Minister for Natural Resources

 

Environment and Sustainability Committee

 

Thursday 26 March 2015

 

Financial Scrutiny

 

1.    This annex responds to the Committee’s e-mail of 21 January identifying particular financial information it would like to receive in advance.

 

Changes made within the portfolio as a result of the two Supplementary Budgets 2014-15, compared to the Final Budget 2014-15, to BEL Level

2.    There were no budget changes made within Supplementary 1, and the following were actioned as part of Supplementary 2.

 

Near cash

·         £12.981m in year savings returned to reserves as requested by the Finance Minister to support additional investments into the NHS;

·         £8.8m resource to capital switch to fund pressures (see breakdown under capital);

·         £1m Flood funding brought forward from 2013-14 under the Budget Exchange Mechanism (BEM) to support the re-profiled programmed flood prevention schemes delayed as a result of the emergency flood repairs which were undertaken due to last years winter storms;

·         £2.5m Invest to Save (ITS) funding from reserves into the NRW budget for Natural Resources Wales ITS successful bid;

·         £2.392m Wind farm Income from NRW to reserves in respect of expected income from wind farm leases;

·         £0.167m from clean energy programme to EST in respect of Energy programme resources, which transferred to EST during the last portfolio change in July;

·         £0.365m from the Landscape and Outdoor Recreation Action to EST in support of Free Swimming and the Schools Sports programme which transferred to EST during the last portfolio change in July;

·         £0.450m from the NRW budget to Central Services and Admin (CS&A) MEG  to transfer to Departmental Resource Costs (DRC) to fund Forestry staff who joined WG following the formation of NRW;

·         £0.038m from Climate Change Action budget to the CS&A MEG as a contribution to the ‘Size of Wales’ Africa programme;

·         £0.030m from Singe Payment Administration budget to CS&A in respect of Land Tribunals, which now resides in their portfolio;

·         All the intra MEG transfers were actioned to realign budgets for improved reporting and to fund a number of pressures across the MEG;

 

Non cash

·         £5.706m from reserves to cover increased depreciation costs of NRW’s ICT infrastructure system;

·         £0.670m from reserves to cover the depreciation costs arising from the implementation of the RPW Online IT system after initial capital investment.

 

Capital

 

Details of any additional funding provided to NRW in 2014-15 on top of grant-in-aid shown in the Final Budget 2014-15.

3.    At the start of this financial year (2014/15) NRW planned for a balanced budget of £191.4m. The current forecast is:

·         Annual income £203.3m (primarily due to £5m of additional income from Welsh Government for Invest to Save initiatives, Natural Resource Management trials, and additional commercial income).

·         Annual expenditure £202.2m(reduced from £202.7m by increased efforts on internal costs.)

·         Forecast Outturn: £1.1m surplusat the year end, (plan to carry forward to 2015/16).

.

4.    Please see below the individual projects which have received a commitment for additional support. These figures relate to provisions which will be paid in 2014/15. To note that there are likely to be additional payments before year end but the exact figures are unknown as yet

 

Invasive Non Native Species Research ( preparation for new legislation)

£138,500

Appraisals for water strategy

£8,000

A465 additional capacity for scheme assessment ( EST funded)

£128,700

Glastir Advanced - Water Quality

£470,000

Seascape characteristic assessment            

£35,000

Welsh Marine Plan 

£40,595

Burry Inlet Cockle Fishery

£75,000

Waste data stream

£138,500

Fly Tipping  Action Wales

£185,000

Natural resource  management area trials

£1,000,000

Nature Fund (Llynfi project)

£627,000

Flood Capital - WEFO Convergence Funding

£190,000

Flood Capital - Wales Infrastructure Investment Plan

£8,150,000

Transfer of IDBs

£296,500

 

Nature Fund

5.    The following table sets out the allocated funding to each of the Nature Fund projects.  It also shows the projected payments from the fund to each project and a note on whether payments are in arrears or in advance.

 

Project Title

Nature Fund Award

Payment to end January 2015

Payment Forecast end March 2015

Projected final payment totals for 2015

Coed Cymru & River Trusts

£658,500

0

£373,600

£284,900

Berwyn & Migneint, Black Mountains and Radnor Upland Recovery Project

£241,800

0

£241,800

0

Natural Buzz - a project to support the Action Plan for Pollinators

£130,000

£108,000

£22,000

0

Cynllun Gwella Dyffryn Elwy Habitat Improvement Project

£180,000

0

£180,000

0

Llyn Partnership Coastal Connectivity

£200,000

 

£30,000

£170,000

Unwanted vegetation and restoration of peatlands

£132,000

 

£132,000

0

Long Forest nature funding proposal

£190,000

£121,550

£45,900

£22,550

Peatland Push Cymru - Pumlumon Living Landscape (PLL) – A Payment For Ecosystem Service (PES) Scheme

£59,000

0

£34,356

£24,644

Eastern Valleys Upland Project

£280,000

0

£205,493

£74,507

Pond Connections

£63,000

0

£27,822

£35,178

Castlemartin Peninsula: Integrating Natural and Social Resources

£144,000

0

£71,750

£72,250

Future Fisheries - Living Seas

£62,000

£0

£52,250

£9,750

Pollinators for life project

£282,100

0

£242,920

£39,180

Elenydd Purple Moor Grass Project

£152,000

0

£90,045

£61,955

Ecosystem Enterprise Partnership (EEP) – Ecobank Project

£150,000

0

£150,000

0

Black Mountains Ecosystem Restoration: Linking Peatlands, Heathlands, Rivers and Woodlands

£201,500

0

£188,750

£12,750

Manage and benefit from woodland resources in rural Conwy

£125,000

£51,000

£74,000

0

NWM Futurescape programme (Incorporating Lake Vyrnwy, Sustainable Moorland, Developing ecosystem & Farm Advisory Focus)

£241,800

0

£179,711

£62,089

Connectivity work in the Duhonw Catchment

£128,000

0

£128,000

0

Llynfi Valley

£627,000

0

£627,000

0

NRW Transition Fund

£750,000

0

£750,000

0

Total

£4,997,700

£280,550

£3,847,397

£869,753

 

6.    The expenditure and the earmarked budget for the Nature Fund sits with the BEL 2828 in the 1000NRF MEG. Funding to date has been allocated from uncommitted monies from Natural Environment BEL 2825, Flood Risk BEL 2230 (the projects supported by the proposed funding include ones which will utilise natural flood risk management solutions or provide better land management which could reduce the risk of flooding), and Climate Change BEL 2815 (the projects supported by the proposed funding utilise natural measures to mitigate for climate change or add resilience for example carbon sequestration in peatlands, wetland and woodland creation).

 

7.    The final element of the NatureFund is the provision of £750,00k to NRW to help the organisation with their transition to taking forward integrated Natural Resource Management.  The funding will be mainly used to support a number of projects that will be contributing to the three area trials currently taking place in the Dyfi, Rhondda and Tawe catchments to help provide the evidence and learning to inform the transition towards integrated natural resource management.

 

Flood and Coastal Erosion

8.    Over this financial year we will have invested £55.6m into flood risk management. This is broken down as follows:

·         FCERM Capital: £9.8m

·         FCERM Revenue: £27.3m

·         ERDF: £6m

·         WIIP: £12.5m

 

9.    We have invested over £245 million in flood and coastal erosion risk management over the lifetime of this Government. This is supported by almost £50 million from the European Regional Development Fund over a six year period ending in 2015.

 

 

 

Yearly breakdown of FCERM core budget:

 

Financial Year

Annual Departmental FCERM Budget

Additional Capital Funding Received in Year

Total Funding (FCERM + additional sources

Capital

Revenue

Total FCERM Budget

CRC/

WIIP

Divisional Transfers

ERDF

2011/12

17.0

19.7

36.7

2.2

3.5

15.0

57.4

2012/13

14.7

21.0

35.7

11.0

 

9.0

55.7

2013/14

14.7

27.4

42.1

14.0

 

5.0

61.1

2014/15

9.8

27.3

37.1

13.5

 

7.0

57.6

2015/16

9.8

27.3

37.1

12.5

 

6.0

55.6

Life of Gov’t

66.0

122.7

 

53.2

3.5

42.0

287.4

 

Revenue: Natural Resources Wales (NRW) take the majority of the revenue budget with around £19.5m annually. The rest of the revenue budget is split between the LLFA grant, programme staff costs and key priority areas for Flood Programme.

 

Capital: Flood and Coastal Risk Management Grant in aid (FCERM) Capital allocations for this year is outlined in the table below. Land drainage schemes have an 85% grant rate, which require 15% match funding from lead local authority whilst the grant rate for coastal schemes can be up to 100%.

 

10. NRW are responsible for main river schemes and manage their own capital programme with funding from the Wales Infrastructure Investment Programme (WIIP), Flood and Coastal Risk Management Grant-in-Aid and ERDF funding through Europe. NRW are forecasting £19.3M spend on capital schemes for 2014/15.

 

11. In January, I announced an additional £150,000 of funding to NRW from within Flood Risk Management budgets to assist in progressing the recommendations. This additional funding will allow for at least 37 to be completed by the end of 2015, without the need to re-prioritise work.

 

12. Dŵr Cymru Welsh Water can also benefit from ERDF funding for flood risk management. For 2014/15 this amounts to £1.4m.

 

2014/15 local authority schemes:

 

Local Authority

FCERM Budget

ERDF

Includes Schemes at:

Ceredigion

3,725,000

 

Borth Phase 2 (Coastal)

Conwy

1,960,679

 

Colwyn Bay phase 1c (Coastal), Afon Bach, Llansannan. Land Drainage)

Denbighshire

1,823,935

1,975,887

West Rhyl (Coastal)

Isle of Anglesey

568,758

551,167

Beaumaris (Coastal)

Caerphilly

178,500

 

Ynysddu (Land Drainage)

Cardiff

854,326

702,674

Whitchurch/Rhiwbina (Land Drainage)

Monmouthshire

411,457

522,972

Station Road, Blake street (Land Drainage)

Pembrokeshire

465,000

 

Little Haven (Tidal flooding)

Powys

955,990

999,329

Kerry Gilfach, Tregynon village, Talgarth phase 2 (Land Drainage)

Rhondda Cynon Taff

679,474

760,009

Nant Gwawr, Bwlffa Road, Rhydfelin, Nant y Fedw (Land Drainage)

Vale of Glamorgan

474,791

457,018

Coldbrook (Catchment)

 

 

Funding for the delivery of the Marine and Fisheries Strategic Action Plan in 2014-15

13. The Marine Strategy Framework Directive is expected to spend in the region of £500k this financial year in support of the Marine Strategic Action Plan. The spend will focus across the projects within the programme as well as legislation.  Because of uncertainty of the expected spend in this area during the year, along with the expected level of budget reductions, funding wasn’t allocated during the supplementary budget process, instead the Marine and Fisheries budget as a whole is being monitored and can absorb some of this spend, and any shortfall will be managed within the year end MEG flexibilities.  Once the profile of current and further spend on the Strategic Action Plan is further identified, the budgets will be allocated during the supplementary process during 2015/16. 

 

Funding for the delivery of the Climate Change Strategy in 2014-15

14. The budget for the Climate Action and Resilience Team, who have responsibility for the Climate Change Strategy, is contained within the Climate Change and Sustainability line of the Natural Resources Management Expenditure Group (MEG) and for 2014-15 it is £617,000.

 

15. This budget line includes statutory funding to the UK Climate Change Committee as well as support for the Climate Change Commission for Wales. Expenditure to the end of December 2014 was £471,851 and it is anticipated that there will be a full spend by the financial year end.

 

16. It should be noted, however, that climate change is a cross-cutting issue and all departments within the Welsh Government work towards tackling it. Maximising the usage of our resources in militating against and embedding resilience to the effects of climate change is a key element of the Welsh Government’s climate change policy.

 

Funding for the delivery of the Wales Data Hub in 2014-15

17. The Information Hub website was launched in July 2014 and provides access to up-to-date, robust data. By working with internal and external stakeholders, additional key data sets have been identified as having value to a wide range of users. Welsh Government officials are working in collaboration with partners and stakeholders to prioritise the publication of these data in line with user need and to develop the tools to allow users to access the data easily.

 

18. A key principle of the Information Hub is to ensure the hub is developed in the most efficient and effective way to add value to the existing network. As such, development of the hub has built on existing systems, utilising existing in house skills and resources. A further £10,000 - £20,000 has been allocated from the same budget before the end of the financial year for maintenance of the IT infrastructure and to secure IT developer resource from the Welsh Government’s Knowledge and Analytical Services Division to enable the priority data sets to be published and development of associated tools. Long term resourcing and maintenance of the Information Hub will be addressed as part of a strategic plan.