Agenda item

To consider any items referred from other Committees.

 

5a) Referral from Extraordinary Cabinet – 26 November 2024 – East of Luton Strategic Masterplan Framework

The Chair advised that the referral 5A from Cabinet would be taken with the respective item on the agenda and referral 5B from Cabinet would be taken at the end of the agenda.

 

8A) Decarbonisation of Leisure Centres Update

 

RESOLVED: That Council proceed with Option 4a and approve the additional forecast capital and ongoing revenue costs (including revenue costs of capital) and note the ongoing project risks.

 

REASONS FOR DECISIONS:

 

(1)   To identify the most appropriate way forward for the leisure centre decarbonisation project, taking into account both the environmental benefits of the project and the impact on the Council’s wider financial position.

 

(2)   Council has the responsibility to make decisions about any matter in the discharge of an executive function where the decision maker is minded to make it in a manner which would be contrary to the policy framework or contrary to/or not wholly in accordance with the budget.

 

(3)   To enable the Council and contractors to continue to meet the delivery time table for the project.

 

 

Audio recording – 3 hours 42 minutes 50 seconds

 

The Chair advised that the referral 5A from Cabinet would be taken with the respective item on the agenda.

 

5B)      DECARBONISATION OF LEISURE CENTRES PROJECT

 

Councillor Mick Debenham, as Executive Member for Leisure, Environment and Green Spaces, presented the referral from Cabinet and advised that:

 

·       The project to decarbonise the three leisure centres in the district was now at detailed design stage and had been made possible because of a £7.74m government grant, alongside the capital contribution from the Council.

·       Issues had been identified with the efficiency and running costs of the heat pumps required for the project.

·       There were larger and more efficient heat pumps available, but these were bespoke and required a longer lead time.

·       Initially it was thought that the larger pumps could not be purchased, but following confirmation from Salix who provided the grant, these could be ordered and still meeting the requirements of the funding.

·       The design process would need to be completed before final cost implications could be provided.

·       Cabinet considered all options and considered Option 4a as best, as detailed in paragraph 8.9 of the report.

 

The following Members asked questions:

 

·       Councillor Ralph Muncer

·       Councillor Matt Barnes

·       Councillor Jon Clayden

·       Councillor Paul Ward

 

In response to questions, the Service Director – Place advised that:

 

·       The cost implications of Option 4 were between a £37k and £117k increase in running costs compared to current prices. The quantity surveyor was mildly optimistic this could be brought down further throughout the design process.

·       Some of this increase was not due to heat pumps, but with the solar PV, as not as many solar PV panels could be installed on the roofs as had been anticipated.

·       Wilmott Dixon were looking at two types of larger air source heat pumps and the capital implications of these would be £225k rise for one option or up to £585k for the other. There was also a redesign fee of £86k.

·       In total, there would be between a £311k and £688k rise in capital costs, based on current assumptions.

·       An external lawyer weas looking at the contract to ensure the Council was protected in case of any insolvency of the provider.

·       Up to date capital forecasts had been provided and there were no further increases expected. Risks were being managed by the project board.

·       The learner pool at North Herts Leisure Centre used a gas boiler for heating which was too new to include in this round of funding. The boilers at Hitchin outdoor pool were almost new and therefore could also not be included.

 

In response to questions, the Service Director – Resources advised that:

 

·       The table on page 8 of the report highlighted the additional electricity that would be required to be purchased, net of any on site generation by the solar PV.

·       The implications would be factored in as part of the budget proposals for 2025/26 onwards.

·       The report presented in summer set out the additional cost of investment, and this update added more costs, which would be roughly a net zero position in terms of revenue and capital. An additional range of options was presented now to combine the costs of these.

 

The following Members took part in the Debate:

 

·       Councillor Ralph Muncer

·       Councillor Ruth Brown

·       Councillor Daniel Allen

·       Councillor Amy Allen

·       Councillor Ian Albert

·       Councillor Sean Nolan

·       Councillor Martin Prescott

·       Councillor Mick Debenham

 

Points raised during the Debate included that:

 

·       Concerns that costs had risen on this project yet again and that ongoing revenue costs could be substantial.

·       This may be an item for the Overview and Scrutiny Committee to explore in further detail as to where slippage has come from and how the process has evolved.

·       There was a risk of continuing with the project, but there was also a serious reputational risk to the Council by not proceeding.

·       Smaller heat pumps would not be appropriate, and larger ones would be better in the long term.

·       The risks needed to be monitored, but the reputational risk of not doing this also needed to be considered.

·       If the Council did not proceed, the grant funding would be lost and when the gas boilers failed, these would need replacing either with gas boilers or heat pumps, at significant costs to the Council.

·       This was a key opportunity to do something about emissions in the district following the declaration of a Climate Emergency and should be proceeded with, especially with funding available.

·       The Council should not proceed with projects solely because it may look bas for the Council to not proceed. Unnecessary risks should not be taken, even if it was detrimental to the Council reputationally.

·       It was a difficult choice, but the boilers in Hitchin and Letchworth could fail which would lead to a cost to the Council to replace and would remove the opportunity of further grant funding in the future.

·       If the Council could not afford the increased costs, then it should not proceed, but this can be achieved.

·       Finance, Audit and Risk Committee could consider and monitor the risk and financial aspects of this project.

·       It was important Members did not overpromise, but this was a transformative amount of grant funding and would have a big impact on reducing emissions.

·       All big projects have some cost slippage.

·       Had this been presented with these costs on day 1, the decision to proceed may have been different, but the reality of the situation means the Council will need to proceed, but the project needed monitoring.

 

In response to points raised during the Debate, the Executive Member for Environment, Leisure and Green Spaces advised that:

 

·       He took on board, and agreed with, most points raised.

·       It was not an ideal situation, but even with cost increases there was still £7.7m in funding provided and a major project to reduce emissions could be delivered.

·       The boilers at Hitchin and Letchworth were at the end of life and would need replacing.

·       The Council had declared a Climate Emergency, and this administration promised a greener North Herts, and this provided an opportunity to act on this.

 

Councillor Mick Debenham proposed and Councillor Amy Allen seconded and, following a vote, it was:

 

RESOLVED: That Council proceed with Option 4a and approve the additional forecast capital and ongoing revenue costs (including revenue costs of capital) and note the ongoing project risks.

 

REASONS FOR DECISIONS:

 

(1)   To identify the most appropriate way forward for the leisure centre decarbonisation project, taking into account both the environmental benefits of the project and the impact on the Council’s wider financial position.

 

(2)   Council has the responsibility to make decisions about any matter in the discharge of an executive function where the decision maker is minded to make it in a manner which would be contrary to the policy framework or contrary to/or not wholly in accordance with the budget.

 

(3)   To enable the Council and contractors to continue to meet the delivery time table for the project