Agenda item

Michael Ogden presented a report which sought authorisation for the West Midlands Combined Authority (WMCA) to underwrite the £18.5 million estimated maximum cost of additional utility works, design and management which would be incurred by HS2 in order to integrate the metro and stop at the Curzon Street HS2 station and to note that the Head of Governance had been granted delegated authority on 30 September 2016 to enter into the Development Agreement with Birmingham City Council (BCC) and HS2 Ltd. he explained that this placed certain obligations upon the WMCA including underwriting costs and for the parties to work together to seek to reduce such costs.

He advised that the initial estimated costs were likely to include some elements of double counting inasmuch as the original design for the Curzon Street HS2 station would require some parts of the utility works addition of the metro and stop would not be responsible for all of the additional costs. Furthermore, it was anticipated that the costs could be reduced through value engineering works and some of the works being carried out by the Midland Metro alliance (MMA). He explained that the costs and scope of the works would be refined early in the New Year.

The Board sought assurances that the WMCA was not being required to underwrite costs which were attributable to the HS2 element of the scheme. Michael Ogden advised that the costs were being disaggregated by the Utilities Working Group comprised of Officers and consultants from WMCA / MMA / BCC / HS2. The Board required this to form part of its formal decision. Councillor Robert Hulland stressed that the WMCA / BCC should only be required to be responsible for any additional expenditure nor any duplicated costs. The Chair suggested that an Agreement be sought with the HS2 Board to this effect. Michael Ogden advised that these matters were included within the Heads of Terms. Sean Pearce suggested a form of words that could be included in the resolution of this Board were it minded to approve the proposals.

Nick Abell queried the identity of those representing the WMCA / BCC in the negotiations with HS2 Ltd. Michael Ogden responded accordingly. Nick Abell commented on the references in the report to exceeding the £18.5 million sum for underwriting the costs, subject to the approval of this Board at some point in the future and questioned whether this actually amounted to a capped limit on expenditure given that a commitment to the schemes would have been made by that point in time and the WMCA would have some responsibility for costs incurred. Sean Pearce explained the financial projections, the governance arrangements and that the total costs of the schemes were not known at this time. He suggested that the decision of the Board could take account of these issues. Phil Hewitt advised that it would be necessary for this Board to receive and consider a further report on this scheme in approximately 12 / 18 months’ time in any event when final costs were known.

Councillor Robert Hulland referred to the comments now made and queried whether it was actually necessary for the decisions now under consideration to be taken at this stage in the scheme. Phil Hewitt explained that these considerations provided ‘Risk Provision’ and that it was necessary for the Development Agreement to proceed.

Resolved:

1.    That the WMCA Board approval of 30 September 2016 be noted;

2.    That the Assurances in place relating to the integration of the metro stop at Curzon Street be noted;

3.    That the sift process undertaken in 2016 leading to the selection of Option 4 and the production by HS2 Ltd of an estimated £27.5 million (worst case scenario) of additional works required comprised of £18.5 million utility diversions and £9 million station and urban realm works be noted;

4.    That HS2 is required to proceed through governance with relation to the interface costs and scope in order to reflect this in the procurement of the design of the station and that this necessitated the WMCA and BCC to commit to underwriting the costs identified in Option 4 at this stage;

5.    That the underwriting of the maximum £18.5 million for additional utility diversions arising as a result of the tram stop integration and not included previously in the HS2 Business Case be authorised;

6.    That subject to 5. above, the grant of delegated authority to the Head of Governance to enter into and execute the Development Agreement in accordance with the powers delegated by the WMCA Board on 30 September 2016 be noted.