NHS GRAMPIAN

NHS Grampian Participation in the NorthTerritory hubco

Aim

This paper is for approval.

The aim is to request approval of the NHS Grampian board to full participation in the NorthTerritory hubco

Strategic Context

hubco is a delivery vehicle for community based infrastructure projects.The projects which hubco delivers will support NHS Grampian in achieving the Single Outcome Agreement.

Discussion

  1. NHS Grampian is one of eighteen public sector organisations involved in The North Territory hub Programme. The NorthTerritory is one of the two pathfinders in the National hub Programme, which has a total of five territories covering Scotland. The hub is being developed by the Scottish Futures Trust (“SFT”) on behalf of the Scottish Government (“SG”) to improve efficiency and provide better value for money in delivering community infrastructure projects.
  1. The hub involves the public sector participant organisations within the NorthTerritory working in partnership along with a Private Sector Development Partner (“PSDP”), and together taking a strategic long-term planning approach for 20 to 25 years to developing the infrastructure that is needed to support the delivery of community services such as health, education and social care. hub provides a platform for a greater degree of joint working and shared facilities, but it is not exclusively for joint projects.
  1. The NorthTerritory hub programme is progressing through the European Union (“EU”) procurement process to select a Private Sector Development Partner. Three bidders were selected from the pre-qualification stage and following competitive dialogue, final tenders were received on 10th September 2010.
  1. After scrutiny and evaluation, the preferred bidder wasunanimously approved by the NorthTerritory hub Programme Board on 29th October 2010 as Alba Community Partnerships and approvals from the Participant organisations are currently being sought to reach Financial Close in December 2010.
  1. To date the following organisations have approved their full participation in the NorthTerritory hubco : Argyll and Bute Council, Western Isles Council, Aberdeen City Council, The Moray Counciland Aberdeenshire Council.
  1. At the meeting on 25th October 2010, the NHS Grampian Asset Investment Group (AIG) recommended full participation by NHS Grampian in the NorthTerritory hubco. This would mean that NHS Grampian signs the Territory Partnering Agreement and becomes a Shareholder. This decision has been informed by discussion of the detailed issues at the Capital Programme Finance Group as a sub group of the AIG, on 14th September specifically to consider the hub.
  2. John Matheson, Director of Finance, Health Finance Directorate wrote to all NHS Boards in June 2009 outlining that hub will take precedence over the Frameworks Scotland for NHS participants, with hub being the default model for the delivery of new build primary health care and community based premises. Exclusivity provisions with hubco will apply to all Health led projects with a capital value greater than £750,000 for the firstten years.
  3. To deliver projects and access the services which hubco provides, an organisation must agree to sign the Territory Partnering Agreement. To fully participate as a shareholder in hubco requires agreement to the Shareholders’ Agreement.
  4. It is anticipated that each of the organisations in the NorthTerritory will fully participate in hubco through acceptance of the Territory Partnering Agreement and the Shareholders Agreement. The Scottish Ambulance Service is not permitted to become Shareholders in any joint venture company although it is anticipated they will participate through signing the Territory Partnering Agreement.
  5. Shareholders in hubco have the additional benefit of potential new revenue streams through investment in hubco and the projects which it delivers. The costs of becoming a shareholder in relation to working capital and shareholder equity are met from a central budget and there are no future liabilities or obligations unless through express agreement. The limit of liability is for the initial working capital and shareholding only, which is being provided from the hub Programme’s Capital Enabling Funds and not NHS Grampian funds
  6. The hub documents, including the Territory Partnering Agreement and the Shareholders’ Agreement, have been reviewed by the Central Legal Office on behalf of NHS Boards. This review confirms that the documents are appropriate for their intended purpose and do not conflict with the statutory and governance requirements of the organisation.

Impact Assessment

Alba Community Partnerships Ltd has demonstrated compliance with statutory requirements in the documents submitted as part of its bid and will continue to be assessed on an ongoing basis as part of the performance management framework with hubco.Impact Assessments will be carried out for individual projects.

Resource Implications

A representative from NHS Grampian will attend the Territory Partnering Board quarterly meetings. Gerry Donald, the Head of Physical Planning for NHS Grampian is proposed as the Public Sector Shareholders representative attending hubco monthly board meetings.As projects emerge from NHS Grampian, resources will be required to support their development. If a project is of a revenue stream then there will be an agreed monthly unitary charge reviewed annually.

Key Risks

(i)Value for money must be achieved

The exclusivity provisions for NHS Boards do not remove any of the requirements that projects must demonstrate agreed value for money criteria. Failure to meet these criteria can result in projects being removed from hubco for delivery through an alternative route.

(ii)Project priority can be agreed

Each Participant organisation will have project priorities which it wishes to achieve. The prioritisation of projects is carried out through the hubco governance forum called the Territory Partnering Board, where issues such as prioritisation of projects and resources will be agreed with hubco.

(iii)Budget and Resources

Budget and resource planning requires to be aligned between Participants and hubco. This is achieved through the ongoing engagement between the Territory Participants and hubco supported by dedicated resource in the form of the Programme Director.

Conclusion

Based on the guidance set out in the June 2009 letter from John Matheson, Director of Health Finance, Scottish Government Health Directorate, it is anticipated that there will be full participation in hubco from health boards.

This will involve committing to the exclusivity requirements and will develop a significant opportunity for delivery of high quality cost effective public services, through a long term partnership approach with a Private Sector Development Partner.

The benefits of full participation in the hubco include more efficient procurement, knowledge and expertise from the PSDP, potential new revenue streams and innovation in financing and delivery. These will directly support NHS Grampian in delivering the requirements of the Single Outcome Agreement and service needs.

Recommendations

Members of the NHS Grampian Board are requested to approve the following recommendations:

  1. the establishment of hubco, the investment in hubco shareholding of £1 and the provision of working capital of £15,000 ([£ 270,000 ] /18 Participants) all funding being provided from the hub Programme’s Capital Enabling Funds not NHS Grampian funds;
  2. the entering into of the Territory Partnering Agreement and Shareholders Agreement, with delegated authority to the Director of Finance to execute the same on behalf of NHS Grampian following the resolution of final clarifications and subject to the final agreement of the Central Legal Office (CLO.)

Executive Lead: Alan Gall, Director of Finance

Report Author: Fraser Innes, hub Programme Director

23rd November 2010

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