Agenda item

13.1

The Executive Directors, Place and Resources submitted a joint report seeking approval to the Council providing additional Capital Contributions to the Streets Ahead project and to progress some more complex alternative funding structures on an ‘invest to save’ basis.

13.2

RESOLVED: That Cabinet approval be given to:-

(a)

Option 2 – providing additional Capital Contributions up to the value of 50% of the existing capital funding of the CIP as set out in section 5.2 of the report;

(b)

the establishment of a budget from the PFI reserves to fund the implementation of the first stage of the preferred alternative funding option and to subsequently progress the second stage to determine the optimum funding structure to be approved by Cabinet;

(c)

fund any abortive costs from the Streets Ahead contingency;

(d)

procure and appoint external financial and legal advisers for the Council;

(e)

develop and submit ab OBC to DfT/HMT to seek approval to progress the changes to the funding arrangements;

(f)

make staged payments to Amey in relation to the Contract change due diligence costs subject to costs being auditable; and in accordance with agreed estimates; and

(g)

progress Options 3 and 4 – the second stage of the preferred alternative funding option on the basis that the conclusion of this second stage will be signified by the submission of a subsequent Cabinet report and the submission of a FBC to DfT/HMT; and

(h)

Cabinet delegates authority to the Executive Director, Resources in consultation with the Cabinet Member for Finance and Interim Director, Legal and Governance to implement the first stage of the preferred alternative funding option following the agreement of the commercially acceptable payment terms with Amey; and

(i)

delegates authority to the Executive Director, Resources in consultation with the Executive Director, Place, the Interim Director, Legal and Governance and the Cabinet Members for Finance and Recycling and Streetscene, to take other such steps as he deems appropriate to achieve the outcomes set out in the report.

13.3

Reasons for Decision

13.3.1

As outlined in the report, there is a clear strategic and economic case to justify the Council using its prudential borrowing powers and increasing the Capital Contributions to the project in order to secure a saving of circa £0.5m pa. This saving can be achieved with minimal risk to the Council and without impacting on the delivery of the highway maintenance service and the ongoing improvements in the infrastructure asset.

13.3.2

Failure to increase the Capital Contributions will result in more pressure on achieving the Council’s current and future budget and may result in more drastic cuts to front line services.

13.3.3

The options to bank refinance the remaining bank debt with alternative bank and/or partial public refinance need to be explored further so as to ensure that an opportunity is not missed to generate additional financial savings to assist with ensuring the Contract is sustainable in the future.

13.4

Alternatives Considered and Rejected

13.4.1

Alternative options were outlined in the report.

13.5

Any Interest Declared or Dispensation Granted

None

13.6

Reason for Exemption if Public/Press Excluded During Consideration

None

13.7

Respective Director Responsible for Implementation

Simon Green, Executive Director, Place and Eugene Walker, Executive Director, Resources

13.8

Relevant Scrutiny and Policy Development Committee If Decision Called In

Economic and Environmental Wellbeing

13.1

The Executive Directors, Place and Resources submitted a joint report seeking approval to the Council providing additional Capital Contributions to the Streets Ahead project and to progress some more complex alternative funding structures on an ‘invest to save’ basis.

13.2

RESOLVED: That Cabinet approval be given to:-

(a)

Option 2 – providing additional Capital Contributions up to the value of 50% of the existing capital funding of the CIP as set out in section 5.2 of the report;

(b)

the establishment of a budget from the PFI reserves to fund the implementation of the first stage of the preferred alternative funding option and to subsequently progress the second stage to determine the optimum funding structure to be approved by Cabinet;

(c)

fund any abortive costs from the Streets Ahead contingency;

(d)

procure and appoint external financial and legal advisers for the Council;

(e)

develop and submit ab OBC to DfT/HMT to seek approval to progress the changes to the funding arrangements;

(f)

make staged payments to Amey in relation to the Contract change due diligence costs subject to costs being auditable; and in accordance with agreed estimates; and

(g)

progress Options 3 and 4 – the second stage of the preferred alternative funding option on the basis that the conclusion of this second stage will be signified by the submission of a subsequent Cabinet report and the submission of a FBC to DfT/HMT; and

(h)

delegates authority to the Executive Director, Resources in consultation with the Cabinet Member for Finance and Interim Director, Legal and Governance to implement the first stage of the preferred alternative funding option following the agreement of the commercially acceptable payment terms with Amey; and

(i)

delegates authority to the Executive Director, Resources in consultation with the Executive Director, Place, the Interim Director, Legal and Governance and the Cabinet Members for Finance and Recycling and Streetscene, to take other such steps as he deems appropriate to achieve the outcomes set out in the report.

13.3

Reasons for Decision

13.3.1

As outlined in the report, there is a clear strategic and economic case to justify the Council using its prudential borrowing powers and increasing the Capital Contributions to the project in order to secure a saving of circa £0.5m pa. This saving can be achieved with minimal risk to the Council and without impacting on the delivery of the highway maintenance service and the ongoing improvements in the infrastructure asset.

13.3.2

Failure to increase the Capital Contributions will result in more pressure on achieving the Council’s current and future budget and may result in more drastic cuts to front line services.

13.3.3

The options to bank refinance the remaining bank debt with alternative bank and/or partial public refinance need to be explored further so as to ensure that an opportunity is not missed to generate additional financial savings to assist with ensuring the Contract is sustainable in the future.

13.4

Alternatives Considered and Rejected

13.4.1

Alternative options were outlined in the report.