Y Pwyllgor Cyfrifon Cyhoeddus - Y Bumed Senedd
Public Accounts Committee - Fifth Senedd11/06/2018
Aelodau'r Pwyllgor a oedd yn bresennol
Committee Members in Attendance
|Lee Waters AM|
|Mohammad Asghar AM|
|Nick Ramsay AM||Cadeirydd y Pwyllgor|
|Vikki Howells AM|
Y rhai eraill a oedd yn bresennol
Others in Attendance
|Dr Chris Llewelyn||Cymdeithas Llywodraeth Leol Cymru|
|Welsh Local Government Association|
|Guy Lacey||Coleg Gwent|
|Huw Vaughan Thomas||Archwilydd Cyffredinol Cymru|
|Auditor General for Wales|
|Judith Evans||Coleg y Cymoedd|
|Coleg y Cymoedd|
|Mark Jeffs||Swyddfa Archwilio Cymru|
|Wales Audit Office|
|Matthew Mortlock||Swyddfa Archwilio Cymru|
|Wales Audit Office|
|Paula Ham||Cyngor Bro Morgannwg|
|Vale of Glamorgan Council|
Swyddogion y Senedd a oedd yn bresennol
Senedd Officials in Attendance
|Claire Griffiths||Dirprwy Glerc|
|Meriel Singleton||Ail Glerc|
Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.
The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.
Dechreuodd y cyfarfod am 14:06.
The meeting began at 14:06.
Welcome, Members, to this afternoon's meeting of the Public Accounts Committee. As usual, headsets are available for translation and sound amplification. Please turn phones onto silent. In an emergency, follow the ushers. We've received three apologies: from Neil Hamilton, Adam Price and Rhianon Passmore. Do Members have any declarations of interest? No. Okay.
Can I take this opportunity, on behalf of the committee, to congratulate Huw Vaughan Thomas, the Auditor General for Wales, on receiving a CBE in recognition of services to public audit and accountability in Wales in the recent Queen's birthday honours list?
I thought it should have been a knighthood.
Well done, Huw.
Item 2. We've got some papers to note before we move on to our evidence session. First of all, to agree the minutes from the last meeting. Happy with the minutes? Secondly, the Permanent Secretary has written with an update on the latest position regarding the regeneration investment fund for Wales. We need to note that letter. Also, the Welsh Government have written with additional information following the evidence session we held on 30 April into care-experienced children and young people. So, we need to note the extra information that they've sent.
Could I just ask something about that, Chair? They say on the second page of their letter that
'Care Inspectorate Wales is currently undertaking a thematic review of looked after children’s services across Wales, which will focus upon children and young people’s outcomes, including placement suitability. It is due to report in March 2019.'
Perhaps we can give some consideration of how we can draw upon that thematic review, when it's published, into our own ongoing inquiry.
And revisit the issue.
Yes, and perhaps ask them. Get them in and then reflect on it.
Yes. Happy to do that.
Thank you very much, Chair.
Good. Okay. The NHS Wales Informatics Service: Andrew Griffiths, the director of the informatics service, sent details of the double running costs being incurred on systems, as we discussed during the evidence session on 16 April, which we then noted on 14 May. Members requested that the figures be checked with the health boards. The auditor general has written to the committee outlining his observations on the letter, and you should have a copy of that in your pack. Did you want to comment on that letter?
No, other than I think that Members do need to consider whether this really requires further work to be done in terms of asking for evidence of NWIS.
Are we going to consider the other letter that we have on NWIS as well? Should we consider them together?
That's the letter that we've got up for next week, isn't it?
It will be tabled next week, but we can consider it now.
Yes, that letter came in late. So, you've got it because it does fit together with the auditor general's letter. We can discuss that, but it's a paper to note next week.
Okay. Is it in order to discuss this now, in reference to this letter from Andrew Griffiths? Because I think there are related themes in them.
We can do that. Yes, that's fine.
No, it's all right. I should have explained it earlier.
So, we've had the response that you indicated, which shows that, with two health boards, the figures reported to us were not accurate and, in fact, the amount of money being spent by NWIS and the health boards double running services is higher than they told us. So, I'm concerned. It's just as well we checked, because otherwise we wouldn't have known that. It was misleading information.
Secondly, on the letter that we've had from the auditor general on 8 June about incidents with the national clinical information system, there have been a number of major incidents and outages of systems in various parts of the NHS, and he includes a paper to the board of Velindre trust, which hosts the NHS Wales Informatics Service, on significant concerns they have, which I also understand have included the inability of clinicians within Velindre to access key information about patients. So, this is now impacting seriously on patient care and outcomes, not just in terms of more obscure IT matters.
For me, it's very troubling, given the evidence we've had, but perhaps the most troubling aspect of both of them is this issue of presenting an overly positive case about their performance, which is something the auditor general charged in his report. They assured us when they gave evidence to us that this was all now in hand and, since then, they're not giving us full information about the costs of double running and now we have a paper about ongoing problems with their systems, which I appreciate was not within the scope of the auditor's initial report, but it does go to the point of the frustration the auditor general did note from people within the system at the performance of NWIS and still we get from NWIS the corporate line that all is well and all is in hand. I think this points to a deeper underlying problem that we touched upon that has a broader implication than the one we looked at as part of our inquiry.
Yes, I agree. I think it is definitely something we need to revisit. Auditor general, did you want to comment first?
I think it's appropriate that we have a further evidence session with NWIS and possibly also Velindre and with Andrew Goodall to explore these issues.
We've got some flexibility in July so we'll factor that in.
Item 3: our report on medicines management was published in March of this year. The committee made 17 recommendations to the Government and all were accepted, on the face of it anyway, but for recommendations 4, 5 and 7. Auditor general, do you want to make any remarks?
As you said, the Government has accepted 14 of your recommendations. They've specifically rejected three, though in fact there are a couple of others where I think the response isn't necessarily a full acceptance. I would like to suggest that the committee does write back. I'm particularly disappointed in the fact that the Welsh Government doesn't seem to consider that there's merit in actually evaluating how cluster pharmacies are being used across Wales. I think that that is something that the committee felt did need looking at, and I think we need to emphasise that to the Welsh Government, together with asking for some updates on, for example, improving medicines storage—we were promised updated guidance and that hasn't been produced as yet—and also other initiatives to improve repeat prescribing and reducing waste. I think, if the committee might write seeking those updates to the Welsh Government, and I think that we were promised in the Welsh Government's response that there would be further information available from them in January 2019, and if we were to ask for the responses on these other aspects also to be raised by then, the committee could pursue that.
Yes, a couple of issues. You'll remember, Chair, that we wrote to the Permanent Secretary asking whether officials were going to accept or reject our recommendations; they were straightforward about it. On a couple of occasions, the auditor mentions that they have rejected some outright, and it's good to have some clarity about that, but even some of the ones they've accepted—. So, in recommendation 1, we say,
'The Committee recommends that the Welsh Government produce an annual report detailing information of improvements in medicines management'.
It goes on. They respond saying 'accept', but then say,
'We do not consider an additional annual report published by Welsh Government is the most appropriate means to achieve the Committee's objectives.'
So, they accept the recommendation calling for them to produce an annual report and in their narrative say that they're going to accept it by not actually producing an annual report. Now, what they've come up with is not so bad, but it goes back to our point that we wrote to the Permanent Secretary on. I don't think the memo has been fully absorbed across the civil service.
They do the same on recommendation 2, where we say that there should be a national directive for a campaign on medicines management and they accept it but actually say that what they going to do is make £50,000 available to health boards in this financial year to undertake local activity, which is not the spirit at all of what we were recommending, because it's very difficult to have impact at scale—I think we said there should be local ability to adapt to campaigns, but there should be some national leadership on it.
They also reject recommendation 5 about the cluster pharmacists, saying they don't need a national evaluation, which I think is mistaken, so I would like us to take them up on that.
And then my final concern is recommendation 17, which is an NWIS-related matter, where we call on them to set key milestones for the electronic prescribing in medicines administration system, which they accept, but then go on to say they're going to complete a business case for procurement of a replacement hospital pharmacy system, with implementation beginning in 2019.
It's back to the points we've made more broadly on digital, of going for large-scale procurements systems with long lead-in times. We've been here before with hospital catering, and this goes to the heart of our challenge on NWIS. So, this keeps happening, and I think it's a disappointing answer.
I certainly take your point and, well, recommendation 1—how you can accept that you need to produce an annual report and then say you're not going to produce one does escape me. Auditor general, did you have anything else you wanted to add?
That's fine. We can accommodate those points in the draft letter.
Good. Oscar—Mohammad Asghar.
Chair, the rejection of recommendation 7 is something that's very—
'The Falsified Medicines Directive (FMD) supplemented by Delegated Regulation…from the European Parliament and Council'.
So, where does the UK stand on this? There's nothing like this. At the moment, he's rejecting on the basis that there's some sort of regulation from the European Parliament, rather than the UK Parliament.
I think that the Welsh Government response as a whole on recommendation 7 doesn't completely get to the heart of the issue that the committee raised, which was how we actually find new, innovative ways to safely use medicine that may have been issued, but which hasn't been opened.
The thing is, basically, this is—after next year, we may not be in the European Parliament. That's another point, so we have to have some of our own rules and regulations on this.
You're opening a can of worms by moving us on to Brexit, Oscar, so I'll steer us back on to twenty-first century schools, but thank Members for that discussion.
Can I welcome our witnesses? Thanks for being with us today. We wrote to a number of—do we need to note the letter first? Yes, first of all, we need to note the letter. I wrote to a number of stakeholders inviting views on the report on twenty-first century schools and education programme, and the views contained in the responses have been taken into account in preparing the briefing for today's evidence sessions, which you have in front of you. So, we need to note that letter.
Without further ado, can I welcome our witnesses to this afternoon's meeting? Would you like to give your name and position for our Record of Proceedings?
Paula Ham. I'm director of learning and skills at the Vale of Glamorgan Council.
I'm Chris Llewelyn, director of lifelong learning at the Welsh Local Government Association.
Thanks for being with us this afternoon. We've got a number of questions. I'll kick off with the first of some general questions to start. In terms of the programme, what do you feel have been the overall strengths compared to what went before, and what areas of improvement and risks have you identified for band B?
Shall I go first? I think, as the auditor general's report says, to understand twenty-first century schools, it is important to understand what went before and the old school buildings improvement grant. What we had in place prior to twenty-first century schools was an annual grant that was distributed using a formula. It didn't allow authorities to plan in a strategic way. I think we saw the consequences then, in terms of provision. There was a period when successive Ministers said that schools would be fit for purpose by 2010, but there was no real understanding of what 'fit for purpose' meant, and the nature of the funding, because it was annual funding, meant that it was very difficult for any of the partners involved to operate in a strategic way.
The twenty-first century schools programme was born, in a sense, out of those deficiencies, and I think the Welsh Government and other partners, including the WLGA and local government, came together in a very constructive way to try and address those problems in a very systematic and consensual way. We now have a programme in place that has enabled longer term strategic planning. Band A has been able to address the surplus places issue. It hasn't resolved the surplus places problem, but what we have is an increasing number of learning environments. I know sometimes people argue over the use of the term 'schools', but we use the term 'schools' because it's something that people understand. But it is a very progressive programme. We have more, better schools in the right places than we've ever had before, but it is quite a lengthy journey.
We're now on the threshold of band B, as it were, and I think it is quite significant that no longer is capital investment in school buildings the contentious issue that it used to be in the past. I think there is a high degree of consensus within local government and very good partnership between local government and the Welsh Government. I know some people don't like using the term 'co-construction', but in terms of co-construction, it does provide a way forward or sets a template, I think, for delivering future initiatives and Government policy targets.
Do you feel you still have the ownership of the programme, as it's been with us a long time now, as you move into band B? And have you consulted with local government? Have they had an input into the structure of the band?
Yes, I think the governance arrangements for band B are still being discussed. At the outset, I think, local government wanted to be as involved as possible in all aspects of the roll-out of the programme. But I think it's inevitable, I suppose, that the Government of the day will want to have as much influence and input over the programme as possible. Within the WLGA and across local government we have this idea that it's the role of central Government to set the strategy nationally, and then it's up to local authorities to deliver that strategy locally, taking account of local circumstances and so on. Local government would like to be as informed as possible in all the decisions about how funding is allocated, but at the same time I think there is a recognition that, ultimately, it is a matter for the Cabinet Secretary, as we have now, and the Welsh Government. It may be that, left to its own devices, local government might shift the balance a little bit and come up with slightly more influence in terms of the governance arrangements. But it's not something—. There are bigger concerns, I think. Authorities are more concerned about the wider financial context, about the intervention rate, the capital that's likely to be available and the revenue that's likely to be available in future years.
Speaking from the local government perspective, certainly during band A and the implementation of band A, we felt engaged in that. In the run-up to and during the development of band B we have been engaged in those discussions. I think one of the areas, perhaps, that is still unclear is how the mutual investment model will operate. There has recently been a senior-level appointment to a post that will be responsible for developing that role further—someone who has a great deal of expertise—and Welsh Government are engaging with individual local authorities to discuss the use of that model further. Certainly, for some authorities that did express an interest, there's been discussion with them about the type of schemes that have been put forward so that it's applied to larger schemes, so we're talking about comprehensive schools or clusters of primary schools. And a number of local authorities didn't express an interest in the mutual investment model. Some perhaps had been stung by a private finance initiative in the past, and others perhaps were reticent because of the uncertainty as to how that model will be developed. Certainly, Welsh Government is engaging with all local authorities at the moment to provide clarity and to seek further interest in the scheme.
When band A was initially devised, there was a considerable amount of engagement with different sectors. So, rather than simply engaging with education within local government and with education directors, there was considerable engagement with finance directors, with chief executives, with the political leadership and the professional officer networks as well. I think that that was part of the success of band A—that that engagement did take place. Some of the feedback was taken on board in advance of the roll-out, and with band B I think there was a recognition that that intense engagement as part of band A had been part of the success, so that that should then continue into band B. On Paula's point about the mutual investment model, I think the anxieties, if you like, about the mutual investment model emphasise the importance of the engagement. We were both at a meeting last Friday with the Welsh Government, with the dedicated officer that they've appointed, to discuss the MIM model, and I know that there have been quite considerable discussions beyond the one that we were part of.
Do you share any of the concerns of the auditor general about the possible centralisation of band B, and that that might work against the collaborative arrangements that made band A successful?
I understand the concerns, and we are still in discussions with the Welsh Government on that point, so I don't think anything has been finalised. The truth is as well that, because authorities have had unfortunate experiences in the past with PFI projects, there is, I think, some reticence within the system as well, which then makes that engagement even more important.
As Chris said, I think those discussions are still ongoing. I think it's quite difficult to have a centralised model where you have local authorities, especially with the capital, putting in 50 per cent of the funding. And the discussions about standardisation are still ongoing as well in terms of standardised buildings. Certainly, the standardised model is something that the Vale of Glamorgan did move towards during band A, but procurement was at a local level and managed locally. I think those discussions, as we've said, are still ongoing with the Welsh Government. There had been some discussion previously about maybe batching schemes and procuring them that way, but certainly we don't seem to be moving towards that level of centralisation at the moment. So, I'm expecting Welsh Government to take forward what worked with band A, to learn the lessons, but not necessarily to move—
You said you're expecting them to, so that doesn't mean you're convinced that they are yet.
I'm optimistic. I don't think I can be convinced until we finally see the outcome of the ongoing discussions.
Do you think local government and Welsh Government are basically singing from the same hymn sheet in terms of the objectives of band B?
I think so. I think the scope is broad enough. There is going to be more of a focus on building condition, but that doesn't prevent local authorities from addressing surplus places, from developing Welsh-medium provision for instance. So, it seems to be sufficiently broad enough. I think—I don't know whether I speak on behalf of all of local government—one thing I would have liked to have seen in band B is, because the focus is primarily on the condition of buildings, I would have liked to have seen schemes that were not necessarily about single schools. So, for instance, roof replacement schemes. So, you could have a scheme for the replacement of x number of roofs across a local authority, or across a number of local authorities, but band B doesn't actually provide for that sort of scheme. But, other than that, I think we're broadly in agreement.
I do think there needs to be some clarity, a strategy for community benefits. Certainly, during band A, local authorities were required to set out their targets in terms of community benefits and to demonstrate how those have been delivered. At that stage, however, no report was required by Welsh Government, and certainly, that wasn't monitored and Welsh Government hadn't set criteria for those community benefits. I do believe that is something that they are now picking up in band B. So, clarity of strategy over what's expected would be helpful.
Thanks. Vikki Howells.
Thank you, Chair. How has the application and approval process felt from a local government perspective? Would you say it was sufficiently clear and easy to navigate, and have councils had sufficient support, do you think, in preparing their business cases?
I think there's been a great deal of training provided during band A. There's a group called the Better Business Cases group that has been very helpful to local authorities, and we have received, at each stage of the process, I think, helpful comments and a steer from Welsh Government as to how we can improve on our business cases. I think, in terms of the process, it did at times come across as being very lengthy, and perhaps there needed to be better information available on each stage of the process and the various panels and boards and their roles and responsibilities. I don't think we were always clear on each step of that process and, as I said, the roles and responsibilities of those various groups who would be looking at the business cases.
Sorry, can I come in? I think that the twenty-first century schools programme team within the Welsh Government has worked very closely with local authorities. My experience is at a national level, at a further distance from Paula's, but I think the programme team have worked very closely with authorities and have been very approachable, and have been prepared to provide support where it was needed. When the scheme was initially conceived, it was recognised that some larger authorities would probably have more capacity than some of the small authorities in the challenging financial circumstances, and the intention was to build up a body of expertise within local government that could be shared. And I'm not sure it's worked out certainly as I'd envisaged it would. But what has happened instead is that the Welsh Government has provided support where it's been felt, or where authorities have asked for that support. So, where they lack capacity, in various ways, the support has been made available to them so that they shouldn't suffer any disadvantage or detriment.
I wonder would you both say the same about the analysis stage of the process, because certainly in his report, the auditor general, one of his conclusions was that there was a lack of detail in the analysis underpinning final decisions on projects, and surely that's very important for an authority to get that kind of feedback to enhance their applications in the future.
Yes, I think that might be the case. I think individual authorities would have a better understanding of that than I would, but I think that probably was the case and I think the Welsh Government has recognised that and is addressing the issue.
I was just thinking back to some of the analysis I received on our business cases in the Vale, and it would have benefited, I think, from some greater explanation in places as to why various decisions had been made or further information was being requested at various stages.
Okay. And in band B, do you think that local government will be as involved in the oversight of the programme and projects as was the case in band A, because I know that the band B panel is going to be comprised of senior Welsh Government officials?
I think there is an issue there, and we are still in discussions. So, it isn't clear to us exactly how things will develop, but I think local government would want to have the same level if not more engagement and involvement and influence over decisions. If, as we are saying, and I think the auditor general is saying as well, band A has been successful, then we wouldn't want to lose any of those aspects that have made band A successful in the way that band B is developed. So, we'll want to push the Welsh Government on that.
Okay. And one final question from me at this stage, and that's about the different processes for projects if they are valued at over £5 million compared to under £5 million. Do you think that having those two distinctive approaches has been an effective one?
My view is that it has. I think there has been an attempt during the development of the programme to try and streamline and rationalise as much as possible and I think it's in everybody's interests to squeeze out as much bureaucracy in the system as possible and, at the same time, provide as much clarity and make it as transparent as possible. So, I would have thought that authorities would have welcomed that, but it doesn't—. As with the whole programme, it is something that is evolving and developing, and if there is the possibility of making it as administratively and bureaucratically light as possible, then I think that can only be a good thing.
I would agree. Production of the business case, inevitably, is very resource intensive, so to have a lighter touch with those schemes that are under £5 million was very beneficial for us as one of the smaller local authorities, perhaps without an enormous amount of capacity to be putting these business cases together.
Okay, thank you.
Thanks, Vikki. Mohammad Asghar.
Thank you very much, Chair. Good afternoon, panel. What it is, just following the Chair's question, I would like to clarify something on band B. Do you think that there has been enough dialogue between the Welsh Government and local councils concerning why certain councils may be opposed to greater Welsh collaboration?
Paula might be better placed to respond in terms of the discussion with the Welsh Government about collaborating with other authorities from an individual authority's perspective.
We haven't had those discussions at an individual authority level, and I'm not clear what feedback the Welsh Government might have had in terms of local authorities not wishing to collaborate. Certainly initially, the Welsh Government, I think, were looking at the concept of, maybe, centralising procurement, having batches of schemes across local authorities. I don't believe, though, that—. I'm not aware of any local government opposition to that concept. Indeed, I don't know how that's going to be developed further by Welsh Government, but, certainly, I haven't heard from colleagues saying that it's not possible to collaborate.
Can I come in? I think that, at the outset, when twenty-first century schools was developed, and when band A was taken forward, there was some discussion around the idea of using the capacity in the system as effectively as possible, and the point I made earlier about some authorities having particular expertise in some areas—if neighbouring authorities lacked that expertise, they would work more collaboratively together. And there was the expectation that a regional dimension might emerge, or that there would be cross-boundary collaboration between authorities. And the truth is that I don't think that that has happened. I think one of the reasons is that because school reorganisation is so difficult and is politically contentious, and it's very local as well—there's an intensely local dimension around school reorganisation—and I think that that range of difficulties has meant that maybe the wider, regional cross-boundary collaboration that might've been aspired to at the outset hasn't quite emerged.
So, what you are saying is that some councils have better skills and others haven't? Or that there is no sharing amongst themselves?
Certainly, some have more capacity, but I think that there is increasingly within the education system as a whole—and the Welsh Government is part of this as well—sharing of good practice and expertise, where it's identified and, you know, identifiable.
If I could just say, my twenty-first century schools programme manager from the Vale of Glamorgan is currently seconded part time to Welsh Government to do exactly that—to share her skills and expertise not only within Welsh Government, but with other local authorities.
Okay, thank you. My questions now relate to the funding for this. Given the concern that councils raised with the auditor general about affordability, and which you raised in your submission, how have they again managed to identify half of the capital element of band B?
From a local government perspective—and I can't talk for all local authorities—our match funding will come from a number of sources. So, part of that will be from capital funding that the local authority has available to it in its annual allocation. Part of that match funding might come from capital receipts generated from the sale of land and buildings. Certainly, in the case of the Vale of Glamorgan, we have funding coming in from housing developments with section 106 funding, and we are anticipating a considerable amount of development funding, which we can then use as match funding for new school buildings that are required as a result of those housing developments. So, it'll be from a range of different sources on the capital side.
And, of course, the mutual investment model will require revenue funding. And I think the revenue funding in particular will be more of a challenge for local authorities to secure.
Is there a risk that some councils won't be able to actually afford some of the projects currently within the plan for band B?
I think this is something we saw, for various reasons, during band A. Certain authorities had schemes that slipped. Some of those are now being slipped into band B. I think there was possibly a range of reasons for that. Some of that will have been because of statutory consultations perhaps not progressing as envisaged. Some will be because of lack of capacity and expertise in individual local authorities. I'm not aware of any cases that didn't proceed because of the capital funding not being available. There is always a risk around the funding element. I've referred to section 106 funding, for instance, which only becomes available, usually, when a development has progressed beyond a certain stage. So, there are risks that that funding might not come forward. There are always risks around capital receipts as well. We can only work from valuations and, on occasion, those receipts aren't as high as we anticipated, for various reasons. So, there is a degree of risk around the funding and, therefore, some risk about programmes being fully implemented.
What is the impact on investment in other vital areas if the council continues to prioritise investment in schools?
Prioritisation of funding, of course, is a question for each local authority. I think the provision of the match funding by Welsh Government provides a significant motivation for local authorities to match that funding and prioritise that investment in schools. Certainly, looking at the size of the programmes that have come in from local authorities, it certainly doesn't appear to have been a concern of local authorities and they have been keen to match that 50 per cent funding that Welsh Government has provided.
Within band B, are councils expecting to fund less of their contribution from the sale of land and assets than in band A?
I'm not aware of the composition of local authorities' programmes and how they're all individually funded. I suppose it will depend upon the assets available to those local authorities now during band A, but I can't comment on whether there will be less funding from capital receipts overall.
Oscar, I just want to bring in Dr Llewelyn on that point. Then I'll bring you back.
Can I just add that I agree with everything that Paula's said? I think all authorities will look at the range of match-funding opportunities, but I think the point you raise is a valid one. Authorities will be intensely concerned about the affordability going forward, both in terms of capital and in terms of revenue. After eight years of austerity, I think that is inevitably the case. During the course of band B, when additional capital was made available to the Welsh Government through consequentials from the UK Government, a lot of that did go into twenty-first century schools, which was advantageous. I think the hope would be, going forward, that the same thing will happen again.
Thank you. What do you see as the key benefits and the risks of a mutual investment model, please?
Who wants to take that? Paula?
I think, initially, it's a higher intervention rate. So, the intervention rate is 75:25. The Vale of Glamorgan have actually put in for mutual investment on a voluntary aided school with an even higher intervention rate, and so it's 85 per cent on that. So, I guess the advantage is that that cost can be spread over 20 to 25 years and that the maintenance of that building will be undertaken as part of the scheme. But, as we've previously said, that model is still being developed. There are still a lot of questions that local authorities have about the model, and the recent appointment of a senior officer, who's an expert in the implementation of such models, and discussions with local authorities now in the coming months, I think will assist greatly in terms of our understanding of how these models will work in the future.
It is a major concern, though, with the revenue situation and with increasing pressures on the revenue support grant for local authorities and cuts to funding, as to whether we can sustain such a model in the future. I think it's been thought that perhaps local authorities can use the funding that they allocate to an individual school for maintenance to pay back what it needs to under the model. I think it's called the annual charge. But, in reality, that amount of funding that schools get for maintenance won't be sufficient to cover that annual charge, and so local authorities are going to have to seek that funding from elsewhere to pay that. So, that is a concern, and, as I said, I don't think we've got all of the details yet as to how beneficial or otherwise that model would be in comparison to those schemes that we're funding from capital.
Thank you, Paula—you have been very open and frank. Do you think that local government really understands the model of public-private investment?
The mutual investment model, we're told, is different to the PFI model, but, as I said, I think we're still awaiting further detail as to how that will operate in practice. Of course, we're quite fortunate, I think, in Wales, for instance, to have had Scotland go before us and for some of those lessons to be learned, and so we can take those into consideration when we're developing our approach to the model in Wales, but it is still, I think, being developed.
Thank you very much. I would like to ask Dr Llewelyn what lessons from the previous use of private finance to fund schools in the UK have created a cause of concern for local councils. Do you believe that the Welsh Government is in danger of replicating the mistakes made in the previous projects?
As I mentioned earlier, I think there were concerns. When the idea of having a revenue-funded approach to school building was suggested in the first instance, I think there were concerns because of the PFI experience. I think that authorities that had experience of PFI projects found them to be too costly over the whole lifetime of the project, and there were concerns in terms of the maintenance costs as well. In the early discussion we had with the Welsh Government around the mutual investment model, there was something of a track record in that that approach has been used in other areas, in highways in particular. There were anxieties, but, from the outset, one of the things the Welsh Government committed to was to look at the concerns raised about PFI projects, both within Wales and elsewhere, and to try and learn from those lessons.
In the same way, as I mentioned at the outset, when the twenty-first century schools programme was devised in the first instance, there was a focus on learning lessons from the school building improvement grant experience. So, there is some confidence in the system that there is the possibility of doing that, but, as Paula indicated earlier, there are concerns. The attraction of the MIM is that hopefully the lessons of PFI will have been learned and the fact that the intervention rate is much higher. But I think if there was enough capital available and if the intervention rate was at around 70 per cent, then in all probability I suspect authorities would prefer to follow a more conventional capital route. But I think they understand, in the current climate, the attractions of the MIM approach and, as Paula has indicated as well, we know that there are experienced people now within the Welsh Government who have experience of this approach from other parts of the UK as well, which is a good thing.
Okay, thank you. Where would—[Interruption.] Sorry.
Oscar, Lee has a short supplementary.
Just to help me understand, local authorities obviously have their own borrowing powers and are able to borrow at relatively low rates. What advantage does the mutual investment model have above you borrowing yourselves and the Welsh Government guaranteeing to meet your payments?
I'm not sure of the answer to that—
Would you prefer just to borrow yourselves?
Part of it is that there's a commitment on the part of the Welsh Government in terms of the revenue component for authorities to take up the MIM approach as well.
Yes, but couldn't they just do that by giving you a guarantee, if you borrowed yourselves, using your interest rates, that you could meet your payments?
I suppose you could look into that. It might be something for further—
Is that not what—[Inaudible.]
I guess we would be looking at that if it was an option. So, I'm not sure whether—
I'm surprised that hasn't been discussed between the WLGA and the Welsh Government.
We have had some discussions—
—financial regulations preclude that in some way.
I don't see why.
We have had some—. At the outset of the MIM discussion, we covered a range of options. I can come back to you, but the truth is I can't remember the scope of that discussion, because it was some time ago. As I say, we've had a similar discussion in other service areas as well. But I understand the point.
Okay. If you could come back to us, perhaps we could ask the Welsh Government too about their thinking on their side. Thank you.
Thanks, Chair. Where would the ongoing revenue costs associated with MIM fall? Will they be funded centrally by the council or will they fall to the individual school?
I think I touched on this, briefly, earlier on. I think there is a notion that the funding that a school currently receives for the maintenance of its building would be used to pay back the annual charge for the MIM. There had been some earlier discussion as to whether that would be met centrally or by the school. Of course, we do delegate the vast proportion of education funding to schools, so there was some discussion about local authorities needing to engage governing bodies in securing that repayment from the school's budget. Local authorities raised some concerns about that approach, because, of course, over time, governing bodies will change, and therefore we foresaw some potential risks in securing that payment. Another approach to use, of course, would be to top-slice that school's budget before it's delegated and to use that to pay back the central charge. But as I said, we don't think that would be sufficient to repay that annual charge, so we'll be needing to seek resources from elsewhere in the central budget to do so.
And now, finally, on the funding round. In December 2017 the Welsh Government reported to us that partners, primarily councils, had identified £600 million of indicative investment through MIM. How firm are those commitments from councils and what factors would turn those indicative commitments into definite proposals?
My understanding is that there are ongoing discussions between Welsh Government colleagues and individual authorities and that those discussions are ongoing. In terms of how far they are from reaching a conclusion, I can't comment. I don't have that information. I don't know if Paula has any information about discussions between the Vale and the Welsh Government.
I don't have anything to add in that respect. We haven't had our meeting yet, but we have been told that there is a programme of meetings, and those discussions will be held. But I can't comment on what's being discussed with other local authorities.
I think that's more a question for the Welsh Government.
Okay, thank you.
Okay, Oscar. Lee Waters.
Thank you. I'm going to begin by asking about procurement and what lessons can be learned from the first round that can be applied to the second round.
Do you want to—?
Again, from a local authority perspective, in the Vale of Glamorgan, we used a framework. I don't think all local authorities were using the framework approach. We used it very successfully in the Vale of Glamorgan. Discussions about procurement, again, are still ongoing with Welsh Government about whether there'll be central procurement or whether it will be left to local authorities to do that procurement. But, certainly, in terms of the framework approach—and in the Vale of Glamorgan we also use standardised design—that was very successful and, of course, Welsh Government are taking that forward now into band B as being an example of practice.
Sure. I'll come to the design in a second, but just in terms of procurement, there's some tension identified in the auditor general's report between, on the one hand, the desire to group authorities together to get economies of scale, and then the necessary flexibility within that approach. So, is that being taken on board for band B?
Some authorities prefer to do things in a localised way, rather than to do a big procurement, because they think there are benefits from using local capacity, local contractors and employment and so on, so it's one of these issues that divides opinion, and there is some contention. As band B progresses, there is the argument that, through using frameworks, there's the possibility of squeezing more value out of the investment, and squeezing greater efficiencies. But there is an argument as well for following a tried and tested approach, where it's deemed that there are a wide range of local benefits.
Right. So, from that I take that there's no consensus on whether or not coming together through frameworks or batches, overall, is a good thing.
Well, as I say, I think it divides opinion. I think, in terms of where the balance—. I've got no evidence of this, but I think that the majority, I suspect, would see the benefit of batching, but I think there are those who are strongly of the view that a more localised approach is more appropriate or suitable to them.
It seems to me, unless you can get your ducks in a row and decide whether to go to one approach or another, you could end up with the worst of all worlds. Because from the auditor's report—he points out that the way the frameworks are designed you wouldn't have to go through a pre-tender competition—that's surely one of the benefits of having a framework—but local authorities are still basically doing that, and inviting such a large number of bidders, up to 12, to participate in tender bids that they're effectively running their own qualification process despite the fact that they've got a framework going.
There are reasons why authorities have free tender exercises, and they'll be based on assumptions made by those individual authorities. I understand the point that was made in the auditor general's report, but I think that individual authorities come to different conclusions based on the evidence that's presented to them.
Well, it makes it very difficult, then, for Welsh Government, to be fair to them, to try and drive some efficiencies, doesn't it, if there's no real consensus between local authorities between getting behind one system or the other? You might as well not bother.
No, I think you can. Where authorities are receptive to those arguments and there is evidence that it's beneficial, then I think it's advantageous to pursue that approach. But, at the same time, adopting or allowing some local flexibility has proved advantageous within band A, so I think that could continue.
Well, except flexibility involves, effectively, running two systems in parallel. Then it does beg the question of whether or not the faff of going through the system of creating frameworks is worth it.
Well, I think, as well, it isn't quite as clear-cut as you depict—
I'm suggesting the opposite, to be fair. It's not at all clear-cut, and perhaps it should be.
The conclusion, I mean—that you're running two completely parallel and different systems alongside one another, and that you have to choose one or the other. What I'm suggesting is that this is a complex exercise and there are a range of factors that need to be taken into account, and coming to just one hard-and-fast solution isn't as easy as that.
Well, I appreciate it's complex, but I'm simply pointing out that if you go through the process of having a framework and then you run a qualification exercise involving 12 different bids, it does beg the question of what the point of having the framework is.
As I say, some authorities come to a conclusion that operating through the framework, adopting a batching kind of approach, is suitable and beneficial for them, and other authorities come to a slightly different conclusion. But I don't see that one undermines the other, necessarily, and I agree with your point as well that it's in everybody's interest to squeeze as much benefit and efficiency out of the system as possible, and I think this will be the subject of an ongoing discussion.
Because there's been frustration amongst the construction industry that not enough has been done to plan the work out—that they know there's a pipeline of work coming and that they know the timings of it. So, if that's not going to happen because they can't agree which approach to take, what else can be done to try and have some bit of order to the system?
Well, in terms of the construction companies—I don't know this but I suspect—. I can envisage a situation where large construction companies want to mop up all of the business that's available and are frustrated that there are local companies that are still taking business that is potentially theirs away. So, I think I wouldn't use that as a single measure. Again, I understand the point, but I think there's probably more to it, and when authorities look at this, some authorities come to a different conclusion.
Well, evidently. I'm not entirely sure that's particularly satisfactory, though. I clearly understand the desire for local supply chains, but my point stands: wouldn't it be better to make an in-principle decision? You either want to do it collectively or not, and if you're not going to do it, then let's cut away the cost and the bureaucracy of creating the frameworks in the first place. But I'm not sure we're going to get any further on that.
So, can I just move on to a different area? You said earlier, Dr Llewelyn, in terms of the body of expertise, that it hasn't quite worked out the way that you would have envisaged—you said it in answer to an earlier question. In terms of the capacity within councils, what more can be done to support authorities that don't have the expertise needed to make the system work?
At the moment, the Welsh Government supplements and provides that expertise. I suppose, at the outset, we'd envisage maybe that that expertise would be developed and shared collectively within the system. I think there may be some issue of a sequencing where authorities are in the programme. Personally, I'd always envisaged that, where there was capacity, it would be easier to share that among neighbouring authorities, or where there was a history or tradition of working together, but if they—. You know, sometimes, the sequencing doesn't allow that, and I think what has happened during the course of band A is that the Welsh Government, in a sense, has found different ways of supplementing or augmenting the capacity that authorities do have. I think that, by and large, that's worked okay. But, as I say, it's not quite how we envisaged it would develop at the outset, but that isn't to say that what we've got in place at the moment is working okay.
Is it a case of local authorities being unwilling to collaborate?
I don't think it is. In this instance, I don't think it is that. I suspect that the climate probably hasn't helped. When ideas about twenty-first century schools were initially developed, the funding climate was much healthier. It was before the eight years of austerity and I think all authorities are now under pressure. In healthier times, it might have been easier, but I'm not entirely sure about that. I think it probably is more to do with the issue of sequencing and the capacity that authorities have got when, and when others need it.
You said in answer to an earlier question about the process you'd gone through ahead of band A to try and get greater collaboration, and you listed the people that you've collaborated with, and they were finance directors, chief executives, leaders. These are all internal within the world of councils—that's the concept I took from that answer. We've had quite a striking letter from the Design Commission for Wales as part of our call for evidence. The tone of it is that they're feeling a little left out of the process. In terms of support and advice being available for local authorities, there is a body set up by the Welsh Government, funded to help, and they're not being asked to help.
'There are too few projects drawing on the expertise of the Commission via its Design Review Service.'
That's an example. I could quote at length from the letter because there are a number of points there that make slightly uncomfortable reading. Have you seen the letter that they've submitted?
I haven't seen the letter. I think there was engagement with them at the outset. I'd have to check, but I think there probably has been more engagement than what you're quoting from the letter now suggests, but no, I haven't seen it.
So, are they not being straight? They wrote to us on 18 May to say that there hasn't been much engagement. You're saying that that is not right.
Well, you know, it depends on their interpretation of the word 'much'. Sorry, I haven't seen the letter. It may be that it's a valid criticism. I don't know.
To be fair, if you've not had sight of that letter—
Let me quote a bit of it, then. It says,
'Where there is genuine collaborative and consultative ethos, some projects can be very good. This does not however characterise the approach to the programme, in our experience. Our contributions to various reviews of the programme have been managed in what is to us a very odd manner.'
That's just one quote from it.
I'd be more than happy to meet them to discuss whatever their concerns are, to look back to see what the level of engagement has been. You mentioned there that they've raised concerns and described things as very odd. I'd be more than happy to meet them to discuss what exactly they've got in mind there, and who they wrote to when and so on. I think there has been some engagement with them, and I also don't recall them writing to us as the WLGA to raise those concerns. But again, it may be that they have.
It does seem that, possibly, we are missing a trick in not involving them more systematically in the programme management of these projects, given the expertise they have and given the role they've been mandated to have by the Welsh Government to get design excellence up there.
Just to move on to another of their specific points, drawing on something that Paula Ham began to address earlier, which is the standards, they say in their letter,
'The approach taken so far to "standardised" elements lacks sophistication and sets minimum standards that do not in our experience drive or stimulate quality and longevity and therefore value for the public purse.'
Particularly in light of the mutual investment model, they are concerned that the quality of the work carried out can be sufficiently good to make sure that the asset that will be inherited is sufficiently sound.
Looking at some of the figures in the auditor general's report, there's a good deal of inconsistency, isn't there, on standardisation, particularly in terms of the size of the buildings and then the knock-on cost implications of that. So, why do you think that is and what can be done to mitigate it?
Can I come in first and maybe Paula will comment. I understand the point, because again this is one of those contestable issues. I'm sympathetic to that argument in terms of the standardised design, but I know that when I discussed this issue with a range of other colleagues it's one of those issues that divides opinion. I think that if there are advantages from—. You know, if you want a 1,500-pupil secondary school and there are two or three off-the-shelf designs that you know have worked elsewhere, I can see the attraction of utilising those designs if it means then there's more funding available elsewhere, but it is one of those issues that seems to be very contestable and does divide opinion.
There's a lot of dividing opinion going on, isn't there? There's a picture developing.
I think, in terms of standardisation, the Vale has used standardised designs throughout band A. I think that maybe there could be, in terms of quality, different interpretation of building bulletin regulations, and perhaps a lack of direction from the Welsh Government on specifications. I think that's now a lot clearer in band B, and indeed the Welsh Government has used a standardised costing system when inviting authorities to submit details on their individual schemes. I think also perhaps some local authorities might have a misconception of what a standardised design is and might see that as, you know, a big aircraft hangar. In reality, that's not what standardisation means, and although you might have a standardised footprint within that standard building, there is considerable flexibility as to how the space is organised. But I believe now, going into band B, that practice that we've had in the Vale of Glamorgan, through one of our officers being seconded into the Welsh Government—she's been able to have those discussions with each local authority as to what standardisation means on the ground.
That's one local authority. Is that being replicated?
I don't know if that has been replicated elsewhere, but certainly we've had a lot of interest from other local authorities coming to have a look at our standardised schools.
Well, that's good to hear, but obviously our role is to look at the whole of Wales rather than just good practice in one local authority, and the picture across Wales, as Chris Llewelyn keeps telling us, is that there are mixed opinions and differences of view. So, what we are trying to establish on the back of the auditor's report is whether or not there's a better systemic way of doing this. So, it's good to hear about the Vale of Glamorgan, but broader than that I wonder if there is scope for involving the Design Commission for Wales more in reviewing designs and hand-holding and helping people overcome misconceptions about standardisation and what it looks like in practice.
I think there is scope, and I'd be interested in meeting them to see what kind of contribution and input they can make. I think, based on what you've set out, that would be a good idea.
Okay. Thank you.
We're moving towards the close of the session now, so if Members can be succinct with their questions and answers.
Thank you, Chair—
I should say Members' questions and witnesses' answers.
This is to Dr Chris Llewelyn. In the light of procurement affairs, why do you think the local councils are opting to run their own qualification process?
In terms of the—?
Again, I think that different authorities will look at the circumstances they face and the capacity they've got, and will come to different conclusions. One of the successes, I think, of the programme, up until now, has been the ability to have a national strategic programme over a lengthy period of time that, at the same time, accommodates local differences and allows authorities, when they deem appropriate, to make decisions according to the challenges and the circumstances they face.
That was very succinct, Oscar. Vikki Howells.
Thinking about making schools more accessible, what barriers are there to that, and how do you think the twenty-first century schools programme can help us to overcome that?
In terms of accessibility for pupils, there are very clear standards, which we have to comply with when we are building a new school or renovating a school. So, that's quite clear. Accessibility to the community is somewhat different. I think a lot has been said about schools needing to be community-focused schools and to be accessible to the community. There's a lot of conflicting guidance. So, there's guidance for governors, there's the education Act and so on, where, if you read all of that legislation and guidance, it is conflicting and unclear as to the expectations of schools. So, for instance, the governing body is responsible for everything that goes on at that premises. And for every group that uses the school, it needs to draw up an agreement. Often, that's quite off-putting, I think, for governing bodies, and we've had some individual cases in the Vale of Glamorgan where maybe there's been a complaint about a community group that's using a school that has come back on the governing body. So, I think there needs to be clarity of expectation when we're looking at access of communities to schools.
My question was around accessibility for pupils who require that, but if there was time, I was going to ask you questions about community usage as well, so it's quite handy that you answered both of those there.
Just briefly, then, to sum up, do you think that the Welsh Local Government Association would welcome guidance from the Welsh Government under the duties under the Equality Act 2010 to make buildings more accessible, or do you think the situation is fine as it is?
I'd have to reflect on that, I think. There are issues—. In terms of the community use, at the outset, there was quite an ambition within the programme, because of the scale of the investment. And for many communities, a £5 million primary school or a £20 million secondary school is the biggest investment that they will get within their community, and you want to squeeze as much value from that as possible and to try and combine various pots of investment as effectively as possible as well.
In the auditor general's report, it's mentioned that it's difficult to establish a causal link between new schools and improved educational outcomes, but what we do know, and what there is evidence to show, is that the more communities are involved in the life of a school in every way, then that does have a positive impact on outcomes.
At the outset, we tried to make sure that, where there were different smaller pots of capital investment taking place from the Welsh Government into communities, they were combined with the twenty-first century schools funding. I think that more could be done at a strategic level between—. We try to work closely with Sport Wales, but other sports governing bodies as well, for them to approach their investment in sports facilities in a joined-up and strategic way. And then, at a local level, as Paula says, in terms of the guidance, there may be some kind of ambiguity, or policy conflict, between the way the community of the school sees itself and its responsibilities, and the wider community. I think there is more work to be done there, and I think the points raised in the auditor general's report are valid ones and ones we need to work on.
Any other questions for our witnesses? No. Thanks for being with us today. It's been really helpful to our inquiry—Paula Ham and Dr Chris Llewelyn. We'll send you a transcript of today for you to check before it's finalised. We will now take a short break until our next witnesses at half past three.
Gohiriwyd y cyfarfod rhwng 15:24 ac 15:33.
The meeting adjourned between 15:24 and 15:33.
I welcome Members back. Can I welcome our witnesses to this afternoon's meeting of the Public Accounts Committee? Item 6 is our evidence session 2 on the twenty-first century schools and education programme in the wake of the auditor general's report on said programme. Would you like to give your name and positions for the Record of Proceedings?
Good afternoon. My name's Guy Lacey; I'm the principal chief executive of Coleg Gwent.
Prynhawn da, Cadeirydd a'r pwyllgor. Fi yw Iestyn Davies, prif weithredwr ColegauCymru.
Good afternoon, Chair and committee. I am Iestyn Davies, chief executive of CollegesWales.
Judith Evans, principal chief executive officer of Coleg y Cymoedd.
Great, welcome. Thanks for being with us. Diolch. I'll kick off with the first couple of questions, and, before moving on to specifics, what do you feel have been the overall strengths of the twenty-first century schools programme from a further education perspective, and what key areas have you identified for improvement?
I think, Chair, first of all, thank you for the invitation to give evidence. It's probably appropriate to say that the experience of the programme has been largely positive, almost unanimously positive, in terms of FE. The inclusion of a slight tweak to the name, to the twenty-first century schools and education programme, is significant for a sector that I feel is often overlooked. But, importantly, there are significant buildings that are now housing and providing a home for learning that simply wouldn't have existed if the twenty-first century schools programme hadn't commenced, and it is important to recognise that. I think, individually, both Guy and Judith will talk about their experience, but the provision of post-16 learning would have been in a very difficult and, perhaps, not as prosperous a place as it potentially can be, going forward, if we didn't have this programme.
I've not benefited directly from twenty-first century schools band A, but have done so indirectly. My college has been involved with a number of projects that are being funded through that strand, including Blaenau Gwent learning zone. So, I think, yes, I would concur with Iestyn when he says that generally it's been a very positive experience and it's led to the renewal of the FE estate.
I have benefited greatly from the capital programme since 2012—this is pre-band A. I've benefited from £70 million investment in Coleg y Cymoedd, and I have to agree with my colleagues that it's been a positive experience. I guess later on you'll ask us about the impact, perhaps, of the new buildings and the investment, and one of the greatest impacts for me is not only on the learners, which is crucial, but obviously on our relationship with employers and how we can then work much closer with employers because we've got the facilities that they require.
Looking forward to band B, we took evidence from ColegauCymru last year, last July, and the message then was you wanted a fair allocation of funding for capital infrastructure. What are your hopes in terms of getting that fair allocation, and what sort of bids are we looking at from colleges at the moment in terms of band B as that's progressed?
There's a wide range of bids gone in, and I think one of the challenges we face at the moment is—my understanding is—that the number of bids in totality for band B is greater than the funds available. There's a methodology involved in that, which is oversubscribe and deliver what actually ends up being delivered, effectively. That was the experience of band A.
I think colleagues would have particular views or concerns around the proposed MIM, the mutual investment model. As ever, the devil's in the detail, so looking forward, my understanding is the majority if not all bids from FE for the future are looking to exploit the MIM model. So it's probably fair to hand over to Guy to talk about the intricacies and then some of the unknown knowns of the MIM project as it currently stands.
It's a great opportunity in terms of the introduction of the MIM strand within band B. So, we're looking at a major redevelopment of the college's facilities in Newport, and we'll be doing this in conjunction with the local authority and the University of South Wales. So, we've developed quite an ambitious plan for an integrated further and higher education project with public library services attached as well.
I think I would start by saying that the process of working through a major capital project and planning it, when there is some uncertainty around exactly how the MIM system will work, has added complexity to what we're doing. But I would not want that to be interpreted as a critical comment on the support that we've received from the Welsh Government colleagues we've been working with on it, because actually they have been very, very helpful and very supportive to us. But it is a question of various unknowns within the structure of the MIM programme, and how it will work. But, essentially, it's a great opportunity for us because it will see us being able to renew a very significant part of our estate, which frankly is in a condition where it needs to be renewed.
What discussions have you had with Welsh Government about the MIM approach and your concerns?
We've had lengthy discussions. We have a project board for the Newport knowledge quarter project, which meets regularly, and that is attended by colleagues from Welsh Government. So, there is ongoing dialogue around the way the financing of a large capital project would work.
I think, for me, the key issue around the development of the investment objectives for band B was that there was a high level of encouragement for projects that would be able to deliver maximum benefit for public service. So, not necessarily just siloed within education or any other particular function. There was an active encouragement to think more widely about how public benefit could be maximised through investment. Unfortunately, I think that's been quite difficult within the MIM construct.
So, for us, putting forward a further education project that is a hybrid with higher education and local authority functions, the financing of that has actually worked out to be very complex. And the reality is that it's retreated into a situation where the further education element will be MIM funded, and the other elements are going to be capital projects financed by those partners on their own, through whatever sources of funding that they can draw down. So, we've lost a bit in the construction of MIM in terms of making a programme that would really be breaking down this—
So, the split is that clear, is it, from what you've just said? So, you have further education primarily doing the MIM—
Yes. So, physically, the square metres of the project will be apportioned into a further education element that will be MIM funded, and then there will be other square metres that will not be further education space, and they will be capital funding.
I think it's fair to say, Chair, that the communication between Welsh Government and the FE sector is good. I'm a member of the programme board, so I'm often aware of the bids that are coming in across the FE sector, and I keep the cards close to my chest and don't discuss them with individual colleges who are bidding into a fund. So, we are ably suited and positioned as ColegauCymru to create that dialogue and build that bridge. Because this particular model is obviously more complex than the models of funding of some of the projects that Judith has alluded to, I wouldn't say we're feeling our way as we go, but we're learning how to live and how to work with this project and, of course, howh to avoid making the mistakes that were and are being made under former PFI programmes.
So, I think this 'steady as you go' approach is not to be frowned on, but is to be understood in the context of trying to develop the best outcomes. As Guy has pointed to, if we're trying to develop multi-use sites and multi-use programmes that are available to be used at 3 o'clock, 4 o'clock in the afternoon and the evening, not just when the college is using them, then we need to think about the governance of this project, at the same time not forgetting that this is a twenty-first century schools and education programme, not a capital allocation for public services more widely.
Thanks. Mohammad Asghar.
Thank you very much, Chair. Panel, my question will be around strategic direction and leadership in the further education sector. Does the further education sector require a different approach to school improvement than state schools and, if so, do you believe that this has been recognised by the Welsh Government?
In terms of capital investment, colleges are very different to schools. So, I know that, within the documents, you've been looking at standardisation of buildings and I think that works very well in terms of classrooms. There is a standard approach to that about how you work out size, but within colleges it's very bespoke in some of the workshop areas. For example, we respond, obviously, to employers' needs, so even within engineering, in different campuses and different colleges you'd have different needs depending on the employers that you're working with. So, they are very much bespoke, and I think that's something that we would want to continue with and not lose those opportunities. For example, aerospace is a sector that I work very closely with in Nantgarw. Guy's requirements might be very different in the area that he's working with. So, there isn't a model that perhaps could fit all, and we've just got to be aware of that.
I think, increasingly in colleges, we're having dialogue with employers about their needs, and increasingly we are seeking to develop employer-led curriculum and employer-led provision. And, inevitably, that means that the complexity of some of those resources is getting more and more demanding on our estate. So, I think, yes, I agree with the point that Judith made that within any large capital project for further education, there are elements of it that are relatively standardised and, if you like, are relatively school-like, but beyond that, there's a degree of complexity that goes far beyond.
And there are some school-like investments that have been made into sixth-form centres, for instance, in Pembrokeshire and Deeside, which are more closely related, but again, in those instances, they are not new schools or new sixth-form buildings; they are buildings that are being co-located within existing FE infrastructure. So, it's definitely not a cookie-cutter approach that you need to see in FE where we take a standardised model and we roll it out, because the needs, representing the FE sector, are not just about class sizes or surplus places, they're about the infrastructure you'd want to put into those buildings, and it does then call for a very close working relationship with—the FE department has the residual capital funding to allow us to put infrastructure in the classrooms, or into the lecture theatres, be they the latest machine lathe, or computer technology, which goes in as well. So, the FE sector has to manage a number, I think, of quite complex individual projects within the overall. And, of course, the size, the physical size, is quite—. You look at the Dumballs Road campus—and I think last time the Public Accounts Committee met with us, we met there—that's very different to building a comprehensive school, even quite a large comprehensive school.
Thank you. How actively was the further education sector involved in shaping the strategic direction of band A, given the relatively late involvement of colleges in the programme, and how is the sector influencing the direction of band B?
Well, I was heavily involved in the band A projects, and I think you're right—things have moved and we have seen improvements for band B. The process itself has been simplified. Perhaps, for band A, we'd got to a stage where we hadn't updated our estate strategy for a number of years—it wasn't requested by the Welsh Government—and mainly that was perhaps because we were all perhaps in a state that we needed such big investment that perhaps it might have frightened people if we'd had all of that information at that time. But we've learnt from that. So, in band B, we're going through a process at the moment—all colleges are involved, with guidance from the Welsh Government. I think we're being consulted on this at the moment, about how we capture our needs for the future going forward, so that it will be a strategy for where the investment should take place.
The process itself, as I said, it's been much smoother, because—. An example that I experienced: we would submit our proposals under band A, and you would be categorised on that project—so, you may be placed in high priority, but we were never given feedback as to when that project could actually be supported and funded. So, Aberdare was one of those projects. So, in 2009, I think it was, we were put as top priority, and, again, a few years later, top priority. But it took a number of years for it then to actually have the investment that was required. In band B—a completely different approach, as has been said earlier: all band B projects have been approved. I think, on the understanding that we obviously meet the justification of the full business cases, we've been told that they would all be approved and go ahead.
It's a more tricky, I think, for an FE sector, and perhaps, I would suggest, the faith schools sector, to be able to engage at the same level as Welsh Government officials and the WLGA. It's beholden on us as ColegauCymru to turn up, to be there, and try to engage. We're a small organisation, and we have a very diverse number of stakeholders, albeit they're numerically quite low. So, I think there's always going to be a question about how do you ensure that the well-intentioned work of Government actually fits with what you're capable of doing, as, essentially, a voluntary body, as a charity, on behalf of our sector. But I can't fault the value of the principle of co-operation. I do sense it's getting better. There's an honesty, there's a willingness, to engage around some of the challenges that Guy has alluded to. But, ultimately, it does often feel as if we are still saying, 'And, of course, colleges'. But that's a wider problem. But I do get the sense that the contribution made to education transformation reform is recognised through the programme, and also the contribution that sites such as Nantgarw, Dumballs Road, Aberdare, other campuses in north Wales, are actually making to the wider community. In some senses, the Dumballs Road campus has helped close the gap between Cardiff city and Cardiff Bay, by creating an area of development that was never possible elsewhere.
So, I think that understanding is now emerging. However, we'll have to see how band B pans out. And I'd be very, very concerned, obviously, if, yet again, colleges are put on the back burner because we are looking to seek to address a particular primary school in a particularly contentious area, where there is an acute, pressing important need politically, but, actually, sight of the bigger picture is being lost. FE has had to transform itself. It's had to respond to changes in demographics. It's had to respond to the changing demand from employers. And whilst I wouldn't want to question the importance of primary schools in reinvestment, there's still a job of work that needs to done within the FE estate if we want it to be the driver of increased skills and, therefore, the driver of the economy.
Thank you. What are the further education sector's priorities for band B, and are you satisfied that these are reflected in the Welsh Government plan for the programme?
I think, again, the sector is very much on the second part of a journey that commenced with transformation. Members will be familiar with that programme, which has brought about, for instance, the creation of new institutions such as Coleg y Cymoedd and reinforced the previous work that had been done to bring together provision, for instance, in Gwent. I think some of the challenges, obviously, that face the FE sector—or, as we're probably referring to now, the PCET post-compulsory sector—they will only perhaps begin to emerge when the new PCET structure, the new PCET body, starts to come to fruition, which will be in 2021, 2022. So, it's important that we have sufficient flexibility in the band B programme to accommodate very rapid, changing circumstances, and allow us to be able, then, to go to other areas of the estate that perhaps need, not massive reinvestment in terms of a big building, but need quite discrete investment, as well, to meet the future need.
So, I think, because the nature of the FE sector is quite dynamic, the programme will need to follow that dynamism as well. It can't just be driven by a spreadsheet or by an allocation. I'm sure Guy could share some of the challenges he faces in terms of his challenges in Gwent—a large landmass area of Wales—in trying to respond, particularly, in terms of the sixth-form need.
I think, in terms of—. How band A has rolled out, and how that has led to a change in priorities within band B, is interesting. What I would say is that my college has benefited from local authority band A projects, so we are currently working with Torfaen on a new-build college in Cwmbran town centre. That sits within the local authority's band A programme. So, I think, for me, my experience of it has been that there has been an element of us being able to join things up and work collaboratively, but I guess that's not true for—
Do you think that the band B part of the programme will be as conducive to collaboration between local authorities as band A was?
Possibly not, because of what I understand as the reliance upon MIM as the funding programme for FE. So, I think that places an obstacle in the way, and I guess the issue around those local authorities who are looking at sixth-form provision and looking at ways in which they can manage sixth-form provision, if they wish to instigate change, is not necessarily going to be supported or helped by the fact that the FE sector is being steered very clearly towards MIM.
We've also got this dilemma of what we want to do with post-16 education as well. We wouldn't, as an organisation, I think, say that one model of delivery is better than another but, rather, we need to understand what outcomes we want. It would be wrong to be planning large-scale investment, for instance, in the school sixth form—academic—if what we want to do is to try to direct and support many more individuals down the more vocationally orientated route. But it's going to take some time, I think, for that debate and argument to work itself through. Now, hopefully, if that can coincide with the roll-out of band B, then we have a strategic purpose and a vision that is matched by capital allocation, which, hopefully, should bring about the best results for the learner. But nothing in public policy is ever perfect, so we need to be careful that we don't get an asymmetric relationship between the strategic planning and the structures that are put in place for capital investment.
It wouldn't be wise, I wouldn't think, now to be building great big sixth-form blocks in schools, but it would be wise to be supporting their delivery of compulsory statutory education, for instance, and making sure they have the space they need to deliver the new curriculum when it arrives. So, we need to be thinking that this is part of a wider vision for education in Wales, and not simply a capital programme that will advance well, because FE is sufficiently mature and robust enough to be able to make a go of the MIM project, where perhaps other partners are less inclined to want to go down that route.
There's always been an element of MIM, if you like, of borrowing, from some of the colleges—in their capital investments, anyway. Some have managed to fund from resources, depending on their size. Some have had to go to the market and borrow. So, the level of maturity in the FE sector does lend it more towards the MIM approach. But it might be the case that, actually, a more direct capital allocation could have been the best way to go, but, as we've heard, we've been steered down this route now for band B.
This is interesting. I'm not going down the MIM route, and the reason for that is that my band B projects are relatively small compared to my band A projects, which we had to borrow money from the banks for, but not to a large extent, because we had been actually saving for that investment for many years, because we knew it was coming. So, the approach that we're taking at the moment is to try and increase our surpluses for the next three to four years so that we've got enough money to support the band B projects. That's our plan. It is working so far, although it's very, very difficult to achieve that.
We were fortunate, under some of the band A projects, that we had European support also. So, Nantgarw benefited from 17 per cent from ERDF. That in itself was very much needed and appreciated, but, you know, the bureaucracy that surrounds that isn't easy either. But it did actually make us focus on things that we wouldn't have focused on perhaps without that funding. So, it encouraged us to look at how we would engage and ensure that we had SMEs within the building, and made sure that they were more open to the public. So, that's been our experience so far.
So, MIM at the moment for us isn't an option, or one that we're considering, although we wouldn't rule it out for the future, because, depending on what the local authorities' plans are for the future, we might change our minds on that. We work very closely with Rhondda Cynon Taf and Caerphilly. Rhondda Cynon Taf have done quite a lot in terms of transformation, transforming schools. We're waiting now to work very closely with Caerphilly and, depending on what they want to do, well, obviously, we'd work very closely with them to make sure we do what's best for the area.
I would like to ask Mr Davies directly on that: has the Welsh Government worked collaboratively with the further education sector to address industry's needs during the band A spending cycle?
My feeling is, and it would be at this point that I'd have to go and check and think more widely about it—it's quite a subjective view, but I think that the focus on the band A has been around building and constructing. You know, building the edifice. Elsewhere, Welsh Government is very, very close to the FE sector. They're not just asking but are sometimes demanding a greater responsiveness to business. As I say, there's capital allocation—small, quite modest capital allocation in terms of this overall project—from a separate and discrete fund to allow that to happen. So, it's not as if—. Because of the complexity of the delivery, it's not as if FE is just looking at this scheme; it's looking at a wider capital allocation.
But what I would say is that it's okay for Welsh Government to say that you can have money either under a MIM or a grant project—you can have a capital allocation—but, as the auditor general will remind us from his previous report, what greases the wheels of that provision is the day-to-day allocation of funds on a per capita allocation basis, and my concern would be that we could undo a lot of the good work around infrastructure and building buildings and creating places for people to learn if we don't look at two other underlying trends. One is the demographic trend and our reliance at the moment on funding per capita for a decreasing demographic—the so-called bell-shaped curve that was highlighted in the previous report. And, secondly, of course, there are far more adult learners in the system—technically, people who need support—than there are young people coming through. So, if we don't look at an allocation base that supports their needs, then we will have buildings that are not being used genuinely as community resources because the funding mechanisms are not there to help bring people into those resources after the time that the school bus or college bus has gone home.
So, it's a very, very balanced picture that we need to maintain, and that calls for different parts of Welsh Government to speak to each other and to make sure that they understand what the future strategic need is likely to be.
Thank you. And how has the application and approval process felt from a further education perspective? Is it sufficiently clear and easy to navigate, and have colleges had sufficient support with preparing business cases?
My experience for band A and, so far, with band B is, yes, we've had a lot of support from the Welsh Government. The five-case business model training was given to the sector for that. We were supported with our application, and, once it had been approved in principle, the Welsh Government were keen to work with us to ensure that we were able to answer all their queries and gave us support for that. No, I think we've been given a lot of support.
And then, once approved, the Welsh Government would normally nominate someone to sit on your project board to make sure that you are able to achieve the outcomes.
Are there any changes to the application and approval process that would benefit band B?
I think the clarity of the MIM, for some institutions.
I think it really goes back to those comments I made about the uncertainties within the MIM. So, we are not yet in a position where, when we ask questions about what is going to happen further down the process—Government colleagues are not in a position to be able to answer those questions at the moment. And that is simply because the process itself is evolving and developing as we move through it.
Do I interpret that correctly, that answer that they're not in a position to answer, and your previous answer where Iestyn Davies suggested different parts of the Welsh Government should speak to each other—taken together, does that amount to a coded critique of the Welsh Government's handling of this process?
I think it's a wider observation about how we are currently trying to face the challenges together that are coming the way of FE. So, you could add into that conversation how do we respond with UK Government to the shared prosperity fund and, as Judith mentioned, the role of ERDF in some capital allocations. We're in a very, very complex situation. Revenue funding, on the one hand, on an allocation basis, needs to be matched to a spending plan and an investment plan for the infrastructure that we think we're going to need. That is genuinely complex. And of course you're dealing with FE institutions that are themselves independent NPISH organisations with their own governance structures. So, it really does call for us to make sure that we keep checking in and we keep thinking medium to long term.
My critique over allocation of funding, I think, would be shared by all FE principals, which is that it's still on an annual basis. So, you're trying to plan a very complex funding model—the MIM—and you're not quite sure, against a backdrop of a current review of our allocation of revenue funding. That's the nature of it, that's the times we live in. I don't think it's a lack of commitment on behalf of any civil servant or individual to support FE. I think we've gone past that point of concern. It's just that we are in very, very challenging times.
In terms of the mutual investment model, did I take from your previous evidence that you're pragmatic about this? You'd rather have a more straightforward allocation of grant, but if this is the terrain that you have to work with, you'll do your best. Some colleges will adapt more easily to that than others. So, what will happen to the others who struggle with that?
I think the demands of the FE investment programme are that the reality is that MIM or a programme like it has got to be part of the equation. In answer to your question, 'Would I prefer just a straightforward capital grant?', yes, I would, but the MIM programme—. Because the crunch question around the MIM programme is going to be revenue affordability for 25 years, and if we can't arrive at a situation where the package as a whole stacks up for 25 years of revenue payments, then clearly MIM is not going to work for the sector. So, that draws us into conversations about the intervention level and so on.
Previously, when it has been capital grant, it's been straightforward: 50 per cent of the cost will be met by the grant, so the college is left in a position of saying, 'Well, if it's a £20 million project, can you finance £10 million?', because if you can, you've got a viable programme. I think, either way, colleges have got to, as Judith has said, manage their finances prudently in order to be able to support investment in their future. As lovely as it would be to have a 100 per cent intervention rate on grant, I don't think that's going to happen, and actually I'm not sure that it should happen, even if it could. But, I think the way we are moving through MIM at the moment, yes, there's a pragmatic approach being taken to it that it is the only show in town, but if it works then it will deliver a very significant renewal of the FE estate in four or five colleges in Wales.
What I'm trying to understand is what happens to those colleges who are less nimble to navigate this terrain.
It might be that their capital requirement is not as substantial, it's not as big, as Judith's alluded to, that they've had significant investment in the past, although I think that is unlikely. There are still plenty of places that don't look shiny and modern and contemporary. There are a lot of areas that need to be looked at, not least with—. We've been discussing, for instance, the situation in Newport and other parts of the FE estate. But those projects will probably go forward on a very different model. Ultimately, I think, yes, everybody would rather know exactly, 'This is the capital allocation you're going to get and borrow the rest', but the upside is that MIM, if done well, could leave a longer, better managed legacy over 25 years. The difficulty, of course, is that if your planning horizon is 25 years but your funding parameters are annual, that's a very difficult equation to get right and, I suppose, to square with your trustee board or your governing body.
So, on that, are you having difficulty getting commercial partners willing to sign up to that length of deal, given the uncertainty of your funding?
To MIM or to loans generally?
Well, either. Both. It's the same principle, really, isn't it?
As far as MIM is concerned, then that will be a Government-led procurement exercise for two preferred partners. So, my understanding is that the initial market testing has been very positive. As far as capital and colleges borrowing is concerned, our experience of borrowing is that we have not had problems to date.
But I guess we are getting to the stage—and I guess that part of your question is about this—that some colleges have perhaps borrowed the maximum that they would want to borrow, not knowing about what the future may hold, and perhaps aren't going forward with a MIM at this moment in time. But they all have their priorities, and I guess that each institution will have worked out what they can afford for the next five to 10 years and 10 to 20 years.
But if you're not, as Guy Lacey just said, having problems raising that capital, maybe the market doesn't share your concerns about future viability, and maybe you're worrying for no good reason.
Or maybe we're just shroud-waving in order to make a political point. There are various ways of—