Y Pwyllgor Cyfrifon Cyhoeddus - Y Bumed Senedd
Public Accounts Committee - Fifth Senedd25/06/2018
Aelodau'r Pwyllgor a oedd yn bresennol
Committee Members in Attendance
|Lee Waters AM|
|Mike Hedges AM||Yn dirprwyo ar ran Rhianon Passmore|
|Substitute for Rhianon Passmore|
|Mohammad Asghar AM|
|Neil Hamilton AM|
|Nick Ramsay AM||Cadeirydd y Pwyllgor|
|Vikki Howells AM|
Y rhai eraill a oedd yn bresennol
Others in Attendance
|Emma Williams||Dirprwy Gyfarwyddwr, Polisi Tai, Llywodraeth Cymru|
|Deputy Director, Housing Policy, Welsh Government|
|Huw Vaughan Thomas||Archwilydd Cyffredinol Cymru|
|Auditor General for Wales|
|John Howells||Cyfarwyddwr, Tai ac Adfywio, Llywodraeth Cymru|
|Director, Housing and Regeneration, Welsh Government|
|Mark Jeffs||Swyddfa Archwilio Cymru|
|Wales Audit Office|
|Melanie Godfrey||Dirprwy Gyfarwyddwr, Cynllunio Busnes a Llywodraethiant Addysg, Llywodraeth Cymru|
|Deputy Director, Education Business Planning and Governance, Welsh Government|
|Nick Selwyn||Swyddfa Archwilio Cymru|
|Wales Audit Office|
|Steve Davies||Cyfarwyddwr, Addysg, Llywodraeth Cymru|
|Director, Education, Welsh Government|
|Tracey Burke||Cyfarwyddwr Cyffredinol, Addysg a Gwasanaethau Cyhoeddus, Llywodraeth Cymru|
|Director General, Education and Public Services, Welsh Government|
Swyddogion y Senedd a oedd yn bresennol
Senedd Officials in Attendance
|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 14:01.
The meeting began at 14:01.
I welcome Members to this afternoon's meeting of the Public Accounts Committee. Headsets are available for translation and sound amplification. As usual, please make sure that phones are on silent. In an emergency, follow the ushers.
We've received two apologies, from Rhianon Passmore and from Adam Price. I'm pleased to welcome Mike Hedges back to the committee to substitute for Rhianon Passmore. Welcome, Mike.
Do Members have any declarations of interest they'd like to make at this point? No. Okay.
Item 3 and papers to note—only the minutes from the last meeting, on 18 June. Okay? The minutes are fine.
Item 4: our latest evidence session into the twenty-first century schools and education programme. Can I welcome our witnesses? Thanks for being with us today. Would you like to give your name and position, for the Record?
Thank you, Chair. I'll start. I'm Tracey Burke, director general for education and public services. I'm joined by my two colleagues.
Steve Davies, director, education.
Melanie Godfrey, deputy director, education business planning and governance.
Thanks. We have a number of questions for you. I'll kick off with the first one. Briefly, before moving on to specifics, what do you feel have been the overall strengths of the programme, compared to what went before, and what areas do you think could be improved as you move on to band B?
Right. Thank you, Chair, and good afternoon, everybody. Obviously, the previous programme was before my time. I think, actually, Melanie, you were probably there at the time before band A actually started, but, from what I've heard and what I've read and seen, the previous regimes—before band A—were sort of annual planning. It was very difficult for people to make longer term financial commitments. I think, Melanie, you described it as being patch and mend, I think, in the early days. So, I think band A was really quite transformative in that sense because it allowed five to seven years' planning horizons with the financial commitments that it was able to make. I also think band A brought about a level of partnership working that hadn't really been there in the sector before—very collaborative working right across the group—but also quite a lot of flexibility. So, whilst it was an overall programme, individual local authorities, for example, were able to move at a pace with flexibility that met their needs, and, because it was managing an overall programme, that meant that the Welsh Government was able to flex and slip some projects where perhaps capital budgets were constrained in one financial year for a local authority, or speed up in other cases.
I think I've only answered part of your question. Sorry, what was the—? That was the part—
No, that's fine, as it was a pretty general question anyway. Just looking ahead to band B, can you give us any more information on details of how many schools might be involved, how many planned projects that we might expect to see?
Fine. So, for band B, where we are in the process now, we're following quite a programme-based approach. So, that involves each local authority or further education institution setting out what they call a strategic outline plan, and then after that, then, comes the outline case, and then the business cases are developed from there. So, where we are at the moment is that we're at the strategic outline plan—the SOP, as we call it internally. So, they've been submitted and they are, as it suggested, a strategic outline of what people would like to see developed. The numbers I think that we've got in relation to the band B programme are probably only indicative at the moment. I know, for example—well, I know in band B—I'm trying to think now, sorry; I don't know the overall figures. Have you got the figures?
At the moment in band B, we've got approximately 217 projects on the blocks, and, within that, as Tracey advised, they've had their programme envelopes approved. So, they've got assurance of funding now, so they know what they can deliver within in terms of funding.
Just before I bring Mike in, what sort of split is there between schools and further education?
So, I think, by number, schools are the vast majority. I think it's probably about three quarters of the projects are—. Yes, about three quarters, from memory, are schools, and about 25 per cent by number are FE. But that's not the same as, necessarily, by value because the FE projects tend to be larger and more expensive projects. So, it might be a different balance by value. I don't know if anyone—
And will a lot of the spend be on new buildings, or are we looking at a lot of refurbishment of current buildings?
I think it will be a bit of a mix. I know that, under the mutual investment model, it will be predominantly new, but colleagues can tell me the mix.
My understanding at the moment is that, out of the 217 projects, 92 will be new builds and the rest refurbishment. But I would just caveat that in that, as we go for the option appraisal process of the programme, sometimes refurbishment could prove to be better value for money than new builds. So, there will be some swapping and changing as they work through their business case and test their options. But, in terms of the detail we've had in the outline programmes, the split is 92 new builds and the remainder refurbs.
I remember that happened in my constituency with a school that was going to be newly built, but then an extension and refurbishment proved to be more cost effective. So, that's understandable. Mike Hedges.
Also, some schools are partial rebuilds, where a newer block is kept. Morriston comprehensive is an example where the new block was kept but the old buildings replaced. My question is, on the list of band B, how many denominational schools are there, because my understanding is that both Catholic and Church in Wales schools were massively under-represented in the first tranche? Are there any in the second tranche? Some of them are in exceptionally poor condition, but, as you know, because you have to get money out of the diocese et cetera, that can cause problems. But how many, if any, are in this next tranche?
I know that there were problems in band A, and some of that was related to funding, not just the church having—or church schools, faith schools—to find their share, but there were also issues about how the money was linked to local authority funding. The 85 per cent was part of the 50 per cent of local authorities' moneys. For band B, we're separating that, so there won't be that sort of rub-up, I suppose, between the two. We're really hoping that that will increase participation, and it's something we're working hard on at the moment. I don't know—Mel, you seem to have lots of figures to hand. Do you have that figure?
I don't know the exact number of the A schools, but what I do know is that there is a greater participation rate in band B. As Tracey said, we've learned lessons from the previous band, and, added to that, we are working much closer now to the voluntary and faith-based sector, whereas previously, in band A, we spoke to them through almost the local authorities. That didn't work, hence the lower rate, and in band B there was a greater participation rate.
In terms of some of the lessons learned, this is generally seen as a more centralised approach than the previous phase. Do you anticipate any problems developing out of that approach, and are you confident that your partners in this are signed up to the fact—they're used to the issues with the first band—that this is a different approach to band B?
Thanks, Chair. I listened to the evidence sessions as a precursor, obviously, in preparation for coming here today, and that issue of centralisation versus how much we would be collaborating—. I think there's certainly no intention of any diminution of collaboration on our part. I think there are two issues there—two related issues. One is centralisation, perhaps through greater standardisation. So, we might be specifying more, and that could be perceived, I suppose, as being less collaborative. The other issue—. I've completely forgotten what the other issue is, Chair, I'm very sorry. I'll come back to it in just a second.
I do that all the time. It's the heat.
I'll settle down. So, on the issue of collaboration, there's absolutely no change to our structures by which we're going to be involving local authorities. In band A, they were part of our twenty-first century programme board. The same will apply in band B.
I've remembered the second thing that I was going to say. The first issue, I think, is that standardisation may mean that people feel we're not collaborating enough. The second issue is to do with the development of the mutual investment model, and I think that, because we've brought our partners every step of the way throughout this process—and I'm speaking on work that colleagues have done here, obviously, not myself—people are used to being involved in every aspect of what we do, but, in the development of the mutual investment model, we have necessarily had our heads down quite a lot. There's been a lot of very technical work involved in doing that, and that development part and actually developing the technical aspects of the model we have really been doing ourselves, although we are now working very closely with local authorities on the model, helping them understand it and how it will all develop and roll out. So, I think those might be the two areas where there might have been a—
So, you've got ongoing discussions with local government about the scale that their participation's going to be.
Absolutely, yes—big collective meetings but also numerous individual meetings. Steve, you are out meeting all the time, aren't you?
I did listen to the Welsh Local Government Association evidence. I think, at the beginning, back in February 2017, we went round every local authority via each region to brief them on what we saw as the potential opportunities through the MIM programme. We then had their SOC through at the end of July.
That's the strategic outline case.
Yes, sorry—the strategic outline case for their proposals. And you're right—there was a time then when we closed in, spent a good deal of time looking at the technical issues, and since then have gone back, but I can understand someone feeling that the centre was looking at things and not involving them in as much depth as we had done previously.
Concerns were raised with the auditor general by some councils about whether there was going to be sufficient affordability in the system, particularly for the capital. Are you addressing those issues?
Yes, I think, to the extent that we can. I think, on the capital funding, all the proposals that have come through from local authorities will have had to have gone through their cabinets for approval before they can come to us. So, they seem assured that they have sufficient capital for the proposals that they've put in, but that's something that we've retested over the last couple of months with them, through meetings and challenge sessions, and it will be something that we continue to test throughout the process. It's in no-one's interest for us to launch an underfunded programme, because this must be successful. So, we will work very hard to make sure that their bids are realistic compared to the capital that they have available.
Finally, before I bring other Members in, there was an issue before with voluntary aided schools in band A, and about their lack of ability to access the funding. Have those concerns been addressed?
Yes. That's some of the work that we've been doing with the faith schools, looking at the separation of money from money that was part of the 50 per cent we were giving through the local authorities, and separating that, but also just discussing and meeting with them to understand if there are any more specific issues other than funding issues.
Great. Mohammad Asghar.
Thank you, Chair. Now, my question to the panel would be around this mutual investment model. What are the main benefits and risks of the strategic partnership model you describe for the mutual investment model?
Of the strategic partnering part of it?
The strategic partnering is the way that we're going to be operating the model. So, we looked at a number of different options for how we might do that. It wasn't possible to look at a framework model, because they tend to just be for four years, and this is a much longer term programme. So, we weren't going to be able to contract through a traditional framework way of doing things. But also, because we need to have a certain scale for a mutual investment model to be attractive to the private sector, it was unlikely that one local authority would have enough to make it an attractive package on its own. And we also had concerns then about a lead local authority, and all of the different multiple contracts that there might have to be then between other local authorities: it felt a very complicated way to go about it.
So, instead, we looked at the Scottish model where they'd been doing this strategic partnering approach, which seems to be working very successfully. So, this is where we procure a strategic partner who will then design and develop the proposals. We saw it as being the least complicated and cleanest way of doing that. Would that be—?
Yes, just to add that our initial thinking was around a batch process, but, as Tracey mentioned, in terms of having a batch it's very difficult to get all the projects to start at the same time, and that's what we'd have been up against. But, by using a strategic partnering approach, we can bring the projects to our partner at varying times. So, as a procurement route, it just enables easier delivery as opposed to a batching process.
In addition to it being easier, it's also speedier and the strategic partner can standardise further approaches, therefore, in terms of the efficiencies, the effectiveness and value for money, working across a large number of schools. We gave an example in our evidence of perhaps two strategic partners representing 50 per cent of the country, and the scale of that and the application of the increased standardisation will, we think, bring efficiencies and value for money.
Thank you very much. Are you confident that there are sufficient safeguards to ensure that MIM ultimately delivers good value for money, which you've just mentioned? Specifically, are you concerned that 80 per cent of the profits and two thirds of the refinancing benefits would go to the private sector?
No, I think we're not concerned about the 80 per cent. I think that's just a necessary part of the model. I think if we were doing a traditional capital build, the profits would go 100 per cent to the contractor who was building the facility—the education institution. So, this is a form of profit sharing, and I think that we are developing and putting in safeguards to make sure that our share—our 20 per cent of public equity that we're putting in—is, in a sense, protected. One of the ways that we'll be doing that is by the appointment of a public interest director. So, that person will have visibility, obviously, of all the board papers and will be able to safeguard the public interest in that. Is there anything else from anybody else that we can say on that?
Just to add on the financing bit, the capital risk element only represents 10 per cent of the total financing package, and the public sector will provide up to 20 per cent of that 10 per cent. And just to add in terms of the controls that we have in place in terms of the value for money, every single project, whether it's MIM or capital, goes through the HM Treasury five-case model, and we test at each stage of the business-case process that value for money is being demonstrated, and we will use that model particularly for MIM just to check that it is value for money at all levels of the project.
Thank you. Could you give us a sense of the scale of private sector interest in the MIM? How many companies are likely to bid for the contracts?
So, we've done some market testing already. I think in the trade it's known as soft market testing—that is, going out and talking to private sector potential contractors or bidders. There have been two big events. There was a launch that the Cabinet Secretary for Finance launched, but also then there was a technical briefing. I think you were at that, Steve, weren't you, so maybe you can say something about that. I think there were over 200 people at the first event and about 200 at the second. So, there certainly seems to be interest and appetite there, but discussions with the private sector seem to indicate that there is sufficient interest in the market for this. Steve, do you want to say a bit more?
Yes. There were 250 delegates at the first and 180 at the second. In terms of the appetite, they see the potential model in terms of the scale and pipeline of business being attractive, particularly because of some of the challenges they're facing elsewhere in the UK in terms of the schools market. So, the feedback we had was a high level of interest. Clearly, we can't define, 'These number of people will be bidding', but we were very impressed and pleased with the number of people who not only turned up, but actually the level of expression of interest.
Thank you. What are the main arguments you are using to convince councils and the further education sector that MIM won't run into some of the well-documented historic problems of PFI?
I think that has been a concern, certainly in the sector and elsewhere, and perhaps around the committee table here. I think the problems with PFI are very well documented in terms of it being very costly, the contracts being very inflexible, and very low-value services. I think we've all seen headlines about the cost of changing a lightbulb and those sorts of issues in some of those contracts. So, we've worked very hard to develop something that's different, that's got better value for money and public interest right at the heart of it.
So, some of the things that we've done are that we've removed the soft services, so things like catering and cleaning—those sorts of issues will not be part of the contract. Other low-value maintenance work will not be part of the contract. Capital equipment that could be better funded just through ordinary capital will not be part of the contract, and also we're going to have a much more standardised contract. I think, under PFI, they were all individually negotiated and there is something about us being a more intelligent buyer, I suppose, and a more intelligent contractor.
Then, the other difference is that we are putting public interest really down the centre of this, so we're going to have a public interest director that will also be attaching quite stringent community benefits into the process. Also, as I say, we're going to be a more intelligent buyer and we are making sure that we've got the expertise to do that. Is there anything I've missed?
Just to add that, whilst we had our heads down, so to speak, in Welsh Government, we were learning lessons from our counterparts in both Scotland and England. So, we're learning the lessons of where they did things wrong and trying to do it better, and also to add that we need to make sure that the contracts that are in place are watertight. In terms of an additional benefit of MIM to local authorities, one thing I would say is, over the 25 years of the lifetime of the MIM contract, those schools will be maintained, and that's of big benefit to local government because that is a drain on their resources in terms of maintaining schools.
Oscar, before you go on, I think there were a couple of supplementaries. Mike Hedges, did you want to come in?
You've said you're using the Treasury model. Is that the same Treasury model that proved PFI worked?
Is that the same Treasury model that proved PFI worked?
No, we're talking about the Treasury model as the five-case business model.
How does that differ from the one that proved PFI worked?
I don't know what that model was that approved the PFIs, I'm afraid.
My understanding is that it was very similar, but perhaps you can give us a note on the differences on that.
We most certainly will and, certainly, if there are lessons to be learnt from that, we'll certainly take them.
I always think, and I'll quote Mark Drakeford here, that we should always be using money from the cheapest possible place, so from our own direct capital if we can provide it, by the cheapest form of borrowing, which is normally through the public works loan board, and then we move on to the third place. Has that been done with this? Giving a local authority additional money so they could have borrowed through the public works loan board, for example, would that have been cheaper or more expensive than this model?
The first thing is that if we'd had sufficient capital, I think that would have been preferred. The reason this model has been developed is there isn't sufficient to match the ambition. But, in terms of providing money to cover the cost of local government borrowing, again, I heard that in the previous evidence session that we listened to and, I think, there's an important distinction there, because if we provide hypothecated revenue to support local government borrowing, it scores against our departmental expenditure limit. So, in a sense, it's not additional—it simply displaces other capital investment. But, in the case of smaller local government borrowing that's more modest and, perhaps, just above the range from which they could normally borrow, as with unhypothecated, then we can support that in that way. But, the scale of what we're doing here means that that alternative is not one that we can pursue.
What's the maximum amount that local authorities can be supported for? It just means how you write the standard spending assessment, doesn't it? You've got to add capital costs to standard spending assessments when you're calculating a local government budget and, to allocate an extra £100 million, there's interest on that, so what's that—£100 million plus paying back over 30 years? You're talking about £10 million.
We've done that. When we started in band A, the original ambition was for the band to be three years in length and then the 40 per cent cuts from capital came from central Government. So, we had to expand it to seven years so that we had sufficient capital to deliver. We then were able to compress that seven years down to five through what we call the local government borrowing initiative. So, Welsh Government, actually, gave money to local councils to actually borrow against. So, we have been doing that in the programme. Added to that, we've also used financial transactions, which is a form of borrowing. One example that's been procured on a financial transaction is the new college in Aberdare. But, as Tracey said, because of the scale and ambition in investment needed across the whole programme—. About eight years ago, they estimated we needed £5 billion to actually get the schools estate up to standard and we need to do that as quickly as possible, which is why we're adding the MIM model into it, because it allows a massive chunk of investment of £500 million to accelerate the delivery of new schools. So, it's a balance between getting cheap borrowing, yes, doing it the cheapest way, but also delivering new schools for our learners.
Okay. Oscar, did you have one more question?
Thank you very much, Chair. The Cabinet Secretary for Finance has previously stated that low-level maintenance work would be excluded from MIM contracts. Given he neatly avoided answering this question last week in Plenary—the finance Secretary—can you clarify exactly what it will entail, furthermore, in terms of the high-level maintenance work over the next 25 years, such as roofing or extensions to the buildings? Can you explain exactly who would be responsible for the payment to sustain this and what liabilities there will be?
Okay. So, the low-level maintenance will not be included—that's been determined. But the higher level maintenance is something that would be ongoing as part of the contract.
As we sit here with you today, we don't know the exact split—that's work to be done in terms of our specification of what will be included and won't be included in the MIM programme. But, be assured, we want to get value for money out of that £500 million, so in terms of the maintenance we expect the partners to provide, it will be quite high. But, sitting here today, I can't confirm the specific elements of what will be maintained.
Are you just saying that £0.5 billion is serious money and you don't know yet what is high level and what is low level? It's a very strange outcome. What is the timescale on it?
In terms of replacing the roof or big water leaks, yes. In terms of a cracked pane, as an example, I don't know. It's the quantum amounts that will include and exclude. So, it's the big maintenance items, for sure, being included. It's the very smaller stuff that needs clarification.
And this detail is what's being worked through. There is quite a long lead-in time before any of these projects would commence and you're taking evidence from us today in part of that development process.
Okay. Do you share ColegauCymru’s concerns about locking into a 25-year contract when there are likely to be changes in the nature of FE demand and provision over that period?
I think any long-term commitment is challenging and must not be taken lightly. Therefore, that's why it's really important not only for the colleges but for the local authorities to have as much information as possible before they actually sign up on the dotted line. So, they will have quite a long lead-in time before they need to do that. So, at the moment, they've submitted a strategic outline programme, as I've explained previously. The next stage is that we'll be asking people to sign up to an agreement, a partnering agreement, a memorandum of understanding, if you like, to be part of the mutual investment model. That is really just signing up to be part of it. There's no financial commitment on them at that stage. They will then be asked to submit their proposals for stage 1, and those proposals will be developed and designed. At the end of stage 1, they'll have the option to say, 'Yes, that's great', or 'It looks good but it needs amending', or 'No, I don't want to proceed', at which case they can opt out of the process, but they will need to pay the development costs for stage 1. They'll then move on to stage 2, and stage 2 will have a—. That will be the full design specification, all of the final costings. They'll be clear at that stage what the unitary charge is likely to be. At that stage, at the end of stage 2, again they've got an option to either proceed, or put in maybe some minor changes, or to withdraw, and, if they withdraw at that stage, they need to cover the costs of the development. So, at the moment, we've only been able to give them a notional indication of what that future charge is, based on a notional cost of capital, a notional life-cycle cost based on a benchmark, and notional facilities management, based on a benchmark and, again, an idea of the cost of funding. So, we've been able to share an idea of what it might be, but they will have plenty of opportunities down the line before they actually have to commit.
Okay. I need to move things on, Oscar, because I neglected to call Vikki Howells earlier, so, Vikki, over to you.
Thank you, Chair. Lots of technical questions there about the way that the MIM funding model could perhaps assist the FE sector, but I think the most important question, really, is: are we going to get more FE colleges benefiting from band B? You mentioned the Aberdare college earlier in your evidence, Melanie, and I'm very fortunate to have that in my constituency, and I know how having first-rate FE institutions like that, with state-of-the-art facilities, really does help local learners. They've seen a huge increase in the numbers going through their doors since it was built, and obviously the beauty of the FE sector is that it's not just catering for 16 to 19 education, but also for adult learners, and we know that there's going to be a huge increase in demand for continuing education, with the changes that our economy is going to see in the future. So, how confident are you that FE will be a more substantial recipient of funding in band B, and is the MIM model the sole vehicle that you're pushing for that, or would there be others too?
Thank you. I'll start with the last bit. No, it's not, certainly, the sole model that we'll be putting forward. I mean, we're not in the business of compelling people, or even, particularly, encouraging, down this route. The MIM model is a model that we want to share, and for people that are interested, but, if people have sufficient capital, then the capital route of band B is still there and still available. I know that all of the strategic outline plans that we've had in from FE so far, I think we have supported. Would that be correct?
Yes. Everything they've asked for we've approved.
Approved. And I don't know—have we seen an increase between band A and band B, do you know, or—?
Yes. There's been a slight increase—not in terms of the larger projects, but there's a mixture of the large and small, which we didn't see in band A. But there's a point to be made that—. I've been with the programme quite a long time. I've been gone and come back. And when I came into Welsh Government from Education and Learning Wales and we devised the twenty-first century schools programme, prior to that, FE had very small-scale projects. It was the odd construction, building and the odd roof replacement. Since the commencement of twenty-first century schools, we've been able to build and deliver much more innovative and large-scale projects, such as the Aberdare campus, such as the new college down the road, Cardiff and Vale College. And, yes, we want to do more of that. So, it's good to be able to be in a position of, band B, actually approving everything they've asked for as a sector.
Steve, you've been out with a team—
Yes, I think the scale of the projects—. There are about 45 projects that have been approved. There were four proposals around MIM that were very large scale, but other large scales within capital. But the balance in terms of the percentage of the proposals around capital amounts to about 60 per cent, and then the MIM for about 40 per cent.
And with those smaller scale projects that you referred to as well, Melanie, would they be routine maintenance, or to what extent would it be colleges changing their interior in order to offer different courses because they are changing the way that they're delivering courses, in line perhaps with the new economic policy?
So, the programme supports, in the main, large-scale refurbishments, not small-scale maintenance. So, the proposals that come in will be new-type buildings, as opposed to maintenance and doing repairs. It will be to support the innovative stuff as well as addressing the change that learners need.
Okay. Thank you.
Mike Hedges, did you have any further questions now?
No, I'm good.
Thank you. You acknowledge in your submission to the committee that one of the risks with the MIM schemes in particular is the availability of expertise in the construction, and you say that you're exploring having a central expert function to make sure there's consistency in design. Could you just tell us—update us—on your progress on that and your thinking behind it?
Yes, of course. I think, as I said a little bit earlier, it's really important that we are an intelligent client, and we do need to have that expertise internally. We've got some external advisers—so, what you'd expect, really: legal, commercial and some technical advisers—and we've been developing our internal capabilities—colleagues within the Welsh Treasury are becoming more and more expert—but we felt that we also needed another level of expertise to be brought into the Welsh Government. So, we've been using what's called Local Partnerships. So, the Welsh Government's got a 5 per cent stake. I can see you nodding; you know what Local Partnerships is. Perhaps the other committee members do, but it's owned between Treasury, the Local Government Association, and we've just taken a 5 per cent stake in it. So, we've been able to avail ourselves of people with very, very deep experience. So, our MIM programme director, I think has got 15, as a qualified commercial lawyer, particularly around private finance contracting. And also the financial lead on the mutual investment model is again brought in under Local Partnerships, and we would hope to bring in more expertise as we need it, basically. But it's a more cost-effective way than purchasing through external consultancies.
So, is that what you're referring to when you talk about a central MIM programme team?
It is, yes.
And will they provide us with granular advice about building design?
No, not—. Some aspects of it, but not the design part of it overly, will they, Mel?
So, there will be what they call an output specification, which is the partial element of the design—what we expect. Then that will go on to architects for the scheme who would give advice, and then that would be standardised.
Right, because we've had some evidence, most notably and starkly, from the Design Commission for Wales—I don't know if you've seen their evidence—
Yes, I've read it.
What did you think of it?
I was very disappointed to read it, actually, and I took it up with the team to understand more, because it was quite sobering to read that they felt very excluded from the programme and that they felt not consulted. I think it would be a good challenge back to us to say why we haven't consulted more with them. So, I've taken this up with Steve and Mel, and I think there were initial discussions with the design commission at the start of programme. That would be correct, wouldn't it?
Yes, there was initial discussion and engagement, and schools and colleges used their expertise. The feedback we've had—because we've followed it up after seeing the details you were given—was that, in those very early days, they learned a good deal around the design aspects, and some further examples in terms of efficiencies. They felt that they took on some of those skills within their own council teams, local authority teams, and were applying those skills, but it's right that it's probably timely that we re-engage with them to challenge if that level of capability is where they believe it is within local authorities. So, I think it is time to bring them back in and engage.
We did consult, obviously, and part of our programme was Constructing Excellence in Wales.
I was going to ask you about that. Because you've pulled their funding.
You've pulled their funding.
Well, I haven't pulled their funding.
Welsh Government has pulled their funding. They're stopping being. They're going to be an ex-parrot.
Pining for the fjords. So, that's who we did use for some expertise in the early parts of the programme, but I think it's a really timely and a good challenge back to us about how we build that capability and design expertise into band B.
Because the evidence goes way beyond just the initial consultation. They're saying they'd be willing to sit on project boards and be part of scrutiny panels and they're just not being involved at all. I hear what Steve Davies says—the local authorities think they've learned enough to get on with it. Well, the ongoing challenge process goes way beyond that, doesn't it? So, it's really not capturing the potential of a body that, after all, you fund.
I think your points are fair. Mel, did you want to add anything?
I was just going to add that, at the start of band A, the Design Commission for Wales ran their own design review panels, and a good number of schools went through those design and review panels. Local authorities are our delivery partners. They deliver the schools, so the expectation is they go through the process if they choose to. So, there would have been good scrutiny early on in terms of looking at design.
Well, that's not the Design Commission for Wales's evidence, is it? They've looked at the designs and they don't think that there's good scrutiny, and they don't think the designs are capturing the best practice.
There is a balance to be struck. Good design is good, particularly in certain localities where it's needed, but there's a balance to be struck between design and cost savings for the programme.
Well, I think the designers understand that. Good design doesn't mean, 'Let's spend more money on it'. Good design could mean spending less, couldn't it? So, it's interesting you have that perception that involving Design Commission for Wales will knock your costs up.
I don't think that's necessarily what you're saying—
Not necessarily, no.
But I do think—
Well, by all means clarify. What do you mean?
That is a balance. I said there's a balance. There's where you get good design advice, but it shouldn't be at the expense of cost. So, it's balancing it out. I'm by no means saying the Design Commission for Wales would take that tack, but it's actually about—. So, one example is: should a building have a nice atrium? Design-wise, it looks lovely, you have a lovely feel when you go into the building. But an atrium can add to the cost of the building project. As I said earlier, the ambition of this programme is vast, and we're trying to deliver as much as we can within the funding we've got available. So, this is just about good design being a balance of—
But one of the points of their evidence was that standardised designs could save costs, and that's not been fully utilised. So, that's about reducing costs from sharing common work. So, that doesn't quite fit in with your understanding of what they bring to the table.
There has been standardisation going on in band A. It varies from local authority to local authority. We want to pull that in now and learn from the best of that, which is why we've now set cost and size parameters. So, again, it goes back to my point about balancing design with cost and delivery.
So, I think that we absolutely take the point that you've raised about the design commission. It is something that we will most definitely pick up again. The work that we'll be doing on standardisation will be important and play into that, because we are going to be increasing standardisation—
Okay. We'll just move on to the Constructing Excellence in Wales thing, because I understand they do a slightly different job. So, the design commission will comment on the designs, and Constructing Excellence in Wales will do more of the peer reviewing of what's built, and spreading good practice. From what I hear from architects, it's a highly valued service that is spreading cost-effective and good practice throughout the sector. Why is their funding being pulled? Have you estimated what impact this will have on the programme, given that you acknowledge that you have a lack of expertise?
No, we haven't made an estimate of the impact of that on the programme. They did play a valuable role in band A and, in band B, we will be looking for expertise to support us in that, but, as I say, we're only going through the process at the moment. We're at the early stages, and that's something that we will need to look at further.
Because it does seem to me—. Clearly, money is tight and I understand that decisions that aren't ideal have to be made, but it does seem to me, potentially, a very short-sighted measure, because the last figure I have for the funding that they were given—. I haven't spoken to Construction Excellence in Wales, but the figure that the committee has is an annual grant of £415,000. Now, if they are providing genuine cost savings—and, as I say, the feedback I have directly from architects who have visited schools in my constituency is that the work that Construction Excellence in Wales do is very valuable to the industry—that could easily be recouped through good practice, given all you've acknowledged of the flaws in the system so far. So, I wonder whether or not that is the right decision to make.
So, we in education didn't provide all of the funding for Construction Excellence in Wales; it came from various departments across Welsh Government. We appointed CEW to do three discrete projects for us in band A. One was around testing our costings, one was around timetable of delivery, and one was around whether we can standardise more. Part of that resource now sits in-house with Welsh Government. So, there was this building surveyor with CEW who has now come to work for us on a part-time basis. So, we've actually brought that expertise in-house to learn lessons across capital, and then to put it into the MIM programme.
Okay, am I the only one who sees the problem here?
No, I completely understand the point you're making.
So, there seems to be danger of siloed funding going on between different parts of Welsh Government, and another part may have pulled the plug, which actually could have had an adverse impact on what you're trying to do.
I genuinely understand the point that you're making here. I think they did good work for us in the band A part of the programme, and we will be looking to build that capability and expertise as we go forward.
Could I just add as well that we do speak to architects outside the Design Commission for Wales? So, last week, for example, we had an Education Estates conference, and we had architects there speaking to FE, HE and local authorities about good design. One example is passive house, which is an environmental design standard. So, there is engagement with architects.
Having a conference is one thing, but from what I understand from the work that Construction Excellence in Wales do is that they take other architects to a school that's just been built and walk them through the project, share lessons learned, point out good design features. So, that's more than a PowerPoint at a conference. That's granular hand-holding with the profession. And you yourselves have acknowledged in your evidence that you have a problem with the calibre of expertise. And cherry-picking the odd person and assimilating them within the Welsh Government is not the same thing. I just worry that you're going to be potentially losing cost savings and good practice from future programmes by this move. And I just wonder whether it's just short term. I appreciate the way these decisions are made within Government. Is it possible to go back and consider with colleagues whether or not this is the right thing for this programme?
I will certainly discuss it with colleagues. I think that the points you're making are well made and I'll certainly—. It wasn't a decision that was made by me, but it's certainly something that I will take away, and I think that's one—
But it could bite your programme on the bottom.
Yes, I think one of the values of being here at the Public Accounts Committee is to receive just that sort of challenge, because I know that, obviously, part of your job is to hold us to account—
We have our uses in our roles.
No, but part of your job is also, I suppose, to really press home where you see the weaknesses in the development of the programme, and I will certainly take that away.
Okay, thank you very much.
Diolch. Vikki, did you have a further question?
Yes, a question around procurement, please. There seems to be some tension between the regional frameworks and the desire for councils to use more local suppliers. In the auditor general's report, he says that councils must use the regional frameworks unless there are exceptional circumstances. But in its evidence to us, the Welsh Local Government Association suggested that some councils don't do this because of their preference for using local suppliers. How many examples are there of procurement outside the frameworks in band A, and do you expect there to be fewer examples during band B?
I don't have that exact figure, and I don't know whether colleagues will, but I will start answering your question anyway. I think there are three issues with procurement. One issue is going off the framework, which you've described, which should only be by exception, and it should only be by agreement of the Welsh Government. So, if that were happening without our agreement, that shouldn't be happening. I think the second issue is that, sometimes, local authorities are retendering, even though people are on a framework. So, they've kind of qualified to be on the framework, but then they're still asking for retendering, and we know from experience that that is something that industry finds very annoying as a sort of practice, I suppose, of local authorities. So, those are two—. And we wouldn't want to encourage that practice either because there's no point in having the framework. So, our position is that there shouldn't be procuring outside of the framework, and there shouldn't be retendering within the framework. Any exceptions to that would need to be agreed with us. Steve, sorry—did you want to come in?
Yes. What has happened is that frameworks have been re-let over a period of time, and I think people who get onto the frameworks have learnt from other processes as to what local authorities are looking for. Following the previous evidence, I've done an analysis back with people in the division, and there are approximately about 10 per cent of councils, or 10 per cent of the bids have gone through separate processes—not on the scale I think that was being inferred at the time, or suggested at the time of the last evidence meeting. That has decreased over time. It may be that there was some confusion around the local authorities letting contracts for large maintenance contracts, which they don't have to let through the frameworks. There is a step-by-step stage through which their proposals come through Welsh Government, and at each stage we challenge the procurement and the extent to which it demonstrates an exception. The next re-letting of the contracts is imminent, so I expect learning to increase further as well, and we will continue to apply those challenges to the process. Do you want to add something?
Yes. We are, again, learning lessons. You see less and less, as the programme moves forward, of local authorities and colleges opting not to use the frameworks. Again, through the business-case process, we do look at their commercial case and we do scrutinise what their procurement route is. Where there are occasions where they're opting not to use the framework, we do challenge that. So, again, yes, it is reducing in numbers.
Is it always the case that working within the framework delivers best value for money, or could there be another way of looking at it? Certainly, when we've done sessions here on procurement in different contexts, we've seen examples where local authorities can come off the procurement framework, support local businesses and local suppliers, and deliver better value for money. Is there an element of that here? Could you give us more of a flavour of why this 10 per cent of schools have come out of the framework?
They will be the exception, and they will make the case that they potentially could be packaging a number of projects together, and they feel that if they go out to re-test the market themselves, they can get better value for money. On the occasions that they do that—they do demonstrate better value for money—then we'll run with that procurement route.
Packaging projects together is one of the things that I often worry about because it does tend to exclude smaller suppliers. If you're building a primary school—let's say, in Swansea, which I know well—for £5 million, £6 million or £7 million, a number of local suppliers can apply. If you package five up to a £35 million contract, there is no local supplier, and probably nobody in Wales who could apply. So, there is a danger, isn't there, of packaging, in the sense that you're taking money out of the Welsh economy?
There is that danger, and we try and cut that off by requiring local authorities and colleges to actually adhere to our community benefits. So, we've set targets of how many local people they employ within a radius, also within Wales how many apprenticeships and traineeships they deliver, and also how many small and medium-sized enterprises locally they use. So, we do try to address that, as and when, and if they go off framework.
But the size of a contract makes a huge difference to local suppliers. We don't have any very large building contractors in Wales, do we? We have a number of medium-sized ones that work on schools, including two in my own constituency, but once you go above £20 million or £30 million—certainly probably above £20 million—they then become excluded, and you go back to the big companies.
That's one of the reasons why we have a differentiation of lots, because, in terms of the frameworks, there are smaller frameworks. Clearly, if local authorities are looking for economies of scale and better value in batching them, that can impact.
One of the benefits, as Tracey said earlier, of the MIM programme is that even though you get larger contracts, you can build into contractual requirements the delivery of those community benefits, so that the construction companies are actually contractually required to deliver on them, which will strengthen that work.
I'd like to turn to energy efficiency. The Welsh Government has an aim of achieving a sustainable estate, and for centrally funded public buildings, therefore, sets certain standards for design and energy efficiency, but a review just over two years ago of 18 new-build projects found that several were not achieving the sustainability and energy efficiency standards that were set. And apparently, within the construction industry there's an awareness that many low-energy buildings use more energy than the designers anticipated and the building owners expected. So, as far as the schools programme is concerned, what steps are the Welsh Government taking to understand why schools and colleges are not seeing the anticipated savings from energy efficiency?
Thank you. It's something that obviously was contained within the report, so it's something that I've been giving particular thought to in discussion with Steve and Mel. My view, as you've said, is that it seemed to be good at the front end, quite good at setting the standards, setting the specification and those kinds of things, but at the back end just not seeing the results. It's hard to know whether it's that people need more support in terms of building in their estimates, or whether or not people need to be more realistic, or whether it's, I suppose, a combination of both. What I am clear about is that the technology is moving very quickly and policies are changing, and there are also issues around how the building is actually managed once it's built. But I think it is a weakness that we currently have and it is something that we'll be seeking to address in the band B second wave. Did you want to say a bit more about what we're doing there?
We're working with the industry and we've committed to a lessons-learned analysis of all of band A projects that we will be bringing together. We have also now established post-occupancy reviews in a period immediately following on from the construction, so we learn the evidence from that to feed it back in.
There have been some cost savings that have not been realised because sometimes a change of energy costs, or sometimes a change in your approach to securing better, more efficient energy. So, for example, early examples included the use of biomass at that time, which was seen to be environmentally more friendly, but actually was more costly. We'll build that into our evaluation of the impact of the band A as part of that process. I don't know whether you want to add anything to that, Mel.
Just to say that, yes, we are learning lessons from band A. Band A's not complete yet. When it is, we'll assess that data and take away and feed it into band B. Tracey's quite right—it's not so much what goes into the building when we build it, but it's actually, when the building is complete, how we then manage and occupy it. We need to learn lessons from that in terms of making greater savings for the estate.
If anticipated savings are not realised, and if this is a systemic problem, then it could affect your value-for-money calculation if you were to retrospectively reconsider that. So, the learning that you will acquire through this process of evaluation would obviously feed into your value-for-money calculations that you will be making for future projects.
That's right, yes, because it's really important to the whole-life cost. So, it's essential that we are better at that at the start of the process because assumptions are made on value for money on the basis of—as I say, I think we're quite good at the front end, it's just that the results aren't at the back end.
The other thing that we're adding into the business case scrutiny is that we have an economist actually giving greater challenge to the value-for-money proposals, and that economist has run a series of training for local authorities and for FE colleges to reinforce the learning, but also bring that to the challenge of the business case process. Clearly, that's been done before we've done the analysis of band A, but we recognise the need for that.
Thank you for that. I'd like to turn now, also, to the wider community uses of educational buildings. Clearly, it's very sensible, if it doesn't interfere with the primary purpose of a building, to open it up to other publicly provided services as well. In the auditor general's report, at paragraph 2.31, it says that
'the Welsh Government and councils recognise that there is more to do to widen the provision of services in school sites as well as to increase the community use of school buildings'.
It then refers to some barriers to increased community use, and that it is
'as much about attitudes and school leadership as the available infrastructure of a school building'.
So, I'm interested to know what actions the Welsh Government proposes to take, or perhaps may have taken already, to enable and require more community use of facilities funded through this programme, particularly to address some of the cultural and governance barriers that are referred to in that paragraph of the auditor general's report.
Clearly, the Cabinet Secretary for Education is very, very keen that education institutions are more than that—that they're actually community hubs. But the decisions on the out-of-hours use of schools lie with the governing body, and so it is for them to determine how and when the school is used outside of school hours. And then, there are a number of factors that limit their willingness to make use available to the community. Sometimes that's insurance, sometimes it may be safeguarding issues depending on the structure of the building, sometimes it's caretaking arrangements. There are a range of barriers there. So, we've set up a task and finish group to look at what the barriers are to those governing bodies opening up the education institutions for more use and we will be taking action on their findings. Is there anything more we can say?
I think it's a wider Welsh Government task and finish group that's looking at community hubs across Government, so it's part of that, and supported by a recent announcement of an additional £15 million by the Cabinet Secretary for finance. It is cultural and it's actually quite long-standing. Unfortunately, with new schools, sometimes the governing bodies and leaders can be quite precious about damage done to the school. I can understand those pressures, but it's balanced by the benefits to the school—and to the children's achievement, normally—by that community commitment to the school, and enhancement of adult education. So, it is part of that cultural challenge to local authorities to work with their governing bodies, to ensure that they're sufficiently enlightened about those broader benefits. Others are to do with health, particularly when they use the sports facilities, and culturally, in terms of—. And it's quite sad that, often, these new schools actually lie dormant later into the evening and to the weekends.
So, we're looking across Government as to what cross-cutting strategies we can get to support the community that wants to work with the school, but also to support the school in their understanding of the benefits. There are some technical issues around caretaking times, but the really enlightened school leaders and governors overcome those and reap those wider benefits. So, alongside the contractual frustration, sometimes, we have to work with those cultural issues.
I understand the point you make, which you make very well, but these are public buildings; they don't actually belong to the governing body in the sense that a private property would do. And there are obvious benefits in terms of the cost of provision of services if you can integrate different services into the same network of buildings—as I said, as long as it doesn't actually prejudice the achievement of whatever the principal purpose of those buildings is. Let's take libraries, for example; there's been enormous pressure upon library services, not just in Wales but throughout the whole of the UK. It seems to be a natural fit with a school to have library facilities that are available to the whole community on the premises, so long as one can, obviously, take proper account of any security difficulties that that might create out of school times. Given that there are long periods of school holidays, it's wrong that the substantial capital investment should, as you put it, lie dormant, when they could be used in other more productive ways.
I think you'll find that we are in absolute agreement with you on that point. We really do want to see them more. But it's laid down in legislation, I think, that it's the governing body's decision as to when and how the school is used.
What we're looking to do is to strengthen its presence in the business case, so at least start with the aspiration, with an expectation that there is aspiration. We can go further and look for local government to join up some of those facilities, so that if they release investment over here by closing a building, could they locate it within the school? So, that challenge is within the programme, to set the aspiration. We're working, as I said, across Government to look at a range of portfolios and how it influences it. But there is a stubborn challenge to actually overcome.
Thank you very much.
There is a way around it, though, isn't there? Because at St Thomas primary school in Swansea, the library was built onto the school, rather than being part of it, and the community room was built onto the school, rather than being part of it. So, you have them on the same site, but you have the library and the community room and the community facilities as part of it. So, the school is distinct, even if you're using the same entrance to enter the whole thing. So, you can, if you want to, have a system by which you can make a large part of the site available, because they will not be part of the official school.
One of the commitments to our task and finish group is that we identify those good examples, because there are other good examples of brand-new schools that are open for very long periods during the evenings and weekends, and it's just being able to share the reality of how they make that work, both cost-effective and not damaging the fabric of the building when it's being used.
Does anyone have any further questions?
Yes. Can I ask a question?
Hang on, Oscar. Lee Waters first.
Thank you. I have a couple of questions. Surplus places still remain a challenge, particularly in secondary schools, where some have 20 per cent surplus places. Then, on the other hand, we have a number of schools in local authorities that are oversubscribed. So, I'm just wondering how you're building flexible capacity into the programme to allow for these variations. You say in your written evidence that the officials who deal with this
'assess business cases for investment and ensure that surplus places are addressed through this process.'
Can you explain to me how that works and, in practical terms, what are you doing to allow that flexibility?
In order to try to be flexible, that means that we do allow changes over time. So, that would be based on things like, perhaps, demography—demographic changes—or other circumstances that might lead to changes. So, we collect information annually on the roll, I suppose, and the demand—I think that's right to say, Mel, isn't it? Do you want to say a little bit more about how we then use that information in the process?
It's a hard thing to balance. When we started the programme, we had a massive issue with surplus places across all 22 local authorities. Now, five or six years down the road, we're facing growth in the urban areas; that's becoming a real issue. So, it's a balancing act in terms of making sure the schools are built in the right places, the right locations and right sizes. Sometimes, projects can be built with some speculation, to give that term, where they know there's going to be an increase in their demographics. That, when we are assessing the business cases, makes us a little bit nervous, because they're building a new school that may be at only 50 per cent capacity when it opens. So, we put provisions in our contract of funding to cover ourselves with regard to that, to make sure that there's good value for money. Also, where there are growth areas, we do as much as we can in terms of giving them capital investment to enable them to deal with the growing numbers, particularly in city authorities.
I appreciate it's difficult. I'm not entirely clear how that builds any practical flexibility, but let's just move on.
In terms of Welsh-medium provision, you say again in your written evidence that there'll be a presumption that each individual project that was in the programme would contribute to the Welsh Government's commitment to 1 million Welsh speakers by 2050. In English-medium schools, what does that mean?
I think, Steve—is it around the Welsh-medium continuum and the work for the curriculum in terms of growing Welsh speakers in English-medium schools?
No, I understand the policy. You're saying there's a presumption in each case that they will, as part of their bid, show how they're going to contribute to the Welsh-medium target. With English-medium schools, what does that mean? How do they demonstrate their commitment as part of your business case?
It's their commitment within their overall planning for building and their provision within the local authority. So, it's not looking at one site and saying, 'How are you going to impact on Welsh education on that site?' It's what contribution is that going to make, whether it could be the development of the continuum within a school, or expanding a school and looking at bilingual provision. So it's actually saying, at each stage, 'How is this contributing to your overall strategy as a local authority in terms of Welsh-medium provision?'
I've obviously misunderstood your evidence, because you say that the presumption is that each individual project in the programme will contribute to the commitment. It's on page 11 of your evidence.
It's probably the language we use. It's a good point, however, because there is a commitment to grow Welsh speakers, and a very powerful tool to achieve that is through the schools programme. We do see English-medium provision applications coming through for schools, and sometimes we can't see the demand for Welsh speakers. So, what we've done in addition to the programme, and we've done it quite recently, is that there's an additional fund that we've asked local authorities to bid to, and what that fund will do, hopefully, is it will address that issue of potentially some local authorities where they're building too many English-medium schools—to actually stimulate the market. Actually, if you have this additional funding and build a Welsh-medium school, that will follow that ethos of, 'If you build it, they will come'. So, we're trying to address the increase of the speaking in Welsh-medium through that way.
That doesn't quite answer my question about what you mean by your written evidence, but perhaps you can have a think about that.
Would you like us to provide a note to clarify that?
Clarification would be very useful, because it doesn't make any sense to me. I'm tempted to go down a different avenue, but I shan't, given the time. Just a further question: in terms of going back to what you were saying about urban areas and the provision of schools and choosing the sites carefully, which I acknowledge must be tricky, the Government has passed the active travel Act, which requires local authorities to plan a network of routes for everyday walking and cycling, and not just leisure routes, but linking up to trip generators like schools. Yet in the last programme, there's been no guidance within the programme for new school buildings to have any active travel infrastructure at all. Is that going to change for the next round?
Yes, absolutely. We can do better. Like I said, there are lots of lessons to be learned from band A, and absolutely, band B needs to demonstrate that.
Why wasn't that thought of when the Act was passed?
It might be a timing thing. I don't know what date the Act was passed, but it might be—
Well, it was four years ago—2013, I believe. It's been a while.
But it's a good point to be made, yes.
What's the problem in the system that that wasn't picked up? Is there something more systemic that we need to be looking at?
It might be something more systemic. I think that's a conversation that we need to have with local authorities. Sometimes it is difficult in finding a site, and finding the right locality. They can be constrained sometimes as to where they can put schools, and that can impact on the travel to school and the planning of it.
Sure, but something like, for example, building brand-new schools without any cycle shelters because there's no requirement within the provision to do it—it does seem very strange when you have an Act requiring behaviour change.
We'll need to check that, because under the BREEAM standard they're meant to build cycle shelters, for example, to get their BREEAM marking. So that's a good point. We'd need to check on that.
Okay, if you would.
As part of band B, one of our aspirations is to aim for BREEAM 'excellent' in all of our new-build schools. So, that would fulfil the new-build requirement.
Okay. So, that's just on the site. So, if you do that, that's certainly an improvement on what you've been doing, but it still then begs the question—
About how you get there in the first place. Again, I think that some of these questions we've found, as you can see, probably a little bit hard to answer, just because I think you're getting to very good points that I think we really need to address. The good thing about coming at this stage in the process is that there's an opportunity for those to be addressed in the development of the programme.
If you could show us how you're doing that, that would be very helpful. Thank you.
We like to have a role to play in feeding into the process and developing policy.
We are virtually out of time, and we do need to take a break, because I know you're with us later as well, Tracey—
It's like having French and biology on the same day. [Laughter.]
—so you need to have a break. But, Oscar, briefly.
I have one question to all three. The Scottish version of public-private partnership, NPD, has been under intense scrutiny, and recently it was found by the Scottish Accounts Commission that the quality of work carried out in 19 buildings in Edinburgh, including those financed under NPD, was less than satisfactory, most infamously a wall collapsed at the NPD-financed Oxgangs Primary School in Edinburgh in 2016. So, what safeguards does MIM have in terms of quality assurance in Wales? You can write to me with an answer if you want, because we haven't got time.
Okay. We will most certainly come back to you on that.
Okay. Thank you very much, Chair.
Great, thank you. I thank our witnesses—Tracey Burke, Melanie Godfrey, Steve Davies—for being with us for this session this afternoon. We'll send the transcript for you to look at before that's published and, as I said, we look forward to seeing Tracey Burke in the next evidence session.
Could I also just thank the auditor general, too, for the report? These are always—. They're just timely interventions and they certainly do challenge us to develop the programme. So, thank you very much.
Great, thanks. I propose we break for 10 minutes or so for a comfort break.
Gohiriwyd y cyfarfod rhwng 15:16 a 15:27.
The meeting adjourned between 15:16 and 15:27.
Welcome back to this afternoon's meeting of the Public Accounts Committee. Can I welcome our witnesses? Item 5 is our fourth evidence session, and our final session, on housing adaptations. As I said, I welcome our witnesses. Tracey Burke, who is still with us from the previous session—
Bit of a marathon session for you today.
As I said, yes, it's like French and biology on the same day, Chair, but I'm ready for whatever this one is.
Thank you for your time, and for changing gear as well in terms of the topics. Obviously, Tracey, you're with us, but would the rest of your team like to give their names for the Record?
John Howells, director of housing and regeneration, Welsh Government.
Emma Williams, deputy director, housing policy.
Good. I'll kick off with the first couple of questions. Given adaptations are critical to enabling older and disabled people to live independently, and the current arrangements for delivery reinforce rather than address inequality, how is the Welsh Government looking to deal with these issues?
Sorry, Chair, if I might just say to begin with, I know from personal experience just how important housing adaptations are to older people remaining at home, just in terms of their dignity and their independence, and reducing the chances that they go into hospital, and certainly, in my own family's case, enabling them to come home from hospital rather than go elsewhere. So, this is a subject that I've got some personal experience of, and I think the auditor general and you are right to say that there is inequity in the system. That is at the larger end of the works that are done. So, for example, really, we're talking about the disabled facilities grant—the DFG. I think there is inequity there, both in terms of the time that it can take for those works to be done and also the process by which that is done. So, if you own your own home, it's a different process to getting a major adaptation than if you are in social housing, where you would, again, go through a different process. So, I think it is right to say that there is inequity in the system at the larger end. So, there have been some improvements over the years. There's been a reduction in the disparity, the variation, I suppose, in times it's taking on the DFG, but some variation, obviously, still remains.
I think, on the smaller end of things, which is the vast majority of adaptations, it's a pretty even and equal service. But it's right to say that it's still there on the large end.
Let's be frank, part of the auditor general's concern was that some of the weaknesses that were identified—new weaknesses in the system—had been around a long time, and there had been a number of reviews previously. It's taken a long time to get this sorted out. Are you confident that, this time around, these issues will be dealt with once and for all?
Yes. In fact, in preparing to come to committee, and in reading the auditor general's report, I actually went right back to the 2005 report to understand the issues there. That was exclusively then around the DFG—the disabled facilities grant—and I think that there have been improvements there. The figures indicate that there was quite significant improvement in terms of the average time taken for those adaptations to be put in place, and that's not to say that that couldn't have been faster achieved, but it was only really looking back at the history, which I have done. I think it was 2013 when it was broadened wider than looking just at the DFG. And that's when the report was done by Shelter—an independent report—which was commissioned by the Welsh Government, and I think that the action since that report was published, in 2014, has actually really progressed matters. But, yes, looking back, I think I probably had the same question—a lot of the issues that were raised in the auditor general's report are not new issues; they're inequity, the inefficiency and, generally, the oversight. Do you want to say any more on that?
We've been frustrated—successive housing Ministers have been frustrated—about performance in this area for, as you say, Chair, a considerable time. But, at the same time, we're aware of an awful lot of committed people in the care and repair sector, and we've been encouraged by the progress made on the rapid adaptation service, where there's no means test, it's on the smaller end of the scale, but where we haven't had official statistics published on the success being achieved by local authorities and care and repair agencies. So, it seemed to us, when we looked at the last review of activity in this area, that one of the important challenges was to begin to redress that balance, and to get a more comprehensive understanding of performance not just regarding DFGs, but DFGs and smaller scale adaptations, where there isn't a need for a means test and where an awful lot of the organisations in this area have been able to make really excellent progress, without adding bureaucracy to the procedure, and making a real difference for significant numbers of older, frail individuals.
If I could just add as well that I think a lot of the complexity, and some of the inequity, comes from the organic manner in which the current landscape has developed. Looking back at the history, we can go back into the 1970s, when we first started funding care and repair agencies, and then there's almost a sense that, progressively, we've added more and more to the system, which has enabled more and more people to receive aids and adaptations, and put more and more funding into the system, but it has also created a very busy landscape, where there are different funding streams, with different legislative bases, different requirements in relation to means-testing, et cetera. So, looking at the complexity and thinking, 'Well, actually, how do we respond to that and how can we make it as straightforward as possible?', the first challenge is actually in how we can unpick that long history, the different legislative bases, and, putting it frankly, the fact that the money is in very different structures. Some of the money is in local government's own funding streams, some of it is grant funding, some of it is capital, some of it is revenue. So, I think it would be fair to say that we wouldn't necessarily be here, at this point, if we'd started with a blank sheet of paper and developed a system in a comprehensive manner from scratch.
You mentioned, in a way, that the current landscape has developed organically. There's inconsistency across that landscape, isn't there? I think the auditor general's report highlighted that the different tenure and the delivery agency affect massively the service that people with disabilities get. What specifically are you looking to put in place to try and even out the current problems, the current inconsistency?
I think we've come quite a long way. So, the Enable programme, which was the direct result of the 2015 report, was the first step, if you like, in trying to present a much more united front, removing some of the confusion at the front end for citizens actually looking to engage with services. That report, the 2015 report, quite rightly said to proceed with caution and be careful that, in trying to unpick this and aim for the perfect scenario of a single funding structure and a single approach, we needed to be very careful about not having unintended consequences and actually making things more difficult for some people in the system.
I think that one of the biggest areas to look at is potentially the disabled facilities grant. We know that there are tensions there and it's the only area where access to funding is required to be means-tested. It's used in slightly subtly different ways in different local authorities. There's always balance to be struck though between looking for consistency and not wanting to stifle innovation and stifle, as John has mentioned, good people out there in the sector seeking to do the right thing for the right reasons.
So, one of the pieces of work that we'll be taking forward very shortly, we've started work on it at the moment, is to actually undertake a systems thinking review that looks across all of the different funding streams at how we can take the best elements of each and seek to bring the worst up to the best as a starting point, and then look for ways in which we can start to streamline. But, I don't think it will be a single step to a perfect answer. I think this is a journey that we're on: Enable was one step; we've still got a way to go.
Tracey, are you happy with that? Going back to the earlier point, why has it taken the auditor general's report to get things moving in this area? As I said earlier, it's been a while that these problems have been around and been recognised. So, why the delay in acting to deal with this?
There are some aspects of the system, I suppose, that we have been working on. So, the Enable change programme is work that was already in train and that we have been proceeding with. There are other aspects of the auditor general's report where I think this has added an extra impetus. There are things that we've had in mind, but I suppose this has brought them to the fore. We haven't been inactive in this area, there's quite a lot that's been going on, but the auditor general's report, I think, has given an extra impetus to it. John, what do you think?
There has been engagement with local authorities over an extended period. This is one of those difficult areas where it's a local authority statutory responsibility to deliver against disabled facilities grants, so, I guess, unsurprisingly, we started from a position of significant variation in performance across authorities. Although, as I mentioned earlier, the frustration has been about the slowness of progress, we have seen over recent years a significant narrowing in the gap in performance between those authorities where there's been the longest wait for DFGs and those where there's been the shortest wait. There's a much narrower gap now and there has been for the last couple of years. The interesting point that the auditor general's report makes is questioning whether the performance of the best suggests that we might be reaching a plateau, whether we are now reaching a position where there's not much further to go in relation to performance on the big adaptations, but there's still significant variation in performance between those authorities that are most successful in this area and those where it takes a bit longer.
Finally from me, before I bring in the other Members, large-scale voluntary transfer housing associations don't receive the physical adaptation grant and are not subject to Welsh Government oversight in delivering the adaptations. Should they be required to comply with the Welsh Government rules in the same way as the others?
I think that there should be—yes, I think that they should be. I think there should be the same level of monitoring and oversight right across the sector. There are some issues with the LSVTs. From memory, I think that—and colleagues will provide more detail, hopefully—the way that they were set up, I think, some of those physical adaptations were already built into it. Therefore, they can't be monitored in exactly the same way.
Yes. When the LSVTs broke away from local authorities, part of the deal, if you like, with each was that they built into their long-term business plans how they would fund these aids and adaptations. Each of those arrangements is slightly different. We don't know the details of each of them, but it does put them in a slightly different position to the traditional housing associations or the stock-holding authorities.
Sorry, I'm just thinking on my feet here, but the work that we're doing to collect the information through Enable, that will include the LSVTs, won't it?
So, we will be collecting consistent data right across the sector, so that will allow us to have oversight of their performance going forward. Is that right?
Absolutely. Likewise, work that we're currently undertaking around quality standards will also include LSVTs; it will be for everybody. So, we're moving forward under the Enable umbrella with a much more consistent approach to some of these matters than has been the case in the past.
Okay. Mike Hedges.
We have made some progress though, haven't we? Going back 20 years ago, an old lady normally would ask for handrails, so they could go out the garden and hang out their washing. Then they were visited by somebody from the local authority who would then tell them that they needed £35,000-worth of adaptations to be done to the house and they wouldn't be able to be done for three years, and all they wanted was a handrail. So, we've made huge progress on that with care and repair doing a lot of these simple ones.
It's also my understanding from local authorities that people can only have one DFG on their property. Is that true? It's what's controlling people having a lot done at the beginning, because they don't think they can go back afterwards to have further adaptations. So, they might need fairly minor adaptations at the beginning, but then they might, 10 years, 15 years later, need further adaptations. Are they able to go back a second time?
The short answer is 'yes'. The system is designed to enable people to be reassessed if their needs change. I can understand why people may have got the wrong idea or they may have perceived that there'd be advantage in getting everything done when the system is in touch with your family, but the system is designed to enable needs to be reconsidered.
This is not the people, it's the people doing the assessments who tend to think they've got to do it all in one go. So, if that's the case that people can go back several times as their needs increase, I think local authorities and the people doing the assessments in local authorities need to know that, because that would reduce a lot of the queuing of people wanting £30,000-worth of work done, when really £3,000 would deal their problems now and the other £27,000 would deal with potential problems in the future.
Are you picking that up consistently? Is that something that—
I'm picking it up.
Yes, okay. Well, that is definitely something that—
The other area where there's significant variation between authorities is their policy on those works that can be done without a means test. We have been trying for a number of years to flex the system to get people to accept that it doesn't make sense to have a complicated system for the simple end of adaptations. I think there is now a growing acceptance out there that it is possible to do small-scale and indeed medium adaptations without asking lots of hard questions. And, in my experience, care and repair agencies have got some very smart individuals who are able to assess need locally. I wouldn't say we've got a well-developed system for understanding, but there are smart professionals within care and repair agencies who are