The Secret College Deal - What Do We Know?

Sandwell College (SC) is a further education institution financed chiefly by central government and funding is partly reliant on the number of bums on seats. It has a second-rate Ofstead grading ie it has not made the top-grade of outstanding but has a second-tier rating of "good".

In September, 2012 the new Spon Lane Central Campus came on stream - "the Ski-Slope" - at a reported cost of £77M but even then SC were griping about the amount of space they had for sixth-formers and it seems that whilst Sandwell is awash with cheap buildings/accomodation it turned its covetous eyes towards The Public - an iconic £70M tax-payer funded PUBLIC asset. It is fundamental to the point of this article to note that SC is NOT part of Sandwell Metropolitan Borough Council (SMBC).

It appears that SC may have been aggrieved with the Government over the amount of space allowed at the Spon Lane site and I would appreciate any information with regard to this. Suffice to say that you need only stand outside the building to see that a huge amount of space is taken up with an empty "atrium" rather than lecture rooms etc. Councillor Cooper, "leader" of  SMBC seems to have involved himself in this grievance since The Express & Star (E&S) reported on 1st October, 2013 that he (Cooper) said the change (of The Public into a college) would compensate for a "gross-underestimation" made by the Government when IT (my emphasis) decided the size of the college needed for the Borough's growing population. Thus we appear to have a political element creeping into this absurd plan.

IF SC needs extra space then it is not clear to me why it cannot find and fund this itself unless all its resources have been utilised on the ski-slope. Again I would appeal for information (see contact details below). Making a personal point here too, some people still seem to view colleges as warm, cuddly, beasts motivated by high altruistic intentions but since Blair and his successors some colleges (not necessarily SC but we shall see) are highly avaricious capitalistic mini-corporations (see the High Principals column in Private Eye).

And so back to September, 2012 when the ski-slope was accepting the first intake of students. At this precise moment SMBC say "SC approached SMBC and initiated discussions concerning the conversion of The Public into a 6th form centre. These discussions have continued" (Cabinet Agenda 16/10/13 para 6.9). Not that the taxpayers of Sandwell and beyond knew anything about this until press releases etc on 9th May, 2013 since even though two public taxpayer-funded bodies are involved it was all kept secret.

Take a look at the minutes of the SC Board of Governors - all references to this shabby plan have been redacted. SC also appear to have no sense of irony in trumpeting to the press that there will be a small amount of arts provision at The Public when they are conniving in (proposed) major vandalism of the interior. To add insult to injury SMBC are apparently going to PAY SC £200,000 per annum for 5 years (allegedly) to provide this seemingly pitiful offering (surely just a fig-leaf to try and cover the inadequacies of the "deal"?)

I don't know how close the heirachy of SC are to that of SMBC but when they "approached" the Council to grab the building from the people they must have known that they were pushing at an open-door given the distaste for The Public shown by some in the Council, who appear to have regretted taking over the building and setting-up Sandwell Arts Trust from day one. This resulted in the infamous (and still secret) obtaining of the Jones Lang LaSalle reports (see previous blogpost) in early summer 2012 and, of course, to the decision to shut The Public just when the New Square Shopping Centre was opening next-door (completely disregarding a large petition and other opposition).

Back to politics. SMBC were involved in the ludicrously expensive Private Finance Initiative, "Building Schools for the Future" programme whereby they got into bed with Interserve Plc, Barclays Equity Capital etc to build some new schools in the Borough. A special company called Sandwell Futures Limited was set up to faciliate this and two employees of SMBC are Directors. The current Education Minister, Michael Gove, then came along and scrapped this programme on the basis, inter alia, that it was not good value for the taxpayer. This was bitterly opposed by the Labour element of SMBC. Of course, a couple of schools have been built and so the business "set-up" is still in place. However, SMBC seem to be trying to ressurect the scheme by the back-door. This would be bad enough if SC was a "school" and part of SMBC but it is NOT. As above, it is a completely separate and independent body.

Unfortunately, the vast bulk of the detail surrounding the proposed college deal is being kept secret by both parties and despite the apparent fact that SMBC have not taken any steps whatsoever to find any other use for The Public. They certainly don't seem to have tried to sell it or lease it to anyone else other than SC and this in itself is a potential financial time-bomb since, as the only party involved, SC may be able to negotiate an over-generous deal (if such a deal is legal in the first place). It was 9th May 3013 when SC and SMBC rushed in front of the media to say that this deal was on the table. SMBC say that various appraisals and reports have been undertaken by "Strategic Finance" etc since May but chose to redact all this (ie keep it secret) in the agenda for the "Cabinet" meeting of 16th October when the decision was apparently approved (even though the minutes appear to acknowledge that a number of enquiries had still not been completed!)

The "deal" as it appears from the "Cabinet" documents indicates that SMBC will pay to convert the building. This, according to what SMBC told Architects' Journal will involve the interior of a building (designed by an internationally-renowned architect) being "gutted" and replaced with such delights as "modular classrooms" (we had those at my old school but they were called portakabins then!) The E&S initially reported this would cost £5.5M but by 16th October this had already risen to £6.67M. Watch this space........ The building will then be leased to the college for 25 years (or less). At the "Cabinet" meeting which lasted just 17 minutes for the full meeting (ie not just the bit about The Public) they did not even decide basic details about the lease etc which was all left to a future date. The documents say that the conversion money will be borrowed "prudently" but details are still secret. It is not clear whether the money is to be borrowed conventionally (eg like a bank loan) or via some sort of PFI-style arrangement with Interserve.. It still begs the question why SMBC are borrowing money to aid an independent taxpayer-funded body? If a PFI deal is planned have SMBC obtained details of conventional borrowing to see whether the PFI deal offers "value for money" - usually not in the history of these arrangements? The waters are further muddied by the agenda minutes which state in para 54/13/10 that the eventual agreement will state the total amount repayable by SC to SMBC "including the cost of borrowing and VAT". What does this mean - that SC cannot/will not borrow the money but will actually service the debt? Will we ever be told what the cost of the borrowing is? Will it be differentiated from rent payable under the lease? Of course, this is all being kept secret at present.

I have referred above to the E&S reporting a £200,000 per annum payment to SC (ie £1M) to run the fig-leaf arts programme but the agenda minutes also refer to an amount (yet to be calculated at 16th October) being "the annual support sum payable by SMBC to SC for a ten-year period". Is this one and the same thing but for a longer period or something totally different and, if the latter, why are SMBC supporting a totally independent college instead of spending the money on things within their statutory remit eg their own schools, social services or Sandwell's disastrous Children's Services.

Because SC appear to have played a clever game here and because SMBC have no negotiating power, since having limited themselves to "the only game in town" the Council have also agreed to pay ongoing repair costs to the tune of £300,000 per annum - SC has even got out of paying for that liability - which will be left to the taxpayers of Sandwell. Further, the agenda minutes state that something still to be decided includes "any outstanding lease payments to be repaid to SMBC IF (my emphasis) the agreement is terminated". This strongly suggests that there is a break-clause so that SC can walk away at some point in the furure but when? Once the proposed vandalism of this PUBLIC building has occured what will happen if the college want to give the building back? What will SMBC then do with a building which by then will have the aesthetic appeal of a B&Q - modular classrooms et al. Are the good folk of Sandwell going to have to pay yet more conversion costs then (or demolition costs).

Whatever one's view of The Public is, there can be no doubt that the original procurement process for the building was mis-handled. Surely this should be a warning sign that extra care should be taken with any "conversion" of the building - legal or otherwise. But no, SMBC has awarded the contract to itself - or at least to Sandwell Futures Limited - SFL - (mainly an Interserve company in which SMBC holds 500 shares and has two directors on the board). SFL was specifically set-up for the disastrous PFI Building for Schools scheme - which has been scrapped - and yet SMBC say the work will be carried out "utilising the standard form BSF Design and Build contract". It seems to have escaped their notice that the building had been designed by a world-renowned architect and, er, built!

There is nothing in the "Cabinet" meetings referring to the obvious conflict of interest in SMBC granting the contract to a Company in which it, itself, holds an interest and to make matters worse SMBC specifically state "any necessary exemptions be made to the Council's Procurement and Contract Procedure Rules". Those rules are their to protect the taxpayer but the "Cabinet" simply voted to disapply them!
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Again, because of the secrecy, we still do not know if a PFI-type structure is to be put in place or whether there will be conventional borrowing. We do not know what a commercial rent for the building (as gutted or otherwise) is and whether SC will pay a full commercial rent. It appears that Jones Lang LaSalle were asked to report (at £39K) on possible uses of the building in its current condition and not after the proposed "gutting" - surely this "fact" would have affected their report? If SC are not paying a commercial rent the taxpayer nationally will be a winner and the loss will be picked up by the taxpayers of supposedly skint Sandwell.

Even SMBC accept an "extremely low risk" that this deal is illegal and constitutes unlawful state aid.

Three principal public sector investors paid huge sums to build The Public but have apparently washed their hands of the project and do not propose to recoup the money on behalf of the taxpayer. Of course, the proposed college will in one sense be a public building but with severely restricted access to the people who will be barred from access to most of the building.
Accordingly a major public building is being stolen from the people. Grand Theft Sandwell!

And finally - planning. If SMBC had to apply to change the use of the building the public would be able to have a say but, of course, that cannot be allowed. Thanks to work done by UKIP Sandwell it has been established that SMBC say no change of use is required as "the existing and future uses of The Public fall within Class D1". UKIP then produced documentation showing that the planning permission for the building was, so far as relevant here - 4,180 sq m Class B1; 2,465 sq m Class D1. Notwithstanding this fact, SMBC now say, "The fact that the schedule identifies a number of ANCILLARY (my emphasis) uses (B1 etc) does not alter the local planning authority's (SMBC's) view that the primary use of the building falls within D1 and the conversion to a college also falls within the same use class". Of course, The Public was never JUST a gallery and the B1 office space was fully occupied by a large number of small businesses who have now been "re-located". SMBC seem to be deliberately ignoring the facts.

PLEASE SEND INFO (letters only at first) to VERNON GRANT, BOX 374, 27 COLMORE ROW, BIRMINGHAM B3 2EW (I am also interested in ANY tales of financial waste by SMBC).

Please also see my blogpost of 19th November. If you are able to help fund the legal fees that yould be very helpful.

Email: thesandwellskidder@gmail.com