WMCA Board Meeting Combined Authority Budget

Transcription

1 Agenda Item 5.1 WMCA Board Meeting Date 10 June 2016 Report title Combined Authority Budget Accountable Chief Executive Responsible Officer Originating Council Report to be/has been considered by Jan Britton, Chief Operating Officer of West Midlands Combined Authority James Aspinall West Midlands Combined Authority West Midlands Finance Directors 26 May 16 WMCA Management Board 26 May 16 S151 Officer of West Midlands Combined Authority Recommendation(s) for action or decision: The Combined Authority Board is recommended to: 1. Approve the balanced summary 2016/17 Consolidated Revenue Budget for West Midlands Combined Authority. 2. Approve the 2016/17 West Midlands Combined Authority Governance Budget. 3. Approve the 2016/17 Investment Programme. 4. Note and Endorse the 2016/17 Transport Delivery Revenue and Capital Budget 5. Note the Financial Monitoring & Reporting Arrangements 6. Note current Tax and Audit Status Page 1 of 12

2 1.0 Purpose 1.1 To approve the Revenue Budget and Investment Programme for the continuation and progression of expenditure on behalf of the Combined Authority for the 2016/17 Financial year /17 Summary West Midlands Combined Authority Revenue Budget 2.1 The 2016/17 Combined Authority Revenue Budget summary is presented below for approval. The Consolidated Revenue Budget consists of: The 2016/17 Governance Budget as detailed in Section 3 of this report for approval. The 2016/17 Revenue impact of the 2016/17 Combined Authority Investment Programme as detailed in Section 4 of this report for approval. The approved 2016/17 Transport Delivery Revenue Budget as detailed in Section 5 of this report. Page 2 of 12

3 /17 Combine Authority Governance Budget 3.1 The following Table summarises the Combined Authority Governance Budget presented by key priorities as outlined in the Statement of Intent: WMCA Governance Revenue Budget 2016/ / /17 Outcome New B/Fwd Total Public Sector Reform Productivity & Skills Commission Mental Health Commission Land Commission Collective Investment Fund Transport Skills Programme, Policy & Governance Set Up Costs Communications Total Budget 2, , /17 Membership Fees: Constituent Members 1,750 1,750 Non-Constituent Members Associate Members / Official Observers /16 B/Fwd Contributions Fee Income 2, ,425 Shortfall (413) (413) Constituent Member Further Contribution /17 Balanced Budget This budget includes some broad estimates which will continue to be refined and assumes that resource capacity will be leveraged in a number of areas from WM Districts. 3.3 Transport Costs cover the work on the M6 Toll and Key Route Network and the CIF cost relates to fees. 3.4 Membership fees of 250,000 per Constituent Member and 25,000 per Non-Constituent Member, plus Associate Members and Official Observers have been included above. This leaves an additional funding requirement of 413,000 which it has been assumed will come from the Consituent Members only; being 59,000 per Member. 3.5 In addition Funds of 0.375m will be bought forward from 2015/16 where Commission expenditure is still to be progressed. These funds are bought forward from the contributions made by the Metropolitan Councils in 2015/ Expenditure will be controlled, monitored and reported throughout the year to the Combined Authority Board in terms of actual and forecast spend. Page 3 of 12

4 4.0 Combined Authority Investment Programme 4.1 Summarised below is the projected 2016/17 Combined Authority Investment Programme which makes allowance for a potential programme of 147.7m. This is an ambitous programme and this first year reflects an early estimate of the profiled aspirations. It is unlikely that all individual business cases for a programme of this size will be progressed during 2016/17 but allowance has been made in the capital budget and revenue financing costs for investment up to this level. WEST MIDLANDS COMBINED AUTHORITY: INVESTMENT PROGRAMME Financial Year Ending March 2017 WMCA Investment Programme Current estimate 000 WMCA Devolution Funded By ( 000) CIF Fund European 3rd Party/ Enterprise (Birmingham) Union Other Zone Local Growth Fund High Speed 2 HS2 UKC Interchange UKC Infrastructure Package 2,400 1, HS2 Curzon Street Masterplan HS2 Wider Connectivity Package HS2 Curzon (Bull St to Curzon / Adderley) 2,200 2,200 HS2 Metro Birmingham Interchange 1,500 1,500 Brierley Hill Metro 1,200 1,200 HS2 Programme Governance High Speed Supply Chain 36,200 36,200 National College - Development Team HS2 Growth Strategy 46,480 3, , ,200 2,700 Coventry UK Central Plus Coventry City Centre Regeneration WM Revolving Housing Fund - Collective Investment Fund 35,000 35,000 Land Reclamation Fund 40,000 40,000 Business Innovation 25,000 25,000 EZ Expansion (excluding Curzon Street) - Combined Authority Total 147,700 70,190 35, , ,200 2, Much of the above programme represents initial development costs of the 8bn Investment Programme based on the Devolution deal with Government. Spend incurred is at risk of the Authorities concerned until the Devolution agreement is signed. 4.3 The 2016/17 spend will be financed from the annual 36.5m Devolution agreement via prudential borrowing, along with other sources of finance shown above. Separately it has been approved that Birmingham City Council will be the accountable body for the CIF Fund and hence will undertake all the required borrowing. The CIF borrowing costs will be met by projected investments from the fund with a gurarantee of underwrite from the Districts should the Fund be in deficit. 4.4 The projected borrowing requirement for the Investment Programme in year is therefore 70.19m, however the Combined Authority is expected only to have borrowing powers for transport during 2016/17. The split of the borrowing requirement between Transport and non- Transport Spend is shown below: Page 4 of 12

5 WMCA Financing Budget 2016/ Borrowing Transport Non Transport HS2 UKC Interchange UKC Infrastructure Package 1,600 1,600 - HS2 Curzon Street Masterplan HS2 Wider Connectivity Package HS2 Curzon (Bull St to Curzon / Adderley) HS2 Metro Birmingham Interchange Brierley Hill Metro HS2 Programme Governance High Speed Supply Chain National College - Development Team HS2 Growth Strategy 3,970 2,400 1,570 Coventry UK Central Plus Coventry City Centre Regeneration WM Revolving Housing Fund Collective Investment Fund Land Reclamation Fund 40,000-40,000 Business Innovation 25,000-25,000 EZ Expansion (excluding Curzon Street) Combined Authority Total 70,190 2,840 67, The Combined Authority will therefore borrow a projected 2.84m in 2016/17 to finance the Transport Element of this programme and this position is reflected in the 2016/17 Combined Authority Treasury Management Strategy Report also reported to this Board for approval. 4.6 Excluding the Land Reclamation and Business Innovation programmes, a balance of 2.35m non-transport borrowing would be required in year and this is small enough to be funded from the Devolution Grant itself in year without borrowing. This eliminates the need for complex inte-authority borrowing arrangements during the interim period when the CA does not have Non-transport borrowing powers in relation to these smaller projected expenditure areas. 4.7 In relation to the Land Reclamation and Business Innovation Funds, until Non-Transport Borrowing Powers are granted to the Combined Authroity, it is proposed that the lead Authority for each workstream undertakes the borrowing and the CA reimburse the Authority in full via an interim agreement from the 36.5m Devolution Grant as direct financing costs and the borrowing cost is included below. 4.8 The Revenue Impact of the 2016/17 Investment Programme is summarised below and included within the Consolidated Revenue Budget in Section 1 of this report: WMCA Investment Programme Financing Revenue 2016/17 Income: 000 Government devo deal grant (part year) (27,375.0) Business Rates growth (1,500.0) Expenditure: Interest payable 1,000.0 Revenue costs of project & programme delivery 2,000.0 MRP 0.0 Revenue Financing of non Transport Capital Exp 2,500.0 MRP 23,375.0 Net revenue (income)/ expenditure Work is ongoing to refine the funding flows between lead Authorities, the financial Administration requirements for the CA as accountable body and the definition of Financial Risk and Responsibility for all the schemes and Funds associated within this Investment Programme. Page 5 of 12

6 4.10 The programme reflects initial work and development costs towards an assumed Investment Programme of around 8bn based on the Devolution Deal with Government. The Combined Authority together with the Mayor will need to make decisions about the scale of the investment programme and the revenue resources proposed to support the funding of the Programme. At this stage, the revenue implications of the 2016/17 capital budget above can be met wholly from the 36.5m Devolution deal revenue grant, without assuming income in later years from any other sources The MRP budget above is a prudent assumption which assumes a tailored profile of debt repayment charges, including a relatively high charge to revenue account in the early years, consistent with the financing of the assumed longer term 8bn Investment Programme. The amount of MRP required in 2016/17 is likely to be revised in the course of the year as the Combined Authority s capital investment plans are developed The Combined Authority s Governance and Assurance processes will review and agree the business cases for the individual capital investment proposals included in its capital budget, to ensure that they are affordable within planned resources, taking account of commitments into later years. Page 6 of 12

7 /17 Transport Delivery Revenue Budget 5.1 This represents the inherited ITA/Centro Transport levy and budget which was approved by the January and March 2016 meetings. Under the Government legislation the previous ITA approvals carry forward into the Combined Authority, however for completeness these are presented in this report for endorsement. 5.2 The 2016/17 Transport Delivery Revenue Budget (net of operational income) is funded by the annual levy and is summarised beow: 2016/17 Transport Delivery Revenue Budget '000 Income Levy 124,830 Total 124,830 Concessions National Bus Concession 53,633 Metro / Rail 4,213 Child Concession 11,425 Passes and Permits ,443 Bus Services Bus Stations / Infrastructure 3,113 Subsidised Network 7,558 Tendering / Monitoring 996 Accessible Transport 7,568 19,235 Rail Services Metro 849 Rail Enhancements Car Park and Ride 1,049 West Midlands Rail 580 Bromsgrove Rail Station 144 2,623 Integration Safety and Security 1,074 Passenger Information 5,147 Sustainable Travel (60) 6,160 Transport Support Costs Transport Support Costs 3,251 3,251 Policy and Strategy and Elected Member Ser 1,897 Finance Charges Finance Costs 16,287 Deregulation pension costs 6,873 23,160 Total Expenditure 125,769 Total Return funded by Reserves (939) Net Income / Expenditure 0 Page 7 of 12

8 5.2 The Table below sets how the 2016/17 levy of m is allocated by Authority: District Resident Population mid /17 Levy 000 % split Birmingham 1,101,360 48, % Coventry 337,428 14, % Dudley 315,799 14, % Sandwell 316,719 14, % Solihull 209,890 9, % Walsall 274,173 12, % Wolverhampton 252,987 11, % West Midlands 2,808, , % 5.3 The Transport Delivery Revenue Budget funds the following: Concessions National Bus Concessions 53.6m Reimbursement for ENCTS is regulated by the Secretary of State with guidance provided by the DfT. Bus operators have announced their prices for 2016/17 and these, along with the latest patronage figures, have been taken into account in forecasting the ENCTS requirement. The current scheme extends entitlement from 9.30am to the last bus which will continue for 2016/17. Rail and Metro Concessions 4.2m In the West Midlands the free national bus scheme has been extended to residents to include local rail and Metro services within the region, enabling cardholders to travel after 9.30am up to midnight on weekdays and all day at weekends and bank holidays. Child Concessions 11.4m The provision of approximately half fare travel concession is offered to children aged five to 15 and young adults aged in full-time education and resident in the West Midlands. This concession is only available on weekdays before 9.30am and between and Passenger numbers continue to rise and are currently 25 million trips per annum. Bus Services 19.2m Bus stations and Infrastructure 3.1m These costs cover the operation of bus stations and all management and maintenance associated with bus stations, stops and shelters. Tendered Services 8.6m Where standards for access to the network are not met commercially, services are categorised into an order of priority giving a focus on journeys to work and access to shopping and health facilities. In residential areas, the maximum desirable walking distance to bus services in continuously builtup areas is 400 metres during the hours of to onmonday to Saturday and 700 metres at other times. The current access standards state that where passenger boarding exceeds eight and the cost per head is less than 1.60, then a service will be provided. Accessible Transport 7.6m This expenditure funds services for 18,000 registered users, making 0.9m journeys per annum. A review of Ring and Ride, saw the reinstatement of some Sunday services and the continuation of Page 8 of 12

9 the current service levels for Monday to Saturday. Current fares are 1 each way. In addition to the Ring and Ride service, a Walsall and Birmingham shoppers service is provided for older people who are primarily based in sheltered housing and a prison visitors service provides assistance for families, especially mothers with young children, to visit family members in prison. Rail Services 2.6m Metro 0.8m The Metro costs relate to annual commitments made under the concession deed pertaining to insurance and maintenance. Park and Ride 1m Rail and Metro car parks are provided free of charge within the Metropolitan area. This policy provides in excess of 9,000 parking spaces. Car parking enforcement was successfully introduced in September 2014, with considerable public and mediasupport. West Midland Rail 0.6m This cost relates to the invitation to tender and subsequent analysis of bids for the new West Midlands Rail Franchise. Bromsgrove Rail Station 0.1m This expenditure is the net cost of financing and operating Bromsgrove Rail station after income receipts from access charges. Worcestershire County Council also make a contribution. Integration Safety and Security 1.1m Safety and security expenditure relates to the Safer Travel Police Team and the CCTV centre based in Centro House which includes additional requirements as part of the drive to utilise this facility across the districts. Passenger Information 5.2m Passenger information expenditure relates to providing real time information across the network; customer information at bus stops, bus stations, on line, and includes the customer services teams and telephone support. This is provided in conjunction with the operators as part of the network commitments, which also includes a number of promotional campaigns throughout the year. Transport Support 3.2m This covers Head office Costs of Summer Lane and the provision of ICT, Legal, Procurement, Health and Safety, Equalities, Programme Management, Finance, Human Resources, Business Management and general business infrastructure and support. Finance Charges 23.1m Finance costs relate to pension, leasing and scheme development costs along with historic borrowing and capital financing costs. The deregulated pension costs relate to the pension commitments arising from deregulation in 1986, when a significant number of employees transferred from the Transport Authority to Travel West Midlands, but their pension rights accrued to that date remained an obligation of the Passenger Transport Executive. Policy and Strategy and Elected Members 1.9m Cost relating to the Policy and Strategy team and Elected members. Page 9 of 12

10 /17 Transport Delivery Capital Investment Programme 6.1 The previously approved 2016/17 Transport Delivery Capital Investment Programme is summarised below: Transport Delivery Capital Budget 2016 / /17 BUDGET 000 MAJOR SCHEMES A45 Sprint 276 Hagley Road Sprint 432 Longbridge Connectivity Package 250 Managing Short Trips 2,967 Metro Birmingham Eastside Extension 2,976 Metro Catenary Free 158 Metro Centenary Square Extension 6,561 Metro East Birmingham to Solihull Extension 1,500 Metro Edgbaston Extension 8,087 Metro Wolverhampton City Centre Extension 3,846 STRATEGIC ECONOMIC PLAN SCHEMES TOTAL 27,053 Metro Wednesbury to Brierley Hill Extension 1,500 Birmingham City Centre Metro Extension 4,493 BBAF Highway Works 283 MAJOR TOTAL 6,276 MAJOR SCHEMES SUB TOTAL 33,329 MINOR SCHEMES Coventry and Walsall Bus Station Safety Measures 210 Metro Line One CCTV Replacement 38 Network Wide Bus Station Refurbishment Phase Network Wide CCTV Refresh and Installation (inc APNR) 640 Network Wide P and R Resurfacing Programme 571 Network Wide Park and Ride Upgrades (Cycle Facilities Height Restrictors) 55 Network Wide Rail RTI- Life Expired Replacements 27 North Walsall Cutting 431 North Walsall Cutting and Stourbridge Junction Structural Improvements 101 Sale of Land at Colliery and Earlsmead Road 8 Shelter Infrastructure (Replacement of Time Expired Stock) 148 ASSET MANAGEMENT TOTAL 2,397 Dorridge and Solihull CCTV Feeds 9 CCTV TOTAL 9 Interconnect development 100 INFORMATION & MAPPING TOTAL 100 Metro Line One Upgrade 250 Tram Wifi Ground Infrastructure Improvements 100 METRO TOTAL 350 Bradley Lane P and R Extension 739 Bus Priority and Shelters Pre Sprint 40 DfT Clean Bus Technology 486 Dudley Bus Station Development 200 Network Wide Park and Ride Expansion Developments -Phase Park and Ride Expansion Developments 20 Sale of Land at Colliery and Earlsmead Road 8 Solihull Station Upgrade and Connectivity Improvements 12 Walsall Town Centre Interchange Feasibility Study 11 PROJECT DEVELOPMENT TOTAL 1,656 Centro Asset Management System 148 ICT- Infrastructure Storage Upgrade 35 ICT Replacement Meru Wifi System 25 ICT- Resource Booking System 30 ICT Rolling Programme 20 ICT Service Desk 20 SYSTEMS ARCHITECTURE TOTAL 278 Network Wide Swift Procurement 152 Network Wide Swift Vending 50 TBT Birmingham City Centre Shelter Design Optimisation 215 TBT Highway Scheme Development (Bus reliability and punctuality) 65 TBT Lode Lane Bus Lane Contribution 450 TBT Network Wide RTI Programme 42 TBT North Birmingham Reliability Measures 13 TBT Platinum Route RTI Equipment Upgrades 184 TBT Wolverhampton City Centre Shelters 42 TBT TOTAL 1,213 Bescot Stadium P and R Improvements 30 Network Wide Cycling Programme Phase 1 14 Network Wide P and R Lighting Enhancement 170 Network Wide Rail Smart Ticketing 41 Network Wide TRT Integration Improvements Masterplan 30 TRT TOTAL 285 MINOR SCHEMES SUB TOTAL 6,288 TOTAL TRANSPORT DELIVERY CAPITAL PROGRAMME 39,617 Page 10 of 12

11 6.2 The approved overall programme is fully funded from direct grants, devolved transport funds and approved Transport borrowing as follows: Transport Delivery Capital Programme Funding 2016/17 m Government Devolved Transport 9,567 Enterprise Zone 4,161 Local Growth Fund 16,135 Prudential Borrowing 7,197 Other 2,557 Total 39, The Transport Delivery Capital Investment programme includes majors (over 5 million) where the delivery of initiatives such as Wolverhampton Interchange, Metro Extensions for Edgbaston, Birmingham Eastside Extension, East Birmingham to Solihull and Wednesbury to Brierley Hill and Sprint will continue. Also shown is the minor works programme which is funded through the Integrated Transport Block to ensure the existing public transport asset base remains accessible and available, whilst unlocking private sector funding and investing in new facilities including park and ride. 7.0 Financial Monitoring and Reporting 7.1 Financial monitoring information will be available monthly and will reported for all Combined Authority Budgets to relevant Combined Authority Boards. 8.0 Combined Authority Tax Status and Audit 8.1 For information HMRC Confirmation has been secured as follows in relation to the Combined Authority: West Midlands Combined Authority has been approved as an exempt body for Corporation Tax, Income Tax and Capital Gains Tax The Transfer of any assets from the PTE and ITA will be deemed to be for a consideration such that no gain or loss will accrue to the PTE The transfer of all obligations and assets will be treated as outside scope for VAT The existing VAT reference can simply transfer to the new body Existing VAT Options to Tax will be replicated The agreement to the interim VAT Recovery position of West Midlands Combined Authority from its effective date to the date of the Treasury Order (S33) inclusion in Statute book 8.2 No formal response has yet been received from the Stamp Duty Land Tax Office although verbal assurance has been given that we qualify for the relief. Contact with HMRC in relation to Stamp Duty was however for assurance only rather than a legal requirement. SDLT is a self assessment basis and the relief is deemed to be applicable as the re-organisation must be under statutory provision and all parties must be public bodies. 8.3 In terms of Audit, Combined authorities are listed as bodies subject to audit under schedule 2 of the Local Audit and Accountability Act Under provisions in this Act, the Secretary Page 11 of 12

12 of State for Communities and Local Government has delegated certain functions previously delivered by the Audit Commission, including appointing auditors, to Public Sector Audit Appointments (PSAA) for the length of the current audit contracts. PSAA will therefore appoint the auditor for 2016/17 and 2017/18 for the CA once the Order establishing the new authority has been made. This will be done in consulation with the CA and the PSAA Board must approve the appointment following consultation. The nearest Board meeting following formal establishment of the combined authority would be the one in early September. 9.0 Financial implications 9.1 These are included in the body of the report 10.0 Legal implications 10.1 This reports presents a fully funded and balanced Revenue Budget and Programmes as required under local Authority regulations Equalities implications 11.1 There are no Equalities Implications Page 12 of 12