While alchemists wanted to turn base metal into gold, politicians want to get private money cheaply into public projects, thus avoiding falling foul of the public sector borrowing requirement and being capped by the Treasury. The latest attempt in Wales is the mutual investment model that levers in private capital to support public sector projects. When launching the mutual investment model the now First Minister, when he was Finance Minister, said:

'The mutual investment model includes important obligatory long-term provisions to secure community benefits, to create apprenticeships and training places for Welsh workers and for sustainable development, in which the private sector partner supports delivery of the well-being of future generations Act. It incorporates our commitment to an ethical employment code and allows us to maximise the benefits of our sustainable procurement practices. The model also enables the Government to exert influence over the chosen private partner to ensure that the public interest is protected. Where we invest in schemes, this influence will be exercised by a public interest director, and this is an important advance on what has been secured in other public-private partnership models in other parts of the United Kingdom. This ensures robust transparency in terms of access to board-level information, alongside a range of reserved matters to protect public funds and the public interest.'

All the above will come with a cost. The private sector will factor in the cost of all these nice things we've added when they put in the price. What you're doing is you're paying for it, and I think that sometimes, we seem to think that the private sector's going to give us something for nothing. They don't. They're interested in making a profit—that's not a criticism of them, but that is what they're interested in doing. You can ask them to do anything whatsoever and they will. What they will do, though, is make you pay for it.

The current Finance Minister said in Plenary in February 2019:

'From the outset, our intention has always been to ensure that the mutual investment model promotes the public interest in the widest possible definition of that term. To that end, the model will deliver positive, additional outcomes in relation to well-being, value for money and transparency, and in doing so will avoid many of the criticisms levied at historic forms of public-private partnership—in some cases, criticisms that the Welsh Government was among the first to raise. For example, you'll recall that successive Welsh Governments have criticised the now discredited form of PFI....In relation to well-being, private partners with whom we contract using the mutual investment model will be obliged to help the Government deliver the objectives of the Well-being of Future Generations (Wales) Act 2015. They will need to deliver stretching community benefits, with penalties for non-delivery.'

So, if there's a penalty for non-delivery, what are they going to do? They're going to factor in the penalty, because it's inevitable. They're not charities; they're doing this to make money. Every time you put anything like that in, you're going to pay a price for it.

'They will need to adopt the code of practice for ethical employment in supply chains. And they will need to build our infrastructure with long-term sustainability and environmental efficiency in mind....We've also developed a new project assurance tool that all MIM schemes will be subject to—commercial approval point checks. We have run two of these checks on the dualling of the A465. These checks have been supported by experts from the European Investment Bank and the UK Infrastructure and Projects Authority. I am convinced that rigorous investment appraisal, coupled with robust project assurance delivered by undoubted experts, will result not only in a better understanding of the risks involved in the delivery of major infrastructure projects, but also in a more credible appreciation of the value for money of such projects, and their affordability.'

Well, if the dualling of the A465 shows the success of this financial model I am not sure what failure would look like. Whatever you think of the A465—and I'm sure my colleague, Alun Davies, may well mention it later on—financially, it has not been particularly successful.

'To increase the value for money of our schemes, we have taken a conscious decision not to use the mutual investment model to finance soft services, such as cleaning and catering, which was one of the major criticisms of previous PFI contracts, and nor will it be used to finance capital equipment.

'With regard to transparency, the Government intends to invest a small amount of risk capital in each scheme, ensuring that the public sector participates in any return on investment.'

The return on investment is getting some of your own money back. If it makes £1 million profit, if you've got 20 per cent of it, you get £200,000 of the profit, and the other £800,000 goes to the people involved. You're buying your own profit.

'This shareholding will be managed by a director appointed under the direction of Welsh Ministers onto the boards of those companies delivering our assets.'

Should we really be reassured if dualling the A465 shows the success of this financial model? My concern is, when you strip away all the warm words, what is being done is paying for private capital over a long period of time. Those providing the capital will be looking for a rate of return higher than the cost of borrowing for local authorities, and will also be looking to minimise their risk.

Whilst the worst excesses of PFI—such as not financing soft services and capital equipment charges, such as £20 to change a light bulb—will not occur, it's still a long-term commitment that will have an effect on revenue budgets for decades. For schools it would be cheaper for the Welsh Government to fund local authority borrowing to pay via the aggregate of external finance for the building of the schools, and let them borrow from the Public Works Loan Board.

Until we know the final cost of the projects we don't know much it's going to cost, but finally, Deputy Presiding Officer, really, you've got to be very careful, because it's long-term costs for short-term gain.