The future of a Government grant for a new road in the Leicestershire town of Melton Mowbray rests with Homes England after the county council said it will not bear the risk of developer contributions failing to cover a portion of the road cost.
Homes England last autumn offered Leicestershire a £15m Housing Infrastructure Fund (HIF) grant towards the £28m southern section of the Melton Mowbray Distributor Road. The road would support a proposed 2,000-home ‘Southern Sustainable Neighbourhood’.
Leicestershire threatened to turn down the Government grant in March (LTT 03 Apr), saying Melton Borough Council had failed to prepare a masterplan for the new neighbourhood, and there was too much uncertainty about the county recouping its expenditure on the new road from developer contributions.
Leicestershire subsequently offered to undertake the masterplanning exercise itself but Melton rebuffed the offer.
Instead, Melton approved its own masterplan on the 17 June, having sent Leicestershire a first draft on 20 May, a second on 5 June, and a third on 12 June.
The borough council said the masterplan provided “the assurances sought in order for Leicestershire County Council to accept the HIF award”.
Borough council chief executive Edd de Coverly wrote to Leicestershire saying the plan was developed “through consultation with yourselves and the developers” and Melton had “done everything which could reasonably be expected to provide the necessary assurance that the development will secure the required contributions”.
Leicestershire, however, says Melton Council’s officer report to councillors about the masterplan “failed to accurately represent the concerns of the county council”.
“The absence of any indication that the council’s feedback and representations have been taken into account in the decision-making process may be seen to be a ‘material and important deficiency’ such as to affect the lawfulness of the consultation process,” said a report by Leicestershire chief executive John Sinnott and council directors.
They said the masterplan was “devoid of detail on the timetable for the development of the South Sustainable Neighbourhood, of any evidence that the South Sustainable Neighbourhood is financially viable, and of any assurance to the county council that it could recover the substantial costs (around £50m) which would have to be met from developer contributions”.
Leicestershire estimated last year that about £160m of new infrastructure will be needed to support growth in Melton Mowbray – about £100m for the northern, eastern and southern sections of the distributor road and £60m for schools provision.
The council now says these costs are likely to be an underestimate even before the impact of Covid-19 is considered. It is also concerned about the wider impact of Covid-19 on the council’s financial position.
The DfT has offered Leicestershire £49m from the Large Local Majors Fund for the northern and eastern sections of the road, subject to a satisfactory full business case. These part of the road will support the new 1,700-home Northern Sustainable Neighbourhood in the town.
The DfT and HIF grants still leave Leicestershire facing the risk on at least £100m, with most of this proposed to be recouped from developer contributions.
Leicestershire remains committed to forward funding the non-DfT funded portion of costs for the northern and eastern sections of the distributor road. “This in itself is a commitment to a level of forward funding and associated risk on a scale much bigger than the council has previously committed to,” it said.
Melton Council has yet to complete a masterplan for the northern neighbourhood. Chief executive Edd de Coverly has told Leicestershire that work is underway with stakeholders to prepare an “equally credible and deliverable masterplan [as that for the southern neighbourhood]”.
On the consequences of losing the HIF grant, Leicestershire says: “If the HIF grant were not accepted, it would not remove the need to deliver new housing in Melton Mowbray; it would mean, however, that growth would take place at a slower pace and in a way much less likely to deliver the transport and other infrastructure required to support growth in a coordinated fashion.”
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