Is this the best way to fund a University?

[megilleland]

Meeting: General scrutiny committee

Meeting date: Monday 11 December 2017
Title of report: Public Accountable Body for NMiTE
Report by: Cabinet member finance, housing and ICT

Purpose and summary
To review proposals that the council act as the accountable body for the new Hereford University, NMiTE (new model in technology & engineering), during its establishment phase.

Accountable body status means that the council will be accountable for funding allocated to the new university project by central government. Accountability involves receiving funds from central government, ensuring those funds are allocated and spent in accordance with any funding conditions specified, and providing reports on that expenditure.
The council has been approached by NMiTE to provide this role and, if approved, would work to support independence as soon as practical.

Recommendation(s)
That:
(a) the committee determine any recommendations it wishes to make to the executive to consider when determining whether to act as accountable body for public funding to support establishment of a new university in Hereford.

(b) the chief finance officer be authorised, following consultation with the monitoring officer and cabinet member corporate strategy and budget, to enter into such legal documentation as are appropriate to protect the Council’s interests.

 

(extracts)

 

3. On 26 October the Department for Education (DfE) announced up to £15m funding over three years to support the establishment of the new university in Hereford, NMiTE (New Model in Technology & Engineering). In addition to this funding, NMiTE is due to receive further funding, £8m, through the Marches Local Enterprise Partnership (LEP). The recommendation is for the council to act as the accountable body for the DfE funding announced and a project accountable body role in support of the Marches LEP funding.

18. No council funds will be payable to NMiTE however the management of the flow of funds between the accountable body and NMiTE will require resourcing. The cost of resourcing these additional operational tasks is to be financed from a share of the grant allocation.

Risk management
23. The legal documentation will clarify the risks of entering this arrangement. Ultimately the Department for Education could require the Council to repay the grant funding that it has been received and which it will have paid to NMiTE. Whilst this obligation will also be passed down to NMiTE through the flow-down agreement, it is possible that NMiTE would not be able to make any required repayment, which would therefore leave the Council out of pocket. The risk of any claw-back can be managed/mitigated by ensuring compliance with the grant funding terms through the monitoring and reporting obligations that will be put in place.

24. In addition the council needs to be aware that if ineligible expenditure is incurred by NMiTE this would not be covered by the grant and could therefore cause a cashflow concern to NMiTE which may lead to a reputational risk.  

25. These risks will be identified and monitored within the corporate finance risk register.

26. The draft MoU has a right for the Council, the Department for Education and NMiTE to terminate on giving not less than three months’ notice. However, this document is not expressed to be legally binding and  appropriate rights of termination will need to be included in the legally binding funding agreements that will also be entered into

 

What could possibly go wrong with £23 million pounds under the council's management?

[Denise Lloyd]

What indeed!