Agenda, decisions and minutes

The Chair welcomed everyone to the meeting. The Chair confirmed that Democratic Services have received apologies from: Cllr V. Holland

Cllr M. Bowen

Cllr R. Sparks

The Chair welcomed everyone to the meeting. The Chair confirmed that Democratic Services have received apologies from: Cllr V. Holland

Cllr M. Bowen

Cllr R. Sparks

Jon Burnes declared an interest in Item 4 Future Role of the Programme / Portfolio Management Office. As he is a member of staff of the Portfolio Management Office.

Jon Burnes declared an interest in Item 4 Future Role of the Programme / Portfolio Management Office. As he is a member of staff of the Portfolio Management Office.

To approve the minutes of the meeting held on 13/01/25 and 18/03/25 as an accurate record of the proceedings.

The minutes were approved.

The minutes were approved.

Following Scrutiny the recommendations were supported.

Debbie Smith, Monitoring Officer for the City Deal, and Chris Moore presented the report included in the agenda pack. They explained that the review of the Portfolio Management Office (POMO) was approved by the Joint Committee on 13 February, along with its terms of reference.

Members were advised that the review focuses on the ongoing relevance of the POMO’s role and functions as the City Deal progresses, noting several projects are well established.

Members were advised that the report examines what governance and decision-making structures are needed for the remainder of the City Deal’s term and explores potential alignment with the Corporate Joint Committee (CJC) to identify synergies and reduce duplication.

Officers highlighted the key suggestions from the consultation phase:

• Merging the two joint scrutiny committees (City Deal and CJC) due to overlapping roles.
• Possibly integrating the Economic Strategy Board (ESB) into the Private Sector Advisory Board under the CJC.
• Considering whether the City Deal could be incorporated into the CJC structure.

Members were advised that some rationalisation like holding Joint Committee and CJC meetings on the same day to streamline attendance and coordination has occurred.

Chris Moore provided financial and contextual background on the Swansea Bay City Deal. He noted that the Deal was designed as a 15-year programme, launched in 2017/2018, with initial funding focused on the first five years to support project setup and delivery. Each of the eight partner authorities contributed £50,000 annually, alongside a 1.5% top-slice of project costs.

Due to delays in project delivery, the original funding model is now running out and is expected to end by 2026/27.

Option 3 in the report explores ways to extend funding, likely involving a downsized monitoring function.

Moore highlighted increasing workloads related to the Corporate Joint Committee (CJC) and suggested exploring staff overlaps between the City Deal and the CJC to optimise resources and extend delivery capacity.

He also noted that while monitoring requirements for the City Deal will reduce as projects complete, there remains a 15-year obligation to report outputs to both the Welsh and UK Governments, with differing expectations, especially after the UK Government reprofiled its funding.

The 50% Service Level Agreement option was highlighted as a potential model for extending the City Deal’s operational life while supporting CJC functions, but further work is needed to refine governance and delivery structures.

The Chair found the report informative and acknowledged the significant work ahead for officers in determining a way forward.

Members expressed surprise at the options presented, noting they differed from expectations, particularly given that 19 City Deal programmes still remain and questioned whether they could realistically be completed by 2027.

While members understood the financial rationale and Welsh Government preferences for a merger, they raised concerns about the proposed structure and the potential implications for the future of the City Deal.

Members felt the original City Deal aimed for full regional collaboration across all authorities, whereas the CJC does not appear to embody that same vision. They viewed the City Deal’s POMO and  ...  view the full minutes text for item 4.

Following Scrutiny the report was noted.

Charlotte Hodges (Internal Audit, Pembrokeshire Council) presented a report to consider and endorse the findings and actions of the 2024-25 Internal Audit review into the SBCD portfolio outlined in Appendix A

Members were advised that the Annual Internal Audit is conducted annually to assess the arrangements within the Swansea Bay City Deal, with findings reported to the Programme Board, Joint Scrutiny Committee, and Joint Committee.

Officers explained that the Terms of Reference were Agreed on December 17, 2024, by the Joint Committee and the audit Period was undertaken during Quarter 4 of 2024/25.

Officers explained that the purpose was to provide assurance that the arrangements are adequate and effective for achieving the region's aims and objectives.

Members were informed that all work is carried out using an evidence-based approach and that the scope Included follow-up of previous recommendations, governance arrangements, project management and monitoring, financial management, and risk management.

The assurance rating continues to be substantial, indicating a sound system of governance, internal control, financial management, and risk management, with effective and consistently applied internal controls.

Officers confirmed that this was the 5th consecutive year with a substantial assurance rating and that two recommendations related to budget setting have already been implemented and service level agreements

Officers thanked the team for their support during the process.

Following Scrutiny the report was noted.

Following Scrutiny the report was noted.

Stephen Aldridge Jones presented the report. Audit Wales seek information from management and governance on various governance and assurance areas.

Members were advised that the focus Areas in the letter are emphasising financial risks, controls, policies, and procedures for the city deal.

Officers explained that the responses are similar to the previous year's letter, with no new issues noted. Members were informed that it is straightforward and routine, with no additional comments necessary.

Following Scrutiny the report was noted.

Following Scrutiny the report was noted.

Jonathan Burnes (SBCD Portfolio Director) provided Joint Committee with an updated City Deal Portfolio Business Case, outlined at Appendix A, required for submission to Welsh and UK Governments.

Members were advised that the portfolio is expected to generate between £1.8 billion and £2 billion in economic value and create over 9,000 jobs by 2033.

Officers also stated that the City Deal aims to accelerate regional economic recovery, focusing on infrastructure and skills development. Officers noted that members should now be seeing visible infrastructure progress across the region.

Members were advised that the Portfolio Business Case remains, strategically aligned, Economically sound ,Commercially viable, Financially affordable and operationally deliverable.

Officers noted delivery has been slower than anticipated, but partners remain committed, and benefits are starting to be realised.

Members were advised that impact assessments are expected to emerge later this year and in future years, providing formal evidence of progress.

Officers explained that the business case update process involved a full review by the Portfolio Office and project teams and had two phases of consultation with all projects and programmes. There has been an incorporation of Quarter 4 monitoring, including end-of-year financials and delivery status. This has had approval by both the Programme Board and Joint Committee.

Members were advised that the Strategic Case demonstrates alignment with key national and regional strategies and policies and includes a clear case for change, showing the need and scope of the City Deal.

Officers advised that this aligns with:

·       UK Government’s Invest 2035.

·       Modern Industrial Strategy.

·       Corporate Joint Committee plans for Southwest Wales.

·       Regional initiatives like the Regional Skills Partnership, Celtic Freeport, and Digital Connectivity.

Members were advised that the red risks and issues have been updated to reflect current status.

Officers explained that the Economic Case, focuses on delivering value for money and wider social and environmental benefits. Members were advised that no new economic appraisals have been received in 2024/25, but Pentre Awel Zone 1 appraisal is expected in 2025/26.

Members were advised that the Commercial Case confirms procurement viability and deal structuring.

The procurement policy has been updated to reflect new regulations, removal of EU funding requirements, and includes a procurement pipeline.

The Construction impact assessment has been updated and is currently reporting a £44.9 million funding gap, with mitigations underway.

Members were also updated on the financial case and were advised the Portfolio value increased from £1.274 billion to £1.373 billion over 15 years.

Officers confirmed that they have updated the Income, expenditure, and cash flow forecasts.

Officers highlighted that grant drawdowns of £241 million and £176 million receipted. 63% dispersed via Carmarthenshire Council.

Members were advised that the portfolio budget was reprofiled with the £155 million variance due to slower spend and not reduced commitment.

There are no projects that report negative impact on outputs or benefits.

Negative cash flows are expected in Years 9 to 10, possibly extending further.

In relation to the Management Case, officers advised that it ensures robust delivery, monitoring, and evaluation arrangements. They have also  ...  view the full minutes text for item 7.

Following Scrutiny the report was noted.

Stephen Aldred Jones introduced the report, reminding members that the previously agreed five-year operational budget ended in 2024/25. A new budget is now required for 2025/26, in line with internal audit recommendations.

Members were referred to Appendix A (p.197), which outlined the 2025/26 operational budget of £1.323 million, funded partly by interest income and a 1.5% top slice of the government grant.

The interim budget shows a £34,000 surplus, reducing the 2024/25 carry-forward deficit from £247,000 to £213,000. This remaining deficit is expected to be offset by future top slice income, generated over the remainder city deal.

When constituent local authorities draw down their grants, City Deal expects to receive approximately £1.13–£1.14 million in remaining top slice funding.

Section 4 (pp.194–195) details the budget assumptions, including:

Officers referred to Section 4 (pp. 194–195), outlining the assumptions behind the interim budget. These include 3.5% salary inflation and 2.5% for other categories. It is assumed the Project Management Office (PMO) will continue operating from The Beacon, with associated rent and rates included.

Service Level Agreement arrangements with constituent local authorities have been increased by 3.5%, reflecting salary-based costs.

For staffing, it is assumed that the PMO Manager and Project Development Manager posts will remain vacant throughout the year.

Key expenditure items include:

Celoxis project management software: £1,000

Annual assurance review: £6,000 (required by UK and Welsh Governments)

Milestone economic evaluation: £16,000 (to assess portfolio impact)

Marketing, conferences, and advertising: £50,000 (to promote City Deal success)

In relation to income, officers explained that the expected top slice for 2025/26 is approximately £822,000, based on Q4 2024/25 partner grant drawdown forecasts.

Following Scrutiny the report was noted.

Following Scrutiny the report was noted.

Stephen Aldred Jones presented the unaudited Q4 provisional outturn, currently under review by Audit Wales. He highlighted that the Portfolio Management Office (PMO) accounted for most of the £469,000 expenditure, with £419,000 attributed to staffing costs, including the 2024/25 pay award. A staffing underspend of £184,000 was reported, as the budget had assumed all posts were at the top of their pay scale, and two key roles, the PMO Manager and Project Development Manager remained vacant for much of the year.

Total income for the year was £2.83 million, comprising £272,000 from top-sliced grants and £2.56 million in interest on cash balances. The interest was treated as a pass-through transaction, with matching expenditure, resulting in a neutral impact on the outturn.

Appendix A shows a 2023/24 reserve of £182,900 and a projected 2024/25 deficit of approximately £439,000, leading to a cumulative deficit of just over £1 million. This is expected to be temporary and due to the timing of top-slice income, with future years expected to offset the shortfall.

Officers noted that the total projected value of the Portfolio Investment is now estimated at £1.373–£1.374 billion, an increase of £100 million from the original budget. This growth is largely due to £72 million in additional private investment in Digital Infrastructure, £3 million in Pembroke Dock Marine (mainly from the MIS project), and a £12 million increase in Pentre Awel, which includes £10.2 million secured by the local authority and £2 million from private contributions. An additional £11 million has also been invested in Supporting Innovation & Low Carbon Growth through the Tata Transition Fund.

The annual investment forecast showed £97 million in total investments against a planned £157 million, with variances across the portfolio. These were mainly due to delays in Digital Infrastructure procurement, the Homes as Power Stations timeline, and the extended construction and planning phases of Pentre Awel. Delays also affected the Innovation & Low Carbon Growth programme, which reached Rebus Stage 4 later than expected, and the APMF projects, which faced land acquisition and remediation issues.

Despite a £155 million variation in annual spending, officers confirmed that these funds are being reprofiled for use in years 9 to 11 (2026/27 to 2028/29), with no reported impact on the portfolio’s total outputs, investment, or benefits.

Following Scrutiny the report was noted.

Following Scrutiny the report was noted.

Jonathan Burns provided an update on the dashboard, noting two changes in the red/green status table. Pentre Awel moved from amber to green, with construction now focused on final finishes and mechanical/electrical fit-outs. Progress has continued since the report was written, and confidence that the programme will complete within the next month.

Digital Infrastructure has gone from amber to green in terms of scope, though its overall status remains unchanged. Members were informed that Digital Infrastructure is the only programme currently undergoing economic appraisal, with a midterm review by the company Farpoint in Q3 2024/25 confirming it is on track and exceeding GDA targets.

The programme is attracting private sector investment faster than expected, which benefits the region by allowing City Deal funding to support harder-to-reach areas.

Members were advised that three red risks remain across the portfolio:

Rising construction costs.

Failure to deliver planned outputs and outcomes

Flood risk management mapping.

Officers confirmed that three risks were closed in Q4.

·       The cancellation of meetings, which now occur regularly on a quarterly basis.

·       Poor alignment of internal communications between partners, which has now improved.

·       Failure to identify and secure revenue funding. In relation to funding, officers noted that revenue funding currently sits at around 4.5–5% across the portfolio, within the parameters agreed with UK and Welsh governments.

Members were advised that the number of red issues has increased from two to three. The first is a significant in-year variance between forecasted and actual figures, which officers are addressing by improving forecasting across all projects and programmes, with work starting next week.

The second is rising construction costs, now considered both a risk and an issue due to their current and potential future impact. The third relates to variance in delivery timelines for programme milestones between now and 2033.

Officers stated that portfolio benefits continue to grow, with job creation rising from 742 to 896, mainly driven by Supporting Innovation, Low Carbon Growth, and Homes as Power Stations.

Investment to date has increased from £459 million to £536 million, largely due to progress in Digital Infrastructure and Homes as Power Stations.

The procurement pipeline remains largely unchanged since Q2 2024/25, and there was no update on the construction impact assessment.

The estimated variance across the 17 remaining project elements is just under £45 million. In terms of risk status, three projects are rated green, seven amber, three red, and four are yet to be confirmed. Officers now have more detailed insight into the remaining projects across the portfolio.

The red-rated areas in the portfolio currently include Pentre Awel Zone 2, relating to affordable and social housing, and Zone 3, which involves the expansion of the Life Sciences and Business Centre. There is also the Morriston Campus (Marston Centre) (Phase 1).

Officers explained that the projects with a “to be confirmed” status are Campuses Phase 2 (Morriston and Sketty Lane), Yr Egin Phase 2, and the Swansea Waterfront Innovation Precinct. Officers reassured members that these areas are being closely monitored, with cost  ...  view the full minutes text for item 10.

The forward work Programme was noted.

The forward work Programme was noted.

Any urgent items at the discretion of the Chairperson pursuant to Section 100BA(6)(b) of the Local Government Act 1972 (as amended).

There were none.

There were none.