Archived decisions

Agenda Item 8

Report to the

Transport for South Hampshire Joint Committee

Date: 29 April 2009

Report by: Jon Pittam, County Treasurer and

Keith Willcox, Project Director, Transport for South Hampshire

tel: 01962 846931 email:[email protected]

Subject: Budget Monitoring 2008/09; Budget 2009/10 and Financial Protocols

Purpose of the Report

The purpose of this report is to inform the Transport for South Hampshire (TfSH) Joint Committee of the likely budget outturn for the year 2008/09; to recommend revenue and capital budgets for 2009/10; to approve the financial protocols and to appoint lead authorities to deliver major capital projects.

Recommendations

It is recommended that the Joint Committee:

1. Notes the anticipated final outturn for revenue and capital budgets for the 2008/09 financial year;

2. Approves the carry forward of underspends from the 2008/09 revenue and capital budgets to 2009/10;

3. Approves the revenue and capital budgets for 2009/10;

4. Approves the Financial Protocols set out in Appendix 1 which replace the interim financial arrangements;

5. Appoints Portsmouth City Council as Lead Authority to deliver the Tipner project; and Hampshire County Council to deliver the M27 Junction 5 improvements;

6. Requires lead authorities to provide financial updates on whole scheme spend of relevant projects (including Bus Rapid Transit, M27 Junction 5 and Tipner) to feed into future quarterly budget monitoring reports; and

7. Arranges Joint Committee meetings at the end of June and September to meet the Statutory Audit approval timetable.

Introduction

1. This report summarises the latest budget monitoring position for the 2008/09 revenue and capital controlled budgets for TfSH. Figures shown reflect the input from budget holders arising from the budget monitoring review carried out during March 2009.

2. The report also recommends approval of the 2009/10 revenue and capital budgets for TfSH.

3. The report recommends that the Joint Committee agree the financial protocols set out in the Appendix 1.

4. The report proposes a workplan to provide for business continuity, whilst a Business Plan is prepared for approval by a later meeting of the Joint Committee.

Revenue Budget 2008/09

5. Table 1 below shows the current TfSH revenue budget together with the estimated outturn for the year.

Table 1

6. The current budget forecast identifies a projected overall underspend of £73,000. The main variations from budget are identified below:

(i) Eastleigh RiverSide, Rail Study - £11,000 overspend in consultants' fees to cover an extended requirement to identify a number of possible rail alignments in conjunction with the link road to serve the RiverSide employment zone;

(ii) Outline Design Strategic Development Area (SDA) studies - £11,000 overspend due to consultancy costs incurred in carrying out additional tasks on the Fareham SDA Access Study and A32 Re-alignment Study as authorised by the project manager; and

(iii) Developing Evidence Base - £100,000 underspend due to delay in formalising funding arrangements and commissioning consultants.

7. It is recommended that the projected underspend of £73,000 be carried forward into the revenue budget for 2009/10 to be spent against new or existing projects.

Capital Budget 2008/09

8. Table 2 below shows the TfSH capital budget together with the estimated outturn for the year.

Table 2

*Note: The total capital spend on BRT is expected to be £1.043 million in 2008/09, of which £500,000 has been funded from Partnership for Urban South Hampshire (PUSH) New Growth Point Grant (NGP) and £543,000 has been funded from Hampshire County Council developer contributions. At the TfSH Joint Committee on 17 October 2008 it was agreed that Hampshire County Council would be appointed as Lead Authority for BRT and this will be accounted for in Hampshire County Council's accounts.

9. The capital budget for 2008/09 of £1.7 million was allocated by the Partnership for Urban South Hampshire (PUSH) Joint Committee at its meeting on 16 September 2008 specifically against the four headings noted above. This grant arose from the New Growth Point (NGP) fund. This is forecast to be underspent by £700,000, due to the late notification of the budget and the lead time required to assemble the evidence base to justify access arrangements for strategic sites. A separate report on this item is to be found elsewhere on the agenda.

10. It is recommended that this underspend is carried forward to provide additional capital spending in 2009/10 for developing the Evidence Base.

Revenue Budget 2009/10

11. A revenue budget of £823,000 for 2009/10 is recommended for the Joint Committee's approval. This budget is based on anticipated funding from the three local Transport Authorities (Hampshire County Council £300,000, Southampton City Council £100,000, Portsmouth City Council £100,000), which corresponds with the previous year's contributions. In addition a NGP revenue grant of £250,000 was confirmed at the PUSH Joint Committee meeting of 19 March 2009. The only specific allocation requested by PUSH was that £50,000 should be spent on investigating strategic access to the Gosport Peninsula. Finally, the budget makes provision for the £73,000 carried forward from the 2008/09 revenue budget mentioned in paragraph 4.3 above.

12. In taking forward transport schemes, it is necessary to provide evidence and undertake feasibility studies to support the business case for potential capital bids. For example, the advancement in the Regional Funding Advice to Government of the proposed Eastern Access to Southampton package will need considerable work to move it from a conceptual bid to a set of deliverable measures. The NGP grant from PUSH is a welcome contribution in both the revenue and capital accounts. Underspends from the 2008/09 revenue budget are recommended to be carried forward and further funding from external sources will also be sought in order to provide a firm foundation for this further technical work.

13. Table 3 below shows the proposed allocation to the 2009/10 revenue budget.

Table 3

Capital Budget 2009/10

14. The capital budget for TfSH comprises £3,214,000, of which £2,514,000 is a NGP capital grant, which was confirmed by the PUSH Joint Committee meeting of 19 March 2009 and £700,000 is the recommended carry forward from 2008/09. This allocation of £3,214,000 will allow the first phase of Junction 5, the west facing off-slip, to be improved; work to continue on delivering the Tipner link; and work to progress on developing the evidence base to support transport improvements across the sub-region.

15. Table 4 below details the proposed capital budget:

Table 4

*Note: The above table denotes contributions towards the overall costs of the listed schemes.

16. In addition, £20 million of grant has been awarded to Hampshire County Council for the Bus Rapid Transit project, of which it is anticipated the County Council will spend £10 million in 2009/10.

Financial Protocols

17. As part of the governance arrangements for TfSH, it is necessary to develop and formalise a set of financial protocols which govern the way TfSH financial management operates. The protocols (set out in Appendix 1) have been prepared by the TfSH financial adviser in discussion with the TfSH legal adviser. It is envisaged that the protocols will be kept under review, and amendments brought before the Joint Committee in due course if required.

18. In accordance with the provisions set out in the protocols, it is necessary to appoint lead authorities for major capital projects, since TfSH cannot incur capital expenditure. Each lead authority will be responsible for managing the costs of its schemes and will have to fund any cost overruns if these occur. Such overspends will not be transferred back to TfSH and liability will not be shared between partners.

19. The Joint Committee is invited, therefore, to appoint Portsmouth City Council to be the lead authority for delivering the Tipner project; and Hampshire County Council to deliver the M27 Junction 5 improvements scheme. For the record, it should be noted that the Joint Committee, at its meeting on 17 October 2008, appointed Hampshire County Council as the Lead Authority for the first phase of the Bus Rapid Transit (BRT) scheme, which has since received funding.

20. The TfSH final accounts will be prepared during the first quarter of the financial year and the Joint Committee has a statutory obligation to approve the accounts by the 30 June 2009. The accounts will then be audited by TfSH's designated auditor who is required to report its findings to the Joint Committee by 30 September 2009 to allow the final audit certificate to be issued and the publication of accounts.

Strategic Financial Overview

21. Future budget monitoring reports will include a strategic financial summary of schemes that TfSH holds an interest in, but does not manage the spend for, such as BRT, M27 Junction 5 and the Tipner project.

22. This will require lead authorities to submit financial information to the Treasurer on whole scheme approvals, spend and forecasts in a timely way to fit into the Committee reporting cycle for future monitoring reports for such named schemes.

Conclusions

23. The underspends in the revenue and capital accounts for 2008-09 will be useful in supplementing the grant from PUSH to advance the work of TfSH during the new financial year. The adoption of financial protocols and appointment of lead authorities to deliver major capital projects will provide a basis for undertaking a number of the tasks in the workplan.

1987Rpt/SM