PAPER A

Purpose: For Decision

Committee

FULL COUNCIL AND EXECUTIVE

Date

19 NOVEMBER 2014

Title

COWES ENTERPRISE COLLEGE - COMPLETION OF WORKS

UPDATE

Report of

EXECUTIVE MEMBER FOR CHILDRENS SERVICES

EXECUTIVE SUMMARY
1.

This report updates the position on the Cowes Enterprise College design and
build project, since the reports to Cabinet on 10 December 2013 and the
Executive meetings on 8 April 2014 and 6 May 2014. It sets out the latest
position in relation to outstanding works and makes recommendations on the
next steps.

BACKGROUND
2.

The previous reports have highlighted the background to the project and the
issues related to outstanding defects and works to complete the project. At
the Executive meeting on 6 May 2014 it was agreed that:the existing budget allocation be utilised to progress the project by
carrying out the highest priority demolition works and the design works
to prepare for project completion (for the avoidance of doubt not to let
the contract for these works) - However:

3.

(i)

The EFA is formally requested to provide additional capital grant

to enable the project to be completed;

(ii)

The decision to allocate further funds be deferred until the

current investigations and surveys are completed and therefore
more information on the likely costs is available. At that time this
decision be brought forward to the Executive and Full Council as
soon as possible.

In addition at the Executive meeting on 16 July 2014 a report was considered

in respect of the transfer of Cowes Enterprise College to Ormiston Academies
Trust in order for them to take over the College as an Academy from 1
September 2014. It was agreed
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(i)

THAT the freehold transfer of the land and premises at Cowes

Enterprise College (as shown in Appendix 1 of the report) to
Ormiston Academies Trust be agreed.

(ii)

THAT the Commercial Transfer Agreement with Ormiston

Academies Trust be confirmed

CURRENT POSITION
4.

Since May 2014 Hampshire County Council Property Services (HCCPS) have
been undertaking the further investigation and defects works as well as
preparing the demolition work to tender stage. Although there are still some
uncertainties the potential costs have been refined to a narrower range. In
particular the fire safety investigation study, roof investigation works and
access audit have been completed.

5.

Works have been prioritised in accordance with the decision of the Executive
on 6 May 2014.
The following tables summarise the current position:TABLE 1 High priority works containable within the
remaining budget
Defects, surveys fees etc. previously agreed by the Executive
Phase 2 investigations re. mechanical ,electrical, window
and door defects etc.
Building works improvements following risk assessment of
Fire Management Plan
Adaptations following access audit
Management costs and high priority defects work
Total remaining Budget

cost estimate
k
357.5
124.0

782.4
75.5
245.6
1,585.0 *

*The cost estimates include provision for design fees and

contingencies
*The Budget does not take into account any remaining issues
related
to the contract and payments to or from the administrators of
Pihl UK
TABLE 2 Remaining works not containable within
budget
COMPLETION WORKS
relating to demolition of the old buildings and landscape
works
complete scope

4,157.0 *

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OTHER POTENTIAL WORKS

Other defects, full accessibility etc.
Further works to roof
Acoustics
Mechanical defects
Electrical upgrades
Other various works
TOTAL OTHER WORKS
TOTAL COMPLETION AND OTHER WORKS
Full scope
Reduced scope * These items could be reduced in scope
saving
1.325m.This would involve omitting the synthetic turf pitch
which
is a planning requirement. A revised planning approval
from the
Isle of Wight Council (with Sport Englands support) would
be required.

336 *
789
118 -354
100 -560
85- 262
176-202
1,604-2,503

5,761 -6,660

4,436 -5,335

6.

On the basis of the remaining current capital budget of 1.585m then there
are works to complete the original project of between 5.761m to 6.660m
without funding. On the basis of a reduced project scope then these figures
could be reduced by 1.325m.The majority of these unfunded works totalling
3.912m-4.946m relate to the demolition of the old building, landscaping and
further works to the roof.

7.

Although HCCPS have recommended where the remaining capital budget

could be allocated, supported by the outcome of detailed surveys and
investigations, we have had discussions with Ormiston Academies Trust and
the College to ensure that they are the items that are most important to them.

8.

There have been a number of discussions with the Education Funding Agency
about attracting additional funding to fund the remaining works. No
commitment either way has yet been received.

STRATEGIC CONTEXT
9.

Full Council on 19 March 2014 agreed the Councils Corporate Plan 20142017. One of the seven Priorities within the plan is improving educational
standards. The delivery of the capital programme for schools is an important
element in enabling this priority to be met.

10.

The Council is also under a Ministerial Direction in respect of Education

services and the improvement progress is monitored by the Department for
Education (DfE). There will be a need to ensure that any decisions made in
respect of the project are consistent with the overall improvement plan.

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CONSULTATION
11.

There was continuous liaison and consultation over the last year in particular
with the Cowes Enterprise Trust and governors and the Education Funding
Authority (the body responsible, as part of the DfE for overseeing capital
projects funded by the department).

12.

There has been regular liaison with Ormiston Academies Trust and the
College.

FINANCIAL / BUDGET IMPLICATIONS

13.

On the basis of the remaining current capital budget there are works of
between 5.761m to 6.660m required to complete the project without
funding. On the basis of a reduced scope then these figures would be
reduced by 1.325m.The majority of these unfunded works relate to the
demolition of the old building, landscaping and further works to the roof and
total 3.912m - 4.946m.

14.

The Council is faced with a significant financial challenge with insufficient

capital resources to meet its overall capital programme in 2015/16 and
beyond and a revenue budget gap of 13.5m in 2015/16 with a further gap of
8.5m in 2016/17.

15.

Realistically the Council is not in a position to fund any additional costs and
this project would not be a priority to allocate further resources to compared
to other capital projects that require funding.

16.

The Council received a capital grant of 32.028m in respect of the project, a

harnessing technology grant of 231k with some 1.591m being provided by
the Council. All the grant monies have been used.

17.

The remaining budget figure used in the report does not take into account
any costs that may arise from claims made by the Administrators of Pihl UK
Ltd under the terms of its contract with the Council. The Council is aware
that there is potential for a claim to be made by the Administrators for work
undertaken where the contractor alleges that the Council has not made
payment. It is believed that such a claim would not succeed as the Council
can evidence that all monies due have been paid. In any event the Council
would have a substantial counter claim against the contractor for failure to
complete the works under the contract and for the rectification of defects

18.

Regrettably, the Council has paid in error to the contractors administrators

the sum of 431,565 plus vat of 86,313 as fully reported to the Audit
Committee on 25 September 2014. We are taking action, formally through
the Courts, to recover the sum paid in error and an updated position may be
available by the time of the meeting. The money is, pending the outcome of
the proceedings and is secure and cannot be distributed to creditors. It is
important to note that should the sums paid in error not be recovered the
available budget would effectively be reduced by 431,565 (as vat is
recoverable).
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LEGAL IMPLICATIONS
19.

From 1 September 2014 the land and buildings comprising Cowes

Enterprise College are owned and managed by Ormiston Academies Trust.
There is nothing in the freehold transfer of the land and buildings which
binds the Council with regard to completing any outstanding works in the
overall project. As the Council has no remaining legal commitments towards
Cowes Enterprise College or Ormiston Academies Trust we need to
formalise the ending of the Councils involvement with the capital build
project and the ongoing commission with HCCPS.

20.

There remain a number of planning conditions associated with the overall

project and which must still be satisfied. However, compliance with these
conditions is the responsibility of the land owner which is now Ormiston
Academies Trust. It will need to take these issues into account and consult
with the Council as Local Planning Authority when it determines how it will
undertake the completion of the capital project.

21.

The decision in respect of the project up to the agreed budget is a decision

for the Executive. Any funding required above the budget that could not be
contained within the agreed budget framework is a matter for Full Council.

EQUALITY AND DIVERSITY

22.

There are no direct equality implications of this report as it deals with the
completion of an existing project. Any issues related to disability access are
covered by the proposals made by HCCPS in respect of additional capital
works which could be undertaken at the College

OPTIONS
23.

The Council needs to bring to a close its involvement with the Cowes
Enterprise College capital building project and formalise the hand over to
Ormiston Academies Trust.
Option 1.
To go no further than agreed at the Executive on 6 May 2014 and just
undertake the remaining works, in agreement with Ormiston Academies Trust,
up to the cost of the remaining capital budget as set out in paragraph 5 Table
1.
Option 2.
To allocate additional capital funding to the project to fund all or part of the
costs set out in paragraph 5 Table 2 and undertake the remaining works up to
the increased budget figure in agreement with Ormiston Academies Trust.

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Option 3 (a)
As option 1 but conclude the commission with HCCPS at the end of
December 2014 and cease all further involvement with the capital project,
other than making direct payments in respect of agreed work up to the budget
figure as set out in Table 1 and supporting Ormiston Academies Trust in their
bid to the EFA for additional resources. Ormiston Academies Trust are then
free to commission HCCPS to continue with the remaining elements of the
work if they so wish.
Option 3 (b)
As option 1 but conclude the commission with HCCPS at the end of
December 2014 and cease all further involvement with the capital project
other than making direct payments in respect of agreed work up to the budget
figure as set out in Table 1,Net of any further costs arising from the
administrators and/or non-recovery of the amount paid in error, and
supporting Ormiston Academies Trust in their bid to the EFA for additional
resources. Ormiston Academies Trust are then free to commission HCCPS to
continue with the remaining elements of the work if they so wish.
Option 4.
To cease the Councils involvement with the project from the end of December
2014 and only pay for items already expended or contractually committed.
This would be some 500k leaving about 1.085m in the budget before any
adjustments in respect of the administrators.
EVALUATION
24.

Ormiston Academies Trust is now the freehold owner of the land and
buildings at Cowes Enterprise College and are responsible for managing and
maintaining the site and complying with all relevant legislation associated with
it.

25.

Option 1 is in accordance with previous decisions and ensures that the

allocated budget is spent on high priority remedial works as identified by the
detailed investigations undertaken by HCCPS and agreed with Ormiston
Academies Trust. Because of the lead in time to the works and when they
could be completed this would continue the involvement of the Council for
another year. Ultimately the Council cannot undertake the high priority
remedial works without Ormiston Academies Trusts approval as the freehold
owner of the site.

26.

Bearing in mind the Councils financial position option 2 is felt to be

unaffordable.

27.

As Ormiston Academies Trust are now the freehold owner of the land and
buildings at Cowes Enterprise College option 3 is recommended either 3(a)
using the current remaining budget figure as set out in table 1 or 3(b) reducing
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the budget figure by any amount not recovered from the erroneous payment
or any claim from the administrators.
28.

Officers have proceeded with the project on the basis of previous Executive
decisions and on the basis that the agreed budget would be allocated to the
Cowes Enterprise College and the Council would do all it could to support the
completion of the project within the financial constraints it faces. Even
committing the remaining budget does not complete the project as originally
intended. The Council does still have an interest in ensuring that the facilities
at the school are the best that they can be in order to support the educational
attainment of the Colleges pupils and therefore it is appropriate that it support
Ormiston Academies Trust in securing additional funds from the EFA in order
to help complete the project as planned. Were it not for the involvement of
Ormiston Academies Trust then the Council would have had to work to secure
these funds from the EFA or its own resources and would be committed to
spending the current budget on resolving the most pressing issues with the
buildings. It is therefore appropriate that the Council commit the remaining
budget allocated to the project.

29.

The Council will also want to have a positive relationship with Ormiston
Academies Trust in the future as part of its priority of improving educational
standards on the Island. Our relationship with the DfE and the Education
Funding Council for future funding for Island Schools is also important. Option
4 is therefore strongly not recommended.

RISK MANAGEMENT
30.

The continued involvement of the Council in the project is a risk as the

freehold transfer of the site has taken place and the College is now an
academy operated by Ormiston Academies Trust. This report is intended to
resolve the position and agree the cessation of the Councils further direct
involvement.

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RECOMMENDATION
31.

That Full Council consider the options set out in the report and agree that no
additional funding be allocated above that already agreed as part of the
budget framework and recommend to the Executive that:Option 3 (a)
As option 1 but conclude the commission with HCCPS at the end of
December 2014 and cease all further involvement with the capital project,
other than making direct payments in respect of agreed work up to the budget
figure as set out in Table 1 and supporting Ormiston Academies Trust in their
bid to the EFA for additional resources. Ormiston Academies Trust are then
free to commission HCCPS to continue with the remaining elements of the
work if they so wish.
OR
Option 3 (b)
As option 1 but conclude the commission with HCCPS at the end of
December 2014 and cease all further involvement with the capital project
other than making direct payments in respect of agreed work up to the budget
figure as set out in Table 1,Net of any further costs arising from the
administrators and/or non-recovery of the amount paid in error, and
supporting Ormiston Academies Trust in their bid to the EFA for additional
resources. Ormiston Academies Trust are then free to commission HCCPS to
continue with the remaining elements of the work if they so wish

BACKGROUND PAPERS
32.

Cabinet Report 10 December 2013

http://www.iwight.com/Meetings/committees/cabinet/10-1213/PAPER%20C.pdf
Executive Reports 8 April 2014, 6 May 2014, 16 July 2014.

Contact Point: Dave Burbage, Managing Director 821000 Ext 6226

e-mail dave.burbage@iow.gov.uk

DAVE BURBAGE
Managing Director

CLLR JONATHAN BACON

Executive Member for Childrens Services

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