Agenda item

As detailed in the recommendations.

Councillor Roberts introduced the report which provided an update on the Welsh Government's (WG) 21st Century School Programme, Mutual Investment Model (MIM).        

            The report provided detail on progress to date and the next steps of the MIM process.  It sought approval to execute the Strategic Partnership Agreement (SPA) with the Welsh Education Partnership company (WEPco) when appointed by WG in autumn 2020.

            The Senior Manager, School Planning and Provision explained that MIM was a new form of Public Private Partnership (PPP) which enabled WG to deliver infrastructure projects beyond that set by present UK Government borrowing limits.  If WG did not use MIM, £500M of investment in the education estate would not be available to councils within Wales and that would have implications on the Council's proposed programme locally.

            A private sector contractor was appointed via a new WG framework and the contract financed, constructed and provided a 25 year 'life-cycled' building product.  That meant that the responsibility for funding and constructing the building, and then repairing and maintaining the building for 25 years once built, remained with the contractor.  This resulted in buildings funded by MIM being maintained at a consistently high level for 25 years.  In response to a question from Councillor Roberts, the Senior Manager, School Planning and Provision explained the differences between Private Finance Initiative (PFI) and MIM and said PFI had been abolished in 2018.

In order to proceed with the MIM process, the Council was required to sign a Strategic Partnering Arrangement (SPA) with WEPco.

A Strategic Partnering Board (SPB) would be set up and would act as the primary mechanism for managing WEPco's performance.  The SPB would be the central forum in which the participants could work together with WEPco, WG and other stakeholder representatives to ensure that the key principles of the SPA were met.  Neil Cockerton was being recommended as the Councils Participant Representative to sit on the SPB.

Annual contractual payments over the lifespan of MIM based on the Council's intervention rate (19% Council, 81% WG), would commence post school construction/handover.

As Chair of Education and Youth Overview and Scrutiny Committee, Councillor Healey made the following observations on behalf of Councillor Mackie, who had received responses to his questions:

The questions and comments are as follows:-

"           This report proposes that the MIM progresses to the next stage.  This is a form of PFI which the UK Public Accounts Committee have repeatedly expressed concerns about.  To quote from the Forty-Sixth report "However the ongoing costs to the institutions at the front line have been high and the contracts inflexible".

"           I believe the report should contain a full comparison of the cost of the MIM against the usual form of financing for such projects and full details of the WG intervention rate funding.

"           I would be interested to know how a 81% 19% split will achieve the same value of money through this model as the traditional capital intervention rate, see paragraph 1.02 of the Cabinet report.

"           I also wondered why the SPA lasts for a maximum of 15 years whilst the building and maintenance contract lasts for 25 years.

            RESOLVED:

(a)       That Cabinet underpins its previous commitment to the Ysgol Mynydd Isa 3-16 project as a Welsh Government MIM Pathfinder;

(b)       That the execution, delivery and performance of the Strategic Partnering Agreement with the Welsh Education Partnership Co in autumn 2020 to facilitate the delivery of a range of infrastructure services and the delivery of the proposed 3-16 campus at Mynydd Isa be approved; and

(c)        That the appointment of Neal Cockerton, Chief Officer (Housing and Assets) be approved as 'Participant Representative' to sit on the national Strategic Partnering Board (SPB).