Change in funding and support for LEPs / Continue to promote the work of the LEP and engage counsellors and MPs from all parties. / 3 / 3 / 9
Due to the unusual investment profile the programme may underperform in 17/18 and then over perform in 19/20 leading to cash flow issues. / There is reputational risk with underperforming this year which could reduce funding available to us in future years. The lack of cash flow in future years again will affect reputation with stakeholders and is difficult to manage once projects are on site. / May need to agree staggering payment profile with LAs. / 3 / 3 / 9
ESIF targets and measurement criteria for C&W, set by Government to meet the National targets, pose a challenge in some of the priority axes to deliver against which puts at risk the achievement of overall LEP ESIF targets and aspirations and could put at risk the 6% performance programme target. / Agreed targets may not be delivered and the ESIF and SEP targets not delivered in full.
If by December 2018, the LEP is not forecasting to achieve its targets by the end of the programme, it risks losing a performance reserve of 6% of the programme (approx. £3.6m)
Reputational damage if the LEP does not meet its targets. / - Work Northern Powerhouse Investment Fund (NPIF) to explore achievement of additional programme outputs and outcomes and ongoing sustainable reinvestment of EU funds post Brexit.
- Possible increase in fund allocation of funds e.g. rural funding.
- Work with Government on any early end of programme targets in view of Brexit. Increased output targets for projects required if investments made in Evergreen. New Calls to specifically focus on additional out put requirements in key areas (e.g. grants to business). / 3 / 3 / 9
Northgate isn't delivered to the size and scale anticipated when the bus station scheme was approved or within the timescales given. / Loss of outputs and potential reputational damage. Would affect the overall impact of the LGF programme. Chester City continues to lose trade impacting the businesses that already exist there. / Offer to provide additional support to the delivery of the project? / 3 / 3 / 9

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