5. What assessment has the Minister made of the financial legacy of the use of the private finance initiative in Wales? OQ59320

There are now 20 remaining historic private finance initiative contracts in Wales. In 2019, the First Minister instigated a review of PFI contracts, encouraging contracting authorities to renegotiate or terminate PFI contracts where there was a value-for-money case for doing so. This work is ongoing.

Thank you for that. That's very helpful. Two of those cases that you've identified are in the Caerphilly borough. One is fully in my constituency, Lewis School Pengam, and the other has a campus in my constituency, which is Ysgol Gyfun Cwm Rhymni, and there are nine years left to run on the original 30-year PFI contracts. I don't think we would have had the schools without them, and they are very impressive schools, but Caerphilly County Borough Council believes that key benefits could be gained if the contract, which relates to the provision of building maintenance, cleaning, catering and grounds maintenance services is terminated early, and it's due to be discussed at full council on 19 April. So, in advance of that, I just wanted to ask the Minister: what support can the Welsh Government provide to Caerphilly County Borough Council, if they did decide to exit that PFI contract early?

Well, authorities are continuing to review their contracts to determine value for money, and contracting authorities that are undertaking reviews to renegotiate or to terminate a contract don't need Welsh Government approval to renegotiate or terminate that contract. Welsh Government does, however, review the business case, as we provide some revenue support cost for PFI initiatives. This stream of funding is considered as part of the value-for-money case for the overall public purse. So, in terms of Caerphilly County Borough Council, they have submitted a business case proposing the voluntary termination of their PFI contract for the two schools, as you just described, and I've approved the continuation of some revenue support for the remaining period that the contract would have run if the PFI continued. It is now for Caerphilly, of course, to make the decision as to whether or not it wants to voluntarily terminate.

Minister, as you know, the use of PFI has been calamitous, to say the least. You will know that many councils were caught in the grip of toxic PFI schemes, and as we know, Minister, at last count, I believe there were 23 PFI projects with a capital value of £701 million, which was sponsored by Welsh Government, and there were five projects sponsored by the UK Government. Minister, there will be times when access to private capital is essential. However, often, they've offered poor value for money and merely place a burden of debt on many generations to come. I just wondered what lessons has the Welsh Government learned from the experience of PFIs. What work is the Welsh Government doing in order to increase transparency and to ensure that taxpayers get the best value for money when engaging with the private sector?

Well, I will say that successive Welsh Governments have consistently avoided the pitfalls of PFI contracts, and as a result of our approach, liabilities relating to this type of scheme in Wales are much lower than in other parts of the UK. For example, the average cost per head of PFI schemes in Wales is around £40, and that's approximately a fifth of the cost per head across the UK as a whole.

In Wales, we've looked to develop a different kind of model, which is of course our mutual investment model. It does differ from traditional PFI in a number of ways. For example, it ensures that the businesses involved have to help the Welsh Government deliver on the objectives of the Well-being of Future Generations (Wales) Act 2015; they will, for example, need to deliver very stretching community benefits, and there are remedies for non-delivery; they will need to commit to the Welsh Government's ethical employment code, and also build with long-term sustainability and environmental efficiency in mind as well.

So, I think we've seen some very good examples—during the construction of the A465, for example, where we've seen lots of new local jobs being created, lots of employment for people who have experienced long-term unemployment, or who are not in employment, education or training, for example, and, of course, a number of community initiatives have been supported through the community initiatives programme, which was set up as part of that as well. So, I think it's important to recognise that we have developed the MIM model, but it does differ significantly from traditional PFI.