Central Bedfordshire Council is consulting on its Revenue and Capital Budgets for 2017-2021. The Capital Budget 2017-2021(a) sets out the capital required to fund the critical infrastructure in the Council’s emerging Local Plan.
‘Critical infrastructure is that which has been identified as infrastructure that must happen to enable physical development. These infrastructure items are often known as ‘blockers’ or ‘showstoppers’, and are most common in relation to transport and utilities infrastructure. Failure to provide these pieces of infrastructure could result in significant delays in the delivery of development.’ (b)
The Council’s Infrastructure Delivery Plan 2015 was produced to show the costs of infrastructure in its withdrawn Development Strategy. One critical infrastructure contained in the strategy was a link road between M1 (J11a) and the A6. The delivery of this infrastructure was planned to start during 2017 and consists of Phase 1: M1 (J11a) over the East Midlands Mainline railway to Sundon Park Road, an estimated cost of £48 000 000 (c) and Phase 2: Sundon Park Road to the A6, an estimated cost of £52 000 000 (d). Another critical infrastructure planned to start in 2021 is the Capacity Improvement of M1 (J11a) the estimated cost of this work was under consideration at the time the delivery plan was being produced (e).
On examining the Council’s Capital Budget a large discrepancy in the cost of the M1-A6 Link Road has been identified. The total costs of this critical infrastructure in the Council’s infrastructure delivery plan was £100 000 000 plus the unspecified costs of M1 (J11a) capacity improvement. However the capital programme says the total cost of the link road is £55 855 000 (f). The discrepancy in the cost of the link road is £44 145 000 plus the cost of M1 (J11a) capacity improvement. According to the capital budget there is exceptional uncertainty associated with the capital and revenue costs of this most expensive ‘show stopping’ infrastructure in the Council’s emerging Local Plan (g).
A consequence of Brexit means the Council cannot expect any EU funding from South East Midlands Local Enterprise Partnership (SEMLEP) to support the link road’s cost. Therefore the Council will have to fund the total cost of the M1-A6 link road through its Capital Budget and hope it will get equivalent funding from s106, s278, the Community Infrastructure Levey (CIL), the retention of business rates and the Government. As the Council failed to get its Development Strategy approved in February 2015 the Council has not been able to raise funds from CIL and therefore is losing £7 700 000 of income a year (h) until its CIL scheme, if approved, comes into effect during February 2019. The retention of business rates could be used to contribute towards the Council’s capital requirements. However this source of income will not be available until 2022 and is likely to be ‘swallowed up’ by the increasing cost of adult social care and the implications of continuing austerity. Another consequence of Brexit is slow economic growth, higher inflation and higher interest rates. These factors will impact Government and private sector capital funding and increase the cost of Council borrowing.
The M1-A6 Link Road cost discrepancy is perplexing and is likely to be greater than £44 000 000. According to the infrastructure delivery plan the cost of M1-A5 link road is £162 100 000 (i). The length of the M1-A6 link road is greater than the length of M1-A5 link road because of the need to accommodate the excessively large housing development proposed North of Luton. On the basis of a cost per Kilometre comparison between the cost of the M1-A5 and the M1-A6 Link Roads plus the cost of bridging the East Midland mainline railway at Chalton the final cost of the M1-A6 link road could be at least £200 000 000.
Irrespective of the magnitude of the cost discrepancy why is there a discrepancy? The discrepancy could be due to the Council’s inability to coordinate the delivery of the infrastructure necessary to connect the Sundon Rail Freight Interchange site to the East Midland mainline railway. Thus reducing the potential profitability of the site and therefore the amount of funding the site’s developers can afford to contribute towards the cost of the M1-A6 Link Road. The discrepancy could be an indication of the loss of EU funding due to Brexit. The discrepancy could be due to changing priorities as it appears more infrastructures and housing development is being planned for Rigmont, Salford & Hulcote, Cranfield, Brogborough, Lidlington and Marston Morretaine, than the development proposed in the withdrawn Development Strategy. A proportion of the discrepancy could represent the total CIL income lost from 2015 to 2019.
Whatever the reason for the discrepancy, if external funding is below the Council’s expectations and the cost of borrowing is greater than forecast, the revenue implications of the capital budget will impact the people of Central Bedfordshire through further service reductions and increases in Council Tax at least until 2021.