Stand-Off Over Road Funding
Sea Change and county council in £millions budget wrangle
In a fresh twist to the long-running saga of the Queensway Gateway project – the road intended to connect the Bexhill Link Road with the A21 at Sedlescombe Road North – the contracting not-for-profit regeneration company Sea Change Sussex has revealed that it has been involved for several months in a multi-million pound dispute with East Sussex County Council (ESCC) and the government-funded South East Local Enterprise Partnership (SELEP) over who owes what to whom.
A spokesperson representing Sea Change says that the outstanding works required to complete the road should take only eight to ten weeks once approvals are obtained from the highways authorities to complete a signalised junction with the A21. But it seems that the company will not undertake those works without either a fresh cash injection or a secure pledge to pay it from a future funding stream. “On the matter of funding, our grant agreement requires us to complete the funded works – which we have done”, the spokesperson told HIP. “There’s no obligation on us to deliver further elements of the project unless we enter into an additional agreement to do so, with further funding to cover that”.
Behind that apparent ultimatum lie six years of tortuous financial wriggling and wrangling between the funding partners.
Budget cut
Back in 2014 ESCC, in partnership with Sea Change, bid successfully for a £15m grant from SELEP funds to build the Gateway road. The whole road was originally scheduled to be completed by November 2016. Planning permission was granted by Hastings Borough Council in February 2015. Commencement was held up for the rest of that year pending a judicial review of the planning decision based on air quality objections, but these were denied in December, and work was due to begin in January 2016.
However, the budget was then cut from £15m to £6m following a SELEP Capital Monitoring report prepared by David Godfrey of Kent County Council which noted that “Sea Change now think the project will be delivered for £6m”. The report did not expand at the time on this remarkable 60% costs reduction, and Sea Change are now adamant that they understood it to be only a temporary underspend arising from the delay in commencement which would be restored in future years.
But the result was curiously beneficial in the short term to both ESCC and Sea Change. Although the government requires SELEP’s funds to be generally offered on a “use it or lose it basis”, it was agreed that in this case they could be diverted to a concurrent road development at the other end of the Bexhill Link Road – a project styled the North Bexhill Access Road (NBAR), in which the two partners were also engaged and for which the ‘saving’ of £9m from the Gateway road came in quite handily.
To compound this funds diversion, a firm of independent technical evaluators, Steer Davies Gleave (SDG), reported to SELEP in February 2018 that the reduction of the Gateway budget from £15m to £6m had been enabled by “subsequent design changes and the availability of large quantities of earth being made available from other nearby projects”. Could that be a reference to the NBAR works? If it was, Sea Change now denies that its management were aware of it or of any design changes that could have justified any budgetary reduction at all.
Budget goes back up
But surprise, surprise: ESCC told SELEP, also in February 2018, that it needed £4m to be added back into the Gateway budget. The road was intended to be joined to the A21 by a roundabout, but the land required for this was leased to a SEAT car showroom. Terms of acquisition needed to be negotiated.
£1m was agreed to be transferred from another ESCC highway scheme (the improvement of the A22 and A27 junction outside Polegate) and £3m from other funds earmarked for transport improvements, notably cycleways in and around Hastings. SELEP were also told that there would be “an additional £2m from developer contributions”. They assumed this would be coming from Sea Change coffers – what other developer could be meant? – but the company also now denies knowledge of any such commitment.
The western section of the roadway as far as the rear of the showroom premises was eventually completed by March 2019. But the terms of acquisition of these were never concluded, and Sea Change has in recent months agreed provisionally with ESCC and National Highways that the simpler and cheaper alternative design of a signalised junction would eliminate the need for the roundabout and therefore for any encroachment on the showroom land.
Some problems with this design may still remain despite Sea Change’s breezy talk of completion within eight to ten weeks. At a meeting of the SELEP Accountability Board a few weeks ago on 23 September, ESCC Head of Economic Development Richard Dawson reported that Sea Change have been “working through” a Road Safety Audit process with National Highways which remains outstanding. But even if this is successfully concluded, the budget dispute remains unresolved – and it’s coming to a head.
Challenging the narrative
At the September Board meeting, attended both by Cllr Keith Glazier, leader of ESCC, and by John Shaw and Christopher Broome as representatives of Sea Change, formal questions were put by the company to SELEP in a manner which effectively challenged the whole budget-adjusting narrative. Sea Change denied knowledge of how and why the original budget of £15m had been cut, claimed complete unawareness of any alternative design or reduced costings which might have justified it, and rejected the suggestion that it had offered a £2m contribution as anything more than a temporary plugging of a cash shortfall. It concluded: “can SELEP please advise why opportunities were missed to restore the £5 million balance of the £15 million funding to allow the scheme to be completed, when such funds remained available?”
SELEP noted in its reply that ESCC had sought investment of a further £3m “in part to replace the £2m Sea Change Sussex commitment to the overall £12m project budget, with an additional £1m to provide contingency to deliver the project for a total cost of £13m”. However, they then put the boot in by describing this application as “considered alongside all other applications for funding to support projects in East Sussex but…not prioritised sufficiently by the Team East Sussex to progress to the SELEP managed stage of the process”.
Cllr Glazier is ESCC’s represen-tative member on the Team East Sussex Board (the local arm of SELEP), but he clearly didn’t have the clout to outbid other members – including Hastings Borough Council leader Paul Barnett – who had given preference to other investment schemes.
In any event Sea Change’s claim of unawareness of the budget reduction in 2015 is extraordinary. The company’s then CEO John Shaw was noted as attending, along with Cllr Glazier and Richard Dawson of ESCC, the SELEP Accountability Board meeting held on 15 November 2015 which considered and approved Mr Godfrey’s report referring to the £9m reduction. Furthermore, Cllr Rupert Simmons, who is currently lead member for Economy in the ESCC cabinet, and was a director on the board of Sea Change from its inception in 2011 until resigning in June 2021, attended a further SELEP meeting on 12 February 2016 when the £9m ’saving’ was agreed to be transferred to the NBAR.
Not backing down
Nevertheless Sea Change doesn’t appear to be backing down. It has suggested to ESCC that one way of getting the road completed “and open for the benefit of the community” would be for the council to contract with a third party construction firm for the final works, engaging Sea Change as project manager rather than the contracting party. It’s suggested that, “for reasons relating to the County Council’s role as the local highways authority”, this arrangement “should reduce the burden of approvals required”.
But the budgetary issues remain and are multiplying. SELEP has been informed that a ‘Deep Dive’ focusing on a number of Sea Change projects is currently being undertaken by the Department for Levelling Up, Housing and Communities, while an audit of all projects which have received funding through the SELEP Capital Programme over the past decade is also to be carried out.
One thing seems pretty certain regarding the Gateway project: there will be no further funds offered by SELEP to ESCC. Indeed there will remain on the agenda at its next Accountability Board meeting on 25 November the potential for the £10m funding to be claimed back in part or whole from the council in view of the non-delivery of the project. So any residual financial shortfall will surely have to be met from ESCC’s own resources.
A spokesperson for ESCC, invited by HIP to comment on this and on the whole history of
the project, responded: “We’re extremely keen to see completion of the Queensway Gateway Road”.
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Gosh feels like a drama looking for a screenwriter! Utterly beyond belief – incompetence, corruption, both??? Meanwhile we queue while they play with our money. No wonder businesses won’t come here!