DD1472 London Borough of Croydon – MRF / LEF Programme Re-profiling

Type of decision: 
Director's decision
Code: 
DD1472
Date signed: 
30 March 2016
Decision by: 
Fiona Fletcher-Smith, Executive Director of Development, Enterprise and Environment

Executive summary

Following approval in principle by the Investment and Performance Board (IPB) formal approval is required for the continuation of the London Borough of Croydon’s projects funded by the Mayor’s Regeneration Fund (MRF) and London Enterprise Fund (LEF) into the 2016/17 financial year. Approval is therefore sought for the variation of five funding agreements to enable proposed project continuation. This includes the re-allocation of funding between projects to deliver an improved regeneration programme for Croydon.

 

Decision

1)    re-allocation of MRF/LEF funding between the London Borough of Croydon’s Business Rate Relief; West Croydon Investment Programme; Old Town Masterplan; Innovation Centre/Tech Hub; High Streets Improvements and West Croydon Interchange projects to deliver an improved regeneration programme for Croydon (as set out at Appendix 1); and 
2)    variation of the GLA’s funding agreements with the London Borough of Croydon in respect of the projects noted at decision 1) above to amend the duration and milestones and outputs of the same enable continued delivery in the 2016/17 financial year.
 

Part 1: Non-confidential facts and advice

Introduction and background

1.1.    Following the public order disturbances in August 2011, the Mayor announced a fund of £70m to invest in the long term regeneration of some of the worst affected boroughs. MD895 and MD1092 approve the overall Mayor’s Regeneration Fund / London Enterprise Fund (MRF/LEF) programme budget of £70m and delegated authority on the detailed allocation of the programme budget, individual project budgets and any further resources required to the Executive Director for Development, Enterprise and Environment.

1.2.    The London Borough of Croydon (“the Council”) was identified as a recipient of MRF/LEF funding on the basis of the impact on businesses in the local area and potential for growth, and was invited alongside the other boroughs to submit a proposal which would be prioritised on the basis of deliverability, value for money and contribution to economic growth.

1.3.    In November 2014 the Investment and Performance Board (IPB) endorsed the proposal for unused capital funding of up to £1,060,354 from the Innovation Centre and High Streets Improvements projects within the Croydon MRF/LEF programme to be re-allocated to the West Croydon Interchange project to cover a funding shortfall due to increased costs, and to deliver additional outputs.

1.4.    In December 2015, IPB was presented with a report setting out the latest position of the Croydon MRF programme, describing the significant number of achievements to date leading to noticeable positive change in Croydon. The report also updated on progress of the remaining projects and approved in principle, subject to the GLA’s annual budget setting process:

•    a revised delivery date for High Street Improvements, West Croydon Interchange, Wellesley Road Crossings and New Addington Improvement Works;
•    the reallocation of funding between some projects to deliver an improved regeneration programme in Croydon;
•    a change of scope to New Addington Improvement Works, Wellesley Road Crossings, West Croydon Interchange and Innovation Centre/Tech Hub projects.

1.5.    Rigorous project and programme management controls have been used to monitor projects where a period of potential continued delivery was identified. In all cases, decisions to extend project timescales where warranted have been based on an assessment of impact on the quality of outputs and outcomes and of deliverability.
 

Objectives and expected outcomes

2.1.    Approval is now sought to enter into five re-profiled Grant Agreements for the following projects within the Croydon MRF/LEF programme:

•    High Streets Improvements (DD1103);
•    New Addington Improvement Works (DD1177);
•    West Croydon Interchange (DD879);
•    Wellesley Road Crossings (DD1021);
•    Innovation Centre/Tech Hub (DD1296).

These revised Grant Agreements will include robust and deliverable project plans which correspond to the extended delivery timeframes. Equally, they will include new output and funding profiles and milestones. This process will ensure that the delivery of projects continues in accordance with the proposal for which funding was originally awarded and that a high quality of output and outcomes are delivered.

2.2.    High Streets Improvements – The project comprises of two main project strands, Physical Works and the Retail Support Package, which aim to deliver lasting improvements to London Road, Old Town, North End and South End. Although a substantial amount of the High Street Improvements is now complete, this funding agreement requires an extension from March 2016 to July 2016. This is due to unforeseen constraints on construction work in the Central area/Old Town affecting the completion of works, and delays in completing designs for Section C of London Road public realm meaning this element will now complete in July 2016. 

Formal approval is now required for the extension into 2016-17. The forecast of funding required is £154,862 capital in 2016-17.

2.3.    New Addington Improvement Works – The purpose if this project is to deliver an improved public realm to Central Parade and the Good Food Matters kitchen and teaching building. The Good Food Matters sub-project has been successfully completed. However, the Central Parade public realm works have been delayed and re-scoped to integrate better with the changed plans for the emerging wider regeneration of New Addington Town Centre. 

Formal approval is now required for the extension into 2016-17. The forecast of funding required year by year is now £337,078 in 2015-16 and £382,879 in 2016-17. 

2.4.    West Croydon Interchange – The project will improve the public realm around the West Croydon Interchange. Project activities include an enlarged tram stop, greening, more space for pedestrians, a welcoming and attractive arrival place outside West Croydon Station and London Road and better connections to the retail core. As part of the re-scoping the project will also deliver building frontage improvements and public art on London Road and Station Road to deliver a more transformative scheme. Construction of the scheme began in January 2015. The forecast completion date for all activities will be September 2016.

Due to project re-scoping, formal approval is now required for the extension into 2016-17, and the addition of £1,003,354 capital funding from the underspend within the Croydon MRF/LEF programme on High Streets Physical Works (George Street tram stop) and the re-scoped Innovation Centre projects to be utilised to deliver the West Croydon Interchange project. The forecast of funding required year by year is now £4,918,020 in 2015-16 and £100,274 in 2016-17. LB Croydon will provide an additional £888,934 of its own funding and £166,219 of non-council match funding to deliver the project.

2.5.    Wellesley Road Crossings – The project will deliver a comprehensive set of interventions to rebalance the streetscape and make the town centre more attractive and accessible to pedestrian users. The reconfiguration of the Lansdowne Road junction and new de-cluttered footways to connect new railway footbridge to Wellesley Road and the upgrade of the existing at-grade crossing with George Street have been successfully completed. The new at-grade crossing at Bedford Park/Poplar Walk and comprehensive landscape improvements have received all approvals and are to be installed by February 2017. The crossing at Lansdowne Road has been de-scoped from the Wellesley Road project and will be delivered at a later stage in conjunction with TfL’s Dingwall Road Loop project.

Due to delays in obtaining the required technical approvals it is proposed to extend the LEF funding period into 2016-17 to deliver the Bedford Park/Poplar Walk crossing and landscaping from existing budget allocations. The forecast of funding required year by year is now £906,691 in 2015-16 and 1,528,762 in 2016-17. 
 
2.6.    Innovation Centre/Tech Hub – The project will deliver a specialist technology business incubator unit to act as a catalyst for the high growth tech sector in Croydon by fostering and supporting local tech businesses and providing a resource to help attract a significant inward investment. As a result of increased costs for office furniture and unforeseen works associated with refurbishing the existing unit to a fit for purpose work space, project costs have increased by £510,000. Options to reduce the scope of works have been considered, however it was concluded that none of these would deliver a viable solution. The operator of the centre have committed to providing £360,000 funding for the furniture from their own resources and Croydon Council has committed to providing £22,060 for the required upgrade of the building systems to part meet the shortfall. The operator and the Council Refurbishment works have also committed to deliver additional outputs. Works are underway and the completion of the fit-out and opening of the centre is forecast for March 2016.

Formal approval is now required to utilise £127,940 from the Croydon MRF/LEF programme underspend to extend the funding on the Innovation Centre/Tech Hub from £800,000 to £927,940 in 2015-16, of which £877,940 would be capital and £50,000 would be revenue. 

2.7.    The extension of the funding period into 2016/17 relates to the stated MRF / LEF projects with an aggregate value of £18,991,995 capital and £109,612 revenue, with £2,166,777 capital of this continuing into 2016/17.Please see Appendix 1 for details of the revised financial profile and Appendix 2 for revised project outputs.
 

Equality comments

3.1.    Through their existing public sector duties and via the requirements set out in the funding agreement, the Council must ensure that they give due regard to the requirements of the Public Sector Equality Duty: eliminate discrimination, advance equality of opportunity and foster good relations between different people when carrying out this project.

3.2.    The above outlined project activities will take place in a location that is accessible and can be used by a diverse representation of Londoners. Access requirements have been be incorporated in the detailed proposals. The Council will be required to monitor the project against the equality duty.
 

Other considerations

a) Key risks and issues

Financial
There is a possibility that the projects will underspend and the full fund will not get disbursed to the London boroughs.  This will be mitigated by revised, well-defined project schedules articulating clear, timely and achievable milestones.

Outputs
There is a risk that the some of the projects fail to deliver the outputs and outcomes they have signed up to. This has been mitigated by the production of a guidance paper on economic uplift and a toolkit for delivery partners to apply. This guidance and toolkit has been designed alongside colleagues in finance, governance and GLA Economics and disseminated to boroughs. Effective monthly monitoring with each borough is identifying early on if projects are not going to deliver, and agree changes to the project or funding as relevant to maintain value for money. The GLA have also commissioned external consultants to provide ongoing support to delivery partners in developing their self-evaluation templates and to plug any gaps they may have in their baselines data.

KPIs
Delivery partners fail to secure or realise committed match funding. Funding agreements have required certification by the borough s151 officer that match funding is committed via schedule 9 of each grant agreement.  The GLA have been seeking assurances from s151 officers as part of each quarterly grant claim return that match funds have been spent as outlined in the project milestones.  This will continue and the re-profiling of agreements will only be signed off once delivery partners have re-profiled any match expenditure to align with the re-profile of GLA monies.

b) Links to Mayoral strategies and priorities 

London’s town centres, including many of its high streets, are a key spatial priority of the London Plan, providing access to a range of services and enabling all parts of London to contribute to London’s economic success. The continued delivery of the Croydon MRF programme will support and help deliver the aspirations of the London Plan and the Mayor’s Economic Development Strategy.

c) Impact assessments and consultations

Requests for extension have been rigorous assessed and monitored by officers in the Regeneration Unit. The extension requests have been presented to and approved by IPB.
 

Financial comments

5.1    This proposal is looking to extend a number of existing grant agreements, relating to the Mayors Regeneration & London Enterprise Funded projects, specifically projects associated with the regeneration programme for Croydon. This will include extending the projects (detailed within the main body of this report) into the 2016-17 Financial-Year and also the re-allocation of funding between projects in order to deliver an improved regeneration programme for Croydon. The revised re-allocation is summarised below: 

 

Current Budget Allocation

 

Revised  Budget Allocation

Project Name

Capital

Revenue

Total

 

Capital

Revenue

Total

 

£

£

£

 

£

£

£

High Streets

7,300,000

0

7,300,000

 

6,757,333

0

6,757,333

New Addington

896,388

59,612

956,000

 

896,388

59,612

956,000

West Croydon interchange

4,600,000

0

4,600,000

 

5,660,334

0

5,660,334

Wellesley Road Crossings

4,800,000

0

4,800,000

 

4,800,000

0

4,800,000

Innovation Centre / Tech Hub

750,000

50,000

800,000

 

877,940

50,000

927,940

 

18,346,388

109,612

18,456,000

 

18,991,995

109,612

19,101,607

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.2    The reallocation summarised above also requires an additional budget increase for the Croydon Programme totalling £645,607, which will be funded from the overall Mayor’s Regeneration Fund as approved MD895. As detailed above the associated funding agreements are to be varied and extended into 2016-17 and Project officers have forecast slippage into 2016-17 will total approximately £2,166,777 (all capital), which will be subject to the year-end closure of accounts process. 

5.3    Any changes to this proposal, including budgetary implications will be subject to further approval via the Authority’s decision-making process. All appropriate budget adjustments will be made. 

 

Planned delivery approach and next steps

Activity

Timeline

Execution of re-profiled grant agreements

March 2016

Monitoring of delivery progress

Ongoing

Project self-evaluation activity

Upon individual project completion

(see Appendix 1)