Mayor-&-Cabinet---Supplementary-Agenda---12-January-2005

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					                       MAYOR AND CABINET

Date:           WEDNESDAY, 12 JANUARY 2005

Item No.                                                               Page No.




                                                                                  SUPPLEMENTARY AGENDA
                                                                                  SUPPLEMENTARY AGENDA
11     Council Tax Discounts for Second Homes                             1
       and Empty Properties

12     Building Schools for the Future - Revised                          8
       Outline Business Case and Formation of a
       Local Education Partnership

13    Matters Referred by the Overview &                                  24
      Scrutiny Business Panel on 20 December
      2004




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                                                       MAYOR AND CABINET

Report Title                   COUNCIL TAX DISCOUNTS FOR SECOND HOMES AND EMPTY
                               PROPERTIES
Key Decision                         YES                                     Item No. 11

Ward                           ALL

Contributors                   ACTING EXECUTIVE DIRECTOR FOR RESOURCES

Class                          Part 1                                      Date: 12 JANUARY 2005


    1.        Summary

                This report explains the legislation which allows the Council to
                raise additional Council Tax income by reducing the discount
                awarded for second homes and empty properties. The
                recommendation is for the Mayor to recommend that Council
                continues to award reduced discounts on these classes of
                property.

    2.        Purpose

                The purpose of this report is to explain the legislation which gives
                the Council the option of raising additional income from some
                types of property, set out the options and make a
                recommendation.

    3.        Policy Context

              The recommendation is in line with Council policy which is to
              maximise income and encourage the use of all empty domestic
              property to reduce homelessness and ease the housing
              shortage.

    4.        Recommendations

               To recommend the Council to:

    4.1        continue with the reduced discount on all empty properties in
               the Borough at 0%; and

        4.2     continue with the reduced discount on all second homes and
                furnished lets in the Borough at 10%.


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5.        Background

5.1       From 2004/05 the Council was allowed to reduce the discount
          given to empty properties and second homes. Until April 2004
          these properties were awarded a 50% discount.

5.2       The legislation, which was effective for Council Tax year from 1
          April 2004, allows the Council to reduce the discount for empty
          properties from 50% to 0% or a percentage in between, following
          a 6 month exemption period. The legislation also allows the
          Council to reduce the second home discount from 50% to 10%
          (this also includes empty furnished lets) or a figure in-between.

5.3       For tax year 2004-05, 1667 properties were classed as long term
          empty where the council reduced the discount from 50% to 0%.
          Analysis of these properties shows that 17% have since been
          taken out of rating, 38% have been sold or let, 5% are now in
          receipt of a single person discount and 40% are unknown (may
          be empty or occupied). It is no longer possible to track progress
          of long term empty properties as they were previously identified
          by a discount code. The full council tax charge is now payable
          and so there is no reason or incentive for owners to advise the
          council when the property becomes occupied, unless there is a
          change of ownership, the property is let or a single person
          discount is claimed.

5.4       For tax year 2004-05, 467 properties were classed as second
          homes (including furnished lets) where the council reduced the
          discount from 50% to 10%. At 1 November 2004 (date of
          completion of CTB1 for Revenues Support Grant) 526 properties
          were classed as second homes.

5.5       It is estimated that reducing the discount on second homes to
          the minimum amount will create an ongoing income to the
          Council of circa £200K.

6.        Options

6.1        The Council can decide to leave the discounts at their present
           rate, (that agreed last year of 0% for long term empty and 10%
           for second homes), as set out above and raise additional
           income. The Council could also choose a discount between


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           the maximum and the minimum possible. The Council can also
           decide to reduce the discount on only empty properties or
           second homes.

6.2       To award a discount of an amount in between the current figure
          and the maximum allowed would reduce the additional
          expected income to a point where there is little value in going to
          the trouble of making the changes and incurring the additional
          collection costs. To reduce the discount on only one class of
          property would also have the same effect.

6.3       In 2004/05 the Council was allowed to keep all additional
          income from these changes. However, for 2005/06 the Council is
          only allowed to keep the additional income from second homes,
          as the additional income from empty properties will be taken
          into account when our Revenue Support Grant is calculated.

6.4       Officers recommend that the discounts for these classes of
          property are retained at the minimum amount.

7.        Financial Implications

7.1       The level of discount agreed by authorities for vacant homes is
          taken into account in the calculation of taxbase for RSG
          purposes. However because of the timing of the settlement this
          calculation is based on the discount agreed for 2004/05.
          Therefore if a discount were agreed for 2005/06 RSG would not
          increase to compensate for the lost income, but this would be
          reflected in the 2006/07 Settlement.

7.2       The taxbase for RSG purposes assumes a 50% discount for second
          homes, so in effect the Council keeps the additional income
          from reducing the discount. At the proposed level of discount
          the estimated ongoing income for 2005/06 is around £200k.

7.3       The calculations in the report „Setting the Council Tax Base‟
          (elsewhere on this agenda) are based on the continuation of the
          level of discounts agreed for 2004/05 and reflects the additional
          income referred to above. If a different set of discounts from that
          recommended is agreed this will result in a lower Council Tax
          base from that proposed.

  8.        Legal Implications

  8.1       The Local Government Act 2003 makes a number of
            amendments to the Local Government and Finance Act 1992.
            These changes and the Council Tax (Prescribed Classes of


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            Dwellings) (England) Regulations 2003 introduce a discretion for
            local authorities to reduce the Council Tax discounts available
            for certain types of dwelling in some or all of their area. Under
            Section 11A of the Local Government Finance Act 1992 such
            determinations have to be made on an annual basis before the
            beginning of the financial year to which they relate and notice
            of the determination has to be published in the local press
            within 21 days of the decision.

  8.2       However, the determination would have to be made before
            the Council sets its Council tax base if the changes are to be
            reflected in the tax base for the next financial year. Under the
            Local Authorities (Calculation of Tax base) (Amendment)
            (England) Regulations 2003, the tax base for 2005/6 has to be
            fixed by not later than 31 January 2005

  8.3       Amendments made to Section 67 of the 1992 Act by Schedule 7
            to the 2003 Act make it clear that the function of determining
            the amount of discounts is one which may only be discharged
            by the authority as a whole and the final decision on the
            discounts will therefore need to be made by full Council.

  9.        Crime and Disorder Implications

            There are no crime and disorder implication to this report.

  10.       Equalities Implications

            The recommendation to reduce the discount on empty
            properties and second homes should not have any equality
            implications. Although Council Tax Benefit cannot be awarded
            on these classes of property it is very unlikely that a vulnerable
            person will be in the position of owning an empty property or a
            second home. The recommendation is more likely to
            encourage the owners of empty properties to bring them back
            into use, which could benefit the vulnerable by making more
            property available.

  11.       Environmental Implications

            The recommendation to bring empty property back into use
            has a positive environmental impact as it reduces the need to
            create more housing in other ways such as building new homes.

  12.       Conclusion




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            Reducing the discount on empty properties and second homes
            will generate additional income for the Council. It is for this
            reason that the recommendation is for the Mayor to
            recommend the Council to reduce the discounts to the
            minimum amount, which will create ongoing income of circa
            £200K.

  13.     Reason for Urgency

          It has not been possible to give 5 clear days notice of this matter
          in
           accordance with Regulation 16 of the Local Authorities
          (Executive Arrangements)(Access to Information)(England)
          Regulations 2000. As a consequence the Chair of the Overview
          & Scrutiny Business Panel has been informed that the decision is
          to be made and is to be treated as a matter of urgency.

            The Council is under a statutory obligation to set the tax base by
            31 January. The Mayor and Cabinet's recommendation will be
            put to the Council at its meeting on 26 January 2005.

                                           BACKGROUND PAPERS

The background document to this report is the legislation - Statutory
Instrument No. 3011 Council Tax, England – The Council Tax (Prescribed
Classes of Dwellings) (England) Regulations 2003.

For more information please contact Lorraine Richards, Head of
Revenues on extension 46047




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                                                      MAYOR AND CABINET

Report Title               BUILDING SCHOOLS FOR THE FUTURE - REVISED OUTLINE BUSINESS CASE
                           AND FORMATION OF A LOCAL EDUCATION PARTNERSHIP
Key Decision                      YES                                          Item No. 12

Ward

Contributors               EXECUTIVE DIRECTOR FOR EDUCATION & CULTURE/EXECUTIVE DIRECTOR
                           FOR RESOURCES & DEPUTY CHIEF EXECUTIVE
Class                      Part 2                                   Date: 12 JANUARY 2004




          1. Exclusion of Press and Public

                    The report contains confidential and exempt information as
                    defined in paragraph 7 of Part 1 of Schedule 12A LGA 1972
                    being:

                    the amount of any expenditure proposed to be incurred by the
                    authority under any particular contracts for the acquisition or
                    disposal of property or the supply of goods and services

                    accordingly this information is contained in Part 2 of the Report.
                    The revised draft OBC to which Members' are referred in this
                    Report and which has been placed in the Members Room for
                    information likewise contains confidential and exempt
                    information as defined in paragraph 7 of Part 1 Schedule 12A
                    LGA 1972. It is recommended that under Section 100 (4A) of the
                    Local Government Act 1972, the public be excluded from the
                    meeting during discussion of Part 2 of the Report and the OBC.

          2. Reason for urgency

          2.1.       It has not been possible to give 5 clear days‟ notice of this
                    matter in accordance with the provisions of Regulation 16 of the
                    Local Authorities (Executive Arrangements) (Access to
                    Information) Regulations 2000. As a consequence, the Chair of
                    the Overview & Scrutiny Business Panel has been informed that
                    the decision is to be made and is to be treated as a matter of
                    urgency.

          2.2.       The reason for urgency is that Building Schools for the Future
                    (BSF) funding has been delayed by several months. Time is now


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          of the essence if BSF-funded work is to commence on site in July
          2006. A number of urgent meetings were held with DfES and
          officers in December to try and establish a way forward.

2.3.       Officers were only advised by the DfES on 23 December, 2004
          that in order to proceed to the next stage, a revised Outline
          Business Case (OBC) must submitted to the DfES in time for a
          meeting of the Project Review Group (PRG) on 18 January, 2005.
          Officers prepared the revised case over the holiday period in
          anticipation of the PRG stipulation for member-level approval of
          the use of the Local Education Partnership (LEP) procurement
          model. This must now be confirmed before the OBC will be
          considered by PRG.

          Summary

2.4.       The report deals with progress on securing investment from the
          national (BSF) programme. The Council had been participating
          in a Pathfinder programme with the London Boroughs of
          Greenwich and Southwark (GLAS). However, the DfES now
          considers that the BSF programme within Lewisham can be more
          effectively and efficiently delivered using a standard single-
          borough Local Education Partnership (LEP).

2.5.       In order to proceed to the next stage, the Mayor is asked to
          confirm approval of a revised OBC and delegate authority to
          officers to submit it for consideration by PRG on 18 January, 2005.
          In order to protect the Council‟s interests, it is considered prudent
          at this stage to formalise terms of reference and governance
          arrangements for a LEP and make provision for the related
          financial implications. Once the OBC has been approved by the
          DfES, the Council will then have to form a LEP and commence
          procurement of a strategic partner to deliver the BSF
          programme.

2.6.       The report recommends a range of delegations to the Executive
          Director for Resources and Executive Director for Education &
          Culture on the advice of the Head of Law. However, approval of
          the preferred bidder will be the subject of a further report to
          Cabinet, with authority for subsequent negotiations delegated to
          the Executive Director for Resources and Executive Director for
          Education & Culture on the advice of the Head of Law.

3. Policy Context




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3.1.       The Council is committed to delivering investment to ensure that
          school buildings are fit for purpose and able to respond flexibly to
          the changing needs of the curriculum.

3.2.       Mayor & Cabinet (20 November 2002) agreed a report:
          Strategic Review of Secondary Places. This sets the framework for
          the proposed changes to secondary provision.

3.3.       Mayor & Cabinet (1 October 2003) agreed the Council‟s
          involvement in the Programme and instructed officers to report
          back following DfES approval to the Programme.

3.4.       Mayor & Cabinet (29 September 2004) agreed to the submission
          of an Outline Business Case (OBC) setting out the case for
          investment in Sedgehill, Northbrook and Catford Business &
          Enterprise College and Lewisham‟s involvement in a Pathfinder
          with Greenwich and Southwark (The GLAS Partnership).

4. Recommendations

4.1.       That in principle agreement be given to the draft revised OBC,
          and that authority to amend and submit a final OBC for 18
          January PRG be delegated to the Executive Director for
          Resources and Executive Director for Education & Culture on the
          advice of the Head of Law.

4.2.       That in principle agreement be given to a proposed single
          borough LEP arrangement as outlined in this report for delivery of
          the BSF programme in Lewisham.

4.3.       To establish a Building Schools for the Future Project Board and
          Steering Group in the period up to the appointment of a private
          sector partner and formation of the LEP.

4.4.       To approve the procurement strategy as set out in this report
          and agree to receive a further report to appoint the Preferred
          Bidder.

4.5.       That authority to the agreement of a detailed OJEU notices be
          delegated to the Executive Director for Resources and Executive
          Director for Education & Culture on the advice of the Head of
          Law.

4.6.      That authority be delegated to the Executive Director for
          Resources and Executive Director for Education & Culture on the
          advice of the Head of Law to place notices in the OJEU for the
          procurement of a private sector partner for the BSF programme.


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5. Background and Progress to Date

5.1.       At the end of March 2003 the DfES announced four BSF
          Pathfinders (Bradford, Bristol, Sheffield and Greenwich).
          Lewisham and Southwark were added to this partnership, with
          Greenwich acting as lead borough.

5.2. In January 2004, the DfES confirmed the Greenwich, Lewisham &
      Southwark Pathfinder. This included three Lewisham schools,
      Sedgehill, Northbrook and Catford Business & Enterprise College.
      The DfES indicated that affordability issues had still to be
      determined and had appointed advisers (PFS) to report back on
      these issues.

5.3.       A draft OBC was submitted (together with Greenwich‟s draft
          OBC) to the DfES on October 5, 2004, with the expectation that
          these would be reviewed by the Project Review Group (PRG)
          during November 2004. Further submissions were made in the
          meantime in response to questions from DfES and PRG, including
          further clarification on how Lewisham would deal with
          affordability issues.

5.4.       On November 2, 2004, a Strategic Business Case was jointly
          submitted by the GLAS boroughs, dealing with the boroughs‟
          educational strategies and cross-borough working.

5.5.       On 30 November, 2004, a further wave of BSF funding was
          announced by the DfES, which would provide BSF funding for
          improvements at Bonus Pastor, Deptford Green, and Sydenham
          schools, together with funding for the proposed new school at
          Ladywell.

5.6.       The DfES then elected to defer submission of the GLAS OBCs to
          PRG because of concerns about aspects of the GLAS
          procurement model and the partnership arrangements.

5.7.       In the event these issues were not considered to be capable of
          being resolved fully within the time constraints of the BSF
          programme. During December 2004, the DFES agreed that the
          partnership with Greenwich and Southwark might be adding to
          the complexity of the project and therefore slowing down
          implementation. The boroughs were advised that Ministers would
          be happy to consider appropriate proposals put forward by the


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          boroughs to deliver their BSF programme independently while still
          maintaining a broad partnership in relation to aspects such as
          educational vision.

5.8.       On 22 December, the DFES formally confirmed the basis of
          Lewisham‟s future involvement in the BSF programme. The
          paragraphs below deal with these issues.

6. Key Features of the revised Outline Business Case

6.1       The key features of the revised OBC are:

          6.1.1 New governance and delivery arrangements within the
                proposed LEP and within the Council, use of standard
                Option 2 LEP model.

          6.1.2 Revision of affordability and value for money analyses
                within the OBC for proposed solutions for each school,
                taking account of a LEP structure and costs and a
                procurement budget through to financial close for each of
                the schools.

          6.1.3 Provision of a revised risk register.

          6.1.4 Provision for future submission of a revised Strategic
                Business Case dealing with the initial PFI and conventional
                schemes and incorporating proposals for the Wave 3
                schemes at Bonus Pastor, Deptford Green, Sydenham and
                the proposed new school at Ladywell.

7. Key Features of new governance and delivery arrangements: LEP

7.1.       The LEP model provides the flexibility to provide services either
          through sub-contracts or Special Purpose Companies, the latter
          being similar to those companies already used in the delivery of
          schools PFI projects.

7.2.       The model recognises that flexibility is needed to:

          7.2.1 assemble the diverse range of services needed to design,
                build, and provide facilities management of schools (the
                supply chain);

          7.2.2 integrate these services, particularly ICT, in an effective
                manner;




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          7.2.3 cope with conventionally financed capital projects
                (financed from supported borrowing, grants etc.) as well
                as projects financed using PFI Credits, the latter requiring
                bank funding and risk capital;

          7.2.4 accommodate the differing needs and varying degrees of
                experience of partnership working among different Local
                Authorities.

7.3.       As a shareholder in a LEP the benefits for the Council would
          include:

          7.3.1 adding value from a local perspective to the solutions
                developed by the private sector partner, so that they are
                more likely to meet the expectations and requirements of
                local stakeholders;

          7.3.2 transparency in decision-making at Board level;

          7.3.3 better alignment of public and private sector interests in
                the strategic programme;

          7.3.4 benefiting from capacity building over the life of the Local
                Educational Partnership;

          7.3.5 additional project development resources brought in by
                the private sector to scope future schemes;

          7.3.6 future business expansion possibilities

          7.3.7 sharing a portion of the financial gain from a successful
                programme, which can be reinvested back into the
                educational estate.

7.4.       The need to maintain innovation and promote continuous
          improvement over the life of the Partnership will be catered for
          within the terms of the Strategic Partnering Agreement, and a
          standard format for the provision of a continuous performance
          plan is provided by Partnerships for Schools.

8. Governance Structures Prior to establishment of the LEP

8.1.       New groups are proposed that will be part of the approvals and
          reporting structure for the delivery of the Building Schools for the
          Future Programme. This structure is designed to ensure that the
          right stakeholders are engaged, the process is streamlined, and



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          that approvals are gained in the most appropriate way. The new
          groups proposed are:

          8.1.1 The Building Schools for the Future Project Board (*A) – to
                be chaired by an appropriate member of cabinet
                nominated by the Mayor (who will ensure that there is
                liaison between the Project Board and Steering Group
                Chairs, if they are different) and to include senior key
                stakeholders (including the PfS Project Director) to oversee
                the programme‟s procurement and is the key strategic
                internal Council body. This group will receive regular
                progress reports from the Head of Partnerships and
                Investments and other officers as necessary.

          8.1.2 The Building Schools for the Future Steering Group(s) (B) to
                be chaired by an appropriate member of cabinet
                nominated by the Mayor and to include ward and/or
                scrutiny members, head teachers and Governor
                representatives, a forum for resolving individual school
                issues through to services commencement.

          8.1.3 The Project Group (C*), to be chaired by the Head of
                Partnerships and Investments, a key officer group
                undertaking detailed work on the project, drawing on
                officers in all directorates with consultancy advice from
                MACE as appropriate on finalising the OBC and including
                the PfS Project Director.

          8.1.4 The Strategic Development Group (D*) to be chaired by
                the Head of School Effectiveness, advising on and keeping
                Educational transformation and pupil attainment at the
                heart of the Building Schools for the Future Programme. This
                group will ultimately provide the educational advice to the
                Project Board once established.

          8.1.5 The diagram below (new groups referenced by letter, in
                black boxes) shows the structure prior to the establishment
                of the LEP:




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                                                      MAYOR

     Executive
  Management Team




    Education and                    Project Sponsor                BSF Project
       Culture                          (Exec Dir                     Board
     Directorate                       Education &                 (monthly) (A*)
    Management                           Culture)
        Team


                                                                     Programme               BSF Steering
                                                                  Director (Head of             Groups
                                                                  Partnerships and         (bi-monthly) (B*)
                                                                    Investments)




     New School Project               Grouped Schools                BSF Project            BSF Strategic
          Group                       PFI Project Group                 Group               Development
        (Weekly or                       (Weekly or                  (Weekly or                Group
       Fortnightly)                     Fortnightly)               Fortnightly) (C*)        (Termly) (D*)




                                                                                 Other Task and
                                                                              Stakeholder Groups
                                                                              Procurement, Legal,
                                                                              Resources, Planning,
                                                                             Property, Construction
                                                                                 Management,
                                                                                   Education




9. Post-establishment of the LEP – Implications

9.1.       Duration: The Local Authority will itself have a contract with the
          LEP, the purpose of which is to develop and deliver projects over
          the lifetime of the Strategic Partnering Agreement, initially ten
          years with the ability to extend it by another five.

9.2.       Purpose: The LEP will be a strategic partnership for the delivery of
          the Council‟s phased, long-term local investment programme for
          Building Schools for the Future. The Partnership will:

          9.2.1 act as the single point of contact for the procurement and
                delivery of all the services likely to be required to deliver


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                     the investment programme ranging from design,
                     innovation, construction, project management, facilities
                     management and maintenance to ICT services;

          9.2.2 integrate and manage a diverse range of supply chain
                sub-contractors – ranging from building contractors,
                Facilities Management services to ICT providers;

          9.2.3 enable delivery of projects through a mix of procurement
                routes – PFI and conventionally funded.

          9.2.4 work with the Local Authority and other local stakeholders
                to understand and develop its strategic investment plans
                for secondary education in the Authority.

9.3.       Governance: The basic model, put forward by Partnerships for
          Schools, suggests that Local Authorities establish a Strategic
          Partnering Board. (In practice this will be a successor to the pre-
          LEP Project Board). This forum will consult the various stakeholders
          who have an interest in the LEA‟s educational vision and
          developing current and future projects over the lifetime of the
          BSF programme. The detailed terms of reference for this group
          will be part of the further report to be brought to Cabinet to
          appoint the Preferred Bidder and will include a more detailed
          explanation of the Local Educational Partnership structure as
          proposed. The diagram below shows the structure after the
          establishment of the LEP



                                                              Private
                               LEA                            Sector                 Partnerships
                               10%                          Partner 80%              For Schools
                              share                            Share                     10%
                                                                                        share




         Strategic
        Partnering
           Board                                            Local
                                                          Education
                                                          Partnership


                                                           Local Supply Chain


                                                        Design & Build             Facilities
                              PFI                         Contracts             Management and
                          (Sedgehill)                  (Northbrook and           ICT Contracts
                                                           Catford)

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9.4.       Legal Structure: The LEP will be a company limited by shares, 80%
          will be owned by the private sector partner with Partnerships for
          Schools and the Local Authority each having a 10%
          shareholding. The Council and PfS will be represented on the
          Board and there will be a Shareholders Agreement between the
          Council and the Private Sector Partner. This is necessary in order
          to retain the Council‟s ability to approve future projects and to
          control the development of Education strategy as it evolves out
          of changes to the Strategic Business Case put forward by the LEP

9.5.      The Council would be the client for procurement of buildings
          and services and the resultant contract management and
          would still have exactly the same responsibilities and approvals
          processes at a strategic level.

10. Procurement Strategy and Selection Process

10.1.      The procurement strategy follows the „negotiated procedure‟
          model produced by Partnerships for Schools on behalf of the
          DfES. Standardised guidance, processes and documentation
          supplied by Partnerships for Schools will be used wherever
          possible, and content and format of the documents will need to
          follow those of the standardised models provided by PfS, who will
          be required to sign off the relevant documents before they are
          issued to the private sector.

10.2.      Lewisham will adopt the „Option 2‟ LEP model for the duration of
          its BSF investment programme. Any derogations from the
          standardised model will have to be formally submitted to PfS for
          their scrutiny and the Council will be required to undergo a
          Gateway 3 Review at the relevant point in the procurement
          cycle.

10.3.      The Key Principles of the procurement strategy are that:

          10.3.1 there should be a competitive process for selecting a
                 Private Sector Partner;

          10.3.2 there should be 3 evaluation stages to select a preferred
                 bidder;

          10.3.3 there should be a clear differentiation between each
                 stage of the evaluation process;

          10.3.4 key stakeholders should be represented on the evaluation
                 panels;


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          10.3.5 schools must be involved;

          10.3.6 lessons from previous evaluation exercises (particularly the
                 Grouped Schools PFI) will be incorporated to improve the
                 process. (Head Teachers retaining an overview of the
                 evaluation process rather than an involvement in a single
                 evaluation area for example).

10.4.      The structure is more complex and will take more time and effort
          to create than a typical single schools PFI project. Once
          established, however, the development and delivery of future
          projects should be much quicker by avoiding the need to
          procure each project separately. Over the medium to long term,
          it is expected to generate efficiencies through savings on bid
          and procurement costs as well as other efficiencies through
          effective management of the supply chain.

10.5.      The process: The evaluation process is designed to select a
          Private Sector Partner to establish the LEP. This will assess the
          capability of the Partner to deliver Partnering Services at the
          strategic level and to establish the costs of providing those
          services.

10.5.1 National guidance from Partnerships for Schools proposes that
       bidders will be evaluated on their proposals for setting up and
       operating the LEP and their proposals for a small number of
       sample schools (depending on the size of the overall project).
       There will be three selection stages:

            Evaluation Stage 1                           to select a long list of around 6 –12 bidders

            Evaluation Stage 2                           to select a shortlist of 3; and

            Evaluation Stage 3                           to select a single „preferred bidder‟.


          10.5.2 Evaluation Stage 1: to produce long list: High-level
                 information, gained by completing a Pre-Qualification
                 Questionnaire, on the proposed partnership would be
                 required at this stage as stipulated in EU procurement
                 directives. The evaluation would be a scored compliance
                 check covering the financial standing of the organisation
                 and any consortium members; their technical capability;
                 and general commercial eligibility. The evaluation would
                 aim to select between 6-12 organisations to invite to
                 submit detailed proposals.


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          10.5.3 Evaluation Stage 2: to produce a shortlist of 3 bidders: The
                 key information for this stage, gained from their responses
                 to the Preliminary Invitation to Negotiate, would be the
                 organisations‟ partnership proposals. Detailed information
                 would be required on financial proposals including
                 financial management arrangements; details of their plans
                 to deliver including capacity and technical capability of
                 proposed partners/teams; their understanding of
                 education strategy and how their proposals will contribute
                 to improving education and providing innovation; and
                 confirmation of their acceptance of the standard
                 documents and agreements. The evaluation would
                 involve scoring the partnering proposals and lead to a
                 selection of a maximum of 3 bidders. The Authority and
                 schools would need to be confident at this stage that they
                 could work in partnership with any of the three short listed
                 bidders.

          10.5.3 Evaluation Stage 3: to select preferred bidder:
                 Organisations would be required to provide greater
                 detailed proposals on the constitution of the LEP, to mark
                 up in detail their response to full legal documentation
                 required to set up the Partnership and to enter into the first
                 phase of the schemes. New at this stage would be
                 detailed designs for the schools along with detailed
                 proposals for their operation, maintenance and
                 management. Detailed scoring of the commercial
                 proposals, designs and service delivery proposals would
                 lead to the selection of the preferred bidder. The approval
                 of the Preferred Bidder will be the subject of a further
                 report to Cabinet.

10.6.      Partnerships for Schools have produced extensive guidance on
          the evaluation process and the scoring of bids in consultation
          with the Pathfinder Authorities, DfES and legal and financial
          advisers and have ascribed weightings to the separate
          elements, some of the elements of which are similar to those
          used in current procurements particularly for example in the case
          of PFI projects. It is proposed to use this evaluation framework,
          however, the overall weighting within this framework will be
          subject to further discussion and approval of the Executive
          Directors of Education and Resources.

10.7.      With regard to the selection and approval of the preferred
          bidder from the shortlist of three potential partners, it is proposed
          to bring a further report to Cabinet in Autumn 2005 to seek


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          approval to the preferred bidder and more particularly to fully
          describe their proposal for the establishment of a LEP. Once this
          approval is given it is proposed that the subsequent negotiations
          are conducted under delegated authority.

11. Legal Implications

11.1.      Under a Shareholders Agreement the Council will own 10% of
          the equity in the LEP. It will also have representation on the Board
          of the LEP. There will be voting rights and minority rights
          protection that will require Council approval prior to any major
          decisions or changes of policy. Such rights will be carefully
          considered and the Shareholder‟s Agreement carefully drafted
          to prevent any pre-emption rights in favour of the Authority
          having the potential to give the public sector effectively 100%
          ownership of the LEP. The decisions are likely to be in the nature
          of strategic direction rather than of an operational nature.

11.2.     Members of the LEP Board will have rights to comment on the
          development of the Strategic Business Case, any new scheme
          proposals and on the general progress of the LEP.

11.3.      Only Council Members can approve new schemes and they will
          ultimately control the development of, and changes to the
          Strategic Business Case.

11.4.      The Council‟s interests in respect to LEP contractual
          arrangements will be safeguarded. Failure on the part of the LEP
          to deliver will lead to remedial action that in turn could result in
          loss of exclusivity and/or termination.

11.5.     At individual project level, the risk to the Council will be dealt
          with in a similar way to existing arrangements for PFI or
          conventional procurement.

11.6.      Any major integration risk between parts of the BSF programme
          is intended to be carried by the LEP, which in turn will pass this risk
          down the supply chain via appropriate interface agreements. In
          this way the risk carried by the LEP itself should be limited.

11.7.     The principle remains that what is sought is the best „value for
          money‟ balance between the public and private sectors,
          placing the risk where it can be managed best.

11.8.      The Council is a contracting authority for the purposes of the EU
          procurement regime and is subject to the European
          Procurement Rules (“the Rules”). The Contract will be for a mix of


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          works and services. However, the partnering services, facilities
          management and consultancy services over the longer term
          point to the services regime being the one which applies. The
          competitive negotiated procedure under this regime is
          appropriate for the delivery of such a complex and innovative
          programme as BSF. It introduces a new approach to and
          advocates innovation in the delivery of educational facilities
          through the concept of a LEP and its supply chain. It also involves
          a number of different contractual delivery methods e.g. a PFI
          though a special purpose vehicle or conventional build
          contracts sub-contracted to the LEP‟s supply chain. This will
          mean complex interface issues. The project also has the scope to
          deliver new as yet unspecified projects at a future date.

11.9.     For the above reasons it is considered on balance that the
          procurement of the private sector Partner falls within the Rules
          permitting competitive negotiation where, exceptionally, the
          nature of the services to be provided and the risks attached do
          not permit prior overall pricing. Additionally the specification
          cannot be drawn up with sufficient precision to permit the
          contract to be let without negotiation.

11.10. The length of the term ( 10 years with an option to extend for a
      further five years) is considered to be sufficient to prevent the
      exclusivity in favour of the private sector partner in relation to the
      project distorting the market whilst ensuring continuity in the
      delivery of the programme and economy of resources.

12.       Financial Implications

          This information has been placed on Part 2 of the Agenda.

13.       Staffing Implications

13.1      At this stage there are no direct staffing implications as the pre-
          LEP structures can be populated by existing personnel.

13.2         Building Schools for the Future combines both PFI and
             conventional funding and is likely to provide new and complex
             challenges throughout the delivery process. To deliver the
             project, resources will be drawn from both within and outside
             the Council. The deployment of all the resources will be
             managed through the Project Group, which will be led by the
             Head of Partnerships and Investments under the authority of the
             Executive Director, Education and Culture.




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13.3         It is clear that a project team will be required to support
             investment of this scale and to that end, two of the temporary
             contracts within the PPP Team in the Education Directorate will
             need to be extended for a minimum of two years from July
             2005.

13.4      In addition, there may be implications for school-based staff
          where PFI contracts are let.

14.       Risk Assessment

14.1      A risk register has been compiled identifying the high level risks
          associated with the BSF programme. The following areas are
          dealt with and an assessment made of the extent of the risks
          involved:

          14.1.1 The ability of the LEP to deliver the full scope of services.

             14.1.2             The ability of the Partnership to manage a diverse
             supply             chain and a mixture of procurement routes.

          14.1.3 The Partnership‟s capacity to develop strategic investment
                 plans.

          14.1.4 The protection and control the Council has as a minority
                 shareholder.

          14.1.5 The transfer of risk from the Council to the Partnership and
                 issues of exclusivity and long term relationships

          14.1.6 The ability of the evaluation process to deliver the correct
                 Private Sector Partner

          14.1.7 Possible slippage to the procurement programme

          14.1.8 Maintenance of the procurement budget.

15. Crime & Disorder Implications

          These projects will provide an opportunity to ensure that school
          design takes into account safety issues within a school and
          minimises the potential for crime.

16.       Equalities Implications

             No direct equalities implications directly arise from the
             development and construction works that are proposed as part


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             of the BSF programme. However, it is expected that the
             improvements in educational attainment that are expected in
             future years will have a positive impact on equality and diversity
             issues within schools.

17.       Environmental Implications

           New and remodelled school sites are likely to have a positive
          effect on local environments, and, where possible, ecological
          and environmental efficiencies and gains will be developed at
          the design stage.

18.       Conclusion

18.1      This programme provides an opportunity for the Council to
          significantly improve its secondary school estate.

18.2         The new procurement proposals from the DfES are designed to
             ensure that the investment is delivered swiftly and with low
             transaction costs and that lessons from PFI are learned.

18.3         The use of a LEP (as opposed to the GLAS) model is now
             recognised by the DfES as being able provide the Council with
             a procurement route that is capable of delivering
             commencement of the BSF programme on school sites by July
             2006.

                                          BACKGROUND PAPERS

         Short title document                                     Date           Location

         Secondary Schools Strategy                               20 Nov 2002    Governance
              Mayor & Cabinet                                                         Support

         Building Schools for the Future                          1 Oct 2003     Governance
                Mayor & Cabinet                                                       Support

         Building Schools for the Future                          29 Sept 2004   Governance
                Mayor & Cabinet                                                       Support

         Revised Outline Business Case                            6 January      Members Room
                                                                        2005

*The revised draft OBC is approximately 300 pages and for this reason a
copy has been placed in the Members Room for information. For more
information about this report, please contact Tony Freeman, Head of



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Partnerships and Investment, Education & Culture Directorate on 020
8314 3797.




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MAYOR AND CABINET

   Report Title                MATTERS REFERRED BY THE OVERVIEW & SCRUTINY BUSINESS PANEL ON
                                                      20 DECEMBER 2004
Key Decision                   NO                                                Item No. 13

Ward

Contributors                                                          CHIEF EXECUTIVE

Class                                                       Part 1                 Date: 12 JANUARY 2005




    1.        Summary and Purpose

              This report informs the Mayor and Cabinet of the
              comments/views of the Business Panel arising from
              consideration of the Best Value Review of Library and
              Information Services. These are set out in section 3.

    2.        Recommendation

              The Mayor is recommended to:

              (i)        note the views of the Business Panel set out in section 3; and

              (ii)       agree that the relevant Executive Directors be asked to draft
              a
                         response to the matters raised by the Business Panel and to
                         report back to the Executive at the next meeting.

    3.        Select Committee Views

    3.1       On 20 December 2004, the Business Panel considered the findings of
              the Best Value Review of Library and Information Services.

        3.2     Members agreed that Lewisham Schools could be better
                utilised for the provision of Adult Education and general
                Information Services to residents, as well as through existing
                facilities. The Mayor and Cabinet are asked to request officers
                to investigate what possibilities might exist in this respect.

    3.3       In addition, members of the Business Panel asked officers to revisit
              the current report taking into account issues raised at the


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          Business Panel on 20 December and bring a further version back
          to the Business Panel scheduled for Monday 24 January.

  3.4       In addition, members of the Business Panel have invited the
            Mayor to attend the meeting of the Business Panel scheduled
            for Monday 24 January. The Mayor is invited to the meeting for
            further discussion on the Best Value Review, in particular issues
            to do with the future of Manor House Library.

3.5       The Business Panel also noted that the Mayor and Cabinet will
          consider a final report on the Best Value Review after further
          discussion with the Business Panel on the issues arising.


5.        Financial Implications

          There are no financial implications arising from this report at the
          current time.

6.        Legal Implications

          The Constitution provides for the Business Panel to report to the
          Mayor and Cabinet and for the Executive to consider the report
          within one month of receiving it.


BACKGROUND PAPERS

Business Panel Agenda, Monday 20 December 2004, item 5: Best Value
Review of Library and Information Services

If you have any queries on this report, please contact Maggie Sullivan,
Interim Head of Overview and Scrutiny on extension 46605 or Mike
Brown, Head of Committee Business, extension 48824.




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Description: Mayor-&-Cabinet---Supplementary-Agenda---12-January-2005