Ryan McCready concerned at City Deal ‘deficits’ arising from inflation and potential for cuts to projects

UUP Alderman Ryan McCready was speaking at the Council Assurance, Audit and Risk Committee meeting this week.

The committee was advised of a number of ‘significant governance issues’ identified in the Council’s Annual Governance Statement for 2022/23 and actions being taken to address them.

One of the risks identified was Council potentially being ‘unable to agree a financial deal with Government for City Deal and Inclusive Future Fund funding’ and that ‘construction inflation costs may reduce the economic impact of the funding package’.

The report, however, noted how the City Deal ‘Heads of Terms’ were agreed February 2021 and that £210m in funding has already been earmarked by regional and central government.

‘Outline Business Cases (OBC) have been substantially progressed for all projects,’ the report advised, but ‘projects have been scaled/ prioritised within available funding envelope to absorb construction and inflation pressures’.

Ald. McCready said: “That deficit from the OBCs and projects within the City and Growth Deals, I have serious concerns within that.

"Internally, who is going to make the decisions on what elements and projects within that are getting cut because I understand there is a governance and assurance aspect within the Governance and Strategic Planning Committee overall but when the OBCs and all of this were set it was set pre-inflation, pre-financial pressures, pre-striking the rate and now there is a financial gap.”

Council Lead Finance Officer Alfie Dallas explained that the Council’s City Deal Working Group is due to meet next week.

“There is a meeting next Monday of the City Deal Working Group which will consider those issues in detail and obviously anything discussed in the City Deal Working Group then comes before G&SP Committee for detailed approval so all those risks will be considered in detail throughout the committee following the meeting of the City Deal working group,” he said.

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Ald. McCready responded: “It is such a big issue. It is so much of a financial quantum and I see it as a significant risk to assure. I don't fully understand the framework of how we can conduct assurance on that within this committee of something which is going to be done external to our committees and then we are just going to be left with whatever the result is anyway.

"So I am just looking clarity on the actual governance and assurance so we can calculate the risk and offset accordingly because it is public money.”

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Lead Assurance Officer Denise McDonnell replied: “I know exactly where you are coming from.”

She suggested that following next week’s meeting of the City Deal Working Group a report be brought to the G&SP and AA&R Committees ‘so that this committee is fully aware of the risk and controls that are in place to deal with it’.

"Also, to advise you that we do have a risk register for City Deal which is discussed by the City Deal board so we can bring a further report into this committee, Ald. McCready, if you are happy with that, in terms of the assurance framework and how members can be assured over all the controls that are in place over City Deal,” she said.

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