Sea Change claims ignorance of QGR budget change

As the spotlight is turned ever more searchingly on Sea Change Sussex and its projects, the economic development company has made the startling claim that it was unaware that the Queensway Gateway Road (QGR) budget was drastically reduced in 2015. It also says it will need further funding to complete the project. Nick Terdre reports.

Sea Change Sussex’s claim that it did not know that the budget for the much delayed Queensway Gateway Road had been reduced from £15m to £6m in 2015 was set out in a question tabled for the 23 September meeting of the South East Local Enterprise Partnership (Selep)’s accountability board. No name was given for the questioner, but HOT has been assured that the questions were put on behalf of the company. So, even if he didn’t write it personally, it no doubt had the blessing of  chief executive John Shaw, who attended the meeting.

The question asked: “…what procedure is in place to correct material inaccuracies of reporting to SELEP on unsupported advice that the Queensway Gateway Road scheme had an ‘alternative design’ and ‘new building costs’ when no such new design and no such new costs existed within the knowledge freely shared by the scheme promoter, Sea Change Sussex with the federated body[?]”

In fact the terms “alternative design” and “new building costs” do not appear in the agenda pack of reports to the November 2015 meeting of the board, or the minutes. East Sussex County Council (ESCC) – according to Sea Change the federated body mentioned in the company’s question – is the accountable body for overseeing the proper use of public funding granted by Selep for East Sussex projects and also for reporting back to it on the progress of these projects.

The agenda pack however does contain a brief mention in the Queensway Gateway entry in a table of projects granted Local Growth Fund (LGF) monies that, “Sea Change now think the project will be delivered for £6m.” This represented a whopping 60% reduction in the £15m original budget for the road. The entry adds: “ESCC/ Sea Change looking to re-allocate the £9m ‘saving’ to North Bexhill Access Rd.”

This request was granted at the board’s February 2016 meeting.

Concerns

Of its claim that reference to an alternative design and new building costs did not come from itself, Sea Change told HOT: “We posed the question at the recent Selep accountability board meeting because we have concerns about the funding of the Queensway Gateway project.

“Information recently came to our attention that Selep and East Sussex County Council members had been told, in November 2015, that the project could be delivered for £6m because of ‘alternative engineering options for delivering the scheme which has driven down the overall scheme costs’.

“As the party responsible for engineering design and construction, we can confirm that, in November 2015, no alternative engineering options or designs existed, and no costs had been driven down.

“Detailed design work didn’t start until July 2016.”

The quote “alternative engineering options for delivering the scheme which has driven down the overall scheme costs” comes from a report to the ESCC lead Cabinet member for Strategic Management and Economic Development dated 3 November 2015.

If it was not Sea Change, who was it who informed Selep and ESCC members of these developments? Misreporting matters in order to access public funds is a serious matter.

ESCC feedback

HOT has asked council leader Cllr Keith Glazier, who sits on the accountability board and is a well-known champion of Sea Change, for his comment. No reply has been received. However, an ESCC spokesperson told HOT: “We’re extremely keen to see completion of the Queensway Gateway Road and we have no reason to think partners have been given inaccurate information about the project.”

When asked to confirm that it was party to the request for the £9m saving to be transferred to the Bexhill project, Sea Change replied: “Because we had a grant agreement in place that referred to a £15 million project, our understanding was naturally that this was the full budget for the project. We’d understood the early Selep reports as referring to a project ‘underspend’ in that year — and we expected the balance of funding to follow. No-one talked to us about a reduction in the total project budget.”

The underspend was due, the company said, to delays caused by the judicial review brought by opponents of the project, which obliged the company to re-apply for planning permission.

“We understood that £9 million was being transferred to accelerate the North Bexhill Access Road project. Our understanding was this was the transfer of the underspend on the Queensway Gateway project that year – with further funds to follow later. We did not agree to a reduction in the total Queensway Gateway project budget – nor could there have been any reduction in it at that point.”

In fact the underspend that year was not £9m but £7m: due to the delay, as the report to the lead member makes clear, spending on the project in 2015/16 was revised down to £3m from the £10m originally allocated.

Unforeseen costs

In February 2018 the Queensway Gateway budget came up again at Selep, when the accountability board was informed that due to “unforeseen costs” the funding requirement had gone back up, to £12m.

Against an undertaking by the company to commit £2m itself, Selep agreed to allow an extra £4m of public funds to be made available by re-allocating parts of the LGF grants for the A22/A27 junction improvements project (£1m) and the Hastings and Bexhill Movement and Access Package (£3m), which caused understandable anger among local supporters of walking and cycling.

Alarm bells rang, therefore, when the ESCC report to the accountability board’s July meeting referred to Sea Change’s commitment to provide £2m as “temporary contingency funding.” Selep’s capital programme manager Helen Dyer wrote, “…the reference to the £2m funding contribution from Sea Change Sussex as ‘temporary contingency funding’ raises concerns as it was previously understood that the Sea Change Sussex funding was committed to the Project.”

Urgent assurances were being sought from ESCC that the funding would be available and that the use of the word “temporary” did not indicate uncertainty with respect to its provision, she wrote. The minutes, however, do not record that any such assurances had been received.

Now Sea Change has clarified its position. It told HOT that it offered to put £2m of its own money into the project on the basis that it “would be repaid in the next Local Growth Fund round, on the understanding there was outstanding funding since its grant agreement refers to a £15m project.”

“Our grant agreement requires us to complete the funded works — which we’ve done. It contains no obligation for us to deliver further elements of the project unless we enter into an additional agreement to do so, with funding to cover that.”

Selep documents regularly reiterate that the £10m LGF funding for the project has been spent. It is unlikely to agree that further public money should be put into the project, which suggests an impasse has been reached. If the project is not completed, Selep may require the £10m to be repaid — in the first case from Sea Change, but if it were not able to do so, the burden would pass to ESCC and the East Sussex taxpayer.

Until now it has been understood that Sea Change was ready to start work on the completion as soon as all approvals and required authorisations are in place. For the time being it remains unclear when this will be the case, or when the road may come into use.

Hard to believe

Many will find Sea Change’s version of events hard to believe. Had it really not discussed with ESCC a drastic change in the budget which was to be reported to Selep in late 2015? After all, it had regular meetings with ESCC officials to report the progress of its projects. Had it really not read the documents relating to the meeting and the decisions taken at it? After all, Shaw was present at it. Did it really not question why the 2015/16 “underspend” was not made up in subsequent years, so that the project eventually ran out of funds?

Another questioner asked the board about four Sea Change projects – Queensway Gateway, North Bexhill Access Road, East Sussex Strategic Growth and Bexhill Enterprise Park North – on which the funding provided through Selep has been spent but the projects remain incomplete, and asked whether the board would instruct an independent external audit of all the company’s projects.

In his reply, Selep chief executive Adam Bryan referred to the deep-dive investigation of Sea Change’s LGF projects currently being undertaken by the Department for Levelling Up, Housing and Communities, and revealed that Selep intends to undertake an audit of all projects which have received funding through its capital programme.

 

Also in: Home Ground

« St Anne’s to be demolished despite committee’s decision
Alarm bells ring at Selep over road funding arrangements »