8. Will the Minister provide an update on the mutual investment model? OAQ54690

Two mutual investment model schemes are currently in procurement: the dualling of the A465, and a delivery partner procurement for the twenty-first century schools and colleges programme. I expect each of these procurements to conclude in 2020. A third MIM scheme—redevelopment of the Velindre Cancer Centre—is currently in development.

I thank the Minister for that response. The mutual investment model costs more than borrowing by the Government. If that were not true, it would be the preferred method of borrowing. It is effectively private finance initiative without facilities management.

On a low-risk project, with an estimated additional cost of 3 per cent for borrowing, 5 per cent for profit, and 2 per cent for the community good part of the scheme, adds an extra £1 million for every £10 million of cost. Does the Minister have different figures? And will MIM schemes, because of the extra cost, have to prove their benefit against more exacting criteria?

So, as a general rule, MIM schemes are expected to be more expensive than traditional capital investment. However, the actual cost for the MIM scheme will be a factor of that specific project and the procurement exercise that goes on ahead of it. And there'll be many factors that play a part. So, borrowing costs, capital costs, operating costs, and the risk transfer being some of those particular factors.

It is important to recognise that we'll be generating an additional investment of over £1 billion through the mutual investment model. Now, we're using this model because that's £1 billion of investment that we would just not be able to make otherwise, and it is a creative way in which to bring investment in. But, as I say, because of the scale of these projects, they are projects that would not be coming forward otherwise.

I've mentioned before, and I know that Mike Hedges is really familiar with the way in which we take our approach to using conventional capital first to fund public infrastructure projects, and then going through those European funds, and then using the borrowing powers, and then, if we still don't have the funding that we need for the infrastructure ambitions that we have, we will be looking to the mutual investment model, or other models such as the housing finance grant, the coastal funding programme that we have in place and so on. So, I think it's important to think creatively, but also to recognise that we've sought to try and ensure that the disbenefits of the traditional PFI schemes aren't part of the MIM programme, but recognising that this is investment that otherwise would just simply be unaffordable.

And, finally, question 9, Vikki Howells.