DRAFT BRIEFING PAPER issued in confidence and without prejudice

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1 Derry City and Strabane District Council s delegation to meet the Minister for Social Development, Nelson McCausland on Tuesday 02 September 2014 at 2.30pm in Conference Room 1, County Hall, Coleraine. DRAFT BRIEFING PAPER issued in confidence and without prejudice Delegation: Presiding Councillor Councillor Maolíosa McHugh Councillor Hilary McClintock Councillor Patsy Kelly Councillor Derek Hussey Councillor Elisha McCallion Councillor Paul Gallagher Chief Executive of Derry City and Strabane District Council Mr John Kelpie 1. Opening and Welcome - Councillor Maolíosa McHugh 1.1 The Presiding Councillor is invited to open the meeting, thank the Minister for agreeing to meet with the delegation and to introduce those present. 1.2 The broad objectives of the delegation are as follows: To update the Minister on the progress within Derry City and Strabane District Council to transfer the important powers of urban regeneration and community development To provide the Minister with an evidence-base to firmly justify our concern in relation to the budget transferring To lobby the Minister for further resources and supports to assist Derry City and Strabane District Council to effectively address the social, economic and physical needs of its district from 01 April

2 2. Brief context 2.1 The new Derry City and Strabane District Council will be home to 147,700 residents, and 8.2% of the Northern Ireland population. It will uniquely combine a regional city with a large urban population with a large and widely dispersed rural area. 2.2 Of those residents 23% have a long term health problem or disability (compared to a NI average of 20.69%) 40% were recorded as economically inactive (in the March 2011 Census figures) (10% above the NI average) 46% have no or low qualifications 2.3 The Derry City and Strabane District Council area is the highest ranking District Council in terms of the percentage of working age population who are employment deprived and income deprived. 2.4 The area suffers from a significantly high degree of deprivation, social exclusion, poverty and health inequalities compared to the other District Councils in Northern Ireland. 2.5 Whilst these statistics may be shocking, the Derry City and Strabane District Council area has a lot to celebrate. Over recent years both Councils, in partnership with the North West Development office and other statutory and private partners has: embarked on an ambitious work programme to regenerate and revitalise the city and region: successfully hosted the inaugural UK City of Culture in sustained ongoing capital investment in the city and town centre public realm. sustained investment in City of Derry Airport created as NI s first Urban Regeneration Company - Ilex 2

3 Ensured that the City s One Plan was adopted in the Programme for Government as the main policy driver for regeneration Designated Derry-Londonderry and Tyrone and the Sperrins as a NI Signature Tourism Destinations 2.6 As a result of these sustained initiatives: The DETI economic briefing in August 2014 outlined that the economically inactive figure has reduced to 30% (albeit this is still 3% above the NI figure of 27.6%) The City and region are firmly on the international map as a key cultural and visitor destination. There is a clear sense of positivity, ambition and a new vibrancy inherent within the City and region 2.7 There is a critical need to sustain this degree of regeneration and to build on this positive legacy. 2.8 We are proud of our past and very ambitious for our future. 3. Update on progress to date 3.1 Derry City and Strabane District Council has a pro-active and engaging partnership with the North West Development Office. The Council has been working very actively with DSD officials to prepare for transferring the important powers of Community Development and Regeneration on vesting day. 3.2 The following examples of collaboration and co-operation are cited for reference: 3

4 A DSD Transfer Workshop was held with Members of the Statutory Transition Committee on the 12 February This event outlined to Members the high-level strategic issues facing the new Council. The DSD Change Manager presented to the April Statutory Transition Committee on these strategic issues. Members put a number of recommendations to the Shadow Council in this regard. The Director of the North West Development Office also presented to the new Council s first Services Transformation Committee of Derry City and Strabane District Council in July The Director of the North West Development Office and the DSD Change Manager are Members of the Transition Management Team and attend monthly meetings. The Chief Executive also co-chairs a DSD Transfer Working Group in partnership with the Director of the North West Development Office. This working group also meets monthly. The DSD Change Manager is represented on our capacity building working group and DSD staff have been invited to attend our capacity building training organised to date. The NWDO are actively engaging and co-operating with our Lead Financial Officer and assisting him in developing a broad financial forecast of the costs associated with the transfer of powers from DSD in preparations for the rates estimates process in Exchange visits have also been organised for DSD staff to both Derry City Council and Strabane District Council. 4. Outcomes to date: 4.1 The new Council has been fully briefed on the range of issues facing it in terms of the transfer of DSD powers to the new Council. 4

5 4.2 The DSD Neighbourhood Renewal funding (including Voluntary Community Unit and Community Investment Fund) for 2014/15 currently amounts to 5.694m and funds 176 jobs within the Derry City and Strabane District Council area. 4.3 The Council has agreed to commence a process of evaluation and appraisal of current Neighbourhood Renewal Projects the outcome of which will be reported to a future Services Transformation Committee. 4.4 Detailed due diligence work is being carried out to scope the costs (maintenance, cleansing, public liability and replacement) of the land assets that will be transferring to the new Council. 4.5 Members received updates on the progress of the DSD Capital programme locally. The Council has concerns in relation to potential over-run costs and has written to the Minister to seek the delay the transfer of the Fort George Site until the mitigation works are completed. 4.6 Concerns have been expressed by the STC and the Shadow Council in relation to the inadequacy of the proposed resources to be allocated to the new Council in Evidence base on the inadequacy of DSD resources transferring 5.1 DSD have proposed that the Derry City and Strabane District Council will receive 7.149m to account for the delivery of powers of urban regeneration and community development. An additional sum is also to be agreed to cover Finance, ICT, accommodation and other support costs which will become real costs for the new Council following the transfer of powers. 5.2 Revenue funding currently provided by the North West Development Office in 2014/15 accounts in full for the proposed allocation as follows:- 5

6 Revenue grants to the value of 6.444m covering Neighbourhood Renewal, Community Investment Funding, Areas at Risk and SPOD s and the Community Support Programme (including advice services).this funding covers 91 projects, 156 full time jobs and 20 part time jobs in addition to the Community Support Programme; A total of 22 assets will be transferring to the new Council. Pending completion of the local due diligence exercise, a minimum of 300k per annum will be required to maintain and insure these assets; The staff costs associated with the allocation, administration and payment of the above grants has been initially proposed by DSD North West Development Office at 420k; 5.3 Of particular concern however is the fact that this resource allocation does not account for any capital expenditure. DSD has invested an average of 3.7m in the Derry City and Strabane area over the 5 years to 31 st March In 2014/15, anticipated capital spend by DSD in this area can be summarised as follows:- 000 Neighbourhood Renewal (27 projects) 5,992 PDU (19 projects) 5,780 Revitalise (3 projects) 1,001 Urban Development Grant (5 projects) 1,582 Capital infrastructure projects (One Plan- 6 projects) 2,466 Total 16,821 There is a risk that some of these projects will not be completed and spend achieved by 31 st March 2015 leaving the new Council with a potential liability of 5.14m. The staffing costs associated with the allocation, administration and payment of these capital grants consist of the One Plan Team and the Physical Development Team and has been initially proposed by DSD North West Development Office at 442k. 6

7 In addition, 17 projects of vital significance to the region (including Fort George remediation works, Foyle Valley Masterplan and Strabane Town Centre Public Realm works) to the value m are to be considered by the new Council for progress after April Evidence from this local due diligence shows that: The 7.149m budget transferring is wholly inadequate. This 7.149m resource categorically does not represent a rates neutral transfer The new Council will have minimal, if any, remaining resources following the transfer to fund vital capital projects Deprived communities will be negatively impacted This legacy funding may hinder business continuity and leave Councils in a development vacuum 5.5 Derry City and Strabane District Council strongly urge the Department to consider this evidence base and increase the resource allocation to ensure a fit for purpose and rates neutral transfer of regeneration and community development powers. The Council argues that an inadequate resource allocation will negatively impact indicators of social and economic need. 6. Commitment to Complete Capital Projects 6.1 A number of DSD capital projects are being transferred to local government which are in various stages of completion. These projects are being transferred with a further potential liability of 5.14m. 6.2 Many of these projects exist, or are in the pipeline in the Derry City Council area as identified in the City s One Plan which has been endorsed in the Programme for 7

8 Government. They are critical to the economic, social, environmental and physical regeneration of the region. 6.3 DSD should continue to fund capital projects which over-run into the new Council, particularly those projects where design work has already commenced and there is a high public and private sector expectation that they will be delivered. 7. Requirement for an additional funding stream. 7.1 The Department of Social Development, in the administration of the powers of urban regeneration and community development can access additional sources of central government funding. It is recommended that the Department of Social Development creates a similar support mechanism for Local Government in the administration of these powers. This additional funding stream will facilitate Local Government s initiation of large scale regeneration projects, and support the sector in addressing these critical affordability issues for future capital development. 8. Redefinition of regionally significant projects 8.1 Derry City and Strabane District Council also recommends that the Department reconsider and refine the definition of regionally significant. A widening of this definition will allow for further central government support and will ensure that larger scale capital project planning and commencement is not hindered as a result of Local Government Reform. 9. Summary comments 9.1 As a result of a legacy of underinvestment and deprivation, Derry City Council, Strabane District Council and the North West Development Office alongside many other statutory, private and community partners have embarked on an ambitious regeneration programme in recent years. 8

9 9.2 The benefits of this regeneration programme are now being realised and there is a need to sustain it to prevent any downward spiral. 9.3 Derry City and Strabane District Council is poised to effectively implement the important powers of regeneration and community development. They will assist local government to become stronger and more effective in addressing social need. 9.4 The Department of Social Development is strongly urged to properly resource this transferring power to the Derry City and Strabane District Council area. The resource allocation model is not rates neutral; DSD is transferring significant revenue commitments and unfinished capital development programmes with limited funding. This approach will have a negative, detrimental impact on social need and disadvantaged communities. 9.5 DSD should commit to funding those capital projects which over-run into the new Council particularly those projects where design work or consultation has commenced. 9.6 A further funding stream should be provided by the Department to allow Councils to initiate large scale regeneration projects. 9.7 The Department should reconsider the definition of regionally significant projects to maximise resources at a local level. 9