Agenda Item 6
Cabinet
Report Title:
A12 Four Village Bypass – Funding for Scheme Development
Meeting Date:
13 October 2015
Lead Councillors:
Local Councillors:
Councillor James Finch, Cabinet Member for Highways &
Transport; Councillor Richard Smith MVO, Cabinet Member
for Finance;
Councillor Matthew Hicks, Cabinet Member for Environment
and Public Protection;
Councillor Guy McGregor, Member with Special
Responsibility for Outside Bodies
Councillor Andrew Reid
Councillor Stephen Burroughes
Director:
Geoff Dobson, Director of Resource Management
Assistant Director
or Head of Service:
Bryn Griffiths, Assistant Director, Infrastructure & Waste
Author:
Michael Wilks, Planning Projects Manager, 01473 264064
Brief summary of report
1.
The County Council has demonstrated an ongoing commitment to the Four
Village Bypass over many years. It is currently identified as a strategic transport
improvement in the County Council’s Local Transport Plan, with developer
funding identified as the likely funding source.
2.
An opportunity has arisen to timetable the delivery of the Four Village Bypass to
tie in with the development of Sizewell C and thus potentially secure significant
developer funding. In order to progress the preparatory work for the scheme, up
to £450,000 is required to ensure that the projects’ programmes can continue to
align.
3.
This report highlights the various challenges in delivering the Four Village
Bypass, but also the benefits that it could bring to Suffolk and thus the factors
to consider in approving the resource requirement.
What is Cabinet being asked to decide?
4.
The Cabinet is asked to delegate approval of expenditure of up to £450,000 in
the current 2015/16 financial year to the Director of Resource Management, in
consultation with the Cabinet Members for; Finance; Highways & Transport;
Environment and Public Protection, and the Member with Special Responsibility
for Outside Bodies, for scheme development of the A12 Four Village Bypass.
5.
Furthermore, the Cabinet is asked to approve that, in acting under those
powers, the Director of Resource Management shall have regard to the
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following indicators in reviewing the release of the monies:
6.
a)
Local MP support for progressing the scheme;
b)
New Anglia Local Enterprise Partnership (NALEP) support for
Government funding of the scheme;
c)
A financial contribution of an additional £50,000 from Suffolk Coastal
District Council (SCDC) being secured towards the scheme development
costs;
d)
The scheme being determined to be a Nationally Significant Infrastructure
Project (NSIP); and
e)
Progress in discussions with EDF Energy in relation to the timetabling of
Sizewell C and willingness to continue to work constructively with the
County Council to support the delivery of the Four Village Bypass,
including the potential for a financial contribution.
The Cabinet is therefore also asked to approve the submission of a request to
the Secretary of State for Transport to direct that the Four Village Bypass be
considered a NSIP.
Reason for recommendation
7.
Spending up to £450,000 on studies to support the development of the Four
Village Bypass scheme will enable the County Council to advance its
understanding of scheme costs, benefits and development constraints and
ultimately to put a business case together for Government funding. Based on
the current understanding of the timetables associated with the development of
the road, and those related to the delivery of Sizewell C, commencing this work
now could allow the road to be delivered alongside Sizewell C and, therefore,
creates the opportunity for a sizeable EDF Energy contribution to the scheme.
However, a large sum of money would still need to be found to meet the
scheme’s full costs and the source of this is currently unknown.
8.
The Cabinet therefore needs to determine whether, having regard to the likely
prospects of securing both further revenue funding for scheme development
and full funding for the Four Village Bypass, it wishes to invest the County
Council’s own resources in the development of the scheme at this time. It is
important to underline the importance of the full support of MPs, NALEP and
SCDC in making a strong case to the Government.
9.
If the Cabinet determines the resource investment is prudent, it is advised that
the preferred option to deliver the scheme is through the consenting regime for
NSIPs. This is because this course of action provides timely decision making
which is crucial if the road is to be completed to support the construction of
Sizewell C. However, as the A12 in this location is detrunked, the Secretary of
State for Transport must specifically direct that the scheme should be a NSIP
and the Cabinet is asked to support a request for this direction.
What are the key issues to consider?
10. The key issue to consider is whether the expenditure of up to £450,000 can be
justified having regard to;
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a)
the current unique opportunity to progress the A12 Four Village Bypass
with a financial contribution from EDF Energy, which may be secured as
part of negotiations in relation to Sizewell C, and;
b)
the risk that further revenue funding for scheme development or the
balance of funding for scheme construction that would be required from
other parties cannot be secured, and/or planning permission is not
achieved.
11. In either scenario, success or failure, the expenditure of up to £450,000 cannot
be recovered from any party.
What are the resource and risk implications?
12. The resource requirement is for up to £450,000 until the end of the current
2015/16 financial year. This could be funded from the Capital Financing
Reserve, but any future funding requirements would need to be considered
through the Council’s budget planning process.
13. As described below, the level of funding required beyond this point is unclear.
The Cabinet’s approval for any further County Council expenditure would be
sought through a future report, having regard to the prevailing funding climate
and a re-evaluation of risks and opportunities at that point. There can be no
certainty over future funding streams if the likelihood of success and the risk
profile have not shown significant improvement and no commitment to meeting
future funding needs can be given by the County Council at the current time.
14. The risk implications manifest themselves in two ways;
a)
That the County Council fails to capitalise on a unique opportunity to
secure developer contributions towards the A12 Four Village Bypass. This
could affect the prospects for delivery of the scheme, at least for a decade
(owing to the overlap with the Sizewell C construction programme), and
fails to respond to calls from businesses and residents for the scheme
which is designed to improve connectivity between the north and south of
the county and to improve the amenity of residents of the four villages of
Marlesford, Little Glemham, Stratford St Andrew and Farnham. If the
scheme is not progressed in the context of Sizewell C, it is difficult to
envisage the circumstances in which the Four Village Bypass could ever
be delivered in the foreseeable future.
b)
That, ultimately, the scheme is not implemented either because further
revenue funding for scheme development, or full funding for scheme
construction is not secured and/or development consent is not granted
and therefore the County Council sees no return for its expenditure of up
to £450,000. Whilst the expenditure would result in an evidence base
which would be available for a limited time if another funding route was
identified, it is difficult to envisage what that might be after the Sizewell C
development is delivered. The non-delivery of the Four Village Bypass of
course exposes the County Council to the risk of having to accept
whichever mitigation proposals EDF Energy might get development
consent for.
15. There are other risks, which are outlined below, though a number of risks are
mitigated by the caveats which apply to the circumstances in which the Director
for Resource Management can release the funds, as described above.
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What are the timescales associated with this decision?
16. Initial discussions with local MPs have been positive, and have resulted in an
undertaking to negotiate with the relevant Government departments on the
County Council’s behalf. Conversations with NALEP have also been
constructive – indeed the Four Village Bypass is identified as a priority in the
Strategic Economic Plan. In summary, good progress is being made to meet
criteria 5(a) and 5(b).
17. SCDC is strongly supportive of the scheme and has indicated, in principle, a
willingness to make a financial contribution subject to appropriate approvals
being forthcoming, meeting criterion 5(c) above.
18. The County Council will, subject to the Cabinet’s approval, imminently submit a
request to the Secretary of State for Transport to have the scheme confirmed
as a NSIP. A positive decision (decisions are issued within 28 days of a
request) would meet the criterion at 5(d) above.
19. The County Council has had constructive initial discussions with EDF Energy
on the practicalities and feasibility of developing the road in tandem with the
Sizewell C development and this is a topic of active consideration, so the
progress on criterion 5(e) is positive at this time, though no definitive
commitments have been made by EDF Energy at this point.
20. It is anticipated, therefore, that the County Council will be in a position swiftly to
procure consultancy support to undertake work to support an application for
development consent and to develop an outline business case.
21. It is intended to put the case to Government to cover the further revenue costs
required to develop the business case for full funding and prepare an
application for development consent – currently estimated to be in the region of
£2m.
22. Cabinet Members will recall that the Government has committed £4m to
develop the business cases for the Wet Dock Crossing in Ipswich and the Third
Crossing in Lowestoft, so the intention is to bring parity to that situation with a
similar arrangement for the Four Village Bypass. However, the Cabinet should
note that securing revenue funding for scheme development is not normal
practice, so there is a significant risk that these monies will not be forthcoming
from the Government.
23. If, however, funding to develop the business case and prepare a development
consent application is secured the business case and application for
development consent would be prepared over the subsequent two years.
24. The business case would be used to support an application to the Government
to fund the scheme. Such funding would not normally cover the whole cost of a
scheme and so additional sources of funding may be required. Subject to the
outcome of that process, an application for development consent could be
submitted in 2018, which would, following an examination process (which would
require further revenue funding from a source as yet unknown), elicit a decision
the following year. The new road is anticipated to take 24 months to construct.
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Alternative options
25. The Cabinet could decide that it has insufficient evidence to warrant agreeing to
the expenditure of up to £450,000 at the current time, having regard to other
budgetary pressures.
26. However, it should be noted that this decision might be seen as downgrading
the delivery of the Four Village Bypass as a priority for the County Council and
there will probably never be a better opportunity to progress the scheme.
Who will be affected by this decision?
27. If the scheme came to fruition, residents in the vicinity of Marlesford, Little
Glemham, Stratford St Andrew and Farnham would be directly affected, mostly
positively, but some individuals may experience adverse effects such as loss of
land holdings or, in the case of proprietors of businesses along the current A12
alignment, a decline in passing trade.
28. Users of the A12, including businesses, would benefit from better connectivity
between Ipswich and Lowestoft, reducing their journey times, decreasing their
costs and thus increasing productivity.
29. EDF Energy would be affected insofar as the County Council would need to
continue to work very closely with the company to ensure that its development
proposals for Sizewell C align with the County Council’s promotion of the Four
Village Bypass. The ambition being that the latter, rather than any alternative
smaller scheme which may be proposed by EDF Energy, could provide the
highway mitigation for the A12 to address the impacts of Sizewell C but, at the
same time, support wider economic growth and address longstanding amenity
issues.
30. It should also be noted that, for the Four Village Bypass to be an attractive
proposition to the Government, it must be clear how it unlocks growth, so at a
strategic level there is an expectation that development would follow the
construction of such a major road improvement. Where and how much that may
be is principally a matter for SCDC and Waveney District Council (WDC) as the
Local Planning Authorities.
Main body of report
Background
31. Following a public inquiry in 1995, the Secretaries of State for Transport and
Environment accepted the appointed Inspector’s recommendation that a 6.75
kilometre dual carriageway trunk road bypassing to the south and east of the
existing A12 trunk road, which runs through the villages of Marlesford, Little
Glemham, Stratford St Andrew and Farnham, should be consented.
32. However, due to a reprioritisation of schemes, the Order was subsequently
modified to withdraw the Compulsory Purchase Order for the acquisition of land
and rights needed to construct the scheme, rendering it undeliverable.
33. The road was subsequently detrunked in 2001, making the County Council the
responsible highway authority. In 2006, Faber Maunsell, on behalf of the
County Council, reviewed the case for the Four Village Bypass, concluding that
the concept of a full dual carriageway bypass remained a valid one as the cost
benefit analysis indicated good economic value for money, though noted
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important environmental constraints would need to be addressed in pursuing
the scheme.
34. In its autumn 2012 Stage 1 consultation proposals for Sizewell C, EDF Energy
recognised a need to provide a solution to the alignment of the A12 in the
vicinity of Farnham (where very large HGVs travelling in opposite directions
cannot safely pass each other) to accommodate its construction traffic. Of the
measures described, the most substantial was a one village bypass of
Farnham.
35. While the County Council at that time found, and continues to find, that option
unacceptable, EDF Energy has consistently resisted committing to delivering a
Four Village Bypass, arguing that it cannot be justified by the scale of impacts
arising from the construction of Sizewell C – and thus it could not be brought
forward as ‘Associated Development’.
36. To demonstrate its continuing commitment to the Four Village Bypass and
maximise the opportunity to deliver, the County Council has therefore been
optioneering with the Department for Transport, EDF Energy, NALEP, SCDC
and MPs over alternative means of delivering the scheme. To inform that work,
AECOM, on behalf of the County Council, has undertaken two recent reviews
into the case for, and deliverability of, the Four Village Bypass. Mott McDonald,
on behalf of SCDC has also sought to examine the wider economic benefits
that improvements to the A12 may bring.
37. The AECOM reports confirmed that the Four Village Bypass remains an
attractive scheme, and, furthermore, it is more cost effective to deliver a
strategic transport solution for the affected four villages in one undertaking,
rather than as a series of smaller bypasses of the constituent villages. Mott
McDonald highlighted concerns held by the business community over the
adequacy of the A12 and the potential for improvements to it to expedite the
delivery of growth.
38. As such it was concluded that it was imperative that, if EDF Energy was not
going to include the Four Village Bypass as part of its development consent
application for Sizewell C, the County Council needs to promote it separately as
a standalone scheme, but one which is ‘twin-tracked’ with the Sizewell C
application.
39. If the scheme is in place in time to deal with the peak impacts of Sizewell C’s
construction traffic it could potentially attract a financial contribution from EDF
Energy of the value equivalent to that which it would otherwise be required
(through the consenting of the Sizewell C proposals) to spend on alternative
improvements to the A12 in this area.
40. The County Council remains in discussion with EDF Energy over the
improvements that would be required to mitigate the impacts of Sizewell C
alone and that should be delivered, if, for whatever reason, the Four Village
Bypass is ultimately not delivered. Evidently, the more substantial the
measures that EDF Energy are required to provide, the larger the equivalent
contribution towards the Four Village Bypass could be. At the current time
therefore the potential size of any EDF Energy financial contribution to a Four
Village Bypass is unknown and there would be many complicated consenting
and legal issues to resolve before any agreement could be reached.
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41. Nevertheless, it is this timetabling obligation to align the Four Village Bypass
with Sizewell C that requires the County Council to progress work now to
ensure a disconnect does not appear – albeit acknowledging that the Sizewell
C programme is also subject to change – so this is a further uncertainty.
42. The County Council’s preferred option is for a dual carriageway Four Village
Bypass, though an option for a single carriageway will also be evaluated at this
time.
43. The estimated (2013) costs range from £45m to £105m depending on the
carriageway provision. The outline business case would consider both of these
options.
Nationally Significant Infrastructure Projects
44. The Planning Act 2008 created a separate consenting regime for certain
schemes, described within that Act as being NSIPs. In relation to highways, it is
generally only projects which relate to the Strategic Road Network that are
considered nationally significant transport schemes. However, the Act provides
that the Secretary of State for Transport can ‘direct’ schemes to be a NSIP
upon a request to him.
45. The request must explain why the scheme should be considered nationally
significant. In the case of the Four Village Bypass, the fact that it would:
a)
help deliver Sizewell C, which is a NSIP itself;
b)
contribute to the delivery of other NSIPs, notably projects that make up
the East Anglia Array and Galloper Offshore Wind farm because it would
improve connectivity to ports anticipated to play some role in the
development of those projects;
c)
improve access to Lowestoft and Great Yarmouth, which are together a
Centre for Offshore Renewable Engineering and host of an Enterprise
Zone; and
d)
contribute to growth over an area larger than a single local authority
make it a strong candidate. For reference, the Norwich Northern Distributor
Road (NNDR) achieved the status of a NSIP through this direction process,
with the Secretary of State finding that it inter alia supports national growth
potential and improves connections to the Enterprise Zone. The NNDR was
consented in June 2015.
46. If the Four Village Bypass is determined to be a NSIP, development consent
must be sought from the Secretary of State for Transport. In practice, the
Planning Inspectorate undertakes a public examination and makes a
recommendation to the Secretary of State.
47. The NSIP consenting route is recommended because there are statutory
timetables associated with decision making and, given the need to have
certainty over this to enable timely delivery with the Sizewell C project, this is
imperative. Other advantages of the regime are that the consent would include
compulsory acquisition powers for all the land to deliver the scheme and it can
wrap up other consents/permissions that may be required, for example in
relation to traffic regulation orders.
48. It is important to note that the process has been described as ‘legalistic’ and
external support would be required throughout. This, combined with the
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application fees, can make this a comparatively more costly process than the
typical route – which would be by an application to the County Council itself –
and which would need to be revenue funded, most likely by the County Council
as the promoter. It is also important to emphasise that, whilst the decision on
the scheme would be taken by the Secretary of State, rather than the County
Council, public hearings would still be required and full consultation would be
undertaken.
49. The initial request to the Secretary of State to have the Four Village Bypass
recognised as a NSIP (as referred to in recommendation 6) does not in itself
have any particular additional resource demands - in terms of applications fees
for example - though legal advice may be sought.
50. If the Secretary of State does direct that the scheme should be considered a
NSIP, this does not accept that the Department for Transport would fund it, but
clearly having the scheme recognised as being of national importance would
raise its profile.
Funding challenges
51. The paragraphs above have set out an indication of the likely revenue funding
to get to the point of submitting an application. To summarise, the current best
estimate is that this will be in the region of £2 to £2.5m. The initial expenditure
of up to £450,000 will take the County Council forward to a position where it
can make a strong case to the Government for the additional £2m to complete
the Business Case and the preparation of an application for development
consent – albeit, as mentioned earlier, it is not common practice for
Government to fund scheme development in this way.
52. The Cabinet should however not lose sight, in considering the detail, of the
broader funding challenge that is securing the full funding for the Four Village
Bypass at some point in the future.
53. The Cabinet should also be aware that the further the scheme development
progresses, the more likely it is that issues of blight may arise, which could
have additional cost implications for the County Council.
54. The NSIP regime requires, with the submission of applications, a Funding
Statement, setting out how it is anticipated the project will be funded, including
how any liabilities will be met – for example in relation to the compulsory
acquisition of land sought.
55. As such it is at this point that there would need to be clarity over the funding
package for the scheme, and where funding is not secured, it is usual practice
that the County Council, as the promoter, would need to underwrite those
monies.
56. The costs of submitting an application and progressing with a public
examination of the Four Village Bypass would also require revenue funding,
which is likely to be significant owing to the high application fees for such
applications and the legal support that would be required throughout the
examination process.
57. Detailed design costs (which typically follow consent, but may need to be
incurred during the examination process due to time constraints) are
considered capital expenditure and could be deducted from the ‘local
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contribution’ if the application is ultimately successful. If the application fails, the
County Council would have to accept these costs.
58. Current practice is that major transport schemes require a local contribution to
be made to add to any monies secured from the Government. It is anticipated
that the proportion required to be contributed locally could be in the region of
25% of the scheme costs; i.e. £11m to £26m based on the current estimated
costs of the Four Village Bypass. The County Council would be charged with
bringing the local contribution together.
59. An EDF Energy contribution could offset a significant proportion of this local
contribution (depending on the nature of its own mitigation proposals and the
final specification of the Four Village Bypass), but this should be considered an
uncertainty, given the hurdles involved in securing this. In any event, any
developer commitment would need to be underwritten (and ordinarily that would
be by the promoter, i.e. the County Council) in case it is not ultimately
forthcoming, for whatever reason. The Cabinet should also be conscious of the
potential for a conflict of interest to arise whereby, while it may wish to seek a
contribution from EDF Energy towards the Four Village Bypass, it may wish at
the same time to raise concerns over the development of Sizewell C, upon
which the contribution would be contingent.
60. It should also be noted that promoters are generally responsible for any
subsequent increase in costs which arise during the construction. The NNDR
has experienced a significant uplift in costs since funding was agreed with the
Government, so this is a further risk for the future.
61. Members should also be aware that the County Council is progressing other
major highway schemes including the Third Crossing in Lowestoft and the Wet
Dock Crossing in Ipswich, which could be in competition with the Four Village
Bypass for Government funding, though it should also be recognised that there
may be synergies between these projects – for example cumulative economic
benefits of the Four Village Bypass and Third Crossing on the Lowestoft subregion.
62. The likelihood of securing Government funding will be determined by the
strength of the respective business cases of these schemes and no doubt the
many others they will be competing against nationwide. Funding for major
transport schemes is now channelled through Local Enterprise Partnerships
and there is an expectation that infrastructure investment is closely related to
economic growth. A further risk, therefore, is that the business case does not
identify sufficient growth dependent on the delivery of the Four Village Bypass
and thus it is found to provide insufficient value for money. As noted earlier, the
responsibility to deliver growth within this area lies partly with SCDC and WDC,
so the County Council will need to work closely with the district councils to
understand what growth potential would be released by the Four Village
Bypass.
Conclusion
63. There is a strong case that can be made to the Government that the Four
Village Bypass is a Nationally Significant Infrastructure Project. It is theoretically
possible to bring the Four Village Bypass forward in such a way and to such a
timescale that it could be used to mitigate some of the impacts of the Sizewell
C traffic, and thus potentially attract a contribution from EDF Energy. In order
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for the latter to be achieved, work needs to commence to develop the scheme
in the very near future.
64. However, the current period should also be recognised as a time not only of
uncertainty for the long term funding of major transport schemes, but an era
where scheme development costs (revenue costs) are ordinarily borne by
promoters in their entirety. This situation is of concern as there will still be a
significant funding gap to bridge, both to get to the point of achieving a consent,
but also in achieving the full development costs (irrespective of any potential
EDF Energy contribution).
65. At this time the only source of Government funding for major transport schemes
is the Single Local Growth Fund (SLGF), distributed by NALEP via competitive
bids. However the SLGF would not normally support schemes of a very high
value, such as the Four Village Bypass, nor their preparatory works. This is an
issue recognised by the Department for Transport but no solution has yet been
identified. This raises a dilemma for Government as the driver for the early
delivery of the Four Village Bypass arises in large part because of the timing of
Sizewell C, a key element of Government’s energy strategy. As such we will
look to the Government to be innovative to ensure that localities hosting
nationally important infrastructure are supported in aspirations to expedite their
delivery alongside that of wider growth.
66. Spending up to £450,000 will enable the County Council to bolster the position
of the Four Village Bypass as an attractive option to both EDF Energy and the
Government by keeping the programmes of the respective projects aligned. It
will enable the County Council to take discussions to the next stage and bid to
the Government for further monies to develop the scheme. However this is only
one step in a long process, and there can remain no certainty over the final
outcome at this stage.
Sources of further information
a) AECOM reports, 2013 and 2015 http://www.suffolkcoastal.gov.uk/yourdistrict/sizewell/transport/fourvillages-bypass/
b)
EDF Energy 2012 – Stage 1 consultation proposals http://sizewell.edfenergyconsultation.info/proposals/
c)
Mott McDonald 2014 – A12 Suffolk - Wider Economic Benefits
Assessment http://www.suffolkcoastal.gov.uk/assets/Documents/District/141216-A12Suffolk-final-report.pdf
d)
New Anglia Local Enterprise Partnership – Strategic Economic Plan 2014
- http://www.newanglia.co.uk/wp-content/uploads/2014/03/New-AngliaStrategic-Economic-Plan-V2.pdf
e)
Planning Inspectorate – application process for NSIPs http://infrastructure.planninginspectorate.gov.uk/application-process/
f)
Suffolk County Council – Local Transport Plan http://www.suffolk.gov.uk/roads-and-transport/public-transport-andplanning/transport-planning-strategy-and-plans/
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