Issue - meetings

As detailed in the recommendations.

Councillor Roberts introduced the item which followed previous updates to Cabinet on Welsh Government’s (WG) Sustainable Communities for Learning (formerly 21^st Century Schools Investment Programme, Band B) Mutual Investment Model (MIM) for the proposed 3-16 Campus project at Mynydd Isa.

The report provided the background to MIM and progress the project had made through the WG business case process and the design development process to cost certainty.

Details of the capital and revenue liabilities were outlined in the report and approval was sought for the annual Service payment, and to enter into a Project Agreement for the construction phase, finance and maintenance of the buildings and associated infrastructure for the years 3-6 campus project.  It was based on a maximum financial cap set by WG to overcome the challenges the construction sector/supply chain were currently experiencing, the complexities of MIM and in order to keep the project timeline on track.

Given the nature of the Public Private Partnership (PPP) the report was written in part to endure funders’ requirements were met, as a consequence the report contained technical and legal wording which had been simplified as much as possible.

Subject to Cabinet approval, the anticipated construction start was August 2022, with building occupation planned for the start of the new academic year, September 2024, thereafter external works would follow, starting with the demolition of the existing Argoed High School.  Any delay to the anticipated start could result in a significant project delay and associated cost increases.  Cabinet approval of the recommendations would allow completion of the funding package for the project and enable the Agreements to be entered into and works to commence in line with the programme.

The Chief Executive explained that over the past 24/30 months, various global issues had been impacting prices in the construction market which were as a result of Brexit, the COVID-19 pandemic and the war in Ukraine.  Those had conflated with the impact being:

·         An increase in demand for construction (post COVID)

·         Supply chain disruption and an ongoing energy crisis.  The consequences of that were the lack of construction materials

·         High inflation and price volatility

·         High raw material prices

·         High energy prices and increased uncertainty

To allow the project to progress, the WG MIM team, with their commissioned experts, had set a funding cap, which set the estimated maximum annual service charge.  The estimate maximum cap was a direct result of the current market, inflation and supply chain issues faced by the construction industry presently and was a reflection of where the project currently sat in the granular market testing/cost certainty process.  However, it was anticipated that the project figure would be confirmed as lower as the project moved towards financial close in July/August 2022.

The Full Business Case to WG also sought agreement from WG to cap the Council’s annual service charge contribution to a maximum value of £1,000,000 per annum.  Should the project figure be lower than the maximum capped figure, as anticipated, that would reduce the annual service charge  ...  view the full minutes text for item 24