Agenda item

Report by the Director of Communities, Economy and Transport.

15.1     The Head of Economic Development, Skills and Infrastructure introduced the report which covers how projects are selected and developed, their governance arrangements and the development of a pipeline of new projects. There have been a number of large capital projects, many of which have been developed through funding from the South East Local Enterprise Partnership (SELEP). The approach the Council has taken and the dedication of staff have enabled it to secure significant levels of investment for East Sussex.

15.2     The decision making on SELEP projects is undertaken by the SELEP Accountability Board, which is supported by technical advisers. Once approval has been given by SELEP, back to back contracts are agreed with the project provider to deliver the project. The role of East Sussex County Council (ESCC) as the local Accountable Body is to oversee the funding and delivery of SELEP projects. Officers carry out regular monitoring and can draw on clauses in the funding agreements to help manage delivery of the projects. The Economic Development Team works with Internal Audit and the Treasury Teams to ensure there is a robust project governance process, which has been recognised externally as being good.

15.3     ESCC has developed a strong pipeline of new projects with Team East Sussex and other partners, in order to take advantage of any existing and new grant funding streams that become available.

15.4     The Committee discussed the report and a summary of their questions and comments is given below.

Scrutiny of Projects

15.5     The Committee commented that once projects are complete the benefits from them can be indirect and may not be delivered for some time. The report suggests that projects can only be scrutinised at the benefits realisation stage, but there should be scrutiny input into the development and monitoring of projects. There should also be an opportunity for scrutiny involvement when projects do not go as planned or encounter difficulties (e.g. the Queensway Gateway project in Hastings). This would allow learning to be gleaned from the project and any lessons learnt applied to future projects. This is important where there may be some financial liability for ESCC arising from the non-delivery of a project. The Committee raised concerns about the delivery of two specific projects and will take this up through the Committee’s future work programme.

15.6     Head of Economic Development, Skills and Infrastructure responded that there is already a substantial level of scrutiny of projects through SELEP and the Accountability Board and the independent technical evaluations that are undertaken on business cases that are submitted for approval. Reports are also submitted to the Lead Member for Strategic Management and Economic Development, and Lead Member for Economy; to quarterly Council Monitoring reports; departmental/corporate capital boards; and in the Portfolio and Council plans that highlight the progress, any issues and corrective steps undertaken with projects.

15.7     ESCC has generally intervened where there has been market failure and there are risks associated with such projects, which can be complicated and complex to deliver. Scrutiny can request to see projects to assure themselves that the risks are assessed. There is always a possibility that SELEP could ask for money to be returned if a project does not proceed and meet the funding conditions set out due to issues that arise. However, this does not usually happen once a project has received SELEP approval and started.

15.8     The Lead Member for Economy commented that ESCC can be proud of how effective it has been in drawing down investment through successful business cases. The ESCC Grants and Loans panel has used capital resources to help local businesses expand, using professional expertise to assess all applications, most of which have been loans rather then capital grants. The main concern is that future funding from SELEP will cease and ESCC and its partners will need to find new sources of funding.

15.9     The Head of Economic Development, Skills and Infrastructure and the Director of CET outlined that scrutiny could request to scrutinise any project if they wished to do so through their work programme. Big capital projects are complex to deliver, and as an example the Queensway Gateway project has encountered a number of issues. However, the majority of the road has been completed and opened up the area for employment space. The governance process for projects is robust and there has been a large number of successful projects. The difficulties encountered with a minority of projects should not detract from other successful work. For example, the recent successful allocation of over £41 million to the Bus Service Improvement Project (BSIP) and £8 million secured from the Levelling Up Fund for the Exceat Bridge in the South Downs National Park.

Project Monitoring

15.10   The Committee observed that most monitoring and evaluation takes place in hindsight and where scrutiny works best is where it can be involved at an earlier stage, as a critical friend in a fair and equitable way. The Committee asked if it could be involved at an earlier stage. The Director of CET responded that there is real value in pre-decision scrutiny work and work where scrutiny acts as a critical friend. There are some good examples of where scrutiny has been involved earlier particularly around involvement in strategy, commissioning and planned policy work (e.g. the development of the Libraries and Information Service Strategy, the Highways maintenance contract re-procurement and the development of the revised Local Transport Plan). There are also opportunities for Members to hold officers and Lead Members to account.

Allocation of Funding to Project Providers

15.11   The Committee noted that of the £130 million of economic growth funding the Council had received, around £63 million had been with one organisation who had experienced some difficulties with two of its recent projects. The Director of CET outlined that calls for funding bids go out to all organisations, and all successful bids for SELEP funding are determined by SELEP based on the business case submitted to them. Hasting Borough Council, Rother District Council and ESCC have a relationship with this organisation. It should be borne in mind that many projects were intervening where there had been market failure and as such there are challenges and risks associated with this type of project which can be complex to deliver. However, it should be noted that this organisation had been successful in delivering a number of significant projects over the years.

Reallocation of Funding

15.12   The Committee commented that there had been some projects such as the Hastings and Bexhill Movement and Access Corridor Package and the Riding Sunbeams Project, where funding had been re-allocated or removed. The Head of Economic Development, Skills and Infrastructure outlined that in both cases there had been issues which prevented the project or parts of the scheme from progressing to implementation, and therefore funding had been re-allocated to other eligible schemes and in the case of Riding Sunbeams funding removed entirely and returned to SELEP. The decision to re-allocate or remove funding was taken either by the project boards or through reports to the Lead Member.

Scrutiny Committee Involvement through the different Stages of a Project

15.13   The Committee noted that although there were opportunities for scrutiny at different stages of the project process this did not always involve elected Members of ESCC or the Scrutiny committee. The Committee discussed whether there was enough transparency in the project process and whether it would be possible to establish a small working group to examine the stages of project development and delivery to identify where scrutiny involvement would be most beneficial and effective (e.g. earlier on in the process).

15.14   The Director of CET outlined that the Committee could request regular updates on projects at scrutiny meetings, and that project progress can be scrutinised in several ways such as through the scrutiny process, quarterly Council Monitoring reports and Lead Member reports. The Director of CET added that work will be undertaken shortly to develop a new Growth Strategy for East Sussex, and this presents an opportunity for the Committee to be involved at an early stage via a scrutiny Member reference group in this work.

Recommendations of the Report

15.15   The Committee discussed the recommendations of the report and were happy to agree recommendations 1 and 3, but not recommendation 2 as the Committee considered that it would limit its ability to scrutinise projects at any stage in the process. The Committee discussed recommendation 2 and after a debate a motion to amend the wording was proposed to so that it would read:

“To agree to receive information on the various externally funded economic growth programmes subsequent to the benefits realisation stage of the programme and at strategic points in the development of the project”.

This was agreed by a majority vote of 5 for and 4 against.

15.16   The Committee RESOLVED to:

(1) Note the reports contents on the principles and processes applied to project development, selection, governance, management and development of pipeline projects;

(2) Agree to receive information on the various externally funded economic growth programmes subsequent to the benefits realisation stage of the programme and at strategic points in the development of the project; and

(3) Note the technical expertise established within the Economic Development, Skills and Infrastructure service which underpins the process for pipeline development and securing external funding enabling the County Council to maximise external investment into the county.