Agenda item

To submit a report by the Director of Function (Resources)/Section 151 Officer.

The report of the Director of Function (Resources)/Section 151 Officer seeking the Executive’s approval to enter into a Strategic Partnering Agreement with Welsh Education Partnership Co. to facilitate the delivery of education and community facilities was presented.

The Portfolio Member for Finance reported that Welsh Government has designed a Mutual Investment Model (MIM) to deliver major capital infrastructure projects in Wales. The Welsh Government will part fund some of the projects through the MIM scheme using revenue funding, partly due to scarcity of capital funding. Welsh Government will appoint a private sector partner who will then form a Welsh Education Partnership Company (WEPCo) with a subsidiary of the Development Bank of Wales. Once WEPCo has been formed they and all participants will be required to sign a Strategic Partnering Agreement (SPA) which will provide for how the parties act together over the long-term in collaboration to support the effective planning, procurement and delivery of infrastructure services, education and community facilities in Wales. MIM projects can only be delivered exclusively by the WEPCo. However, signing the SPA  does not commit the Council to participate in any MIN scheme but does provide the opportunity for it to participate in a MIM scheme should a suitable project be identified in future and also gives greater scope in attracting Welsh Government grant funding.

The Director of Function (Resources)/Section 151 Officer explained that the Mutual Investment Model is a new way of financing schemes in Wales and has been in the making since 2017. For projects in Band A and much of Band B of the Schools’ Modernisation Programme Welsh Government has been funding its contribution by grant or local authority supported borrowing; Welsh Government itself has to borrow to fund this way of working up to a point at which its borrowing is then capped. The proposal offers a way for Welsh Government and local authorities to transfer what are capital and borrowing costs to revenue costs. Welsh Government will appoint a private sector partner and  subsidiary of the Development Bank of Wales to form the WEPCo;  authorities will then make an annual payment over 25 years to WEPCo for using buildings (be they schools or otherwise) which have been built under the MIM scheme. Rather than contributing 50% towards new school buildings through grant and borrowing arrangements Welsh Government will instead contribute 81% of a council’s annual revenue costs to cover the annual payment to WEPCo. Unlike under PFI arrangements, where as well as making an annual payment for the buildings so commissioned, councils also had to pay for the costs of a range of ancillary services – cleaning etc. - which could be high, and were restricted as regards any alterations they themselves could make having instead to pay added charges to the contractor to make minor changes, such restrictions do not apply under the MIN.  WEPCo will be responsible for the main fabric of the building with councils being free to make other changes e.g. painting as they wish at their own cost. To begin with the MIM will cover projects of £15m and over so it is possible that it will not apply to the majority of Anglesey’s projects including its new primary schools which are unlikely to reach this cost threshold. However, signing the Strategic Partnership Agreement will give the Council the option to participate in a MIM project in future; not doing so means that if the Council wanted to enter the Partnering Agreement at a later date then it would require the consent of all the participants to do so.

The Project Manager emphasised that in signing up to the SPA the Council is not committing itself to any MIM project at this point in time with the only commitments being that should it wish to participate in a MIM project in future then that would be undertaken exclusively through the WEPCo and that the Director of Function (Resources)/Section 151 be appointed to sit on the SPB which will oversee the WEBCo’s performance.

Having sought and received assurances about the MIM in terms of the extent of the Council’s commitment at this stage as well as the nature of the obligations that would  fall to the Council were it to participate in a MIM project in future, the Executive was happy to authorise entering into the Strategic Partnering Agreement.

It was resolved –

•           To note the progress of the Preferred Bidder Stage of the Competitive Dialogue Procedure under the Public Contracts Regulations 2015 as outlined in the report.

•           To approve the execution, delivery and performance of the Strategic Partnering Agreement with the Welsh Education Partnership Co in the Autumn 2020 to facilitate the delivery of a range of infrastructure services and the delivery of education and community facilities.

•           To approve the Strategic Partnering Agreement summarised in Appendix 2 of the report so as to give effect to recommendation 2 above, but subject to recommendation 4 below.

•           To delegate authority to the Director of Function (Resources)/Section 151 Officer and the Director of Function (Council Business)/Monitoring Officer –

• To approve the final terms of the Strategic Partnering Agreement including any amendments to the Strategic Partnering Agreement approved here as  may be necessary for reasons including but not limited to finalising any outstanding matters, and

• To approve any further deeds and documents which are ancillary to the Strategic Partnering Agreement here.

•           To note that the Strategic Partnering Agreement shall be executed as a deed and attested in accordance with article 14.5 of the Constitution.

•           To approve the appointment of the Director of Function (Resources)/ Section 151 Officer as “Participant Representative” to sit on the Strategic Partnering Board (SPB).

•           To note that in agreeing to the Strategic Partnering Agreement, it is not being asked to decide to proceed with any specific project, and that nothing within the SPA obliges the Council to make any such commitment. Any decision to proceed with a specific project will be a matter for future Executive decisions.