1 THE ISSUE

2 RECOMMENDATION

2.1 The Council Executive is asked to:

(1) Note the relatively small financial implications arising from the scheme if a transfer to the MCC is delayed. The maximum potential exposure could be up to £92,000 a year in the latter years of the 25 year contract. But this cost should be funded over the period of the contract from revenue support grant PFI credits (as set out in paragraph 3.4).

(2) Confirm the support of Bath & North East Somerset Council to the Avon and Somerset Magistrates Courts/Probation Service PFI Project.

3 FINANCIAL IMPLICATIONS

3.1 In Capital terms the proposed PFI project will attract PFI credits which will be "funded" through grant and a share of these credits will be reflected in our FSS formulae and Revenue Support Grant (RSG).

3.2 The current Council revenue budgetary contribution to the costs of the Magistrates Courts is £250,000 a year. However the Courts Bill proposes the Magistrates Courts Service should be transferred from agency funding (i.e. via our budget) to direct funding from the Department for Constitutional Affairs. Subject to the Bill being enacted, the timescale of this project is such that the Council may have to fund the excess revenue costs of this scheme for just one month, or for just over one year. This cost would be funded through PFI/RSG credits to this Council. The Council makes no contribution to the cost of the probation service.

3.3 The last time this issue was raised (October 1999 Resources Committee), the total additional annual revenue cost to us of this proposal was £12,000.

3.4 Three scenarios are considered in the report and their financial implications are summarised in the table below:

3.5 Costs have risen for the project overall and there is a risk to this Council of a higher longer term commitment if the transfer of the Magistrates Court Service is delayed or does not occur.

4 THE REPORT

4.1 The provision of accommodation for magistrates' courts services is, at present, the responsibility of upper tier local authorities. The accommodation therefore occupied by the Avon and Somerset MCC is provided by Somerset County Council and the four unitary authorities (the `Paying Authorities'). From 1 April 2005 however this responsibility will pass to the Department for Constitutional Affairs (DCA) and the MCC will be wound up. The project also provides accommodation for the Avon and Somerset Probation Service.

4.2 By agreement Somerset County Council is acting as the lead authority on the PFI project and will enter into the main contract with the private sector provider when the time comes. The cost of the PFI project will be met approximately 82%/18% between the DCA and the Home Office (National Probation Directorate) The Paying Authorities will in turn meet 20% of the DCA share of cost between them, distributed according to Council Tax base.

4.3 The approved PFI development scheme is in three parts

4.4 The preferred bidder for the PFI contract are Amey plc funded through Equion plc and Barclays Bank. Financial close for the project is planned for 19 November 2003. Construction will commence shortly thereafter and the first facility (MCC HQ at Worle) will be available for service from March 2005.

4.5 The Paying Authorities will have responsibility for making the first payment under the PFI scheme, but none from April 2005. However the enabling legislation to permit the transfer of functions to the DCA has not yet received Royal Assent and there is a risk to the Authorities therefore of a higher contribution to this scheme than just for one month if the Courts Bill is delayed or not enacted at all. (The financial implications of the three scenarios are summarised in paragraph 3.4).

4.6 This project was reported to the former Resources Co-ordination Committee (RCC) in October 1999. At that time it expressed support for the project and made comments regarding identification of efficiency savings in the proposal and properties remaining within the ownership of the Unitary Councils and County Council. It also approved the setting up of a `smoothing' fund to deal with the mismatch of FSS and grant funding to actual costs.

4.7 The proposal is now in a recommended form for progression. Somerset CC has prepared a briefing note summarising the proposal which is attached as Appendix A.

4 OTHER OPTIONS CONSIDERED, RATIONALE AND PROPOSAL

5.1 The only other option that can be considered is not supporting the scheme.

5.2 But it is anticipated that the proposal will receive support from the other participating authorities and rejection by this Council is therefore unlikely to prevent the project proceeding, nor avoid the Council's financial liability to it.

5.3 Therefore in view of the overall financial risk and transfer and the previous decisions of the Resources Co-ordination Committee to support the scheme, it is recommended that the Council confirm its support for the project.