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Meeting of the City Council 18 September 2013

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Meeting of the City Council 18 September 2013 This report is PUBLIC [NOT PROTECTIVELY MARKED] Agenda Item No: 8 Meeting of the City Council 18 September 2013 Report Title Approval of Financial Close and Contract Award for Building Schools for the Future (BSF) – Phase 3C Scheme Schools Referring Body Cabinet 11 September 2013 Cabinet Member with Councillor Phillip Page Lead Responsibility Schools, Skills and Learning Key Decision Yes In Forward Plan Yes Wards Affected East Park, Heath Town Accountable Strategic Tim Johnson, Education and Enterprise Director Originating service Education and Enterprise, Schools, Skills and Learning, Building Schools for the Future Accountable officer(s) Peter Davies Interim BSF Programme Director Tel 01902 55(3773) Email [email protected] Recommendation(s) for action or decision: The Council is recommended to:- 1. Approve the draft Final Business Case (FBC) for the Phase 3C PFI project for Heath Park and Deansfield Community School, noting that the total capital expenditure costs of £42.166million have been included within the PFI financial model. These costs are confirmed as affordable with no requirement of a contribution from the Council and negotiations are currently on-going to reduce this down closer to the Council’s revised shadow tarrif target of £40.2million Report Pages Page 1 of 9 This report is PUBLIC [NOT PROTECTIVELY MARKED] 2. Approve the delegation of authority to the Cabinet Member for Schools, Skills and Learning and Cabinet Member for Resources in consultation with the Chief Executive, the Strategic Director for Education and Enterprise, the Assistant Director, Finance Officer (Section 151 Officer), and the Interim Chief Legal Officer to: • Complete and finalise the draft FBC, including making amendments and submission of other appropriate documentation to achieve approval by the Education Funding Agency (EFA), Department for Education (DfE) and HM Treasury. • Complete and finalise negotiations with the LEP to improve upon the worst case financial position quoted within this report. It should be noted that these negotiations will not be concluded until immediately prior to financial close. • Approve the draft Phase 3C Section 151 Letter, attached as an appendix to the report, and authorise the Council’s Section 151 Officer to submit the letter to the EFA, subject to any adjustments to reflect final updates to the FBC. • Authorise the execution of any of the project documents and ancillary documents by affixing the Council’s common seal in accordance with the Council’s Constitution and to approve that the Interim Chief Legal Officer and Interim Assistant Director, Education and Enterprise, in consultation with the Council’s Section 151 Officer, may take any necessary action (including the execution of legal documents by the Interim Chief Legal Officer) to complete the Project, including any final amendments to the project documents, and give effect to Councillors’ resolutions and authorised delegated decisions referred to in the report. • Approve that in order to give effect to the resolutions set out above, the Interim Chief Legal Officer, in consultation with the Council’s Section 151 Officer and relevant Cabinet Member, as necessary, be authorised to approve any variations to the terms of the contractual documentation and any other related documentation and/or other commitments given by the Council at financial close. • That the Council’s investment in the Private Finance Initiative (PFI) Special Purpose Vehicle (SPV) be approved to the value of £600,000 and authority be delegated to the Assistant Director Finance (Section 151 Officer) in consultation with the Cabinet Member for Resources to agree the final sums to be committed and establish the necessary budgets in the capital programme. 3. Approves that TUPE apply to the transfer of relevant staff from the service commencement date to the PFI service provider and that the necessary on-going consultation and communication taking place in respect of this be continued. 4. Approves that the Admission Agreements for the West Midlands Local Government Pension Scheme be entered into and executed by the Interim Chief Legal Officer to enable those transferring employees to retain their current pension benefits. Report Pages Page 2 of 9 This report is PUBLIC [NOT PROTECTIVELY MARKED] 1.0 Purpose 1.1 The next and final phase of the Wolverhampton BSF programme is due to receive investment as Phase 3C and the Council is now required to submit the FBC in order to achieve financial close and secure the necessary funding. 1.2 The Phase 3C project consists of Deansfield Community School (specialists in media arts) and Heath Park School, part of the Central Learning Partnership Trust. 1.3 This is a PFI funded project and, subject to the approval of the FBC and the Council achieving financial close for Phase 3C, it is anticipated that construction will commence in late 2013 and will deliver a completed project by autumn 2015. 2. Background 2.1 The financial implications of BSF are significant and were initially detailed in the report to Cabinet in October 2008 (Outline Business Case). BSF has provided £270million+ of Government funding to transform Wolverhampton schools for secondary age learners. To date, circa £119M was confirmed in April 2010 for the sample schools phase and the ICT capital grant for the whole programme, of £60M in February 2011 for the phase 1 schemes, of circa £25M in December 2011 for the phase 2 schemes, circa £57M in November 2012 for the phase 3A schemes and of circa £8M for the phase 3B scheme. Each phase requires a detailed project approval process and approval of an FBC that will be subject to Cabinet and Council approval. 2.2 On 11 September 2013, Cabinet considered a report on the Financial close and contract award for BSF - phase 3C school scheme project consisting of Deansfield Community School (specialists in media arts) and Heath Park School, part of the Central Learning Partnership Trust. 2.3 This is a Private Finance Initiative (PFI) project and total expenditure for the two schools is circa £42.2M, which is fully affordable and requires no contribution from the Council. 2.4 The PFI project requires a maximum Unitary Charge of £5.677M per annum, which is fully affordable within the available resources combining PFI credits that the local authority will receive from the Government and contributions from the two schools. 2.5 The exempt report can be accessed by Councillors on line on the Committee Management Information System (CMIS) on the Council’s website by following the link:- https://wolverhampton.cmis.uk.com/decisionmaking/Calendar/tabid/73/ctl/ViewMeetingPublic/mid/410/Meeting/8398/Committee/1446/Default.aspx 2.6 Cabinet approved the recommendations contained within the report which are now referred to Council for approval. 2.7 Council is therefore recommended to:- (i) Approve the draft Final Business Case (FBC) for the Phase 3C PFI project for Heath Park and Deansfield Community School, noting that the total capital expenditure costs of £42.166million have been included within the PFI financial model. These costs are confirmed as affordable with no requirement of a Report Pages Page 3 of 9 This report is PUBLIC [NOT PROTECTIVELY MARKED] contribution from the Council and negotiations are currently on-going to reduce this down closer to the Council’s revised shadow tarrif target of £40.2million (ii) Approve the delegation of authority to the Cabinet Member for Schools, Skills and Learning and Cabinet Member for Resources in consultation with the Chief Executive, the Strategic Director for Education and Enterprise, the Assistant Director, Finance Officer (Section 151 Officer), and the Interim Chief Legal Officer to: • Complete and finalise the draft FBC, including making amendments and submission of other appropriate documentation to achieve approval by the Education Funding Agency (EFA), Department for Education (DfE) and HM Treasury. • Complete and finalise negotiations with the LEP to improve upon the worst case financial position quoted within this report. It should be noted that these negotiations will not be concluded until immediately prior to financial close. • Approve the draft Phase 3C Section 151 Letter, attached as an appendix to the report, and authorise the Council’s Section 151 Officer to submit the letter to the EFA, subject to any adjustments to reflect final updates to the FBC. • Authorise the execution of any of the project documents and ancillary documents by affixing the Council’s common seal in accordance with the Council’s Constitution and to approve that the Interim Chief Legal Officer and Interim Assistant Director, Education and Enterprise, in consultation with the Council’s Section 151 Officer, may take any necessary action (including the execution of legal documents by the Interim Chief Legal Officer) to complete the Project, including any final amendments to the project documents, and give effect to Councillors’ resolutions and authorised delegated decisions referred to in the report. • Approve that in order to give effect to the resolutions set out above, the Interim Chief Legal Officer, in consultation with the Council’s Section 151 Officer and relevant Cabinet Member, as necessary, be authorised to approve any variations to the terms of the contractual documentation and any other related documentation and/or other commitments given by the Council at financial close. • That the Council’s investment in the Private Finance Initiative (PFI) Special Purpose Vehicle (SPV) be approved to the value of £600,000 and authority be delegated to the Assistant Director Finance (Section 151 Officer) in consultation with the Cabinet Member for Resources to agree the final sums to be committed and establish the necessary budgets in the capital programme. (iii) Approves that TUPE apply to the transfer of relevant staff from the service commencement date to the PFI service provider and that the necessary on-going consultation and communication taking place in respect of this be continued.
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