Agenda item

Minutes:

Nigel Hudson presented a report which explained the reason for the submission of the Change Request i.e. following the approval by the Investment Board in August 2020 negotiations had been taking place between the Urban Growth Company/ Solihull Metropolitan Borough Council and the WMCA over the funding agreement with the WMCA requesting that the benefit cost ratio (BCR) be used as a material clawback event, which was a position not acceptable to Solihull MBC as the Accountable Body, given the difficulties in measuring economic outcomes of this specific infrastructure scheme. Following an exchange of letters, it had been agreed that Solihull MBC would present a paper to the Investment Board in the form of a ‘change control’, confirming the suitable and measurable outputs and outcomes that it could contract on.

 

The report recommended that the proposed clawback position based on achieving a certain Benefit Cost Ratio (BCR) discussed following the original Investment Board decision be not taken forward while recognising the outputs that Solihull Metropolitan Borough Council was able to contract on as detailed in the report and supporting documentation. Martin Clayton added that under the previous suggested agreement, Solihull Metropolitan Borough Council was not in a position to control delivery of the BCR as the realisation of benefits were outside of its control. This point was confirmed by Ian Martin who referred to the office block/hotel site and railway station. Neither of which was currently funded and the sites and buildings were owned by others.  The Chair commented on the Output Report from the Investment Panel which confirmed that there were no fundamental changes to the Business Case for the scheme.

 

Linda Horne explained that the original approval had been subject to conditions which neither side were in a position to agree on the delivery of the benefits and that it was for this Board to determine whether it still wished to support the investment in the knowledge that the timing and realisation of the benefits was not guaranteed

 

Councillor Stephen Simkins accepted the case now put forward but suggested that there was a need for a fair and equitable distribution of investments across the WMCA area together with a need to demonstrate value for money and for an audit trail to be established. In response to a question from Gary Taylor, Nigel Hudson advised that the land for the proposed office block/hotel was in the ownership of Network Rail and that Birmingham City Council owned the adjacent surface car park, with the rail station being in the ownership of Network Rail. Both organisations had plans to bring forward schemes but dates were not currently available. Councillor Karen Grinsell commented that it was not a unique position when all components of a scheme could not be controlled. The proposed realignment would assist in future proofing the scheme.

 

Nick Abell supported the comments made by Councillor Stephen Simkins and recognised the need for the economic outputs to provide value for money when competing against other schemes for investment funding. He commented on the need to assess what economic outputs would be achieved. Ian Martin advised that economic outputs could not be stated due to the lack of control of associated elements. Councillor Stephen Simkins suggested that the WMCA Mayor and the Leaders should be requested to set out a detailed strategy on what the Investment Programme was trying to achieve with sufficient flexibility to accommodate unprecedented events such as the Covid-19 pandemic.

 

Councillor Tristan Chatfield advised that he supported the proposal but asked whether it would still be compliant with Green Book requirements. Nigel Hudson advised that he believed it was as it was a strategic scheme.

 

Resolved:

That negotiations be finalised based on scheme outputs outlined by Solihull Metropolitan Borough Council and that the BCR be not used as a material clawback consideration. This approach followed industry best practice and established guidance due to the inherent uncertainties contained within benefit forecasting methodologies and the additional cost that would be incurred in measuring benefits of the scheme. Funding of £5.75 million for the proposed Automated People Mover (APM) realignment be agreed, recognising the strategic case for the project driven by the HS2 programme and the opportunity cost benefit to the international station redevelopment  in addition to the economic potential of adjoining land and wider growth plans for the UK Central (UKC) Hub area.