Agenda item

The report was noted.

Ian Williams, SBCD Portfolio Development Manager gave members an update on the City Deal Portfolio Business Case required for submission to Welsh and UK Governments.

Members asked how robust the business case is still in financial terms.

Officers said that it remains affordable as the business case confirms. However, there are challenges and mitigations ongoing and risks and issues still remain for the delivery programme  but at present it remains affordable across all the programmes and projects.

Members asked if the report is a snapshot from months ago. Officers confirmed that it is based on the quartQ3 2023/24 returns.

Members noted that they could get a better update at the next scrutiny meeting where members can ask for affordability issues on the business case.

Officers advised that there are regular financial reports on a quarterly basis. Officers also added that when the business cases were written several years ago, the value to the economy, the value to the lead deliverers, the stakeholders involved and the beneficiaries of it have in a few instances now become higher value today than what it would have been a few years ago for several reasons.

Officers used the examples of from the Supporting Innovation and Low Carbon Growth Programme, specifically the Bay technology Centre and the decarbonisation of steel project (SWITCH). It is likely that they now have a greater economic value than when the business case was developed three years ago. This means that even though costs may increase, the economic return of what those buildings will produce will be higher for the region.

Officers stated that they will have to keep their fingers on the pulse in that sense and officers noted that affordability is the important thing, and they have a mechanism to check that through the quarterly financial monitoring as well as business case updates among others, to make sure that they are still viable and affordable and that they're being delivered as planned.

Members noted that because several business cases were initiated around 2017 society and the business world has completely changed. Members asked how relevant today is the City Deal with what has been produced then to what is here now.

Members also commented that while officers undertake mitigation measures to put projects in a position to get the best benefit out of what is being done, members felt that they needed to understand what the change is within that business case is, they know what is being done.

Officers agreed with this and referenced the change control procedure in place to capture those changes. Officers gave the example that for Pembroke Dock Marine (PDM), Floating Offshore Wind was not part of PDM originally. But the project went through a change control process to incorporate that into it. The envelope of money stayed the same for PDM, but their focus changed and what would happen then is the return on that is a lot higher than what they originally planned. Officers referenced SWITCH and stated that it is a heightened need within the region because of the situation with Tata Steel.

Officers advised that Yr Egin phase two must make sure that it is viable and that it is aligned to business and the universities need and all projects are going through change control and officers support those projects through that process.

Members stated that there has been a rush to build offices in a hope that we go back to pre-pandemic office usage and were concerned that there is little evidence to prove that it will go back up to that level. Members were glad that officers were investigating and reporting back because those are the ongoing things that will matter after the initial build of all these projects.

Officers agreed that the purpose of the buildings and the type of space that's in them is important and used the example of Yr Egin proving in Phase one that it has been near to full occupancy throughout the whole five years of operation. The Bay Technology Centre has lab space that industry requires and the hanger annexes in PDM are on site where they need to be to work in collaboration with other partners to put technology into the Celtic Sea. Officers stated that there are good drivers for having these premises, but it is about adapting and making sure that what was signed up to a few years ago is still viable and that they adapt and make sure that they change to the business need.

Report was noted.