Agenda Item No. 3
The Vale of Glamorgan Council
COUNCIL - 9 February 2017
Report of the Leader of the Council
Cardiff Capital Region - City Deal Proposal
Purpose of the Report
- The purpose of this report is to update Members on the progress being made in the formal establishment of the Cardiff Capital Region Joint Committee (the Regional Cabinet), and to seek approval for the establishment of that Joint Committee.
- The report also seeks approval of the suite of documents attached to this report, which are required to establish the Cardiff Capital Region Joint Committee and the City Deal Investment Fund.
- Approves the Joint Working Agreement (JWA) as the legal document that formally establishes the Cardiff Capital Region (CCR) Joint Committee (the Regional Cabinet) as a Joint Committee, with delegated functions, with a commencement date of 1 March 2017. The elected Member representative to the Regional Cabinet shall be the Leader of the Council, with the Deputy Leader as a nominated Deputy.
- Approves the financial contributions from each constituent Council towards the collective £120m total, (together with such associated costs e.g. carry costs), as detailed in the body of this report.
- Approves the carry forward of any remaining revenue funds from 2016/17, contributed by each constituent Council, into 2017/18 in order that the support structure for the Joint Committee continues.
- Approves the collective revenue contributions of up to £1 million (inclusive of recommendation 3 above, on a proportionate basis as set out in the JWA) to the 2017/18 budget, in order that the support structure for the Joint Committee continues.
- Approves the City of Cardiff Council acting as the Accountable Body with the responsibilities as set out in the JWA.
- Approves the Assurance Framework as the open and transparent, robust decision making process for considering all proposals requiring support from the CCR City Deal Wider Investment Fund.
- Approves the Implementation Plan in the form attached to the JWA, subject to each constituent Council approving the JWA Business Plan.
- That the Managing Director in consultation with the Leader of the Council, the Head of Legal Services and s151 Officer be granted delegated authority to agree such amendments as are necessary to the JWA, Assurance Framework and Implementation Plan (as are appropriate) from the date of acceptance of these recommendations to the Commencement Date of the 1 March 2017.
- That the Managing Director in consultation with the Leader of the Council, the Head of Legal Services and s151 Officer be granted delegated authority to decide whether the Council should continue to explore the opportunity to participate in the CCR City Deal in the event that one or more of the ten constituent Councils fail to agree any of the recommendations 1 - 7 above.
- That the Leader of the Council or his/her nominated Deputy be granted delegated authority to sign the JWA on behalf of the Council.
Reasons for the Recommendations
- To allow the mechanism for creation of the Joint Committee and to secure representation on that Committee.
- To allow this Council to fund its share of the City Deal Investment Fund.
- To allow the use of funds currently held to support the work of the Shadow Joint Committee to be carried forward to support the work of the Joint Committee in 2017/18.
- To allow for a fund to be established to support the work of the Joint Committee during 2017/18.
- To allow the City of Cardiff Council to fulfil the role of Accountable Body.
- The Assurance Framework is included as a schedule within the JWA and will allow a robust consideration of all potential City Deals proposals by the Joint Committee.
- The Implementation Plan is included as a schedule within the JWA.
- To allow any amendments to be undertaken in the interest of clarity.
- To allow further consideration being given to the merits or otherwise of a City Deal if not all 10 South East Wales Councils agree to progress at this stage.
- To allow the Joint Working Agreement to be executed on 1st March 2017.
- In 2015, each of the ten constituent Authorities in South East Wales agreed to work towards developing proposals for a Cardiff Capital Region City Deal. A report was presented to Cabinet on 27 July 2015 (minute C2873 refers) which provided information on the concept of City Deals and outlined the work undertaken up until then on a potential City Deal. At that meeting it was resolved (in summary) that this Council contributes to work on an initial business case for a City Deal and that a contribution of circa £42.5k be provided from the Policy Budget to progress the business case.
- On 15 March 2016, each of the ten constituent Leaders in South East Wales, the First Minister, the Welsh Government Minister for Finance and Government Business, the Secretary of State for Wales and the Chief Secretary to the Treasury signed the Cardiff Capital Regional City Deal Heads of Terms Agreement. This represented a significant step in working towards a City Deal for South East Wales. This agreement was the subject of a report to this Council's Cabinet on 22 February 2016 and in summary Cabinet resolved that the Leader be authorised to sign an 'in principle' City Deal document and that further work be undertaken with constituent Authorities, the UK and Welsh Government to progress further the City Deal (Cabinet Minute C3088 refers). Council on 2 March 2016 resolved to approve the proposals as set out in the Cabinet Report.
- The City Deal Heads of Terms Agreement included:
- £1.229 billion investment in the Cardiff Capital Region's infrastructure - with a key priority for investment being the delivery of the South East Wales Metro, including the Valley Lines Electrification programme.
- Connecting the region - with the creation of a new non-statutory Regional Transport Authority to co-ordinate transport planning and investment, in partnership with the Welsh Government.
- Support for innovation and improving the digital network - to develop capabilities in Compound Semiconductor Applications.
- Developing a skilled workforce and tackling unemployment - with the creation of a Cardiff Capital Region Skills and Employment Board to ensure skills and employment provision is responsive to the needs of local businesses and communities.
- Supporting enterprise and business growth - through the creation of a Cardiff Capital Region Business Organisation to ensure that there is a single voice for business to work with Local Authority Leaders.
- Housing development and regeneration. The Welsh Government and the Cardiff Capital Region commit to a new partnership approach to strategic planning. This will ensure the delivery of sustainable communities, through the use and re-use of property and site.
- A small number of key targets are set out in the Heads of Terms Agreement to ensure that the right investments are made to secure significant economic growth. Such targets include the creation of 25,000 new jobs by 2036 and the leveraging of an additional £4 billion of private sector investment as a result of the £1.229 billion public sector investment that makes up the City Deal.
- The Heads of Terms Agreement is attached at Schedule 7 of the Joint Working Agreement at Appendix A. Of particular reference to this report are paragraphs 51-55 inclusive which refers to governance arrangements. The Heads of Terms Agreement at paragraph 51 agrees to establish a governance model that:
- Complies with the existing statutory framework that exists in Wales to deliver the City Deal proposals;
- Strengthens and streamlines the existing governance and partnership arrangements across the Capital Region;
- Improves business involvement in local decision making;
- Provides confidence and assurance to both the UK and Welsh Governments that Local Authority Leaders are making collective decisions which will serve to drive economic growth across the Capital Region; and
- Enables Local Authorities to explore with Welsh Government alternative governance arrangements in the medium term.
- The Heads of Terms Agreement at paragraph 53 relates to the establishment of a Capital Region Cabinet which will comprise the 10 participant Authorities and provide the basis for initial decision making regarding the Investment Fund. The Heads of Terms Agreement states that the Cardiff Capital Region Cabinet will be responsible for:
- Management of the Cardiff Capital Region Investment Fund;
- Additional devolved funding provided to the Capital Region;
- The Cardiff Capital Region Transport Authority;
- Contracting with Transport for Wales on prioritised Metro projects;
- Control over devolved business rate income above an agreed growth forecast, subject to Welsh Government agreement;
- Strategic planning including housing, transport planning and land use;
- Influencing skills and worklessness programmes;
- An Inward investment and marketing strategy; and
- Considering the scope for strengthening Capital Region governance further.
- Since the signing of the Heads of Terms Agreement on 15 March 2016, the ten Authorities have been progressing work, in partnership with the Welsh and UK Governments to establish the necessary governance arrangements required to release the £1.229 billion investment fund, which comprises of two distinct elements, as follows:
- A £734 million Metro Scheme Fund consisting of £503 million Welsh Government funding provided over the first seven years of the Investment Fund (2016/17 to 2022/23), £106 million from the European Development Fund (committed and guaranteed by both Welsh and UK Government) and £125 million from UK Government. This £734 million will be the direct responsibility of Welsh Government.
- A £495 million Regional Cabinet Fund. This arises from the commitment of the ten constituent Councils to borrow £120 million over the 20 year period of the Investment Fund, together with the £375 million funding from the UK Government. This element will be the responsibility of the Cardiff Capital Region Regional Cabinet (The Joint Committee).
- Given the commitments as outlined in the Heads of Terms Agreement, much of the recent work has focussed on the development of necessary governance arrangements. This work has been prioritised as the experience of other City Deals has highlighted the importance of effective and robust arrangements. As a result and following the signing of the Heads of Terms Agreement in March 2016, a Shadow Cabinet was established for the Cardiff Capital Region in Summer of 2016, comprising the 10 Leaders of the participating Local Authorities. This Shadow Cabinet has provided interim governance and momentum to taking matters forward. Alongside this, a Project Management Office has been established consisting of a Programme Director and Project Manager. This office has been responsible in supporting Officers and the Shadow Cabinet in taking forward and developing key elements of the City Deal, which are covered in the body of this report under Relevant Issues and Options. Finally, external legal support has been appointed to develop the Joint Working Agreement (Appendix A) which will provide the legal framework for the establishment of the Joint Committee for the Cardiff Capital Region.
- In addition, and since March 2016, a non-statutory Shadow Regional Transport Authority has been established in line with a commitment contained in the Heads of Terms Agreement. A key aim is to co-ordinate transport planning and investment, in partnership with Welsh Government, with responsibility for:
- Pooled local transport resources;
- Regional planning for the local transport network;
- Working with Transport for Wales to ensure alignment of objectives for transport investment;
- Exploring the creation of a single integrated ticketing platform for public transport across the Cardiff Capital Region;
- Working in partnership with the Welsh Government to define the priorities of the South East Wales Metro and to support its delivery; and
- Working in partnership with the Welsh Government to promote the development of integrated aviation routes from Cardiff Airport and St. Athan Enterprise Zone, to deliver economic benefit.
- The Heads of Terms included a commitment to initiate the establishment of a Cardiff Capital Regional Economic Growth Partnership. This multi-agency advisory board will assist shape the development of the wider city-region economic development agenda. It has been agreed that the partnership will include recommending a regional economic vision to the Cardiff Capital Regional Cabinet, providing recommendations relating to City Deal Investment decisions; and providing a broader advocacy role for the Cardiff Capital Region. The overall membership will cover local government, business and employee bodies, higher education and skills, community development, the third sector and social enterprise.
- An independent person will be appointed in early 2017 to lead the process of the formation of the Regional Economic Growth partnership and the appointment of an independent Chair. Such an approach reflects those taken by city-region partnerships across the UK to ensure wider public, private and voluntary sector buy-in to city-region governance and strategy.
- The Cardiff Capital Region is committed to strengthening the existing Learning, Skills and Innovation Partnership, to be re-launched as the Cardiff Capital Region Skills and Employment Board. The Board will represent a wide range of stakeholders, including: business organisations; higher and further education; Local Authorities and the Welsh Government. It will be responsible for:
- Cardiff Capital Region's skills and worklessness strategy;
- Pooled Local Authority skills resources including any devolved Welsh Government budget;
- Producing an annual regional plan for employment and skills. This annual plan, led by industry, will set out how both the existing skills needs of businesses and the Capital Region's future skills challenges will be addressed;
- Influencing and monitoring the delivery and impact of employment and skills programmes across the region;
- Ensuring an industry-led approach to the design and delivery of apprenticeship programmes meets the needs of both business and apprentices;
- Supporting the Welsh Government's 'Curriculum for Wales, Curriculum for Life' plan, by encouraging closer alignment between future employer skills needs and education provision across the region; and
- Ensuring the committed European Union funding investments in skills and employment add value and align with other programmes.
- Another commitment in the Heads of Terms was to develop a Regional Business Organisation consisting of key business stakeholder groups across the region. A single voice for the businesses across the region will strengthen the input of business to relevant City Deal activity. Launch of this new organisation is anticipated in the Spring of 2017.
- Since March 2016, a major element of work has been undertaken, which involved procuring an Independent Growth and Competiveness Commission which was charged with reviewing evidence considering key challenges to economic growth and making recommendations as to how the Cardiff Capital Region can meet its full potential.
- The Independent Growth and Competitiveness Commission was established under the Chairmanship of Professor Greg Clark and reported its findings on 16 December 2016 in a formal report with recommendations. That report is attached at Appendix B. The key assertion in that report is that the Region has the potential to develop into a prosperous capital city region, but that this requires an integrated economic strategy. The report considers the evidence base by reviewing previous studies and reports and also considers evidence from other City Regions across the world. Part 3 of the report includes the review and recommendations. Recommendation focus on key areas of Economy, Inclusion, Spatial Development, Housing and Economic Regeneration and Governance and Leadership.
- In particular recommendation 13 'Organising the Capital Region' refers to:
"The Cardiff Capital Region Cabinet should quickly establish itself as the primary strategic decision making body for the city-region and build a strong partnership with WG to ensure that Local and Welsh Government act in tandem, as the City Deal requires. This means that the CCR Cabinet should integrate appropriate strategic activities in Economic Development, Spatial Development, Transport, and Skills and Employment within a single framework of authority and reporting, and avoid fragmented initiatives."
Relevant Issues and Options
- Given the work that has been undertaken in recent months, all ten participating Councils are now in a position to consider matters relating to the governance of the Cardiff Capital Region City Deal. Alongside issues of governance are issues relating to the financial principles within which the City Deal will operate. Three specific requirements need to be considered and these relate to:
- The Joint Working Agreement which establishes a Regional Cabinet as a Joint Committee and allows the current Shadow Regional Cabinet to move "out of shadow arrangements";
- Formal approval of an Assurance Framework for Investment Fund; and
- Formal approval of the Implementation Plan.
- The Joint Working Agreement (JWA) is a legal document that will formally establish the Regional Cabinet as a Joint Committee. The JWA is attached to the report as Appendix A. This is the document that will establish governance arrangements, determining the roles and responsibilities for a joint committee and the powers that will be conferred to that Committee as delegated functions. Subject to approval, it is recommended that the commencement date for the Joint Committee will be 1 March 2017. At the time of writing, arrangements are being made for the JWA to be signed at Cardiff Airport
- The Joint Committee model is a model that is effective and is used in other major collaborations, such as Project Gwyrdd and the Shared Regulatory Services. It confirms that the Joint Committee will be formed by the ten participating Authorities, working on a one member one vote principle. Decisions would be made by a simple majority, notwithstanding the fact that decisions will always be sought by consensus. A quorum of seven is provided for. The Joint Committee will be able to establish sub committees, such as the Regional Transport Authority.
- It is clear that by approving the JWA and establishing a Joint Committee, functions will be delegated to that Joint Committee. The responsibilities for overseeing the implementation of the City Deal will be delegated to the Joint Committee with only reserved matters being brought back to respective Councils for approval.
- Clause 9 of the JWA sets out the decision making process and identifies 3 categories of decision making, namely (i) the Regional Programme Director (in consultation with the Chair and relevant portfolios lead) (ii) the Joint Committee, where it is expected that the elected Member of each Council will be able to make decisions and (iii) matters reserved to Councils.
- In terms of the latter, a matter reserved to Council is a matter which will require the unanimous approval of all ten Councils before implementation is possible.
- Schedule 1 sets out the 3 matters that are reserved to Councils, namely:
- Approval and adoption of the JWA Business Plan. Clause 1 of the JWA defines this as 'the strategy which defines the regional objectives, including the high level programme to be agreed which shall include, amongst other matters (i) the indicative investment programme for the programme themes (defined under the Implementation Plan and any agreed strategic projects together with the indicative spend profile for the wider investment fund, and (i) the updated affordability envelope, methodology for agreeing projects, methodology and responsibility for external audits and performance indicators and monitoring plus addressing any revenue and capital monitoring reports for the Joint Committee.
- Agreeing any increase to the affordability envelope (which is the overall costs and investment of each Council under the JWA) over the 25 year evaluation period, which shall not exceed, in aggregate £210,800,000 and shall include, without limitation, all interest and UK Government cost of carry and shall be updated to reflect the terms of the JWA Business Plan, including the high level programme (once approved by the constituent Councils).
- Approval of any increase to the Councils' contribution above the £120 million.
- It is important to note that the JWA also authorises the Joint Committee to have discretion over £50 million of HM Treasury funding before the JWA Business Plan is agreed by the ten constituent Authorities as a reserved matter. This sum of £50 million is approximately 10% of the £495 million investment fund and would be funded by the first five years of the UK Government funding. Notwithstanding this ability any potential spend within this period (in advance of the approval of the JWA Business Plan) will have to be subject to the Assurance Framework and all associated evaluation. In the event that the Regional Cabinet does commit or spend a sum of up to £50 million in advance of the approval of the JWA Business Plan and a Council or Councils subsequently fails to agree the JWA Business Plan, the Regional Cabinet would still be liable for any spend committed. As a result, approval of the JWA will bring with it a risk and associated liability relating to that committed expenditure.
- Importantly, the Agreement commits Councils to participation in the Joint Committee for a minimum of five years or, if later, the completion of the first five years Gateway Review. This is referred to as the "lock-in" period. "Lock-in" provisions also feature in other collaborations involving the Council, including the Shared Regulatory Service. For the sake of completeness, if this or any other Council sought to withdraw from the joint working arrangement during the lock-in period it would be in breach of the provisions of the Joint Working Agreement, (unless a negotiated arrangement could be reached with the other Councils). Entering the agreement therefore, creates a legitimate expectation that the Council will remain a part to the City Deal arrangements for at least the lock-in period.
- Following the lock-in period, any Council may withdraw from the Agreement at any time, in accordance with the defined withdrawal provisions. This would however be subject to liabilities determined by, among other matters, the extent of financial commitments made.
- It is also important to note that if the reserved matter relating to the Joint Working Agreement Business Plan is not approved, then the Council would still be locked into the Joint Committee for the lock-in period. This would serve to constrain the Committee since it would not have an agreed plan against which to deliver the City Deal investment programme. In practice it is intended that all parties will be actively involved in the preparation of the Joint Working Agreement Business Plan and that this will be agreed by all Councils.
- The Joint Working Agreement outlines the administrative arrangements that will be put in place, including the establishment of an Accountable Body. The Accountable Body will administer the City Deal and will hold the funds from UK Government, local government and other sources. The Accountable Body will also be responsible for ensuring financial and legal compliance.
- It is proposed that the City of Cardiff Council should become the Accountable Body of the City Deal, and as outlined in the Joint Working Agreement, the Accountable Body will be required to:
- Act diligently and in good faith in all its dealings with the other Councils and it shall use its reasonable endeavours to discharge the Councils' obligations in relation to the City Deal pursuant to and in accordance with the Agreement and all applicable legislation;
- Act as the primary interface (on behalf of itself and the other Councils) with the Welsh Government, the UK Government and the European Regional Development Fund and any other body necessary to discharge the Councils' obligations in relation to the City Deal; and
- Act as the Accountable Body to hold any funds received directly from the Welsh Government, the UK Government, the Regional Development Fund, the Councils and/or any other sources in relation to the City Deal and only to use and release such funds as agreed in accordance with the terms of such funding and this Agreement.
- Resources to cover the costs of the Accountable Body role will be allocated on a population basis among constituent Local Authorities.
- The Assurance Framework (the Cardiff Capital Region City Deal Wider Investment Fund Assurance Framework) is attached in Schedule 8 to the JWA. The Assurance Framework applies to the £495 million Investment Fund and is the document that outlines the set of systems, processes and protocols designed to provide an evidence based and independent assessment of the governance, risk management and control processes of that Investment Fund.
- The Assurance Framework has been scheduled as part of the JWA as it is important in the context of decisions made in relation to the City Deal. It sets out a reporting structure with regards to the development of a programme and specific projects. This Assurance Framework will apply to the Investment Fund as well as any additional funding devolved in the Cardiff Capital Region, additional borrowing by the constituent Authorities and any use of devolved business rate income above an agreed growth forecast (subject to Welsh Government agreement).
- The Implementation Plan is set out in Schedule 9 of the JWA and details the work to be undertaken over the next 3 to 5 years, setting out key milestones and activities against which the Gateway review (as defined in the JWA) will assess performance of the City Deal activities at the first 5 year milestone.
- The Implementation Plan outlines the approach that will be taken to deliver the key elements of the City Deal Heads of Terms and the Independent Growth and Competitiveness Commission recommendation.
- At the time of writing this report, all nine other constituent Councils will have already considered a series of recommendations in relation to the City Deal. An update can be provided verbally at Council on 9 February 2017.
Resource Implications (Financial and Employment)
- Members will note from the earlier reports to Cabinet that work has progressed on the City Deal for some time. In July 2015, Cabinet resolved to contribute £42,582 to the development of a business case for a City Deal, and that this contribution is funded from within the existing Policy Budget. This contribution was based on a sum of £500,000 being provided to take forward work on the City Deal, and followed the establishment of a Memorandum of Understanding which set out a Partnership Contribution Budget.
- It is recommended (recommendation 4) that this arrangement continues for 2017/18 but that the sum is increased to £1 million. The share for the Vale of Glamorgan will be a maximum of £85,164 and it will be recommended in due course that this will be included within its base budget for 2017/18. It is also recommended that the underspend for the existing Partnership Contribution Budget be carried forward into 2017/18 to support the Partnership (recommendation 3).
- This is the first City Deal awarded to Wales. The administration of an Investment Fund totalling £495m introduces a number of practical and accounting considerations. As a consequence officers have engaged with senior officials from both Welsh Government and Wales Audit Office to work through the implications of such considerations.
- One of the issues relates to the Terms and Conditions that will accompany the UK Government Funding to the City Deal. These terms and conditions are yet to be received and as a consequence the JWA contains a condition that its continuation is subject to the terms and conditions being acceptable to the Joint Committee.
- Another issue relates to a detailed technical accounting matter which requires further dialogue with the Wales Audit Office, and relates to grant expenditure potentially being received prior to receipt of City Deal Investment Funds. Other City Deals have faced similar challenges (such as Glasgow and Clyde Valley) but successfully resolved the issues with their auditors. These matters do not alter the costs of the City Deal but could alter the payment profiles during the course of the 25 year repayment term.
- As advised within the body of this report, the Cardiff Capital Regional City Deal comprises two distinct elements:
- £734 million - METRO scheme. This will comprise £503 million, Welsh Government funding provided over the first seven years of the Investment Fund, from 2016/17 to 2022/23; £106 million from the European Development Fund, (which is committed and guaranteed following Brexit by both UK and Welsh Government); and £125 million from UK Government. This element will be the direct responsibility of Welsh Government.
- £495 million - Regional Cabinet Fund, comprising the ten constituent Councils' commitment to borrow £120 million over the 20 year period of the Investment Fund, together with the £375 million from UK Government, for investment in infrastructure, housing, skills and training, innovation, business growth and 'Metro plus' transport proposals. This element will be the responsibility of the CCR Joint Committee.
- The £375 million of funding provided by the UK Government to the Regional Cabinet Fund is funded on a staged basis over 20 years, £10 million a year over the first 5 years, £21 million a year over the following 5 years and £22 million a year over the remaining 10 years. Therefore, if the Joint Committee is to generate the economic improvement the region requires, it is likely that investments will be made early in the life of the Fund and the ten constituent Councils will have to borrow funding to cover the temporary shortfall in funding from the UK Government. This is called the carry costs of the funding.
- The s151 officers have modelled a number of potential scenarios, agreeing appropriate assumptions in respect of variables such as the profile of likely spend, interest rates for borrowing, the split of capital and revenue funding and the treatment of inflation. The result of this detailed work is a prudent funding model which estimates that the total costs of the deal at the regional level is projected to be £210.8 million, of which £166.8 million is the estimated cost of the Local Authorities' capital contribution and £44.0 million is the estimated carry costs of financing the UK Government debt as described above. The Vale of Glamorgan share (8.5%) of the estimated total costs is projected to be in the order of £17.9 million over a 25 year repayment period (based on an assumed average asset life).
- The annual revenue budget requirement to fund this contribution is profiled over the life of the deal given the timing of spend and income requirements. The total cost will be smaller in the early years of the deal (years 1 to 5 estimated to be a total of £903,000) and will peak in Year 11 at £1.1 million for that year. Prudently this Council will include a sum within its base budget requirements when the first year contribution is needed and will seek to set aside funding to support the future years as part of the medium term financial planning arrangements.
- In summary therefore, the modelling provides for a total affordability envelope of £210.8 million. The Vale of Glamorgan Council's share stands at £17.9 million. Approval of the City Deal on this basis will set the envelope in which the ten Local Authorities will manage the cost of the Cardiff Capital Region Investment Fund.
- As part of the terms of the City Deal, the CCR Joint Committee will be required to evaluate the impact of the £495 million Investment Fund in order to unlock UK Government funding. Every five years a gateway assessment will be undertaken, which consists of an independent review to evaluate the economic benefits and economic impact of the investments, including whether the projects have been delivered on time and on budget. The gateway reviews are likely to be structured to occur at Years 5, 10 and 15. Therefore, funding from Year 6 onwards will be subject to the agreed performance objectives being achieved at each of the gateway stages. If a future Investment Fund gateway is not achieved, leading to a reduction or cessation of City Deal grant, then it will be the responsibility of the ten constituent Councils to manage the financial impact of this within their existing Council budgets.
- In order to mitigate this risk, the projects selected will go through the Assurance Framework to inform the key discussions that will take place around performance measures. The final performance targets agreed will include a 'margin of safety', which will further reduce the risk of targets not being achieved.
Sustainability and Climate Change Implications
- Progress on the City Deal links with the sustainable development principle under the duties of the Well Being of Future Generations (Wales) Act 2015. The City Deal will allow for an integrated approach to service delivery and economic development across the region, being an excellent example of collaborative working. The Joint Committee will need to look to the long term over a 20 year City Deal time frame. The details in the body of this report also indicate that partner organisations will be at the heart of decision making, being able to influence opportunities for strategic investment and intervention. In summary, the Cardiff Capital Region City Deal provides for an excellent opportunity for the 10 Local Authorities to work together in addressing the seven Welsh Government Well Being goals.
Legal Implications (to Include Human Rights Implications)
- Many legal implications are covered within the body of the report. In summary, the JWA sets out the basis for establishing a Joint Committee, which includes details relating to decision making and duties of the Joint Committee. The JWA also sets out the responsibilities of the Accountable Body (Clause 5) and other participant Councils (Clause 6). Clauses 15 and 16 refer to the withdrawal from the agreement and the consequences of termination, these being matters that have been addressed earlier in this report. Terms of reference of the Joint Committee are attached to the JWA at Schedule 2.
- There are a number of legal powers available to the Councils to facilitate the proposed collaboration and creation of Joint Committees. These powers include Sections 101, 102, 111 and 113 of the Local Government Act 1972, Sections 2, 19 and 20 of the Local Government Act 2000, section 9 of the Local Government Wales Measure 2009, Section 1 of the Local Authorities (Goods and Services) Act 1970 and Section 25 of the Local Government (Wales) Act 1994. These powers include the ability to delegate functions, the ability for two or more Authorities to discharge any of their functions jointly, and where this occurs, to do so via a Joint Committee, and/or by their officers and the ability to supply administrative professional and technical services. Councils also have the power to spend outside their area, where there are benefits to their area from doing so.
- To facilitate the delivery of the City Deal it is proposed that the 10 constituent Councils conclude a Joint Working Agreement which will serve to establish a Joint Committee to be known as the 'Cardiff Capital Region Joint Cabinet' (recommendation 1). It is proposed that the Councils will delegate their relevant Executive and Council functions relating to delivering the City Deal to the Joint Committee save for the matters detailed in the report. These legal implications highlight the relevant legal issues raised by the Joint Working Agreement, within the body of the report.
- It is proposed that one Authority (namely Cardiff Council) will act as the 'Accountable Body' (recommendation 5). As the Accountable Body, the Council will take responsibility for employment of staff directly affected, enter any third party agreements required and provide all support services required by the Joint Committee. Of significance, the Council will act as the primary interface (on behalf of itself and the other Councils) with the Welsh Government, UK Government and the European Regional Development Fund (if applicable) and any other body necessary to discharge the Councils' obligations in relation to the City Deal. Further, as the Accountable Body, Cardiff Council will hold any funds received directly from the Welsh Government, the UK Government (if any), the European Regional Development Fund (if any), the Councils and/or any other sources in relation to the City Deal. Cardiff Council will have the primary obligation to ensure that the funding received is only used and released in accordance with the terms of the funding imposed by WG, which in turn are passed back to the other Councils via the Joint Working Agreement.
- At the time of writing the report the terms that will attach to the City Deal funding are not definitively known. Accordingly, the Joint Working Agreement contains a condition (referred to as a condition subsequent) that approval of the terms of any Welsh Government funding conditions relating to the City Deal is a "Matter Reserved to the Joint Committee and Cardiff Council, as the Accountable body for approval".
- The Joint Working Agreement sets out that each Council would appoint 1 elected Member to the Joint Committee (recommendation 1). Decisions would be taken by simple majority vote and each Council would have one vote exercisable by their appointed elected Member. It is proposed that the Chairperson would be one of the elected Member representatives, appointed for 12 months, with the position of Chairperson allocated in turn to each Council. The Joint Working Agreement provides that the Chair would agree not to exercise their casting vote.
- The Joint Working Agreement provides that the Joint Committee would be supported by a Programme Board comprising of one officer nominated from each Council. This Board would not be a decision making body. The Board would be chaired by the Programme Director, who is given certain delegated powers (which are primarily intended to relate to day to day operational matters) more particularly detailed in schedule 1 of the JWA. The Joint Committee will provide an annual report on progress which would be reported to the Council/Cabinet as appropriate.
- It is important to note that the Joint Working Agreement contains 'lock-in' provisions. What this means in practice is that no Council can withdraw from the Joint Working Agreement for a period of five years from the commencement date (proposed to be 1st March 2017). Thereafter a party can withdraw but such withdrawal is likely to come at significant costs to the withdrawing Authority. The reason for this is that the withdrawing party has to make good to the other Authorities in respect of any additional costs they would incur as a result of the withdrawal (in effect the monies the Council has agreed to contribute).
- The Joint Working Agreement contains what are referred to as reserved matters. These are matters which have been referred to in the body of this report. A key such matter is approval of the City Deal Joint Working Agreement Business Plan. If the reserved matter is not approved, then the Council would still be locked into the Joint Committee for the lock-in period but in effect the Committee would be stymied in its actions because it would not have an agreed Joint Working Agreement Business Plan against which to deliver the City Deal investment programme. In practice it is intended that all parties will be actively involved in the preparation of the JWA Business Plan and that the same would not be presented to Councils for formal approval until all were content. It is, however, proposed that prior to approval of the reserved matter (the Joint Working Agreement Business Plan) that the Committee would be empowered to spend up to £50m on City Deal projects identified as having regional benefit and meeting the other requirements set in the Assurance Framework. It should be appreciated that even if the Council does not approve the reserved matter (Joint Working Agreement Business Plan) that it will nonetheless be obliged to meet its part of any expenditure committed up to the sum of £50 million. This Council's contribution is 8.5%.
- The Joint Working Agreement at Clause 12 sets out the totality of the Council's agreed financial contributions. The Joint Working Agreement sets out how the costs associated with delivering the City Deal and running the Joint Committee are to be met, which will be shared on a per capita population basis as at 2015 figures for the Vale of Glamorgan this is 8.5%.
- The Joint Working Agreement contains provision to address matters such as disputes, variations, data protection and freedom of information. As Accountable Body, Cardiff Council's Senior Information Risk Owner (SIRO) will retain responsibility for all information security and information management policies regarding the upkeep and exchange of data.
- There are a range of approaches to scrutiny of collaborative activities, which include scrutiny by existing Scrutiny Committees on a 'Council by Council' basis, joint meetings between Council's Scrutiny Committees through to the establishment of new joint overview and a Scrutiny Committee. It is proposed that initially scrutiny will be undertaken by Councils' existing Scrutiny Committees but that the Councils will work together to create a new City Deal joint overview and Scrutiny Committee. It is anticipated that Scrutiny would be involved in monitoring the performance and governance of the City Deal on an ongoing basis; but it would be a matter for the Scrutiny Committee to determine what areas it wishes to scrutinise.
Crime and Disorder Implications
- There are no specific crime and disorder implications associated with this report.
Equal Opportunities Implications (to include Welsh Language issues)
- The City Deals is currently in its infancy and no decision has yet been taken on an area of specific policies, investment and intervention. In addition specific projects have not been agreed. As a result a full Equality Impact Assessment is not deemed necessary at this stage. In future, and if deemed necessary and appropriate individual assessments will be undertaken on a regional basis as decisions are considered.
However, the City Deal has the potential to have positive impacts in relation to equality, given that key themes include improving transport and connectivity, improve employment prospects, investment in digital infrastructure and improve skills.
- The City Deal proposal is included in the Council's Corporate Plan and links to Wellbeing Outcome 2 - An environmentally responsible and prosperous Vale. Objective 3 - Promoting regeneration, economic growth and employment includes an action to maximise economic growth, inward investment and employment opportunities through the Cardiff Capital Region. A further action in relation to Objective 3 relates to the delivery of transport improvements associated with the Cardiff Capital Region and Metro schemes.
Policy Framework and Budget
- This is a matter outside of the Policy Framework and Budget and is a matter for Council.
Consultation (including Ward Member Consultation)
- As this matter relates to a Vale of Glamorgan wide issue and not specific wards, there has been no specific ward member consultation.
Relevant Scrutiny Committee
- Corporate Performance and Resources.
Cardiff Capital Region - City Deal Heads of Terms.
Cardiff Capital Region - City Deal Growth and Competitiveness Commission Report and Recommendations
Cabinet Report 27 July 2015 - Cardiff Capital Region - City Deal Proposal
Cabinet Report 22 February 2016 - Cardiff Capital Regional - City Deal Proposal
Draft Joint Working Agreement, Assurance Framework and Implementation Plan
Rob Thomas, Managing Director
Corporate Management Team
Head of Legal Services
Head of Finance
Head of Regeneration and Planning
Rob Thomas, Managing Director