Finance Committee

Okay, we'll move on then to our substantive item this morning, which is the evidence session with the Senedd Commission. We have our witnesses here with us and I note that we have part of the team in the public gallery as well, so welcome to them as well. Can I ask you to introduce yourselves for the record, please?

Hefin David, Member of the Senedd for Caerphilly and Senedd Commissioner for budget and governance.

Ed Williams, the director of resources at the Senedd Commission.

Welcome.

Andrew Gibson, director at Avison Young, commercial director.

Lovely, thank you very much. As you're aware, the committee made a recommendation in our report on the Commission's draft budget that the Commission attends public evidence sessions in relation to the Cardiff Bay 2032 project, and that's what we're doing this morning, so I welcome that.

Before we go into questions, I just wanted to explain that this morning's session is split into two. One is in public like this, so that people are able to hear about the project and to have some scrutiny in public. But then also, because of commercial sensitivity, we will have a further briefing in private after that session, and that's because of economic and commercial sensitivities in the procurement process. We know that you're aware of that, but just for people to be aware of that listening in to this session.

So, I'd like to start. For the public record, can you briefly set out the need for the project to deliver future accommodation for 2032 and summarise the progress that you've made to this point, of publishing the contract notice in January? So, give us an outline of what's been happening, so that we've got it on the record. Thank you.

The very simple answer is that our lease is up in 2032 and when your lease is up, you've got to consider what options you take next. Even not doing anything then in those circumstances is obviously a decision because you would essentially be rolling over your lease, but you'd be at the whim then of the decision of the landlord about how that lease would be costed, and you have limited your own choices just by rolling over. So, what we're trying to do is achieve value for money by looking at other options that we could undertake to succeed in providing a building for Senedd Members, which is required, and that is the process that we are undertaking right now.

The key issue here is value for money. We want to get value for money when our lease is up. You can't start doing that a year before the lease is up—you've got to start now. All the advice we've received is that it takes up to seven years just to start the process and get to fruition. So, that's why we're starting now, or have started in the last year. And we're very cognisant of the Finance Committee's five principles. As a directly funded body, we need to be responsible to you, to demonstrate that we're undertaking a process that's value for money. So, this process of reaching out to the market to see what options we have, without making a decision at this stage, is intended to provide value for money to the public taxpayer and to demonstrate that we are acting in accordance with the principles that the Finance Committee has set us.

Could you explain a little bit more about the process that's got you to this point now, then? So, when did you start the process, what have been the stages up to this point? Just from a factual point of view.

The Commission agreed to go out to tender in, I think it was, January, at the end of January. So, the market has been consulted from January. But, obviously, the options were being built up and drawn up a year to six months in advance of that, to look at the plans for what happens after 2032. So, the in-house work, with the advice from Avison Young and CBRE, has been developed over the course of a year, to look at the market. And the advice we've received from those respected consultants, I would say—they were consultants to the Welsh Government as well—has been that this is the best process to go through. So, there's been a year in the planning, and then the decision to go to market was taken in January, at a Commission meeting, by Senedd Commissioners.

And what does it mean now that you're—. You published the contract notice in January. What does that mean to people—to lay people, I suppose? Ed, would you be able to explain what a contract notice is?

Absolutely. So, it's, broadly, a statement of our requirements, in terms of what we are looking for interested parties in the marketplace to provide for us by way of a solution. It became clear, as Hefin said, during the early stages, that there was more than one interested party. We were therefore into a procurement situation, not just dealing with our own existing landlord, and, as such, we then engaged the Welsh Government and the Treasury Green Book process, gone through stages, to manage what is a public procurement process. So, in line with the Green Book process and procurement laws and regulations, we publicly issue a statement of our requirements, and that allows the market then to respond to that. That's the opening stage: we say what we need, we've had some responses, and we now then go into a procurement process.

Okay. Thank you very much. Sam.

Thanks, Chair. Thanks for joining us this morning—it's really appreciated. I just want to come in on that point there about the requirements for the solutions that are needed to deliver—I guess what's needed for the Senedd to function appropriately. We know that the Senedd is expanding by 36 Members for the next Senedd term. I wonder how much of that is driving some of the urgency and the need behind this project more broadly.

It isn't. This isn't about 36 Members. This is about the lease on Tŷ Hywel. So, if you look at the Senedd Commission budget from last year, there were two ring-fenced elements—there was Senedd reform and there was ways of working. This is the ways of working element. So, I would be very concerned if, in public, this was in any way linked to Senedd reform. This is not a Senedd reform project, this is a Tŷ Hywel lease project, which is part of devolution, which all parties in the Senedd support.

Okay. Thanks. So, then, in terms of the Senedd expansion—the number of Members is increasing by 60 per cent, and, of course, the cost of this project, the Bay 32 project—I wonder how much of that cost is proportionate to the Senedd expanding at all. Because, of course, with more Members—

None of it.

—more capacity is required to accommodate them, and I wonder what the consideration of that is within this, the project you're working on.

No. No. The Senedd reform element of the budget is about what will accommodate those extra Members. So, we had a 16 per cent increase in the budget last year to deliver a 60 per cent increase in the size of the Senedd. The fitting of Tŷ Hywel will have to happen whatever happens, because of the nature of the end of the lease and the fact that we need to look at a building that is starting to be no longer fit for purpose because it's a crumbling building. So, it isn't to do with Senedd reform, and I reiterate that. The increase in the size of the Senedd is entirely separate to this, which is providing a building for all people who work in it—you know, 530 staff who work in this building.

So, to be really clear, then, what you're saying is the number of Members has nothing to do—. So, whether there's one Member of the Senedd or 1,000 Members of the Senedd, it makes no difference whatsoever.

I mean, if you had 1,000 Members of the Senedd, you probably would be looking at a bigger building—

So, it makes a difference, doesn't it?

—but, accommodating an extra 36 Members in a staff of 530, in a building like this, is not part of this project. This project is about a building that is fit for the Senedd for the future, regardless of the number of Members.

But you can't separate the two, though, can you? And I don't mean to make a big point of this today, but you've clearly come out wanting to make a big point of this today.

No, no—

You have.

I'm just trying to tell you that—. So, I'm not coming in with any party political angle here. I'm a Senedd Commissioner. My role as a Senedd Commissioner is to get value for money for the Senedd, and it is—

I'm just trying to understand what proportion of that value for money is linked to the fact that there's going to be more Members of the Senedd next time. Because there has to be a link.

No, there's not. If you redesign and refit Tŷ Hywel in a way that is going to make it fit for the future, then the cost of that will all be absorbed in that fit, or in a new build or whatever choices are made; it isn't to do with Senedd reform. Senedd reform has a separate ringfenced budget. So, if you look at the budget—I'm sure you have looked at the budget—there's a ring fence for Senedd reform, which is £6.5 million last year, and there's a ring fence for ways of working, which is this, which is £2.8 million.

Okay, but—

Let's take the political out of it—

Sorry, hang on—sorry, hang on—

—I'll ask Ed to confirm that.

Sorry, I'm asking questions. So, the point is, though, that the requirements, the contract notice, the requirements for the solution, that's based on the number of Members of the Senedd. So, therefore, the requirements would be different if it was 60 Members or if it was 96 Members. That's the point I'm getting to. And that can't be denied.

The requirement would be minimal; you wouldn't be looking at—. If you're introducing a new build, for example, the cost of that new build is going to be roughly the same, however many additional Senedd Members, unless you're talking, as you said, 1,000, which we aren't. If you're looking at a number of new Members, that new build is not going to cost any different; it's just how you fit it out.

Okay.

Would you like Ed or Andrew to come in and—?

I think it's just a basic principle that's not being acknowledged.

From a commercial perspective, the nature in which you now use office space is very flexible, so the requirement size has not changed throughout the process, regardless of Senedd reform—I'm obviously non-political in every way in this discussion. So, from a pure protecting the Senedd's future accommodation needs, whether it be going up or going down, the size requirement has been thought out to specifically do that, to ensure that the future—and that is 25, 30, 50 years—is accounted for throughout this process.

And in those terms—because fitting an office, as Andrew's just described—the number of Senedd Members is marginal in that, in the size and scope of the building. And let's reiterate this: we deliberately had two separate ring fences in the budget, one for Senedd reform and one for this. So, that's why—you know, they don't link.

Okay.

[Inaudible.] Ed, did you want to add to anything, or we'll—?

Yes. Hopefully not just to go over old ground and to insert myself right on the precarious middle, the Member is absolutely right that, of course, when we come to detailed design, the number of key stakeholders and building users is going to be a factor. However, that is not to say there won't be other factors; the design of buildings and the way that buildings work these days are different to when the existing building, Tŷ Hywel, was built, so there may well be other efficiencies that net that off. It is also absolutely true to say, as Hefin just alluded to, in our business case work, assisted by Avison Young, the outline costings that we've had to do date, the precise number of Members going from 60 to 96 is just not a factor in the costs that we've been looking at, or the budget that we've put forward to support the project to date.

Yes. I know we don't want to get stuck on this issue. I can't see how those things don't not necessarily correlate, exactly, but it must be a factor of which—. But I want to go on to my next—

I just think it's a fact. I think to disagree with facts is—. They're the facts.

But the space required surely has to consider, at least—

No.

—and therefore there's a cost to that, and the size—

It's marginal. It's absolutely—

Okay. Whether it's marginal or not, there's a difference, isn't there?

Well—

Can I bring—? I'll bring Mike Hedges in on this. Thanks. Mike.

Obviously, if we employ fewer people working for the Commission, the cost will go down. It's not just Members. I mean, Members are a very small part of the Commission costs, aren't they, in terms of the number? So, if you were to reduce the number of Commission staff by 36—and I've got suggestions how that could be done, but that's not for now—if we were to do that, the actual amount of space needed would be exactly the same.

And it's important to note, Mike, that the staffing costs were in the Senedd reform part of the budget, not in the ways of working part of the budget. So, that's important.

Okay. Can—?

On the building itself, I was trying to get across. If the building is going to take, currently, 536, if we had 36 fewer members of staff and 36 more Members, the size of the building would not change, would it?

I'm conscious we've got quarter of an hour or so to get through quite a few more questions, so, if we could move on, then, that would be great.

No problem at all. Thanks, Chair. So, just—. You've explained so far the process and some of the timeline we've gone through up to where we are today; I wonder if you could just explain the next steps in terms of process with the contract notice and perhaps a timeline that we should expect that to work through.

Yes. I'm sure the committee will be aware of the procurement plan and the process, because you've already made reference to it, but the key dates will be towards the end of this year—. I'll just find the right page here. Yes, the preferred solution would be coming in in December 2025. So, the detailed dialogue—. So, the initial dialogue and outline solutions evaluated will be completed by 25 June; detailed dialogue and potential tender dummy run, 14 October 2025; invitation to submit final tender, 14 October 2025; and then the preferred solution would be around December 2025.

But what I need to stress now is that the Commission has not made any decision. So, you know, this is—. The timeline starts to become a little bit more elastic towards the end, because we need to think—. Well, we don't know how long it's going to take for the bidders to come in and also we aren't making a decision yet. So, we haven't made any decisions at this stage. And it's important also to note that any decision that is made would be subject to next year's budget as well, which needs to be passed by the Senedd. So, you'll have further chances to scrutinise me on that budget in the future, which will involve any decisions that we make into next year.

Thanks. And just a final question, Chair, if I may? I know you find the sessions with Members really helpful in communicating and hearing from and gathering input; I was just wondering how you could explain how that will continue—. Or could you explain, sorry, how that will continue in the coming months, just so Members can be fully briefed and involved in this?

Yes. It's really important to me that Members are engaged. That's one of the reasons why I offered to give a public evidence session today as well—and, of course, I've got to do it if you ask me to do it—but I want to make sure that—. First of all, we've got a budget engagement plan, which the Senedd Commission has introduced this year, which is modelled on what we learned from doing the budget last year. Party groups are going to be involved. At any stage, a party group can request a meeting as well on Bay 32 and the future of what the building will look like. The wider budget, there will be drop-in sessions in the Cwrt. I will make myself available at any point; the Llywydd will meet with party leaders and I'm happy to meet with party chairs. So, you know, we want to be as open and as accessible as we possibly can be, and I've asked the Senedd Commission to draw up this engagement plan, which will be reflected in the way we do Bay 32, as well as the budget.

Yes. And can I just put on record briefly, Chair, my thanks to the Commission staff in particular for—from my own group in particular—being willing to come along to those sessions to share so far? We welcome that continuing in the future so—

That dialogue is very useful, I know, from my group as well. Ed.

Sorry, Chair. Can I just do what officials do and just say that we gave some dates just there that we were happy to share with committee, that we came with the intention of sharing, but just to put the health warning that we're about to start, within the next fortnight, the first round of meetings in the competitive process, so they are—

So they might flex.

—indicative. We are, you know—

But what it does is it gives an arch of the process, rather than, 'These are set-in-stone markers', basically.

Absolutely. But, yes, just to put it in that context.

But it will be useful just to have that so that we're aware, especially with the dialogue that we, as a committee, have with yourselves, and that's good for us to know when—

It's a process that's through to the course of the end of the year and, you know, we need to be waiting to see what happens and what emerges from all of that.

Yes.

On that process, obviously, as part of our function as the Finance Committee, we monitor and we scrutinise the way that the consolidated fund is used, so, expenditure and financing of the consolidated fund—related to financing or expenditure of the consolidated fund.

Yes.

Could you talk a little bit about how this project will be financed without, possibly, going into any commercially sensitive figures, but the process of—? You know, there's going to be a fair few millions of pounds being spent. How's that going to be managed and what options have you got and—?

It's in the money that was allocated in the ways of working budget, so it's there. You've agreed that for this year, in this financial year in the Senedd—the £2.5 million that was in there. It may come in less than that, as a result of some of the savings from the—

But what I mean is, going forward, obviously, this is a project for several years—

And the same thing—the same thing. So, it’s important to note this is about procurement. The money that will be in the budget is about the procurement process. It isn't about building anything, because we haven't made any decisions on that. The Senedd Commission projects its budget over—. It shows the budget from last year, this year and next year, but we don't hold reserves. We've got to come to the Senedd every year to request a budget. We can't project more than two or three years ahead and, given the fact we haven't made a decision, we can't then project how much it's going to cost in the future. So, we'll be coming back to you to talk about that, depending on what decision both the Commission and the Senedd decide to take with the budget next year.

Okay, talking about decision making then, obviously, you as commissioners will sit around the table and discuss this and be advised. What role does the Senedd and what role do we, as Senedd Members, have in that process of voting for it? How do you foresee that working, especially with what you're saying about engaging with Senedd Members?

So, you have absolute engagement on the process of Bay 32. I'm sure you know that your Senedd Commissioners are approachable at any time on this, and every Senedd Commissioner is represented in each party political group, which is important.

The budget needs to be agreed by the Senedd. So, if we decide to go ahead with a further stage next year, that will be, within a ring-fenced figure, a ways of working figure, in next year's budget. You will be able to ask me in detail, this October, what that's all about, and the Senedd will have a final say whether that's included or not. So, if the Senedd decided not to support that element of the budget, you're effectively then saying, 'We're not supporting Bay 32.' So, every Senedd Member's power is in their vote on the Senedd budget. But we would hope we wouldn't get to the point where we're having those kinds of arguments because I would like to think that we get to a point where we get consensus across the Senedd, where there's at least a two thirds majority in the Senedd in favour of going forward into the budget with the Bay 32 figure in it for procurement, and we move on on that basis.

Fine. Okay. Thank you.

Does that address your—?

Yes. I was just thinking about the technicality, because the Senedd Commission's budget is attached to the final budget motion, and if, as we saw this year, there was negotiations around the Government's budget—

The whole thing falls apart then.

That's where, maybe, some consideration as to how we, potentially, approve this element might need a little bit of thinking through, that's all.

There is a separate vote on the Senedd Commission budget as well. So, before it can go into the Welsh consolidated fund's budget for next year, we've got a vote in the Senedd and a debate, you know. So, there's every chance to have it then. I think, when you start then talking about whether the Welsh Government's budget will fall or not—

That's something else.

—everything starts falling apart at that point.

But, just from a technical point of view, it's quite interesting to see how—

Perhaps it'll be a good argument for me to ask people to support the Welsh Government’s budget next year.

We won't go there, in this session anyway. I'll now bring in Mike Hedges with some further questions. Can you unmute Mike, please? There we are. Diolch, Mike.

I unmuted me and then you unmuted me. We know where we are in terms of what we want to do. What we don't know is what the funding is going to look like, and we don't know what the capital costs are going to look like. So, how are we going to ensure that we have value for money in this project? It's a difficult question in the sense that we don't know what's going to happen to the economy. Things are much different to how we expected them even six months ago. So, we don't know whether the economy is going to keep on expanding or how it's going to expand, and where the pressure will come on the cost of building. We do know that office buildings are being downsized. So, how are you going to ensure we get value for money?

So, the whole process is about value for money. If we weren’t concerned about value for money, we wouldn’t be doing this. Looking at the commercial tension in the market, and seeing where we can benefit from that commercial tension, that’s this process. The non-value-for-money option would be just to let the lease roll over, because you’re gambling then on whether you’re going to have a landlord who’s effectively holding you to ransom, whereas, if we go to the market, that’s how you get value for money, because we may get better options out there—there we are, there’s a Conservative supporting me there with that. [Laughter.] You could also look at publicly owning buildings as well.

But, looking at value for money, you do that by going to the market. And that’s what we are doing, to see what good commercial options are out there, and test that against the alternative of rolling over the lease. So, we can see which would be the cheaper through this commercial process. Now, if you just didn’t do that and rolled over the lease, then the landlord could say, 'Well, we’re charging you double next time.'

Just moving on from that, are you looking for a building to hold 100 per cent of Commission staff, 90 per cent of the Commission staff, or 70 per cent of Commission staff, with the rest working remotely?

There would be—I’ve just been advised—90. Ninety-per-cent would be working here. I think you can see that the building is busy. I was in Westminster yesterday, and seeing a democratic building at work is quite impressive. I think we don’t realise when we’re here, when we’re part of it every day, what we’re actually seeing. But being in another place, I really did see quite impressive democracy at work. But the whole issue is we haven’t made a decision yet on the nature of what the building will look like and what the lease or ownership would be, and so it’s hard to answer those questions directly while we’re still testing the market.

I’m just throwing that out there. When I’ve walked through part of the building in Tŷ Hywel on a Monday, I'll tell you what, bits of it look more like the Mary Celeste than a working office. But I’m not going to take that any further.

What are the potential financing options for the project, and how could costs be phased across future years?

Sorry, could you ask that again? I was speaking over you. I'm sorry, Mike.

All right. No problem, Hefin. What are the potential financing options for this project, and how might costs be phased over future years?

[Inaudible.]—decision on that until we get further clarity on what the market looks like. So, I think we’d need to make those decisions further down the line. So, when I talked about December, that’s the point at which we make those decisions, and then they’d be factored into next year’s budget.

Okay. Fine.

I should add that Westminster is like the Mary Celeste on a Monday and Friday as well, mind.

I wasn't saying anything about that at all. I was just making the point that lots of organisations are downsizing their office space. I know somebody who's just started working for an organisation in the private sector, who attends work twice a week in terms of physically being in the office, and the other three days they work remotely, and they have a certain volume of work to carry out remotely.

All of those things will be factored into the new-build decisions that we're looking at.

Perhaps we can have a further discussion later.

Yes.

Sorry, Chair.

Sam, did you want to just come in?

Yes. Thank you, Chair. It's just a broader question, I guess, in terms of the governance, oversight and having some assurances around this as a project. Clearly, we’re not necessarily at the earliest of stages at the moment; things have progressed. I’m just wondering how you see the governance arrangements evolving as this progresses, and what assurances you can give us as a committee that the appropriate oversight and the controls will be in place, to ensure that there’s not project creep into things that aren’t necessarily within the remits of this piece of work, and that the costs will be controlled appropriately with the governance arrangements that would be in place, and how you can see that evolving over the coming months and years.

We had an independent gateway review that took place in November 2024, which was done by an independent adviser, and it received an amber/green confidence rating. So, that’s the point at which we’re saying, 'We’re confident that this is an amber/green risk project.' You cannot mitigate every risk—it’s not possible to do so. But because we’re taking this stage-by-stage approach, we can undertake these reviews regularly. We can look at where we are with each step. And the fact that, at this point, we haven’t made this decision, we’re happy that we’re at the green/amber indication. I think what we need to do is, at every step, consider those issues. We haven't made a decision, but if we hypothetically went for a new build, we'd have to look then at the project outline, we'd have to compare it with retrofitting Tŷ Hywel, and those decisions would be made at that point. But, at this point in time, we're confident that both value for money is being addressed and that risk is being mitigated.

Yes, and the governance arrangements around that will evolve proportionately and appropriately as the project progresses as well.

Well, I don't know if, Ed, you want to say something about the team you've got who are responsible for this.

I'm going, very quickly, to run through the layers just to try and give assurance. So, we've got the Commission, and that is the legal entity, and the board that we are supporting. Below that, there is the executive board that makes the recommendations up to the Commission. Underneath the executive board, there is a programme board—the ways of working programme board. There is then a major project board, overseeing the project, supporting the—. And I am the senior responsible officer for the project, working with the board. There is then an integrated project team, some of whom are here today, and they've got a number of independent external advisers on the project team, with a heavy emphasis on specialist procurement advice, governance advice, legal advice, and procurement and commercial advice.

We've then got a joint assurance board with the Welsh Government. As Hefin alluded to, we went through the Welsh public sector assurance hub and went through a gateway review process, and I have to say that amber/green was the top rating that we would get. We wouldn't get a full green, as the project, at that point, was still in the preparation stage and has some risk associated with it. We've got our audit risk and assurance committee, again, with independent members. So, we've got a number of officials, and I should say also that there's a specific Member reference group as well, and we have this committee.

So, we've got a tiered governance structure with a number of officials acting in different capacities, wearing different hats, to give you assurance, to give me assurance, as the SRO, to provide valuable input, a number of independent professional advisers, engagement with Members as users, as well as Senedd Members who are funding it, and engagement with the Welsh Government. So, there's a lot—

It sounds complicated, but it isn't really when you see it on an organic structure. It isn't that complicated, but it is very rigorous. And I'm a member of the audit and risk assurance committee, which meets regularly, and I can tell you that they are very rigorous, especially on things like this. So, I have got great confidence there that we are having independent people questioning what we're doing.

Thank you very much. That brings us to the end of our public session today.

Yn unol â Rheolau Sefydlog 17.42(iii) a (ix), dwi'n cynnig bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yma. Ydy pawb yn hapus? Iawn, hapus. Diolch yn fawr.