Agenda item

To present the report of External Audit.

The report of External Audit on the outcome of its review of the progress made by the North Wales Economic Ambition Board (NWEAB) on its journey to support the development of the region’s economy and delivery of the North Wales Growth Deal was presented for the Committee’s consideration. The review was focused on how the NWEAB is making progress in delivering the low carbon energy programme and in so doing it examined governance arrangements; the support provided by the programme management office; the impact of Covid 19 on planned delivery and shared learning for the ambition overall.

Mr Alan Hughes, Wales Audit’s Performance Audit Lead reported that the review found that the NWEAB has clear and established governance arrangements and is supported by a developing Portfolio Management Office, that external factors may impact on the planned ambitions and that NWEAB is adapting to accommodate these. This conclusion was reached because –

·         Partners have agreed ambitions for the North Wales economy and have established a clear governance framework, although not all elements are operational;

·         The NWEAB has established a well-resourced Portfolio Management Office to support delivery of its ambitions; where it finds gaps in skills, knowledge or capacity it is resourceful in filling shortfall; and

·         The success of the Growth Deal is dependent on many external factors that may change planned ambitions; the NWEAB is adapting to overcome these emerging challenges and risks.

The report contains six proposals for ways in which the councils through the North Wales Economic Ambition Board could improve the delivery of their overall goals and these are set out in Exhibit 1 at page 5 of the report.

In responding to the report, Alwen Williams, Portfolio Director for the North Wales Economic Ambition Board said that the situation is evolving quickly and several of the proposals have already had a response; it is expected that further progress will have been made when a report back is made towards the end of the year. The economic situation having been impacted by Brexit and by Covid-19 has changed and it remains fluid. However, the review findings and recommendations do not contain any surprises and a number of the recommendations relate to areas where pieces of work have already commenced. This was the first review of the North Wales Growth Deal and supporting arrangements conducted by Audit Wales and upon reflection it has proved to be a constructive process and the resulting opinion and proposals for improvement have been positive for the Team.

In considering the content of External Audit’s report, the Committee raised the following points  –

·         The Committee sought clarity on whether any of the North Wales Growth Deal projects have commenced; whether price increases are likely to pose a problem and whether any issues are envisaged in navigating the planning process.

The Portfolio Director confirmed that whilst no project has yet started, three Outline Business Cases have been presented to the NWEAB and have received approval to proceed to the next stage of Final Business Case development which involves the procurement process. It is not anticipated that actual construction work will begin until the end of the calendar year or early into next year. The Portfolio Director advised that the availability of resources, skills and materials is a significant risk and has been recognised as such by Growth Deals across the UK. Those and other risks are being recognised and managed. By the time the projects enter the procurement phase and spend occurs it is hoped that economic conditions will have settled; however the Team is working against a set of assumptions since the economic situation has been volatile. There are benefits to working on a Growth Deal where there are many other such deals across the UK in that lessons can be learned and best practice can be shared. To ensure the projects can move forward, there needs to be intervention in the market as this may be a risk that cannot be mitigated. A situation where projects are de-scoped needs to be avoided as a value that is to be achieved for North Wales through the Growth Deal has been set and that is the planned outcome for the investments made. The Portfolio Management Office will work with project sponsors and local planning authorities to identify any planning risks early in the process to assess whether or not risks identified pose a challenge and to subsequently work through each risk. The desire to see Growth Deal projects being realised is strong as the projects have been designed to deliver growth and jobs for the region.

·         Whether given escalating costs and a number of other external factors beyond the control of the NWEAB, the projects under the Growth Deal will still deliver according to aspirations or whether they will be watered down and fail to bring value for money.

The Portfolio Director confirmed that a Portfolio Risk Register has now been produced and implemented and a reporting process established whereby the Risk Register is reported to the NWEAB quarterly. Programme Risk Registers have also been developed for each of the five programmes. Information on higher risk projects is brought forward in order that risks may be dealt with transparently thereby ensuring that appropriate decisions are taken at the appropriate time to obtain value from the investment. In response to a further question she confirmed that a national group of Portfolio Offices drawn from Growth Bid Deals in Wales, Ireland and Scotland does share good practice. In terms of the funding landscape , she clarified that the next challenge will be to develop a strategy to bring in private sector funding as the contributions to the North Wales Growth Deal by the Westminster and Welsh Governments have been made on the basis of securing private sector investment as well.

On behalf of the Committee, the Chair thanked Alwen Williams, Portfolio Director for her attendance and contribution to this meeting of the Committee.

It was resolved to accept the report of External Audit on its progress review of the North Wales Growth Deal and to note its contents.