Agenda item

Weyside Urban Village ("WUV") was a major 41-hectare brownfield regeneration scheme that the Council had anticipated could deliver approximately 1,500 homes across a range of tenures, as well as 2,000 square metres of community space and 6,500 square metres of employment space. In February 2020, the Council had committed £334.9 million to de-risk the infrastructure and site assembly process needed across the Weyside Urban Village site. Over 44% of the site was currently in Council ownership, and 100% would be achieved on completion of land transfers with Thames Water Utilities Ltd (“TWUL”). The conditional contract with TWUL had been signed on 25 April 2019 (the "TW Agreement").

The Council had signed a Grant Determination Agreement (GDA) with Homes England in July 2020 for Housing Infrastructure Funding (HIF) for £52.3m, to draw down the grant expenditure associated with the implementation of the infrastructure works. In October 2021, the Planning Committee had issued a Resolution to Grant for the hybrid planning application for Weyside, with the decision notice to approve the application issued in March 2022.

The broader economic landscape and its impact on the construction industry over the last 12–18 months had been profound. At the end of 2021, the Building Cost Information Service - which provided cost and price data for the UK construction industry - reported that the annual growth in its material cost index had reached a forty-year high. Since then, pressures on supply chains had persisted and labour shortages had become more acute. Although the lifting of Covid restrictions had led to a return of high activity levels, the war in Ukraine and high rates of inflation had put the construction industry in further turmoil. The impact of these issues was being felt at a local level, with forecast construction and financing costs also increasing significantly.

The Executive had agreed in January 2020 that the project team would report the financial position to the Executive on an annual basis. The report now before the Council had set out the current financial forecast to the end of the programme ahead of a further paper being presented to Executive and Council outlining the proposed mitigation plan to address the potential financial deficit that had arisen as a result of macro-level factors.

The Council noted that the report had been considered by the Executive at its special meeting on 9 May and details of its decision and recommendation to Council was set out on the Supplementary Agenda Pack.

Upon the motion of the Deputy Leader of the Council and Lead Councillor for Regeneration, Councillor Tom Hunt, seconded by the Leader of the Council, Councillor Julia McShane, the Council

RESOLVED:  That the Council approves the transfer of £69.548 million from the provisional capital programme to the approved capital programme for payments which the Council is obliged to make to Thames Water Utilities Limited under the Thames Water Agreement for 2024-25, for costs necessary to meet the milestones set within the Homes England HIF agreement and construction costs of phase 2 Infrastructure, Offsite Highways and the New Council Depot.

Reasons:

·         To ensure that there is sufficient understanding of the projected financial forecast of the programme and outline the work underway to develop mitigation strategies to alleviate the forecast deficit.

·         To ensure that there is sufficient funding in the approved programme to cover construction of phase 2 Infrastructure, Offsite Highways and the new Council Depot and the payments which the Council is obliged to make to Thames Water Utilities Limited under the Thames Water Agreement for 2024-25.

·         To ensure that statutory service agreements and construction agreements can be entered into for the delivery of services and infrastructure for the development and to ensure that Homes England Housing Infrastructure Fund (HIF) milestones are achieved.

·         To support the delivery of the Council’s Corporate Plan (2021-2025) priorities, by supporting the high-quality development of a strategic site, creating employment opportunities through regeneration and facilitating affordable housing.