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BIS Government Major Projects Portfolio September 2013 (CSV)

Updated 23 May 2014
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Project name FE Capital Investment Programme The Francis Crick Institute (formerly UKCMRI) Green Investment Bank HE Reform Programme Royal Mail Sale of Shares BIS Shared Services SLC Transformation Programme ICR Monetisation Urenco Future Options Further Education 24+ Learning Loans Programme Business Bank Project Catapult Centres
Department BIS BIS BIS BIS BIS BIS BIS BIS BIS BIS BIS BIS
MPA RAG rating (A Delivery Confidence Assessment of the project at a fixed point in time, using a five-point scale, Red – Amber/Red – Amber – Amber/Green – Green; definitions in the MPA Annual Report) Amber/Green Amber/Green Green Amber/Green Amber Amber Amber Amber/Red Data exempt under section 27 and section 43 of the Freedom of Information Act (2000) Amber/Red Amber/Green Amber/Green
Description / Aims To renew and modernise the FE College estate with modern, versatile buildings, facilities and industry standard equipment; through a well managed, benefit/value-focused programme; offering learners high quality learning environments in line with the FE College Capital Investment Strategy (December 2012) and Ministerial priorities The Francis Crick Institute (formerly UKCMRI) is a joint venture between the UK's largest biomedical research and academic institutions: The Medical Research Council (MRC), Cancer Research UK (CRUK), the Wellcome Trust, University College London, Kings College, London and Imperial College, London. A new research Institution will be established involving the construction of a new facility located close to St Pancras station, London. This facility will accommodate 1,268 scientists when fully operational. The National Institute for Medical Research (NIMR) will be closed. This NIMR site at Mill Hill and the National Temperance Hospital site will be disposed of as part of this project. The project aims are: Sustain UK's position as a leader in biomedical research; Engagement with the most challenging research questions; A scale to compete with major new overseas developments; Promote the health of the public and wider UK economy; Address key concerns of 2006 Cooksey review on publicly-funded healthcare research; Excellent training environment for biomedical research. To build a green investment bank, to accelerate a transition to a green economy, by engaging in activities which the company’s board considers will, or are likely to, facilitate the development or expansion of businesses; enterprises; industries; infrastructure; projects or technologies which, in the opinion of the board of the company, have an environmentally beneficial objective, such as facilitating the reduction in greenhouse gases; improving resource efficiency or protecting and enhancing the natural environment. To put higher education funding on a sustainable footing from September 2012 by shifting public spending away from teaching grants towards repayable tuition fee loans and contribute to eliminating the economic deficit while maintaining high quality in higher education. This overarching objective is supported by a number of subsidiary objectives with the following key deliverables: • Generation of £3 billion savings annually by 2014-15 • A single regulatory framework by Academic Year (AY)15/16 • Quality of HE provision maintained or improved from AY11/12 levels • Successful launch of the annual student support application cycle • An agreed Communications and Stakeholder Engagement Strategy and Plan To sustain the universal postal service for the benefit of all users by securing Royal Mail’s future through the introduction of private sector capital and associated commercial disciplines. This will be achieved through: i) delivering a sale of shares of Royal Mail within this Parliament; ii) creating an employee share scheme that, as decided by Parliament, will lead to at least 10% of the company in employee ownership to drive strengthened employee engagement; iii) delivering a financial outcome for the taxpayer, which when considered in the context of the overarching policy objective, represents overall value for money. A shared service solution for the BIS network will: - deliver a structural reduction in the cost base; - provide simpler, transparent and more integrated processes across the BIS family of organisations; and - secure continuous cost and process improvement through innovation and the application of a professional business focus. Shared services enables wider business transformation. Greater benefits will be realised as the service matures beyond transactional services to higher value ones. There are opportunities for shared services to support: - strategic procurement with effective compliance – managing the >£1bn contract expenditure of BIS and partners much more effectively, to deliver savings that could dwarf those from consolidating transactional services - real benefits from Clear Line of Sight – so that rather than being an initiative about consolidating end-year accounts, it can underpin strategic management of BIS and its partners with timely, accurate, valued and well-aligned financial management information The SLC Transformation Programme supports the Coalition's programme for Government. The objectives of the programme respond to a number of challenges including the reforms introduced in the White Paper "Students at the Heart of the System". Over the next three years the SLC anticipates major increases in student numbers, and loan values and volumes. The student experience at present is very poor, due to operational and technology issues including lack of availability of complete case information and the time delay between the issue of evidence by students to the completion of the application process at times of high demand. Due to the limited technology update over the last few years the current system needs replacement. A robust and agile customer-centred student finance system is required. Introduce a modern, integrated and flexible IT system to enable the safe delivery of HE reform (including changes to borrowers’ repayment terms including variable interest rates). • Enhance customer service and operational efficiency. • Support the transformation of SLC’s business through introduction of a unified technology platform and the standardisation of processes. Expected benefits: • Improved customer experience: easier access to real time information, additional communication channels and a reduction in incomplete calls, etc; • Operational efficiencies: increased process automation, reducing avoidable contact and standardisation of workflows; • Strategic fit: alignment of the programme with Government ICT strategy as well as with the strategic direction taken by SLC. • Financial benefits to Government: ensuring HE reform-related savings, agreed as part of the Comprehensive Spending Review, are realised; potential for increasing the value of the loan book and an increase in the recovery of student debts; • ICT efficiencies: introduction of a unified business technology platform, the use of standard technology and the ability to use more agile development approaches HM Government is carrying out a programme of asset sales with the purpose of reducing public sector net debt (“PSND”). The Government has announced intentions to sell the pre-Browne Income Contingent Repayment (ICR) student loan book to contribute to this objective and to realise value to the taxpayer. This loan book will be sold in a series of tranches over a number of years. The first tranche of loans is expected to be sold by 2015-16. As is normal with transactions of this type, there will be a value for money assessment made before each sale. Each sale is required to meet the value for money assessment as well as other key project objectives to be considered a success. Failure to meet objectives will result in a decision not to sell. The Government has adopted a policy of asset disposal where there is no longer a good case in public policy terms for continued public ownership. On that basis, the Department of Energy and Climate Change (DECC), with commercial advice and support from the Shareholder Executive, are taking forward preparations for a sale of HMG’s one-third shareholding in Urenco, a uranium enrichment company. A sale could realise significant proceeds which have, in part, been earmarked to capitalise the Green Investment Bank in 2014/15. The project was transferred to BIS (in the Shareholder Executive) through a Machinery of Government change in February 2013. To Introduce loans for those aged 24 or over, undertaking provision at Level 3 and above from 2013/2014. The project will allow savings to be realised through the conversion of grant to loan funding while still allowing access to advanced and higher level provision . Introduction of loans should put greater power into the hands of learners, creating a more responsive system. System should be simple and non-bureaucratic , representing good value for money and making use of HE infrastructure to minimise disruption and facilitate progression. In September 2012 the Government announced the creation of a business bank to address long-standing structural gaps in the supply of finance to SMEs and mid-sized corporates. The bank, which has been allocated £1bn of Government funding, will be tasked with supporting the development of diverse finance markets for business, tackling market failures in the provision of finance, and ensuring that businesses are aware of and can access the support provided by Government. The new institution will operate through the wholesale markets in order to unlock institutional investment to benefit small to medium sized businesses; it will not have any retail presence. Rather, it will facilitate the provision of loans, including long-term patient capital, to UK firms through banks and other financial institutions. The 'Business Bank' will be the single public identity and centre of expertise in government on all commercially-minded finance schemes for small and mid-sized businesses. These services will be managed as a single portfolio with operational and budget flexibility. The bank will commercially-focused, employing finance, investment, business and public sector professionals to pool the expertise of the relevant markets and efficiently build up and manage the bank's operations. It will be able to determine its own priorities, subject to high level objectives, budgets and operating principles set by Ministers. The 'Business Bank' will not seek to replace or compete with existing and future finance providers, but rather to ensure that there is a greater range of providers and products on offer to businesses. By harnessing the power of capital markets, it has the potential to transform business finance in the UK. Direct, targeted, government incentives for business led R&D and knowledge transfer is provided via the BIS sponsored Technology Strategy Board, through a wide range of economically robust business support interventions. Catapult technology and innovation centres will complement these approaches, by providing a business led, capital intensive infrastructure, that enables business to exploit new and emerging technologies, by providing a capability that primarily operates, at Technology Readiness Levels 4 to 7, bridging research and technology commercialisation, de-risking the process for business.
Departmental commentary on actions planned or taken on the MPA RAG rating. MPA RAG rating as at 30 September 2013 was Amber/Green. The programme is well established and operates using tried and tested systems, processes and arrangements. Ministers are supportive of the programme and the sector is fully engaged. The Amber/Green status reflects the good progress that has been made in terms of progress to time, cost and quality. Good progress has been made on the on going transition element of the project. The MRC Monitoring Committee reviews progress at its monthly meeting. GIB became fully operational in October 2012 following receipt of state aid approval. It has since made commitments of £1.3bn, and mobilised more than three times that amount in private capital. The Amber/Green status reflects that student numbers appear to be recovering this year after a fall in the first year of the new regime. New regulatory requirements for alternative providers have been introduced to strengthen protections in the absence of primary legislation. The Programme is nearing its closure point and we are moving activities increasingly into Business As Usual. Action has been taken to ensure continued good governance to oversee risks and issues and stewardship of benefits realisation on a continuing basis. The Amber status reflects the view that the project was being managed effectively but significant external risks threatened successful completion - namely market conditions and industrial relations. Extensive monitoring and contingency planning were undertaken to manage potential risk materialisation, and a plan was put in place for decision-making and auditing of key decisions in the run-up to the sale of shares. Post-IPO the department has defined the division of responsibilities between the policy and shareholder teams and added measurement of benefits to the ongoing role of the policy team. The project closed in October 2013 and a lessons learned document has been developed which will include consideration of how the skills developed by the project team could be deployed on similar projects elsewhere within Shareholder Executive and more widely across Government. The Amber status reflects the challenges faced with the continued movement of partner organisations to the new service during Phase 1, and finalising the timetable for future BIS Partner Organisations involved in Phases 2 & 3. In order to reduce the risk of delaying the on-boarding of clients (that have a higher level of readiness to others), a decision was taken to develop individual business cases for organisations identified for inclusion in the latter stages of the programme. The programme remains fully resourced and achieved go-live in October 2013. The Amber status reflected the requirement to have more detailed plans in place from Transformation Partners and programme work-streams. Detailed planning sessions are planned to l enable the development of a baseline delivery roadmap which will then be used to refresh the delivery plan , budget and team structures. This roadmap will continue to be refined. Resource capacity has been highlighted as a challenge - action plans are being put in place to manage this challenge. A resourcing governance process has been agreed, defined and implemented. Actions being taken to address the Amber/Red rating include the Project Steering Group assessing and confirming the delivery capability of key partners. Following agreement that the Go/No-Go criteria (required to continue with phase two of the project) has been met the Project will undertake work to further define its objectives, establish more robust plans, governance and project management disciplines, and appoint experienced external advisers to assist on the project. Data exempt under section 27 and section 43 of the Freedom of Information Act (2000) The Amber/Red rating reflected the fact that there were initially concerns that the loans payments system would not be launched on time and there were aspects of the system that had defects. Whilst overall takeup of loans was strong at the time generally there were areas where take-up was very low, one being apprenticeships. Robust plans were put in place and contingencies used to ensure successful launch and rectify defects. It was also decided that apprenticeships be removed from loans. Due to both the successful removal of apprenticeships and launch the programme officially closed on the 24th October 2013. A total of £660m of new financing reached small businesses in 2013 as a result of the BBB programmes - a 70% increase on the previous year. We continue to engage with the European Commission and hope to receive state aid approval to enable the BBB to go live in Autumn 2014 The Green rating reflects good progress to date and steady delivery at Catapult centres including various stages from the establishment of new facilities, operations, engagement with businesses and development of R&D programmes. All seven Catapult centres were operational in 2013. With the network maturing, the TSB is now ready to move the programme to a ‘business-as-usual’ activity and to start to establish the next phase of centres, Precision Medicine Catapult and Energy Systems Catapult.
Project - Start Date (Latest approved start date) 31/05/2010 01/10/2006 01/06/2010 30/06/2011 01/04/2012 04/05/2011 01/03/2012 01/03/2010 01/02/2010 30/11/2010 24/09/2012 01/12/2010
Project - End Date (Latest approved end date) 01/09/2015 21/12/2017 01/09/2012 31/12/2015 17/10/2013 01/04/2014 19/03/2016 31/12/2018 Data exempt under section 27 and section 43 of the Freedom of Information Act (2000) 31/10/2013 15/11/2014 01/04/2013
Departmental narrative on schedule, including any deviation from planned schedule (if necessary) The first MPA Annual Report in May 2013 stated the project end date as the end of the financial year for which funding is available. The end date shown this year 01/09/15 is the date by which the last of the programme funded projects will become operational The Project remains on schedule for completion by the forecast end date. No departmental narrative No departmental narrative The Project start date is given as June 2011, which is when the Postal Services Act 2011 received Royal Assent. However, the sale of shares project was not launched until FY 12/13, following successful implementation of the other parts of the Act. The project end date should read 01/04/15 (as per the Q2 2012/13 GMPP report). Additional scope was incorporated into the programme in 2012, in line with the objectives of the Civil Service Reform programme. The later project end date is an indicative date reflecting the enlarged scope of the programme. Given that work is being progressed under business cases dedicated to individual organisations, the end date cannot be finalised until all business cases have been completed. No departmental narrative Previously an end date reflecting the end of the feasibility study was provided. The project has now moved from a feasibility study into delivery phase including sale preparation and sale phases and timescales have been revised to reflect this. The proposed end date reflects the completion of a series of tranches being sold over a number of years. Data exempt under section 27 and section 43 of the Freedom of Information Act (2000) No departmental narrative No departmental narrative The Catapult programme continues to progress well and is largely on track against the original schedule. A number of the new Catapult facilities will come on stream in 2014. Minor delays in securing suitable premises have not impacted delivery of the programme or centres’ objectives. Budget 2013/14 [from GMPP data] = £127m Forecast 2013/14 [from GMPP data] = £134.55m Budgeted Whole Life Costs [from GMPP data] = £757m
2013/2014 Budget (£million) 450.37 112 0 970 380 3.785 19.86 5.5 5.889 83.65 237.92 127
2013/2014 Forecast (£million) 450.37 112 0 1180 350 3.785 19.86 5.5 4.092 84.604 185.569 127
2013/2014 Variance (£million) 0 0 0 210 -30 0 0 0 -1.797 0.954 -52.351 0
2013/2014 Variance %age 0.00% 0.00% 0.00% 21.65% -7.89% 0.00% 0.00% 0.00% -30.51% 1.14% -22.00% 0.00%
Total budgeted whole life costs (£million) (including non-government costs) 5609.46 753 278 4600 31.2 19.27 139.13 28.61 18.416 572.291 1567.45 757
Departmental narrative on budget/forecast variance for 2013/14 (if variance is more than 5%) Programme is currently forecasting a balanced budget. Following the SR announcements relating to the transfer of FE Capital to the Local Growth Fund which would restrict funding commitments to 2013-14 and 2014-15, the Agency are developing further initiatives to maximise investment in the sector in line with the published Strategy. No departmental narrative No departmental narrative HE Reform affects academic year 2012/13 onwards, with the system changes reaching full implementation by 2015/16. The assessment of the long-term resource cost of loans has increased since the original cost estimates were made, primarily because the £21,000 repayment threshold for 2016 will now be more generous than originally planned due to lower than typical earnings growth. The budget figures reflect the original costs of the reforms and the forecast/actuals the current assessment of the costs. The original decisions on the reforms were taken in Spending Review 2010 and the assessment of costs and benefits used to justify the reforms were set out in the June 2011 Impact Assessment "Higher Education: Students at the Heart of the System". The current assessment of costs is consistent with estimates available during Spending Round 2013. Any increase in costs above Departmental budgets will be resolved as part of annual discussions with HM Treasury. Forecast costs of £350m include estimated cost of the employee free shares scheme (£300m) and execution costs (£50m). The final cost of the employee free shares scheme was £330m, with the variance due to HMG achieving a higher IPO share price than was originally estimated in the GMPP return. The final figure for IPO execution costs was £27.1m. N/A Underspend against FBC estimates in FY 13-14 due to later than planned contract finalisation and subsequent delay to the start of the delivery of the core banking implementation. No departmental narrative 13/14 forecast represents the estimated cost of administering the sales process, including use of expert advisers for the FY13/14 year as at September 2013. No departmental narrative Since the original budget was set there has since been a reallocation of budgets to reflect spending profiles of investments. The underspend 2013/14 will be rolled forward for investment in future years TSB asked the Catapult programme to absorb additional spend at mid-year point because of anticipated emerging underspend in other programme areas and issues leading to delays in property. Additional funding outside of the GMPP baseline quoted above has also taken place. Significant additional funding has been provided to the Catapult centres to expand the size of the network. This includes two new Catapult centres and the expansion of the number of the existing High Value Manufacturing Centres.
Departmental narrative on budgeted whole life costs Whole life costs include over 50% contribution from non government sources, including college reserves, borrowing and disposal proceeds. Since the first MPA Annual report in May 2013 the programme has received an additional £550m to invest across 13/14 and 14/15. At Q2 this additional funding had been allocated to colleges across a mixture of detailed applications and expressions of interest. The additional WLC is therefore made up of a combination of capital grant and college contributions. The Total (WLC) cost for the Crick project is circa £753m. This is funded by six partners; Medical Research Council (MRC), Cancer Research UK (CRUK), Wellcome Trust (WT), University College London (UCL), Kings College London (KCL) and Imperial college London (ICL). The funding proportions are; MRC - £253m towards construction costs, £30m for transition costs in the move from NIMR to the Crick and £47m towards land costs. The remaining £423m is provided by CRUK,WT,UCL,KCL and ICL. No departmental narrative The financial benefits are the savings to HEFCE teaching grant that result from the reforms within the timeframe from first year of change through to full implementation in 2015-16. The net present value is from the HE White Paper Impact Assessment, and shows the discounted net costs (a saving) to Government. This has not yet been reviewed but is likely to fall as a result of the increase in the estimated resource cost of the new student loan outlay. We will review this estimate once we are in a position to review the expected cash outlay on loans using final 2012/13 academic year data. Only the non-Government spend is classified as 'budgeted whole-life costs'. These are costs met by Royal Mail in relation to their own advisory work to prepare for the sale of shares, and also BIS adviser fees that were recovered from the company by the Department. The Government recovered £4.8m from Royal Mail to cover transaction-related adviser fees incurred in 2012/13 and 2013/14 (this is separate to the fees associated with execution of the IPO itself which are described above and were borne by the Department). The variance in whole life cost is a result of the enlarged scope. The original forecast for phase 1 was £12.74m (of which £0.8m was capital). Phase 1A requires an additional £1.5m to support increased costs of delivery relating to the system security requirements. Two organisations also have deferred go live dates (Insolvency and IPO) to February 2014 and additional costs of £0.3m are expected. The expected costs of phase 2 are expected to be £3.7m and phase 3 £1.1m Whole of life costs are still anticipated to be within FBC estimates - however work is ongoing to verify these. The costs include replacement of core systems and business and technical transformation. Figures reported in 2013/14 were provided before the full business case had been finalised and the figures approved. Therefore that £131.91m figure was an estimate and £139.13m was the figure agreed in the Business Case. Previously, the whole life costs provided reflected the costs of the feasibility study. The project has now moved into a delivery phase and the revised costs reflect the costs for the whole project, including sale preparation and sale phase. The costs reflect that there will be a series of tranches sold over a number of years. Whole life costs represent the cumulative total of the annual allocated budgets and do not represent estimated spend. This will be materially lower, as a significant portion of each year's allocated budgets may be unused, and consequently rolled over. Each annual budget represents the estimated cost of administering the sales process, including use of expert advisers No departmental narrative No departmental narrative The through life costs apply to current Comprehensive Spending Review period and do not include the ongoing core funding anticipated for the Catapult centres.