Session 2007/2008

Second Report

Report on Springvale
Educational Village Project

Together with the Minutes of Proceedings of the Committee relating
to the Report and the Minutes of Evidence

Ordered by The Public Accounts Committee to be printed 20 September2007
Report: 4//0708R Public Accounts Committee

PUBLISHED BY AUTHORITY OF THE NORTHERN IRELAND ASSEMBLY

Public Accounts Committee
Membership and Powers

The Public Accounts Committee is a Standing Committee established in accordance with Standing Orders under Section 60(3) of the Northern Ireland Act 1998. It is the statutory function of the Public Accounts Committee to consider the accounts and reports of the Comptroller and Auditor General laid before the Assembly.

The Public Accounts Committee is appointed under Assembly Standing Order No. 51 of the Standing Orders for the Northern Ireland Assembly. It has the power to send for persons, papers and records and to report from time to time. Neither the Chairperson nor Deputy Chairperson of the Committee shall be a member of the same political party as the Minister of Finance and Personnel or of any junior minister appointed to the Department of Finance and Personnel.

The Committee has 11 members including a Chairperson and Deputy Chairperson and a quorum of 5.

The membership of the Committee since 9 May 2007 has been as follows:

Mr John O’Dowd (Chairperson)
Mr Roy Beggs (Deputy Chairperson)

* Mr Micky Brady replaced Mr Willie Clarke on 1st October 2007

Table of Contents

List of abbreviations used in the Report

Report

Executive Summary

Summary of Recommendations

Introduction

The Department for Employment and Learning’s Handling of the Project

Why the Project Failed to Deliver the Main Campus and Applied Research Centre

Other Areas where the Project could have been Better Handled

The Aftermath of the Project

Appendix 1:

Minutes of Proceedings

Appendix 2:

Minutes of Evidence

Appendix 3:

Correspondence

Appendix 4:

List of Witnesses

List of Abbreviations used in the Report

The University           University of Ulster

The Institute             Belfast Institute of Further and Higher Education
                                (now known as the Belfast Metropolitan College)

The Department       Department for Employment and Learning

C&AG                       Comptroller and Auditor General

HEFCE                     Higher Education Funding Council for England

PFI                          Public Funded Initiative

Executive Summary

Introduction

1. The Springvale Educational Village project was aimed at addressing the particular educational, cultural and social needs of West and North Belfast, as well as Northern Ireland in general. With a strong cross community dimension, it also aimed to promote regeneration in an area marked by significant economic and social deprivation and educational underachievement. The project promoters were the University of Ulster (the University) and the Belfast Institute of Further and Higher Education (the Institute) – now known as the Belfast Metropolitan College, with the Department for Employment and Learning (the Department) being the main funder.

2. The project was to have three components, costing a total of £71 million:

• Main Campus: to be shared between 1,500 further and 1,500 higher education students (£59 million).
• Applied Research Centre: to stimulate inward investment and develop local companies in start-up units (£8 million).
• Community Outreach Centre: a hub for community and outreach programmes and a training facility (£4 million).

However, only the Community Outreach Centre (some 6% by value of the overall project) was delivered.

Overall conclusion

3. The Committee’s overall conclusion is that this project was stamped with failure: failure to deliver; failure in the Department; failure in the University; and failure to respond to the needs of the local communities and properly acknowledge the huge voluntary commitment made by them.

4. In the Committee’s view, both the Department and the University lost the will to succeed. There was enormous political goodwill towards this project. It was announced with a great deal of fanfare by the President of the United States and the Prime Minister of the United Kingdom. When the University’s concerns over the governance arrangements and project affordability emerged, it could have called upon the national and international goodwill towards the project, but chose not to do so.

5. The Committee found it particularly disturbing that the Department effectively did nothing to save the project when the University disclosed its reluctance to continue. Had the Department signalled these difficulties at the time, the Committee believes that funds could well have been found to save the project. Regrettably, however, it was a case of the University not asking for more assistance and the Department not offering any. By failing to capitalise on the enormous local, national and international support for the educational complex at Springvale, the Department and the University and the Institute missed what was an unprecedented transformational opportunity for one of the most heavily deprived areas of Belfast.

The Department for Employment and Learning’s Handling of the Project

6. The Committee feels very strongly that the Department failed in its role as Government’s representative on the Springvale project. The evidence clearly shows that the Department did not ensure that the project promoters had a firm grip on the viability of the project, from the start; the Department also failed to foster a balanced and realistic view of the risks of failure among the local communities; its monitoring of the University’s changing financial position was clearly inadequate; its handling of the University’s declaration, in late 2001, that it wished to withdraw was weak and ineffective; and when the University did finally pull out in late 2002, the Department was lacking in its efforts to rescue the project.

Why the Project Failed to Deliver the Main Campus and Applied Research Centre

7. The University said that it was withdrawing from the project primarily because of affordability concerns, but the Committee’s view is that it lost the will and chose not to proceed. While the University’s financial strength appeared to deteriorate, it nevertheless proceeded with a number of other, substantial capital projects, ahead of Springvale. Moreover, the University could have gone back to the Department and the private donor to request additional funding, or considered taking a strategic decision to afford Springvale (the annual deficit in running costs of the project was estimated at between £270,000 and £1.2 million, at a time when the University’s annual income was £120 million). Notably, none of these options appear to have been properly explored.

8. The Committee believes that neither the Department nor the University tackled project viability and affordability at the right time and in the right way. What is particularly disturbing is the failure of the Department and the University to properly communicate on the crucial issue of viability. Even now, in evidence submitted to the Committee after the evidence session, the Department and the University disagree on the requirements for assessing the project’s viability and have provided contradictory information. The Department states that the University could have allocated the income from 1,500 students to Springvale and, therefore, made the project viable. However, the University maintains that this was not its understanding of the funding conditions which the Department had imposed. This divergence of views on such a fundamental issue for the project is appalling. It is little wonder that the project went awry, when there was such a lack of understanding between the principal parties from the outset.

9. The governance arrangements for Springvale were another source of friction and formed the basis for the University’s disclosure to the Department, in November 2001, that it wished to withdraw from the project. Given the leading role of the two promoters in the project, there was an inherent conflict between the relative primacy of the parent institutions and Springvale. Doubts about the suitability of the governance model were first expressed in 1998, when the Department told the University and the Institute that no one had previously succeeded in carrying through such a joint project to a conclusion. This suggests to the Committee that the governance arrangements of Springvale were ill-advised. There is evidence that problems arose at various times between the promoters and there were tensions between the level of community involvement and the University’s academic/institutional independence. Nevertheless, the University had signed the legal contracts which underpinned the governance arrangements and ought, therefore, to have lived up to them. The Department must also bear a measure of responsibility for the flawed governance model; the Accounting Officer told us that it had been closely involved in developing the arrangements.

Other Areas where the Project could have been Better Handled

10. The Committee has serious concerns about the quality of financial planning, management and control exercised by the project promoters. Almost five years after the initial proposal, the Outline Business Case identified many key areas of uncertainty in relation to both capital and recurrent funding.

11. The project appraisal process was also inadequate. Earlier appraisals appear to have provided an unduly optimistic and misleading view as to the viability of the project. From June 2001, however, appraisals came to a very different conclusion, even though the essence of the project had not changed. Such was the contrast with the earlier appraisals; the Committee is concerned about the possible manipulation of results.

12. The University behaved deplorably in its relationships with the Institute and the local communities, its principal partners in this project. Moreover, the Department appears to have acquiesced in this. Not surprisingly, the communities have expressed their outrage at the University’s behaviour. In their view, for the University to "pull the plug" on what was originally its project was the "ultimate example of bad faith and breach of trust". The Committee notes the University’s apology for the manner in which it withdrew from the project and its acknowledgement that it should have been more open and transparent with its partners. While this is welcome, it would have been more fitting had that apology been made directly to the local communities at the time.

The Aftermath of the Project

13. There have been only limited tangible benefits from the project. While the Community Outreach Centre was completed and now provides a valuable resource for the area, there is no Main Campus and no Applied Research Centre. The Committee acknowledges that there have been other initiatives, including the approval of a £13 million Workforce Development Centre. However, these do not amount to a university and so the vast majority of the anticipated educational, cultural, social and economic benefits of the planned project have not materialised. The levels of deprivation within these areas are as high today as when the project was brought to an end in 2002. An opportunity to reduce the ‘brain drain’ from Northern Ireland and respond positively to the findings of the 1997 Dearing Report was also lost.

14. In addition, some £3.6 million of direct funding was wasted and a further substantial, but unquantifiable sum was lost in respect of the enormous amount of time and effort devoted to the project by the local communities and various Government Departments and agencies. Given the long term community effort, the decision not to implement the project in full was a massive blow to West and North Belfast and has left an ongoing legacy in terms of the damage caused to community relations.

15. Both the Department and the University failed to deliver the Springvale Educational Village project, but they are not the ones paying the price of failure. That price is being paid by Northern Ireland in general and in particular by the local communities. It is to the great regret of this Committee that their experience has been one of loss: lost hopes, lost time and effort and, above all, lost opportunities.

Summary of Recommendations

The Department for Employment and Learning’s handling of the project

1. Government needs to recognise that Departments will always have a key leadership role to play in projects where they are the major funder. The Committee considers that a Department must ensure that, where local communities are substantially affected by projects which are wholly or partly funded by it, they are kept fully informed of all significant developments, throughout the life of the project. The Government must never again be party to the raising of community expectations to such a high level, especially in areas of high deprivation, only to dash these at a late stage in the process (see paragraph 7).

Why the Project Failed to Deliver the Main Campus and Applied research Centre

2. The Outline Business Case is a key document in a PFI project and one which forms the basis for a crucial element in the decision making process. Where an Outline Business Case is prepared in respect of a publicly funded project, the Committee expects the funding Department to be a formal recipient of the completed document. Departments must never allow themselves to be sidelined from such a vital part of the decision making process (see paragraph 15).

3. Funding Departments must, in all cases, comprehensively review and, where necessary, challenge the findings of the Outline Business Case. This is especially important where the results point towards a fundamental change in the direction of the project (see paragraph 16).

4. In projects as significant as Springvale and especially where Government’s credibility is involved, the Committee expects Departments to be highly pro-active in examining alternative ways in which projects can be funded and afforded by project promoters (see paragraph 17).

5. In the Committee’s view, the failure to take account, in the decision to withdraw, of the wide range of socio-economic benefits that would have accompanied the completed Springvale project was a serious omission. The Committee considers that the potential value of the loss of wider benefits should always form an integral part of the decision making process in such cases (see paragraph 18).

6. The University used affordability as the pretext for its withdrawal but, in the Committee’s view, the loss of will to make the Springvale project work was the major factor in its failure. Where, in the future, the University is involved in a partnership on a publicly funded project, the Committee expects it to meet the highest standards of full, open and constructive co-operation with its project partners (see paragraph 19).

7. Recipients of substantial grants of public funds must ensure that all significant actions relating to the grant-aided activity are properly documented. This is a minimum standard. Departments should make sure that their clients are aware of the standard required (see paragraph 21).

8. The Department must ensure that the viability of projects is fully assessed at an early stage, with detailed updates carried out as circumstances develop. The aim of a rigorous assessment of viability is not to ‘trip up’ a project; rather, it is a mechanism to ensure that potential weaknesses are identified at an early stage and can be addressed (see paragraph 24).

9. Given the Department’s comments about the adequacy of the guidance for assessing viability in this type of project, the Committee recommends that it liaise with both HEFCE and the Department of Finance and Personnel to determine whether further guidance might usefully be developed (see paragraph 25).

10. The Committee finds it incredible that the Department did not establish, with the University, a clear and shared view on project viability, both at the outset of the project and, later, when crucial decisions were being made on its future. This was a fatal omission and one which indicates an amazing failure of communication at the top of both organisations. The Committee insists that in future projects, the Department and the project promoters work on an open basis, to deal unambiguously with project viability from the outset and throughout the project, fully sharing information on which to base informed decisions (see paragraph 28).

11. The Committee considers that, where a new educational entity is being proposed or supported by two or more autonomous organisations, it is more likely to be successful where the management of the entity is vested in a single body. If, however, the new entity is to be run jointly by two or more institutions, there must be a clear strategic vision from the outset and one which is wholly shared by each of the partners involved. It will also be important for the institutions involved to agree the detail, in practical terms, of the governance arrangements at an early stage and so avoid the type of problems which beset the Springvale project at such a late juncture (see paragraph 32).

12. When a Department is confronted with substantive operational problems on a major project, the Committee expects it to pursue every reasonable means of overcoming the difficulties in order to achieve the project objectives. Failing to tackle the problems in a meaningful is not an option (see paragraph 35).

13. The Committee wants to see the Department adopt a position where it can exert sufficient influence over the management and direction of any project which it is funding. The institutional autonomy of a funded body, such as the University, will not be accepted by the Committee as an excuse for Departmental inaction (see paragraph 37).

Other Areas where the Project could have been Better Handled

14. Effective financial planning and management of projects are pre-requisites for success. The Committee expects funding Departments and project promoters to get a firm grip on these fundamental elements of control, from the outset and throughout the life of a project (see paragraph 40).

15. It is clear that a number of the project appraisals failed to identify what proved to be key issues in relation to viability and affordability at a sufficiently early stage, when they could have been more easily addressed. Departments and project promoters must ensure that project appraisals address all of the relevant issues in a comprehensive and objective manner (see paragraph 44).

16. Where the Department is working on a project in partnership with an external body and providing significant levels of public funding, it must closely monitor the financial position of the funded body, to ensure that it can honour its financial commitments to the project (see paragraph 47).

17. Where a Department is a major funder in a project, it has a responsibility to ensure, as far as possible, that the project promoters are constructive, open and transparent with each of the key stakeholders and that important information is shared on a timely basis. The Committee considers that, where a Department finds that a promoter is not meeting the standards of openness expected, it must take affirmative action to counter this (see paragraph 50).

18. The Committee expects both the Department and the University to learn the lessons from the unsatisfactory way in which the withdrawal from Springvale caused so much upset and damage to the ongoing relationships with the local communities (see paragraph 54).

19. The Committee wants to make clear that it will never again accept any publicly funded body failing to provide essential information to the Audit Office in the exercise of its functions. The Committee expects all such bodies to offer the highest levels of co-operation at all times (see paragraph 56).

20. The Committee was disappointed that the Belfast Institute of Further and Higher Education, a project partner, was not present at the evidence session. Indeed, it seems to the Committee that the exclusion of the Institute has been one of the hallmarks of the latter stages of this project. The Committee expects Accounting Officers to ensure that, when a range of organisations are involved in a significant project, they bring a fully representative team of witnesses to the evidence session (see paragraph 58).

The Aftermath of the Project

21. Against the background of damaged relationships with the local communities and in view of the continuing high levels of deprivation in West and North Belfast, the Committee expects the Department and the University, along with others, to make strenuous efforts to continue to tackle the low levels of further and higher educational attainment there (see paragraph 65).

22. The Committee is also keen that the Department finds ways in which to further reduce the annual level of student outflow to Universities outside Northern Ireland. Currently standing at 28%, this represents a very substantial cost to the local economy (see paragraph 66).

23. The Committee calls on Government to take a fresh look at the potential for establishing a significant educational facility at the Springvale site to complement the existing Community Outreach Centre and planned Workforce Development Centre. Such a facility could, in the Committee’s view, act as a conduit for increased participation in third level education from the area, a bridge for progression from further to higher education and an important catalyst for economic regeneration and increased cross community contact (see paragraph 70).

Introduction

1. The Public Accounts Committee met on 14 June 2007 to consider the Comptroller and Auditor General’s report on the "Springvale Educational Village Project" (HC 40, Session 2006-07). The witnesses were:

• Dr Aideen McGinley, Accounting Officer, Department for Employment and Learning.
• Mr David McAuley, Director of Strategy & Employment Rights Division, Department for Employment and Learning.
• Professor Richard Barnett, Vice Chancellor, University of Ulster.
• Mr John Dowdall, Comptroller and Auditor General (C&AG).
• Mr David Thomson, Treasury Officer of Accounts, Department of Finance and Personnel.

The Committee also took written evidence from Dr. McGinley, Professor Barnett, the Belfast Institute of Further and Higher Education, the West Belfast Partnership Board and the North Belfast Partnership Board.

2. The Springvale Educational Village was to be based in the particularly deprived area of West and North Belfast and contribute to the educational, cultural, economic and social needs of the area. With a planned cost of £71 million, it was to comprise a 3,000 student Main Campus (£59 million), an Applied Research Centre (£8 million) and a Community Outreach Centre (£4 million). However, after five years of effort by a range of Government Departments and agencies, the University of Ulster, the Belfast Institute of Further and Higher Education and the local communities, only the Community Outreach Centre was delivered.

3. In taking evidence, the Committee focused on a number of key issues raised in the C&AG’s report. These were:

• the Department for Employment and Learning’s handling of the project;
• why the project failed to deliver the Main Campus and the Applied Research Centre;
• other areas where the project could have been better handled; and
• the aftermath of the project.

The Department for Employment and Learning’s Handling of the Project

4. The Department is charged with oversight of higher and further education and was Government’s main representative on the Springvale project. It was to be the major funder, having offered £40 million towards the project. The Departmental Accounting Officer is responsible for ensuring value for money for the grants paid to the University and for ensuring good management and sound governance arrangements.

5. The Committee considers that the Department failed to effectively exercise its role as the Government’s representative in the Springvale project. The Department has said that it has a responsibility to fund projects which will maximise benefits to the economy and local community, while on the other hand, as an appraiser of applications for public funding, having a duty of care to ensure value for money and the appropriate handling of projects. In its view, a delicate balance has to be maintained. In this case, however, the Committee feels that the wrong balance was struck, with the Department’s contribution, at times, being woefully inadequate:

• it did not ensure that the project promoters (the University and the Institute) got a firm grip on the viability of the project from the start;
• it failed to maintain a balanced and realistic view, among the local communities, of the risks of failure;
• its monitoring of the University’s financial position was inadequate;
• its handling of the University’s private disclosure, in late 2001, that it wished to withdraw was weak and ineffective; and
• when the University did finally withdraw in late 2002, the Department was decidedly lacking in its efforts to try to rescue the project.

6. The Committee is particularly disappointed by the Department’s failure to maintain effective communications with the local communities over the course of the project, especially in relation to the risk of failure. This was apparent in the latter stages, when it became clear that the project was not going to come to fruition, by which time community expectations of success had been raised to very high levels. In the Committee’s view, the Department had a prime responsibility, as the Government’s main representative in the project, to do all it could to ensure that there was a balanced and realistic view of the risks and prospects for the project, among the local communities. Unfortunately, the Department failed to do so.

Recommendation 1

7. Government needs to recognise that Departments will always have a key leadership role to play in projects where they are the major funder. The Committee considers that a Department must ensure that, where local communities are substantially affected by projects which are wholly or partly funded by it, they are kept fully informed of all significant developments, throughout the life of the project. The Government must never again be party to the raising of community expectations to such a high level, especially in areas of high deprivation, only to dash these at a late stage in the process.

Why the Project Failed to Deliver the Main Campus and Applied Research Centre

8. The project failed to deliver the Main Campus and the Applied Research Centre. Together, these amounted to almost 95%, by value, of the planned development. The Committee’s review has highlighted a number of concerns in relation to the consideration of project affordability, the assessment of project viability, governance arrangements and the efforts made to save the project.

Affordability of the project:

Capital Funding

9. The University announced that it was withdrawing from the project primarily because of affordability concerns. There is, however, a strategic judgement to be made when considering affordability, about whether a body chooses to incur costs involved, through cross-subsidy from the institution as a whole. The University’s assessment in September 2002 that the Springvale project was not affordable. It claimed that this reflected its changed financial position. However, in the preceding four years, it had spent £37 million on other capital projects. The University told the Committee that around 50% of this spend had been ‘earmarked’ funds, which meant that the University had an element of choice on which projects to spend the other £18.5 million. While it is a matter for the University to determine its own priorities, the Committee cannot reconcile the change in its financial position and its overall capital development programme, with its long-standing obligations to Springvale. In the Committee’s view, it was incumbent upon the University to ensure that it could meet its financial commitments to Springvale.

10. The Vice Chancellor also told the Committee that capital funding had not been a major issue and that the University’s £6·5 million capital contribution was not difficult for a university to raise. The Committee finds these comments surprising, given that the difficulty of raising the capital contribution was presented as a significant problem in the draft Outline Business Case and in discussions with the Springvale Board. The inconsistency in the evidence is unsatisfactory and adds to the Committee’s deep sense of unease about the handling of this project.

Outline Business Case

11. The Department said that the 2002 Outline Business Case was never finally completed and not formally submitted to the Department. The Committee finds this astonishing, given that the Outline Business Case was the basis upon which the University stated that it could not afford the project and was therefore withdrawing. Indeed, the Department had even paid for the Outline Business Case. The Department’s failure to formally and comprehensively review the Outline Business Case and challenge the assertions in it was, in the Committee’s view, an astounding omission. Whether this was due to incompetence or indifference is not clear; either way, it was not acceptable.

Recurrent Funding

12. The Vice Chancellor told the Committee that the main issue for the University on funding was the forecast annual recurrent loss which, he said, could not have been sustained. The C&AG reported that the University was forecasting an annual deficit at Springvale of between £270,000 and £1.2 million per year. This was a very small amount, compared with the University’s overall annual income at that time of £120 million. Moreover, the Vice Chancellor also told the Committee that the University has been in surplus in each of the past three years. In light of this, the Committee can only conclude that affordability should not have been allowed to become a ‘make or break’ issue.

13. It is also worth noting that, in making the decision to withdraw from Springvale, no consideration appears to have been given to the loss of the many wider benefits that would have accompanied the project. The Committee finds this astonishing, given the Accounting Officer’s evidence that the Springvale project was chosen for the socio-economic impact that it would have on West and North Belfast.

14. All of the above factors lead the Committee to conclude that affordability was a pretext for the University’s withdrawal from the project and that the real reason was that the University had lost the will to proceed with the project. The Committee is particularly critical of the Department’s failure to mount a meaningful challenge to the University’s assertions on affordability, given that the evidence suggests the difficulties involved were far from insurmountable.

Recommendation 2

15. The Outline Business Case is a key document in a PFI project and one which forms the basis for a crucial element in the decision making process. Where an Outline Business Case is prepared in respect of a publicly funded project, the Committee expects the funding Department to be a formal recipient of the completed document. Departments must never allow themselves to be sidelined from such a vital part of the decision making process.

Recommendation 3

16. Funding Departments must, in all cases, comprehensively review and, where necessary, challenge the findings of the Outline Business Case. This is especially important where the results point towards a fundamental change in the direction of the project.

Recommendation 4

17. In projects as significant as Springvale and especially where Government’s credibility is involved, the Committee expects Departments to be highly pro-active in examining alternative ways in which projects can be funded and afforded by project promoters.

Recommendation 5

18. In the Committee’s view, the failure to take account, in the decision to withdraw, of the wide range of socio-economic benefits that would have accompanied the completed Springvale project was a serious omission. The Committee considers that the potential value of the loss of wider benefits should always form an integral part of the decision making process in such cases.

Recommendation 6

19. The University used affordability as the pretext for its withdrawal but, in the Committee’s view, the loss of will to make the Springvale project work was the major factor in its failure. Where, in the future, the University is involved in a partnership on a publicly funded project, the Committee expects it to meet the highest standards of full, open and constructive co-operation with its project partners.

Additional donor funding

20. In March 1999, the private donor involved in the project asked the University to contact it if there was any difficulty in raising funding. However, in 2001, when the University was expressing affordability difficulties over Springvale, there is no evidence that it asked the donor for additional funding to save the project. Following the Committee’s evidence session, the University wrote to say it understood that, in 2002, the then Vice Chancellor met with representatives of the private donor, but the precise date of the meeting and the substance of the exchange are unknown. The Committee regards it as both extraordinary and unacceptable that a meeting of such significance should not be regarded as sufficiently important to formally record the proceedings.

Recommendation 7

21. Recipients of substantial grants of public funds must ensure that all significant actions relating to the grant-aided activity are properly documented. This is a minimum standard. Departments should make sure that their clients are aware of the standard required.

Viability of the project:

The timing of the consideration of viability

22. It is clear that the Department did not press the project promoters early enough on the issue of project viability. The C&AG’s Report shows that, as early as March 1998, the Department raised questions internally about the viability of the project, if the income from only 600 new student places was used as the basis for assessing viability. Despite Higher Education Funding Council for England (HEFCE) procedures stating that viability should be examined at an early stage, the Department decided to wait until external funding had been secured. External funding was not secured until March 2000 but, even then, a comprehensive assessment of viability was not carried out. Not getting to grips with such a key issue from the start was a serious error of judgement by the Department.

23. The Committee believes it is not enough for the Department to say that there were no HM Treasury requirements to examine viability in economic appraisals, when the first assessment was carried out in 1998. When a major funder, as the Department was in this project, with a potential investment of £40 million, is appraising a project, viability should be fully tested at the earliest opportunity. At the very least, an early assessment of viability would have presented a realistic basis on which to consider the broader issue of affordability. The Committee notes that the Department has since recognised its error and has apologised for this failing.

Recommendation 8

24. The Department must ensure that the viability of projects is fully assessed at an early stage, with detailed updates carried out as circumstances develop. The aim of a rigorous assessment of viability is not to ‘trip up’ a project; rather, it is a mechanism to ensure that potential weaknesses are identified at an early stage and can be addressed.

Recommendation 9

25. Given the Department’s comments about the adequacy of the guidance for assessing viability in this type of project, the Committee recommends that it liaise with both HEFCE and the Department of Finance and Personnel to determine whether further guidance might usefully be developed.

Lack of clarity in the assessment of viability

26. The Department also told the Committee that its February 2000 offer of funding to the project was based on the September 1999 Addendum to the Economic Appraisal. This noted that, in addition to the 600 ring-fenced places for Springvale, the University had been allocated an additional 900 fully-funded places, across all campuses. While the Department has said that it had not expected the viability assessment to be based solely on the income of 600 places, the Committee notes that it failed to challenge the University when this approach was used in the Outline Business Case. There was ample time to do so, between the final draft Outline Business Case in July 2002 and the University notifying the Department of its withdrawal in September 2002. The Committee finds it astonishing that the Department failed to engage with the University on the viability issue, especially when it realised that the University had changed the basis for calculating viability, from the income of 1,500 students to only 600.

27. The failure of the Department and the University to properly communicate on the crucial issue of viability is profoundly disturbing. Even now, in evidence submitted to the Committee after the evidence session (Appendix 3), the Department and the University disagree on the requirements for assessing the project’s viability and have provided contradictory information. The Department states that the University could have allocated the income from 1,500 students to Springvale and, therefore, made the project viable. However, the University maintains that this was not its understanding of the funding conditions which the Department had imposed. This divergence of views on such a fundamental issue for the project is shocking. It is little wonder that the project went awry, when there was such a lack of understanding between the principal parties from the outset. The Committee can only conclude that one of the reasons this flagship project for Northern Ireland has been lost is due to Government’s failure to properly explain to its partners what it required. This is a dreadful indictment of the Department’s handling of the project.

Recommendation 10

28. The Committee finds it incredible that the Department did not establish, with the University, a clear and shared view on project viability, both at the outset of the project and, later, when crucial decisions were being made on its future. This was a fatal omission and one which indicates an amazing failure of communication at the top of both organisations. The Committee insists that in future projects, the Department and the project promoters work on an open basis, to deal unambiguously with project viability from the outset and throughout the project, fully sharing information on which to base informed decisions.

Weaknesses in the governance arrangements

29. Another key factor in the project’s demise was the governance arrangements. The model chosen created an inherent conflict between the relative primacy of the parent institutions and Springvale. Significantly, in 1998, the Department of Education told the promoters that "nobody had so far succeeded in carrying through such a joint project to a conclusion". This suggests to the Committee that the governance arrangements of Springvale were ill-advised.

30. There is evidence that problems arose at different times between the promoters. There were also difficulties, particularly within the University, between the level of community involvement and academic/institutional independence. The Committee notes the Accounting Officer’s comments on the tensions between the University’s academic integrity and the communities’ expectations, which arose out of the first academic planning exercise. The Committee was advised that the local communities wanted the Campus to more closely reflect the community needs, rather than those of the University and this led to some uncertainty about the ability of the site to attract enough students.

31. There is also clear evidence that the governance arrangements for Springvale formed the basis for the University’s disclosure to the Department, in November 2001, that it wished to withdraw from the project. However, the University had signed the legal contracts which underpinned the governance arrangements and ought, therefore, to have lived up to them. The Department must also bear a measure of responsibility for the flawed governance model; the Accounting Officer told us that it had been closely involved in developing the arrangements.

Recommendation 11

32. The Committee considers that, where a new educational entity is being proposed or supported by two or more autonomous organisations, it is more likely to be successful where the management of the entity is vested in a single body. If, however, the new entity is to be run jointly by two or more institutions, there must be a clear strategic vision from the outset and one which is wholly shared by each of the partners involved. It will also be important for the institutions involved to agree the detail, in practical terms, of the governance arrangements at an early stage and so avoid the type of problems which beset the Springvale project at such a late juncture.

The lack of effort to save the project

33. The Committee believes that the Department could have done much more to save the project, especially in view of the very substantial political backing, both domestically and internationally, at the highest levels of Government. What is particularly disappointing is that, when the University informed the Department of its intention to withdraw from the project, the Department was so decidedly lacking in ways to save the project.

34. There is no evidence that the Department ‘bent over backwards’ to rescue the project. Despite the relatively modest sums involved, it did not offer additional funding or make a strenuous effort to find another funder or partner once it realised that the University was going to withdraw. While the Department has claimed it took decisive action in asking the Springvale Board to commission a review of the way forward, the Committee is far from persuaded. Passing the problem on to the Springvale Board can in no way be deemed decisive action. This looks more like an abrogation of the Department’s responsibility and one that led to a £71 million project becoming a £4 million project.

Recommendation 12

35. When a Department is confronted with substantive operational problems on a major project, the Committee expects it to pursue every reasonable means of overcoming the difficulties in order to achieve the project objectives. Failing to tackle the problems in a meaningful way is not an option.

36. The Department also told the Committee that the University is an autonomous body and that, although the Department funds up to 50 per cent of its operations, there are areas of the business over which the Department has no control. It seems to the Committee that the Department’s view of this autonomy, in effect, allowed the University to walk away from the project at a very late stage and was used by the Department as a reason not to act. The Committee readily supports the concept of academic autonomy, but shares the view of the Westminster PAC that, "the purpose of autonomy is to allow a proper level of academic independence for institutions, not laxity in the control of the … public money that institutions … manage each year. Nor should this autonomy be seen as an excuse for the [funding departments] to be anything other than rigorous in their oversight of the way this money is managed and used" (Twenty-Sixth Report 1998-99, Overseas Operations, Governance and Management at Southampton University, July 1999).

Recommendation 13

37. The Committee wants to see the Department adopt a position where it can exert sufficient influence over the management and direction of any project which it is funding. The institutional autonomy of a funded body, such as the University, will not be accepted by the Committee as an excuse for Departmental inaction.

Other Areas where the Project could have been Better Handled

38. There are a number of other areas where, in the Committee’s view, the Springvale project could have been better handled. These relate to the standard of the project promoters’ financial planning and management, the quality of project appraisals and reviews, the Department’s monitoring of the University’s finances and the circumstances surrounding the withdrawal of the University from the project.

The standard of financial planning and management

39. There is ample evidence in the C&AG’s Report to call into question the standards of financial planning, management and control exercised by the project promoters. This is illustrated by the fact that, almost five years after the initial project proposal, there were still so many key areas of uncertainty in relation to both capital and recurrent funding, highlighted by the Outline Business Case. This points strongly towards shortcomings in the promoters’ project planning and financial management. The Committee is left with the impression that this situation was allowed to develop as much through inertia on the part of the Department as failings within the University and the Institute.

Recommendation 14

40. Effective financial planning and management of projects are pre-requisites for success. The Committee expects funding Departments and project promoters to get a firm grip on these fundamental elements of control, from the outset and throughout the life of a project.

The quality of project appraisals and reviews

41. There were seven major appraisals/reviews of the Springvale project. Four of these, carried out in 1998 and 1999, considered the project both affordable and viable. The remaining three reviews, between June 2001 and September 2002, concluded that the project was neither affordable nor viable; yet the essential nature of the project had remained the same. It appears to the Committee that the appraisals and reviews carried out prior to June 2001 may have provided an unduly optimistic and, consequently, misleading view as to the viability and affordability of the project.

42. The variation in the results raised the question as to whether the Committee could have any confidence in them. The Department stated that it operated to the standards at the time, but that current standards are stricter. The Committee is not persuaded by this explanation and feels that the Department should have injected a ‘dose of reality’ into the process.

43. Of particular concern to the Committee was the pattern that, when the University wanted Springvale, it was affordable and viable but, in the later stages when the University clearly had a change of heart, it became unaffordable and unviable. Indeed, the contrast between the early optimism and the later assessments of viability is so great as to raise the concern within the Committee that project appraisals were not only carried out at below the appropriate standard but may even have been manipulated to get the desired results.

Recommendation 15

44. It is clear that a number of the project appraisals failed to identify what proved to be key issues in relation to viability and affordability at a sufficiently early stage, when they could have been more easily addressed. Departments and project promoters must ensure that project appraisals address all of the relevant issues in a comprehensive and objective manner.

The Department’s monitoring of the University’s finances

45. Over the four-year period to September 2002, the University’s finances had changed significantly. It recorded a cumulative deficit of £22.7 million over the period and saw its reserves plummet from £18.5 million to debt of £7.4 million. The Accounting Officer said that, along with HEFCE, the Department had monitored the University’s finances and, in its opinion, the downturn in finances was a "blip".

46. The Committee is unconvinced by the explanations put forward by the Department. If, indeed, it had seen the downturn as a blip, why did the Department not challenge the University on its assessment that Springvale was unaffordable, when this was put forward as the reason for its withdrawal.

Recommendation 16

47. Where the Department is working on a project in partnership with an external body and providing significant levels of public funding, it must closely monitor the financial position of the funded body, to ensure that it can honour its financial commitments to the project.

The University’s withdrawal from the project:

The Department’s lack of action

48. The Department was made aware by the University, in November 2001, of its desire to withdraw from the project. While it rightly urged the University to make its position clear to the Institute and the local communities, the University failed to do so. The Department said that making the University’s intentions public may have led to the project’s demise and that a judgement had to be made about sharing this information.

49. Given that the University’s proposals effectively signalled an end to the project (it later withdrew, in October 2002), the Committee is of the view that the Department should have insisted on the University sharing the proposal immediately with the other stakeholders. The Committee notes that the Department now concedes that it should have done so.

Recommendation 17

50. Where a Department is a major funder in a project, it has a responsibility to ensure, as far as possible, that the project promoters are constructive, open and transparent with each of the key stakeholders and that important information is shared on a timely basis. The Committee considers that, where a Department finds that a promoter is not meeting the standards of openness expected, it must take affirmative action to counter this.

The University’s lack of openness

51. Both the Institute and the local communities felt a strong sense of disappointment at the failure to secure the Main Campus and the Applied Research Centre at Springvale and this was heightened by the manner of the University’s unilateral and unheralded withdrawal from the project. A high level of expectation for Springvale had been built up over several years, much of it by the University itself. In their submissions to the Committee (Appendix 3), the local communities expressed their sense of outrage at the University’s behaviour. In their view, for the University to ‘pull the plug’ on what was originally its project, was the ultimate example of bad faith and breach of trust. Unfortunately, the demise of the project has also reaffirmed, in the minds of many local people, their distrust of Government agencies and this has made the situation more difficult for those currently attempting to promote engagement between Government and the communities.

52. In the Committee’s view, the University behaved deplorably in its relationships with its partners in this project. Moreover, the evidence points towards the Department having acquiesced in this. The local communities told the Committee that they were appalled by the manner in which the Department appeared only too willing to do the University’s ‘dirty work’; knowing that the University had lost the will to make the project work, the Department became, in the communities’ view, a willing pawn in the University’s strategy for getting off the moral and financial hook. The Committee welcomes the Department’s acknowledgement that it could have handled this much better.

53. The Committee also notes the apology from the University’s Vice Chancellor for the way in which it behaved in the later period of the project and hopes that this will help the process of rebuilding relationships and moving forward. It would have been more beneficial and much more fitting, however, had the University made an apology directly to the local communities and the Institute, at the time. This would have gone some considerable way to lessening the hurt caused.

Recommendation 18

54. The Committee expects both the Department and the University to learn the lessons from the unsatisfactory way in which the withdrawal from Springvale caused so much upset and damage to the ongoing relationships with the local communities.

55. The University’s lack of transparency was not confined to its dealings with its project partners. The Committee was displeased to learn that the University had not even provided basic information about its capital programme requested by the Audit Office during its review.

Recommendation 19

56. The Committee wants to make clear that it will never again accept any publicly funded body failing to provide essential information to the Audit Office in the exercise of its functions. The Committee expects all such bodies to offer the highest levels of co-operation at all times.

The absence of BIFHE at PAC

57. The Committee questioned why the Institute was not present at the evidence session. While accepting that the Permanent Secretary of the Department is the Accounting Officer for Further Education and that, in discussion with the Institute, had agreed to represent it at the evidence session, the Committee expected the Institute to be present, as it was the Further Education partner in the project. The Committee welcomes the evidence submitted by the Institute (Appendix 3).

Recommendation 20

58. The Committee was disappointed that the Belfast Institute of Further and Higher Education, a project partner, was not present at the evidence session. Indeed, it seems to the Committee that the exclusion of the Institute has been one of the hallmarks of the latter stages of this project. The Committee expects Accounting Officers to ensure that, when a range of organisations are involved in a significant project, they bring a fully representative team of witnesses to the evidence session.

The Aftermath of the Project

59. The lasting impression of the Springvale project in the minds of the Committee is one of failure: failure to deliver; failure in the Department; failure in the University; and a failure to respond to the needs of the local communities and properly acknowledge the huge voluntary commitment made by them. The aftermath of these failures is one where limited tangible benefits have resulted from the project, substantial levels of time and effort have been wasted and a legacy of upset and distrust has been engendered among local communities. Worst of all, high levels of deprivation continue to exist in the areas most affected by the collapse of the project.

The limited tangible benefits from the project

60. The tangible benefits from the project have been limited. Only the Community Outreach Centre, costing £4 million, was completed. While this provides a valuable resource for the area, there is no Main Campus and no Applied Research Centre. These were, by far, the larger parts of the project. As a result, the vast majority of the anticipated educational, cultural, social and economic benefits of Springvale have not materialised.

61. The failure of the project has also had an effect outside of West and North Belfast. The 1997 Dearing Report estimated that the outflow of students from Northern Ireland to other Universities was costing the local economy £45 million per year. With the failure of Springvale, a real opportunity to reduce the ‘brain drain’ from Northern Ireland was lost. While the level of outflow of students has reduced over past 10 years, it still stands at some 28%, a substantial figure.

62. The Department and the University told the Committee that they have been supporting a range of other initiatives which will have a beneficial effect on West and North Belfast and beyond. Funding of £13 million has been approved for a Workforce Development Centre, to be built on the site that had been earmarked for the Applied Research Centre. The Department also said that it has spent £7.5 million through a series of programmes on the Springvale community outreach initiative, involving some 26,000 participants across 280 projects, addressing such issues as family literacy and suicide prevention. The University has, from 2006, administered the ‘Step-Up Programme’ in the Greater Belfast area. This involves working with schools in areas of educational underachievement and where the proportion of people going into higher education is low. The programme funded 100 places in the last academic year and will grow to 140 places in 2007-08. The Committee welcomes these initiatives as positive developments. However, they do not constitute a university and fall a long way short of what was intended under the Springvale Educational Village.

63. The local communities told the Committee that West Belfast continues to be the most deprived constituency in Northern Ireland. One area of particularly severe deprivation, Shankill Ward, is currently attaining further education enrolments of only 4.4% of its population and higher education enrolments of only 0.9%. Figures provided by the Department and the University show that 1,144 students from West and North Belfast were studying at the University of Ulster in the 2006-07 academic year (Appendix 3). Although this represented a 15% increase on 2001-02, it still amounted to an average of only 0.7% of the West and North Belfast population. While the level of educational attainment has improved in West and North Belfast since 2001-02, it remains disappointingly low. Unfortunately, it will never be known what the improvement might have been, had there been a Main Campus.

64. Given the long term community effort, the decision not to implement the project in full was a massive blow to West and North Belfast and has left an ongoing legacy in terms of the damage caused to community relations. Both the Department and the University failed to deliver the Springvale Educational Village project, but they are not the ones paying the price of failure. That price is being paid by Northern Ireland in general and in particular by the local communities. It is to the great regret of this Committee that their experience has been one of loss: lost hopes, lost time and effort and, above all, lost opportunities.

Recommendation 21

65. Against the background of damaged relationships with the local communities and in view of the continuing high levels of deprivation in West and North Belfast, the Committee expects the Department and the University, along with others, to make strenuous efforts to continue to tackle the low levels of further and higher educational attainment there.

Recommendation 22

66. The Committee is also keen that the Department finds ways in which to further reduce the annual level of student outflow to Universities outside Northern Ireland. Currently standing at 28%, this represents a very substantial cost to the local economy.

The waste of resources

67. The C&AG reported that £3.6 million of the sums spent on Springvale could be regarded as waste. In addition, a substantial, but unquantifiable sum was lost in respect of the enormous amount of time and effort devoted to the project by the local communities and various Government Departments and agencies.

68. The Committee notes the Department’s comments that the £3.6 million was spent on legal, professional and consultancy fees which, it said, was an essential part of the process. In the Committee’s view, this spend could only be considered to have been an essential spend if the project evaluations had been thorough. It is clear, however, that they were not and no tangible benefit has resulted, so the Committee has to conclude that this £3.6 million was wasted.

A way forward

69. Ten years after the Springvale Educational Village project was first proposed by the University and the Institute, the situation in Northern Ireland has changed profoundly. What has not changed, however, is the pronounced level of deprivation within West and North Belfast and the unacceptably low level of educational attainment there. Together with a need for substantial economic regeneration in the area and increased cross community interaction, especially between young people, the case for a major regeneration project is as great today as it was ten years ago. The Committee is strongly of the view that there is a need for positive action.

Recommendation 23

70. The Committee calls on Government to take a fresh look at the potential for establishing a significant educational facility at the Springvale site to complement the existing Community Outreach Centre and planned Workforce Development Centre. Such a facility would, in the Committee’s view, act as a conduit for increased participation in third level education from the area, a bridge for progression from further to higher education and an important catalyst for economic regeneration and increased cross community contact.

Appendix 1

Minutes of Proceedings
of the Committee
relating to the report

Thursday, 14 June 2007
Senate Chamber, Parliament Buildings

Present: Mr John O Dowd (Chairperson)
Mr Roy Beggs (Deputy Chairperson)
Mr Willie Clarke
Mr Jonathan Craig
Mr John Dallat
Mr Simon Hamilton
Mr David Hilditch
Mr Trevor Lunn
Mr Mitchel McLaughlin
Ms Dawn Purvis

In Attendance: Mrs Debbie Pritchard (Principal Clerk)
Mrs Cathie White (Assembly Clerk)
Mrs Gillian Lewis (Assistant Assembly Clerk)
Mrs Pauline Hunter (Clerical Supervisor)
Mr John Lunny (Clerical Officer)

Apologies: Mr Patsy McGlone

The meeting opened at 2.00pm in public session.

3. Evidence on the NIAO Report ‘Springvale Educational Village Project’.

Mr Beggs declared an interest as a member of the Court of the University of Ulster.

The Committee took oral evidence on the NIAO report ‘Springvale Educational Village Project’ from Dr Aideen McGinley, Accounting Officer, Department of Employment and Learning (DEL); Mr David McAuley, Director of Strategy and Employment Rights Division, DEL, and Professor Richard Barnett, Vice Chancellor, University of Ulster. The witnesses answered a number of questions put by the Committee.

The Committee requested that Dr McGinley should provide additional information on issues raised by members during the evidence session to the Clerk.

3.52pm Mr Craig left the meeting.

4.16pm Mr Lunn left the meeting.

4.18pm The evidence session finished and the witnesses left the meeting.

[EXTRACT]

Thursday, 20 September 2007
Room 144, Parliament Buildings

Present: Mr John O’Dowd (Chairperson)
Mr Roy Beggs (Deputy Chairperson)
Mr Jonathan Craig
Mr John Dallat
Mr Simon Hamilton
Mr David Hilditch
Mr Patsy McGlone
Mr Mitchel McLaughlin
Ms Dawn Purvis

In Attendance: Mrs Cathie White (Assembly Clerk)
Mrs Gillian Lewis (Assistant Assembly Clerk)
Mrs Nicola Shephard (Clerical Supervisor)
Mr John Lunny (Clerical Officer)

Apologies: Mr Willie Clarke
Mr Trevor Lunn

The meeting opened at 2.02pm in public session.

2.20pm The meeting went into closed session.

7. Consideration of Draft Committee Report on Springvale Educational Village Project.

Members considered the draft report paragraph by paragraph. The witnesses attending were Mr John Dowdall, C&AG, Mr Robert Hutcheson, Director of Value for Money, Mr Alan Orme, Audit Manager and Ms Jacqueline O’Brien, Audit Manager.

The Committee considered the main body of the report.

Paragraphs 1 – 6 read and agreed.

Paragraph 7 read, amended and agreed.

Paragraph 8 read and agreed.

3.00pm Mr McGlone left the meeting.

Paragraphs 9 and 10 read, amended and agreed.

Paragraphs 11 – 13 read and agreed.

3.10pm Ms Purvis joined the meeting.

Paragraph 14 read, amended and agreed.

Paragraphs 15 – 22 read and agreed.

Paragraph 23 read, amended and agreed.

Paragraphs 24 – 29 read and agreed.

Paragraph 30 read, amended and agreed.

Paragraphs 31 – 35 read and agreed.

3.25pm Mr McLaughlin left the meeting.

Paragraphs 36 – 44 read and agreed.

Paragraph 45 read, amended and agreed.

Paragraphs 46 – 55 read and agreed.

Paragraph 56 read, amended and agreed.

Paragraphs 57 – 63 read and agreed.

Paragraph 64 read, amended and agreed.

Paragraphs 65 – 69 read and agreed.

Paragraph 70 read, amended and agreed.

3.52pm Ms Purvis left the meeting.

The Committee considered the Executive Summary of the report.

Paragraphs 1 – 14 read and agreed.

Paragraph 15 read, amended and agreed.

Agreed: Members ordered the report to be printed.

Agreed: Members agreed that the Chairperson’s letter and Clerk’s letter to Dr Aideen McGinley requesting additional written information and Dr McGinley’s and Professor Richard Barnett’s responses would be included in the Committee’s report, together with the written submissions from North Belfast Partnership Board, West Belfast Partnership Board and Belfast Institute of Further and Higher Education (now known as Belfast Metropolitan College).

Agreed: Members agreed to embargo the report until 10.00am on Thursday, 11 October 2007, when the report would be officially released at a press conference.

[EXTRACT]

Appendix 2

Minutes of Evidence

14 June 2007

Members present for all or part of the proceedings:

Mr John O’Dowd (Chairperson)
Mr Roy Beggs (Deputy Chairperson)
Mr Willie Clarke
Mr Jonathan Craig
Mr John Dallat
Mr Simon Hamilton
Mr David Hilditch
Mr Trevor Lunn
Mr Mitchel McLaughlin
Ms Dawn Purvis

Also in attendance:

Mr John Dowdall CB Mr David Thomson

Comptroller and Auditor General Treasury Officer of Accounts

Witnesses:

Mr David McAuley Dr Aideen McGinley		Department for Employment and Learning
Professor Richard Barnett		University of Ulster

1. The Chairperson (Mr O’Dowd): I remind members and visitors to switch off all mobile phones. Please do not set them to silent mode, as even that will interfere with the sound system.
2. Patsy McGlone has sent apologies. In his absence, I will ask the questions that he wished to raise.
3. Today we will discuss the Comptroller and Auditor General’s report into the Springvale educational village project. I welcome Dr Aideen McGinley, accounting officer of the Department for Employment and Learning (DEL). Dr McGinley, please introduce your colleagues.
4. Dr Aideen McGinley (Department for Employment and Learning): With me today is Professor Richard Barnett, the vice chancellor of the University of Ulster, and Mr David McAuley, who is director of strategy and employment rights in DEL and who was responsible for higher education from 2001 to December 2006.
5. The Chairperson: Is no one from Belfast Institute of Higher and Further Education (BIFHE) with you?
6. Dr McGinley: No. I will be able to cover the information relating to BIFHE in my role as accounting officer.
7. The Chairperson: OK. However, was BIFHE a partner in its own right in the project?
8. Dr McGinley: Yes, but the amount of information on BIFHE in the report is relatively small. That is why I brought representatives of the major players. I am accounting officer for further education and for BIFHE, so I am happy to answer any questions. If any questions should arise that members want BIFHE to answer, I will certainly get that information to the Committee.
9. The Chairperson: Questions on BIFHE may arise during the evidence session, or, as occasionally happens, the Committee may write to you, as the accounting officer, with questions.
10. I will open today’s questions, and each member will have approximately 10 minutes — we will not be too stringent with the timing — in which to explore questions or concerns that they might have. As we want to ensure that all points are covered, the question session might be prolonged: it might not be too long, but I am sure that you will understand that, having studied the report and talked to the Comptroller and Auditor General, members will have many points to address. I hope that you understand those circumstances.
11. Mr Beggs: At the outset, I wish to declare an interest as a member of the court of the University of Ulster.
12. The Chairperson: I will assume that no other member wishes to declare an interest.

The Springvale project aimed to address the educational, cultural and social needs of west and north Belfast. It also aimed to regenerate an area marked by significant deprivation and educational underachievement. However, for the most part, the project was a failure. Do you accept the conclusion of paragraph 3.27 of the report, which states that the Springvale project: "could have been much better handled."

1. Dr McGinley: You are right to point out the unique and important nature of the Springvale project. It was multi-dimensional and complex in its development, and it was a model of partnership working that was unique at that time.
2. One must remember the context of the early 1990s, when west Belfast not only suffered from severe problems associated with the Troubles, but from deprivation, unemployment and educational underachievement. Therefore, the three named objectives were the right ones, and to this day, the positive legacy of the Springvale project — that I will be happy to share with the Committee — reflects those three objectives, which are socio-economic needs, regeneration needs and educational underachievement.
3. The Northern Ireland Audit Office’s (NIAO) report raises two issues that it feels that the Department could have handled better. First, the Audit Office had concerns about the appraisal process and the issue of viability. The process used was rigorous and robust. It complied with HM Treasury guidance and to the standards that prevailed. Admittedly, due to amendments that were made to the green book in 2003, areas such as viability would be examined more robustly if the Springvale project were being undertaken today. Further guidance from the Higher Education and Funding Council for England (HEFCE) that would have applied to the project was published in 2003 and 2004. However, the appraisal and viability process used for the Springvale project met the standards required at that time.
4. Secondly, NIAO raised the issue of community expectation. I fully acknowledge that that was, perhaps, the most disappointing and tragic element of the project, because it was an opportunity to forge links across and within communities and between further and higher education and the Government. There was a huge amount of goodwill and, in reading the related papers, it is evident that everyone, regardless of their sector, wanted the project to work. Although Government were not the promoters — they were very much the funders — they tried their utmost, along with the promoters and the community, to make the project work. Therefore, the manner in which the project became — as you said — a failure, was disappointing. However, every effort was made to give it a chance.
5. The Chairperson: Whether every effort was made to give the project a full chance will be at the centre of the Committee’s report. Dr McGinley, you said that there were positive outcomes of the Springvale project. What were they?
6. Dr McGinley: One positive outcome was the community outreach centre that opened in May 2000 and has been functioning for over five years. Furthermore, in April 2006, funding of £13 million was approved for the workforce economic development centre, which will come to fruition at the end of 2009 or the beginning of 2010. Those are two fundamental pieces of work in west Belfast, and DEL has funded a series of programmes in the Springvale community outreach initiative, which involve over 26,000 people across 280 projects in areas such as schools and literacy, family literacy and suicide prevention. Over the period, some £7·5 million was invested in such initiatives. Although the original campus idea did not go ahead, very solid and sound work is now being done in the community.
7. The Chairperson: Yes, but it is still not a university.
8. Dr McGinley: The initiatives lead people to higher education. Statistics from the most recent census show that there has been a 73% increase in the number of young people from the Springvale area who have gone on to study for a first degree. Admittedly, the area still has huge levels of over-16s — some 51% of that population — with no qualifications, but the proportion has dropped more than 21 percentage points from the previous level of 73%. Many of the community education and training initiatives, which provide a progression path that leads people through further education into higher education, are having an impact.
9. The Chairperson: I may return that point in my concluding remarks.

At paragraph 3.2 of the NIAO report, the Department states that Springvale: "had, from its inception, a significant political dimension."

1. The Department also notes that the project’s inception occurred in the early 1990s and was progressed during 1994-95, which was a period of great hope and was the start of what has become known as the peace process. Does the reference to a "significant political dimension" mean that a political will existed in the Department and in the other political institutions to make the project work? When did that significant political dimension come to an end?
2. Dr McGinley: Again, the evidence shows that, at the highest level — from the Secretary of State down to each Minister who was involved during the lifetime of the project — there was total commitment to achieving the three objectives that I outlined at the start. Indeed, when the withdrawal became evident, the then Minister asked the Springvale board to undertake a review to see what could be done. The review’s terms of reference were very broad, and no change was made to the conditions that were set down. The political will continued through the duration of the project, and continues to this day. There is evidence for that in the recent grant of funds for the workforce economic development centre.
3. The Chairperson: Surely the community and its political representatives could point to the fact that the only physical building to emerge from the project was funded — I think that this is correct — by private funds. That suggests that, at senior level, the Department did not have the political will to complete the project. At the end of the day, it was the Department’s duty to ensure that the political will was carried through to fruition by ensuring that a new educational, cultural and regeneration project was put in place in Springvale.
4. Dr McGinley: There was ministerial commitment. I have read through the evidence in some detail, and I have not come across any negative ministerial or political will, to use your phrase, towards the Springvale project. Indeed, there was genuine insistence by Ministers that this was a project of the right ilk. The Springvale premium is testament to that.
5. Although the Springvale option was the most expensive of the nine options given in the economic appraisal of 1998, it was agreed that the socio-economic outputs from it made it worthy of attention. The Springvale premium was a means of bridging the gap to make the project affordable and to allow it to go ahead. That is just one example of how the Government tried to assist the promoters in ensuring that the project had the maximum impact on socio-economic development.
6. The Chairperson: I am not sure that assisting the promoters goes far enough. In my view, there was a duty on the Government to ensure that the project happened. Did any Minister issue a ministerial directive at any stage in the process?
7. Dr McGinley: There was no need to issue a ministerial directive. At each stage, working closely with the promoters, we identified the hurdles that had been thrown up in the various economic appraisals and we took them through. The process was very much a journey. However, when we reached the outline business case stage, some of those obstacles became insurmountable. The university then had to make a judgement call about whether it had reached a point beyond which it could not proceed.
8. The Chairperson: When did the Department make the decision that the project would not proceed?
9. Dr McGinley: It was not for the Department to make that decision. It was not the promoter of the project; it was the funder. Some 56% of the capital funding came from Government. A very delicate balance had to be maintained.
10. On the one hand, the Department had to maximise the benefits to the community and address the objectives that were set; on the other hand, as the appraisers of an application for public funding, it had a duty of care to ensure value for money and appropriate handling of the project. At all times, the Department worked with the promoters in an enabling way to lever the necessary funding from Government. Indeed, the promoters levered further funding from external sources.
11. It is right to say that a private donor funded the community outreach centre. That was part of the legacy left by the university.
12. The Chairperson: At one point you told me that, in the Department’s opinion, the economic appraisals were OK. I am not disputing that. However, you have also said that when the university approached the Department to say that, for reasons that will be explored later, it could no longer continue with the project, the Department felt that it had no further role in the process. Is that correct?
13. Dr McGinley: The Department did have a role and worked with the Springvale board on the review to see what —
14. The Chairperson: What happened to the enthusiasm of the early 1990s? Did it disappear? At one stage, the communities in north and west Belfast were being shown photographs and images of Bill Clinton, the then President of the United States, and Tony Blair, the Prime Minister of Great Britain. There was great euphoria, with the digging of sods and such like. The political will had to have disappeared somewhere.
15. Dr McGinley: I contend that, in my view, the political will did not disappear. Unfortunately, the achievable aspiration was not as significant without the main campus. However, Government’s intention was that something be done. Something has been done, and what has been achieved will leave a pathway of progression for the people in those communities. The statistics show that it is working.
16. The Chairperson: The NIAO report states that £3·6 million "could be regarded as waste". Is it your view that that money was wasted?
17. Dr McGinley: The word "waste" is open to interpretation. As members can see, the total spend amounts to £9·2 million. Of that money, £5·6 million was spent on the community outreach centre and infrastructural works. The £3·6 million that you mentioned was spent on items including legal and professional fees. The project was very complex, requiring a lot of legal advice, consultancy reports and so on.
18. The legal advice and consultancy reports were a necessary part of the analysis and supporting framework to get the project through the normal Government standards required by the Government Accounting Northern Ireland (GANI) guidelines. Therefore, it is probably inappropriate to say that that money was wasted. It was used for essential elements of the project.
19. Some of the works on the northern part of the site, which are included in the element of the spend that could be considered to be waste, will come to fruition. For example, the Department for Social Development is completing master planning for the northern part of the site. In the longer term, expenditure on that part of the site will be regained.
20. Undoubtedly, because the main campus and the applied research centre were not realised, they, potentially, could be classified as waste. However, the site that was prepared for the applied research centre will be used for the workforce economic development centre.
21. There are reasons for describing certain elements of the project as waste. In theory, it could be said that the money was wasted: because nothing came of it, it was wasted. However, it was spent on an essential part of the appraisal process.
22. The Chairperson: Yes, but, in a sense, it was not an essential spend. It could only be considered to have been an essential spend if there was a will to build a university. The Committee must establish whether such a will existed. If it did not, £3·6 million was wasted.
23. Dr McGinley: In the NIAO report, the Department has stated that there was an issue around the will to continue with the project.
24. Mr Hamilton: I want to touch on what you, Mr Chairman, and the accounting officer referred to as community expectation. The NIAO report — and you also raised this, Mr Chairman — refers to the elaborate ceremony that took place on the site, in the presence of the current Prime Minister and the former President of the United States Bill Clinton. It was an emotional occasion, with sod cutting and the involvement of young children, and it created a real sense of hope in the community. Unfortunately, when the plug was pulled on the project, that hope turned to hurt.

That hurt was more accentuated by the fact that north and west Belfast comprises one of the most deprived areas in the United Kingdom. The plight that that area suffered during the Troubles has been mentioned; and, during President Clinton’s speech, he said that the campus should: "be a living, breathing monument to the triumph of peace."

1. An accusation that might have some founding is that that is very much the way that the project was marketed from start to finish. It was more about peace process PR than the practicalities of delivering a viable educational campus at Springvale.
2. Does the accounting officer admit that the Department handled the expectations of the community badly, particularly in the latter stages, when it became apparent that the project was not going to come to fruition for a community that had invested much time, energy and hope in the project?
3. Dr McGinley: Yes. The Department and the Government were committed to ensuring that a community voice was heard from the outset of the project. That is evident in the conditions of the grant offer of November 1998, when one of three conditions specifically stated that the community voice was fundamental to the success of the project. Governance structures were established, including the Springvale village council, which included representatives of all the partnership boards in the area, along with the university and BIFHE. The community was also represented on the Springvale board. There was a full intent to embed the community’s voice in the project. Ironically, the disappointment that Mr Hamilton describes, and the loss of hope, made the loss of the project more difficult.
4. The Audit Office’s only criticism of the Department concerns the period after the meeting between the Department and the university in December 2001. The Department took the view that the university had identified problems, but that those problems were not insurmountable, and it was important to give the project its fullest chance and to seek any way to resolve those issues.
5. There was a danger that, if the Department spoke out too soon, it would undermine the credibility of the project. Indeed, there were mixed messages. In January 2001, the university took up an option on the north site, the academic planning group was formed, and in April of that year, there was a European tender for the applied research centre. The Department was working closely with the university at the time, but there was a sense that the university was trying to work its way through the issues and problems that it had identified.
6. At that same time, the outline business case was being developed, because the project was to be a PFI venture. The outline business case began to throw up evidence of issues concerning affordability, viability and so on. It was July before it became definitive that the project was not going the way the Department had hoped.
7. In hindsight — and it is wonderful for me to be able to say that, because I was not involved at the time — if the Department had alerted the community to that fact that there were problems, the shock to the community could have been avoided. That situation undermined the basis of trust, and the Department could have handled it better.
8. However, the Department was forceful with the university. It is on record that the Department urged the university to involve BIFHE and the community in the project. Perhaps the Department should have been more forceful, but it was trying to resolve the issues.
9. Mr Hamilton: Some interesting points have been raised, and I am sure that my colleagues will delve into those further.
10. I wish to address some questions to Professor Barnett. The Chairman has said that politics were involved, but there were educational objectives too. Hope was raised that educational underachievement would be overcome in one of the areas in this country — indeed, in the whole of the UK — that suffers most from that problem.
11. The Comptroller and Auditor General’s report states that the university told the board that it would continue to address those problems, and that it would accelerate the process of entering students to university, even after the project collapsed. Has educational underachievement in west and north Belfast improved since the university withdrew from the Springvale project? What proactive measures has the university taken since 2002 to increase participation in higher education?
12. The Committee has already heard from the accounting officer that entry to university has risen by 73%, but I am keen to know how low the base was originally. The University of Ulster has a very good record of admitting students from less well-off backgrounds, but what proportion of students in the university come from north and west Belfast — the areas for which the university promised it would do so much, even after the project collapsed?
13. Professor Richard Barnett (University of Ulster): I first wish to make very clear that the manner in which the University of Ulster withdrew from the project is regrettable. It was wrong that the university was not more open and transparent with our partners — the community, the Springvale board and BIFHE — during the decision-making process. I have already apologised for that, and I am willing to apologise again today. The decision-making process should not have been conducted in the way in which it was.
14. As Mr Hamilton said, however, the University of Ulster is committed to widening access to higher education. For statistical purposes, the university’s performance is measured as part of the UK higher education system. The university came third out of 100-plus universities in the UK for its initiatives to widen access and to provide opportunities for people from families and from neighbourhoods who would not normally be able to go to university. The university continues to be close to the top of that table.
15. To answer Mr Hamilton’s question more specifically, the university has administered the Step-Up programme in the north-west for several years now. We work with schools in areas of underachievement and where the proportion of people who go on to higher education has been relatively low. That programme has worked incredibly successfully with a range of schools in the north-west and has been hailed as an example of best practice.
16. With the support of the Department, the university has extended that programme to the greater Belfast area, including north and west Belfast and, in particular, to east Belfast, where there are also areas of deprivation. The university works with 15 schools in deprived areas across the city to help young people to progress to higher education. The programme, which is in its first year, has funding for 100 places, again with the support of DEL. Next year, 140 young people will go through the programme — private funding has been raised for the 40 additional places. The university remains committed to that project.
17. In partnership with BIFHE and Castlereagh College in east Belfast, the university has developed foundation degrees, which provide ladders of opportunity. That is what the Springvale project was all about; it was not necessarily for kids who would have gone straight into a university degree programme at 18 years of age.
18. The notion at the time was that the project would house the further education element and the higher education element in one building. Those two elements are not together in one building at Springvale, but the concept is being delivered through the strong partnership that the University of Ulster has with BIFHE. The further education element is provided by BIFHE, and students can progress to the campuses at Jordanstown, Magee in Derry, or Coleraine. Those elements are central to the university’s identity and its current policy.
19. About 40% of the University’s admissions — a high figure — come from families that would not normally send their children to university. I will write to Mr Hamilton with details of specific percentage figures for north and west Belfast, if that is acceptable.
20. Mr Hamilton: We may have to ask Professor Barnett to write to the Committee about participation levels. Dr McGinley mentioned that those levels had risen by 73%, but what was the base figure?
21. Professor Barnett: I do not have the precise figures to hand, but participation has increased substantially. As we know, the pockets of real deprivation are in the north and west of Belfast. I will have to provide the precise figures to you in writing.
22. Mr Hamilton: The Step-Up programme for 140 young people that Professor Barnett has described is an admirable achievement. However, do you accept that that number is far short of the number of students pursuing further and higher education for which the original Springvale campus was intended to provide?
23. Professor Barnett: Some opportunities for additional student places that would have been available have been lost as a consequence of the Springvale project not going ahead. However, progression from further education to higher education is still going ahead. From the university’s perspective, it should be borne in mind that, although there were to be 1,500 student places at Springvale, only 600 of those were to be new places. The remaining 900 places would have been transfers from our other campuses. That is the nub of the issue.
24. Six hundred new student places across three-year and four-year degree programmes really represents an additional entry of 150 to 200 students a year. Through the Step-Up scheme, we are reaching a level of 140 new students; however, that is a different type of programme.
25. The university remains committed to the fundamental concept that underpinned the Springvale project, namely widening opportunities for kids from deprived areas to get into higher education. We continue to deliver on that.
26. Mr McLaughlin: Paragraph 2.47 of the Comptroller and Auditor General’s report includes a long list of key areas of uncertainty in both the capital and operational funding of the project, which were highlighted in the outline business case of 2002 — almost five years after the initial project proposal. Does that not point strongly to poor project management and poor financial management? Does it not support the Chairperson’s point about the political climate and will having changed? The political wind had gone out of the sails of the project.
27. It is clear that those problems should not have come as a surprise to those who were involved in progressing the project. Political support and direction were clearly required to reach the planning stage. It would appear that problematic factors were allowed to develop as a result of inertia on the part of the Department.
28. The Government was a primary investor in the project; we have heard an explanation of the constraints on intervention that that meant. However, that did not absolve the Department from its responsibility to deliver on the project as it was presented at the early stages of the peace process, in the context of fostering confidence and hope for the future for the peace-process generation.
29. In a relatively short time, the project was allowed to collapse. There is a paper trail that indicates that the Department was in receipt of information about the changing climate and, particularly, the changing attitude of the university. That information was not acted on. How does the Department explain its management of the project, particularly between 1998 and 2002?
30. Dr McGinley: When the economic appraisal was carried out in 1998, we were never given any grounds not to support the project. The economic appraisal process went ahead, and the Department had to produce an addendum to that appraisal in 1999 due to, as you say, changes of circumstances.
31. Some of those changes were positive: for example, the outcome of the comprehensive spending review (CSR), which allowed for an extra 600 places that were ring-fenced for Springvale. That is one obvious example of a Government commitment to create a significant number of additional ring-fenced student places for the project. That was unique in that CSR settlement.
32. The addendum to the 1998 economic appraisal also took into account the change in context that resulted from the university retaining its York Street campus. In the original economic appraisal, the sale of the York Street campus formed part of the assessment. Subsequently, due to developments in the Cathedral Quarter, the retention of the York Street campus, BIFHE’s city centre campus at Millfield and other initiatives, the Department had to review and take into account those developments and practical changes. Professor Barnett can pick up on that matter.
33. In the addendum, the identified risks had reduced and the figures had improved. It may be a relatively minor change, but the total cost of the project changed from £71 million to £70 million due to a re-examination of aspects of design, etc. The addendum showed that we were reactive to changes in context, some of which were outwith the gift of the Department. The addendum went on to state that the project was still affordable and viable. That is why we then proceeded to the second letter of offer, with the conditions that the project continued. We proceeded with an outline business case to test for PFI. Therefore at every stage, the Department followed due process.
34. Any issues that arose were taken into account, and, after work on the addendum, Government support increased from £40 million of PFI in the first letter of offer to include expenditure for an additional 600 student places.
35. Mr McLaughlin: Therefore in what might be regarded as the honeymoon period, the case actually strengthened. However, by the end of 2001 the Department was getting indications that the University of Ulster was anticipating difficulties and had serious issues. What did the Department do about that, given the political direction involved and that the opportunity to strengthen the social and economic circumstances in the area would be lost? A year later, the university announced that it was pulling out of the project. Did the change of Secretary of State, from Mo Mowlam to Peter Mandelson, or the vice chancellor’s leaving, affect the project? Certainly the circumstances changed.
36. As I read the NIAO report, the questions confronting me are: did the Department go to sleep; was it dragged into the project in the first instance; did it want the project to succeed; and what did it do to try to save the project when it seemed to be under threat?
37. Dr McGinley: In the first instance, as I said, I admit that there was a time lag after the Department received the November 2001 letter, which is in appendix 4 of the NIAO report. The Department immediately met with the university’s representatives. The meeting was robust, and it is on the record that the Department challenged the university and told it that any alternative to, or change in, the proposals would require the consent of the other partners and the assent of the community. The Department also insisted that many of the issues that the university had highlighted could be resolved and asked the representatives to go away and reappraise and rethink.
38. The Department had observer-status on the Springvale board. We attended the council as and when requested; we were involved closely in developing the governance structures; and we worked with the university. However, at the same time as we were producing the outline business case, the university was also looking more closely at its role. That is another element that shows the level of Government support in that although the appraisals were commissioned by different parties, such as Springvale board and Springvale Educational Village Ltd, they were all funded by Government, meaning that there was no economic barrier to the appraisal process for the promoters.
39. The university had to take the bigger picture into account, and Professor Barnett may wish to describe some of the problems that the university was starting to encounter. Again, with hindsight, the Department might have realised that the university was signalling its withdrawal. However, we were genuinely trying to see whether we could resolve the issues and save the envisioned main campus.
40. Subsequently, in July, when it became evident that the project had, unfortunately, run into the sand, the Minister immediately met the parties concerned and contacted the Springvale board as a matter of urgency.
41. Mr McLaughlin: Was that a direct rule Minister?
42. Dr McGinley: No. It was the devolved Minister.
43. Mr McLaughlin: Was it Carmel Hanna?
44. Dr McGinley: That is right. She met the parties involved and wrote immediately to the Springvale board and asked it to conduct a review. As I said, the terms of reference of that review were very open and encouraging. Indeed, in the letter, the emphasis was on the social and economic circumstances. It reiterated the three objectives of the initial vision and said —
45. Mr McLaughlin: What was the date of the letter?
46. Dr McGinley: It was dated 25 September 2002.
47. Mr McLaughlin: The Committee might conclude that the university’s capital assets had not declined in that period — in fact, they had increased quite significantly — but that the resources that it had originally earmarked to support Springvale had either been de-prioritised or had dropped off the table. However, I do not intend to get into that now.
48. Given that reference has been made to poor communication between the various groups, I am intrigued that the Belfast Institute of Further and Higher Education (BIFHE) is not represented today. The stakeholders did not appear to be in the information loop when the university was raising questions about its commitment to the project or its ability to deliver on it. It appears that the Department kept that information to itself and did not accept any responsibility for ensuring that the partners were brought into the loop. That would have had an effect. The community representatives and, I am certain, the BIHFE representatives, might have turned to the political parties to see what could have been done about the situation. However, none of them were given the opportunity to save the project. That must raise serious questions.
49. I have illustrated where I believe the Department fell down significantly. What advice did it give to the Government at the time? Did it tell the Government that it could see a problem with the project and that it might not happen? Did the Department make positive representations to the Government about how the project could be preserved?
50. Dr McGinley: The Minister was made aware of the issues. Officials were working closely with the university, as it was one of the project’s promoters, to find a resolution to those issues.
51. Mr McLaughlin: What suggestions did the Department make to the Minister? You seem to be blaming the Minister.
52. Dr McGinley: The Department certainly does not blame the Minister. Ministers enable Government officials to do what they do. Officials would not have been able to take any course of action without the Minister’s awareness and approval.
53. Mr McLaughlin: It seems that the Department did not embark on any course of action. The Department either fell asleep or, for some reason, did not see any need to try to save the project. That is my basic assertion. Can you respond to that?
54. Dr McGinley: At the time, the Department proceeded with the outline business case that had been agreed and with all the work that was necessary for the PFI tendering to the Official Journal of the European Communities, to cover the applied research centre (ARC), and so on. It was business as usual. The Department wanted to ensure that the university was given the time that it needed to overcome its internal problems. The Department stated that in its report.
55. The credibility of the project was important. The Department’s making those problems known at the time might have led to the project’s demise when it could otherwise have been saved. A judgement call had to be made about whether the information should be shared at that stage. With hindsight, I accept what the vice chancellor said: the Department should have shared the information so that it did not eventually come as a shock. As Mr McLaughlin rightly pointed out, there might have been an opportunity to resolve the issues through other channels. Unfortunately, that was not done.
56. Mr McLaughlin: The shock is one thing: I can testify to that myself. I am concerned — and I am being measured in my language — that there was no attempt to preserve the project or to share the problem and to give others the opportunity to deal with it. I will illustrate that: paragraph 2.47 states that in July 2002 the outline business case raised concerns for the first time about whether 3,000 students could be attracted to Springvale. That was four years into the project. Where did that concern come from? Did the Department validate that concern? Did it do its own research? Is that the Department’s opinion?
57. Dr McGinley: That issue was first raised in the consultants’ economic appraisal in 1998. The issue was not new: it had underpinned the whole project. Initially, when the art college was supposed to be relocated to Springvale as a complete entity, it was felt that it would bring its students with it. When that changed, the situation was re-examined. The issue re-emerged.
58. However, at the time, significant work was being done with the community, the university and BIFHE on academic planning. Community representatives responded to the first academic plan by saying that it did not match their outlook for the college. They wanted the campus to reflect more closely the community’s needs rather than those of the university. That caused tension between the university’s academic integrity and the community’s expectations. That fed into uncertainty about the ability of the site to attract enough students. However, the issue had been addressed in the 1998 appraisal.
59. Mr Beggs: Paragraph 2.40 and the letter at appendix 4 set out the university’s change of heart. There is no mention of financial difficulties, just concerns about the governance arrangements, including the level of community involvement. However, community involvement had been a key requirement since 1998. Bearing in mind that the university had negotiated the legal agreement that supported the governance arrangement, why did community involvement become a problem in 2001?
60. Professor Barnett: That was in February 2000, in accordance with the university’s decision-making process. The project was a complex one for a permanent secretary and, throughout the 1990s, many people were trying to find a way to make the project work, such as by looking at various packages and various means of delivery. For example, the university’s initial plans were for a university campus with 3,750 places, but that was not seen as workable, so the university abandoned that and came up with another plan — a joint further education and higher education plan with BIFHE — which reflected the 1996 Dearing Report, ‘The Report of the National Committee of Inquiry into Higher Education’, and its emphasis on greater integration.
61. That plan was explored, along with the means of funding the project. As the permanent secretary said, that plan was considered as a way of providing higher education places, and Springvale was not the most cost-effective place to do that, hence the Springvale premium — which refers to the additional cost of providing places in that location, rather than somewhere else. The Government’s view was that that premium had to be paid by the university and BIFHE, because the Government would not and could not pay for that. To answer your question, as the project evolved and the final bid came through in February 2000, the Government set three preconditions for the university’s being able to proceed with the Springvale project, as the Audit Office report reflects in paragraph 2.30. One of those preconditions was that project had to be financially viable; it had to pay its own way. Therefore the suggestion that the university could cross-subsidise the project from other campuses no longer was an option. The Government’s stipulation that the project had to be financially viable changed the basis for whether or not it was affordable.
62. Therefore the outline business case posed a question: could the university proceed on the basis of the preconditions that the Government set at the time? The university’s internal analysis suggested that the Springvale project would not be financially viable, and those calculations were confirmed by the Audit Office’s report and are in appendix 8.
63. Mr Beggs: You have talked a lot today about packages, funding and the higher cost of providing higher education places in Springvale, but in your letter, you cited the governance arrangements — there was no discussion about the project’s finance. Was the question of where the Springvale project appeared in the university’s list of funding priorities for capital expenditure important?
64. Is it true that the prospect of annual running-cost losses, which varied between £100,000 and £1 million a year, was the real reason for the failure of the project, rather than governance? You said in your letter that governance was the problem.
65. Professor Barnett: The letter that you refer to was from Professor McKenna, and predates mention of the financial difficulties of the university. In 1999, just before Professor Smith retired, there was a rigorous debate and governance and finance were the two fundamental issues throughout that. Those matters featured in all the letters and discussions of that time, and there was ongoing discussion about the nature of the governance of the project, but we had to meet the precise precondition that the project be financially viable. Clearly, we could not meet one of those conditions. Therefore I put the question back to you: supposing the university had gone ahead, without having met a precondition, what would the Audit Office be saying to us now?
66. Mr Beggs: My next question is for the permanent secretary. The preconditions meant that the project could not go ahead. Would you and the Department not have known that when you set those preconditions? Anyone would have known that a small additional campus would have additional running costs.
67. Dr McGinley: Absolutely. That was taken into account in the support that Government offered. The Springvale premium — the money required to bridge the gap between the most expensive option and the least expensive — was one example of that. That was an accounting treatment. However, if money is also received from sources outside the UK Exchequer, a business case can be made. No Department will support a project that is not financially viable.
68. We also took into account student numbers and the resultant recurring costs that would need to be met. Therefore the Government worked with the promoters to put together the conditions that would make the project viable.
69. Mr Beggs: I address my next question to Professor Barnett. We have seen that the university did not tell the Audit Office how much of its own money has been spent on capital projects since 1997, and it has divulged neither its capital priorities since 1997 nor where Springvale featured in those priorities.
70. Why was that information not provided?
71. Professor Barnett: First, the Audit Office refers to £37 million of capital expenditure on the university over a four-year period. Although that may seem a lot, it is a low level of capital expenditure. Indeed, over the period in question, the university was not spending enough on capital to maintain the viability of its estate.
72. At the moment, the consultant’s report, which considers capital expenditure in all universities, suggests that the University of Ulster should spend approximately £18 million per year to maintain the sustainability of its estate. A few years ago, it would not have taken £18 million per year. If we had spent half of that sum then, which is what would have been required to maintain the existing estate, we could not have added another campus while letting conditions deteriorate at the Magee campus in Derry and the Jordanstown campus in Mr Beggs’s constituency. That would have resulted in poor quality standards for students, and it is especially relevant, given that we now have top-up fees.
73. In a sense, the capital expenditure was low during that period. It was not high. The capital requirements for the Springvale project were not really problematic. The university had to find approximately £8 million for the premium. We were told that we would have to find that money outside the UK; otherwise, it would have been a drain on the public purse. That was not a big issue. Rather, the big issue was the recurrent loss. What would have happened is that income for that campus, in recurrent terms, would have fallen short of recurrent expenditure. The ongoing recurrent loss over the life of the campus and not the capital would have caused the problem for the university.
74. Mr Beggs: Could the issue of recurrent loss not have been identified early on? Was there no discussion between the university and the Department at an early stage, before so much public money was committed?
75. Professor Barnett: There was always ongoing discussion. As I mentioned earlier, the precise nature of the funding package, and the precise nature of the campus, evolved over that 10-year period. It began as wholly a university campus with 3,750 extra places and later changed to a position where there were 1,500 students but only 600 extra places. Still later — until the end of the 1990s — the university planned to sell the York Street campus. Therefore in the 1990s, the university’s intention was not to have a fifth campus, but to have a renewed fourth campus by closing York Street and relocating and developing.
76. Two things happened. First, the additional student numbers and the size of the Springvale campus had been reduced. That meant that if we had sold the York Street campus, we would have had an art and design campus in west Belfast that would not have met the social and economic needs of the city — because York Street has about 1,000 students. Therefore approximately 1,000 to 1,500 student places would have been taken up by art and design. That would not have provided the required spread of skills-related courses.
77. Secondly, at that time, the politics of the city were changing. Laganside was developing, the Cathedral Quarter was being developed, and the university then decided to keep the York Street campus. Therefore the funding changed and evolved over that period. It was not that there was one project that did not change at all and could have been evaluated over 10 years; rather, there were many different projects throughout the period.
78. Mr Beggs: The problem was that from the early stages there was no business plan. Surely the Department had a vital role in liaising with the university to get an acceptable business plan from the early stages?
79. Dr McGinley: The outline business case would have led to a business plan. The sequencing of that, regarding economic appraisals that would have led to an outline business plan, was appropriate.
80. Mr Beggs: Is it appropriate that so much public money had been spent prior to that?
81. Dr McGinley: The member is correct. Again, that was the standard at that time. Nowadays, the issue would be raised at an earlier stage, and that would be picked up in current practice.
82. Mr Dallat: I know that Mr McLaughlin asked Dr McGinley to explain why a representative from BIFHE is not here. Will Dr McGinley accept that we would have a far better report if we had the widest possible access to the partners who were involved in the process? The Committee’s purpose in meeting here today is to ensure that the mistakes of the past are not repeated. We are somewhat restricted by the absence of one of the partners who were involved in the project.
83. I would like to hear the opinion of the Comptroller and Auditor General on this matter before we proceed further. Have the Committee’s enquiries been somewhat neutralised due to a lack of access to the partners?
84. Mr John Dowdall CB (Comptroller and Auditor General): Clearly, this is a case where there are lessons to be learned, and the Committee is already highlighting a considerable number of those lessons — in particular, the need for issues to be fully addressed at an early stage in high profile projects such as this, before enormous impetus builds up. That is not a green book issue with respect to the permanent secretary. That could not have been perfectly well understood in the climate of the early 1990s, as is evident now.
85. It is one of the major lessons that will come out of this report and probably out of the Committee’s findings also.
86. Dr McGinley: I apologise, but when we were preparing to meet the Committee it was our judgement that BIFHE would not be required to attend. Protocol, though not exact, suggests that there should be three witnesses. I am the accounting officer for further education, and I have had significant discussions with BIFHE and its accounting officer about the project. BIFHE was content with the Department’s view that it was not necessary for it to be represented here.
87. The only criticism of BIFHE in the NIAO report was that it did not obtain independent appraisals during the process. The University of Ulster had obtained appraisals through its internal audit. As stated in the report, BIFHE felt that governance processes such as the outline business case would cover any matters relevant to it. BIFHE had no viability issues, but it did have an affordability issue with respect to raising the balance of funding at the outset. Since that was the only matter that affected BIFHE, I felt that I could represent its interests. If the Committee requires more detail on any particular questions, we would be happy to come back.
88. Mr Dallat: I am finding this questioning difficult because I have the highest regard for the University of Ulster, and I was shocked when the university dropped the project. Professor Barnett has already set out the success that the university has had in attracting people from working-class backgrounds. Therefore I was amazed when it walked away from a project that offered opportunities to fundamentally change the lives of thousands of people in north and west Belfast. The project was simply swept aside, without even consulting the partners or the local community. Why did the university not make its position known publicly?
89. Professor Barnett: I cannot answer that question. I have already apologised to Mr Hamilton for the fact that the university did not make its position clear. That was wrong; I regret it, and I apologise for it. A partnership can work only if partners are open and transparent with one another. In this instance, the university was not. During the period concerned, substantial discussions were ongoing in the university, which, perhaps, it felt were necessary to be settled first. At the same time, the outline business case was being considered in some detail. However, the way in which the university behaved was wrong, and I can only apologise for that.
90. Mr Dallat: I thank Professor Barnett for his honesty. It is not easy to cross-examine people who were not in place at the time, and that applies to all of today’s witnesses. It is a weakness in the system that must be examined.
91. The university did not tell other people. Will Dr McGinley explain why the Department did not?
92. Dr McGinley: It was a judgement call as to whether a solution could be found. At the time, a series of actions had already begun — academic planning, taking up land options etc. The Department felt that the university appeared to be getting around to resolving the issues. With hindsight, the Department should at least have had discussions with the other partners. The Committee is right to point out that BIFHE and the community were kept out of the loop. That is the most unfortunate element of what happened.
93. The irony is that it is hypothetical to suggest that, had the problems been made known earlier, the project would have been saved. However, it is quite correct to say that, had the problems been made known earlier, the expectations of the community and the other partners would not have been dashed.
94. Mr Dallat: I have an off-the-cuff question: was the tail wagging the dog? Was the Department in charge or were people in the University of Ulster sitting in their ivory tower, completely aloof from the world below and the problems that the Assembly had inherited? Those problems included an illiteracy and innumeracy rate of 25% and 250,000 people without the proper skills to get work. The proposal was to build the campus right at the heart of one of the areas that suffered as a result of such problems. The university walked away from that plan, and the Department did not say a word. Had the Department lost control of the university?
95. Dr McGinley: It is interesting, and useful, to highlight that the University of Ulster is an autonomous body. It is not like a non-departmental public body (NDPB). As accounting officer, I have three roles with the university: first, to ensure that the funds that are voted to it are appropriately spent; secondly, I must ensure value for money for those funds; and thirdly, I must ensure good management and governance. Furthermore, I have responsibility for taking a wider overview of the university’s financial health. The university is an entity in its own right, and was established by charter in 1984. However, there are areas of its business over which the Department has no control.
96. Mr Dallat: You are absolutely right; we have hit the nail on the head. The university’s autonomy meant that it could walk away from the project any stage without bothering to tell people that it was doing so.
97. Paragraphs 2.51 and 2.65 of the report give reasons as to why the university chose not to continue with its involvement in the project. Those reasons include £8 million of capital funds and recurring expenditure. However, the university was subsequently asked whether it would reconsider its involvement in the project if the money became available. Of course, the answer was no. Was this nonsense about money just wee porkies to enable it to renege on its commitment? Perhaps the university had some other more idealistic or glamorous projects in hand.
98. Given that other campuses were losing money, why was the Springvale site treated differently? Does the Department not accept that democracy allows resources to be spread out in order that deprived areas can benefit from aspects of life where the university was doing well? To isolate the Springvale campus on the basis that it would lose money runs contrary to everything that we believe in. Would the gas pipeline have gone to Derry if such arguments had been used? Would the railway continue? Would anything? It would not.
99. Dr McGinley: The project is an example of how Government opted for the most expensive option in recognition of the socio-economic impact that it would have. Nine options were considered in the 1998 appraisal; two of which were ruled out at an early stage, leaving seven options. The least expensive option combined the Millfield site, the community outreach centre and the applied research centre based at the Springvale site. However, the difference was the Springvale premium. The Department identified how the partners could bridge that in order to enable the project to proceed under the chosen option, which was the most expensive, rather than that offering value for money. That therefore reflects the Government’s intention to support what was best for the area.
100. Mr Dallat: One reason given for the university’s withdrawal was that it had concerns that further education and higher education would share the campus. The University of Ulster has been highly successful in developing outreach programmes. How could the University of Ulster therefore justify that concern to people in the Springvale area as a reason for not proceeding with the project?
101. Dr McGinley: The matter must be considered in the context of the Dearing Report and the Kennedy Report —Prof Barnett has already mentioned this. Those reports were very much concerned with creating those ladders of progression that you described. Further education is often the bridge to higher education in those communities. Around that time, it was unique to combine the two sectors — Prof Barnett can verify that — and the attempt to formalise it was probably a first for the UK. In effect, what we now have is that in action.
102. My Department is a strong advocate, through the skills strategy and Further Education Means Business strategy, of giving further education its place in bridging the gap. There has been a significant increase in that area, through foundation degrees, diploma work and the accreditation processes that are now under way. The pathways to further education have been made easier, and I must commend the University of Ulster for reaching out proactively.
103. That model has evolved since the Springvale project. Indeed, the project probably sowed the seeds for a much more proactive relationship between further education and higher education. There is a particularly strong relationship between BIFHE and the University of Ulster, and that provides probably more entries to higher education than any other colleges, so there is proven practice in that area.
104. Mr Dallat: I thank Dr McGinley for her sincerity. However, is it not ironic that a very good model for further education and higher education was spawned in Springvale but never delivered there?
105. Dr McGinley: The physical manifestation was not delivered. Mr Dallat is quite right. It may not be of the scale and quantum that it might have been; however, the ethos is still there, and it is alive and well.
106. Mr Lunn: Prof Barnett, paragraph 3.8 of the report concerns the university’s finances and the deterioration over the four years to March 2002. The university had a cumulative trading deficit of £22·7 million, and its reserves had depleted from £18·5 million to a debt of £7·4 million. Bearing in mind the obligations that the University of Ulster had to the Springvale project, which dated from 1997, how would he describe that performance? Was it a result of bad forward planning, poor management or plain negligence?
107. Professor Barnett: In the last three years since I have been vice chancellor, the University of Ulster has generated a recurrent budget surplus and reduced its borrowing substantially — it is now among the lowest in the sector. That must also be put into context, which is something that the report does not do. It does not reflect the nature of higher-education funding throughout the 1990s, when finances for the university sector as a whole were deteriorating. Across the UK system, which is different to that in the South, the unit of resource that universities received per student fell by 33%. Throughout the UK sector, the balance sheets were worsening.
108. Indeed, in millennium year — a year in which we should have been celebrating — the university sector as a whole was in deficit. Not every university was in deficit, but, on average, those in surplus were outnumbered by those in deficit. The finances of universities generally over that period were deteriorating, and what was happening at the University of Ulster was not untypical of what was happening generally with Government funding for the universities through the 1990s.
109. Of course, that is the context for the political debate about how funding for universities was going to be restored to a level at which they could remain internationally competitive. The outcome was the introduction of top-up fees. Funding was deteriorating for universities as a whole. That led to questions about how money would be brought into the sector to retain the level of funding or to bring it back to where it was before.
110. Returning to Mr Beggs’s point, capital expenditure at the time was not high; the university was underinvesting in that area. The capital estate was not at the standard that it should have been. The Government’s response was not to put more money into higher education, and I regret that. The university was against the introduction of top-up fees; however, they have been introduced, and funding is improving as a result. University funding must be viewed in a national context, and the University of Ulster is not untypical. To look at one university in isolation does not give a fair reflection of what is going on in the sector.
111. Mr Lunn: The addendum to the economic appraisal in September 1999 stated quite clearly that the university could afford a £6·5 million contribution to the capital costs from its reserves and still continue to operate within the minimum cash holdings required. In such circumstances, one must think a few years forward. How could the situation have deteriorated quite so dramatically to the point where, in mid-2002, it all blew up?
112. Professor Barnett: The key decision was made in 2001. In 2002, the university was doing other things because the Springvale project was not on the agenda in this form at that point. Capital funding was not a major issue. To raise £6·5 million sounds a lot, but it is not much for a university to raise. If the university had not had the money in its reserves, it could have been borrowed. Even when our borrowing was at its highest, the ratio of borrowing to income was only about 10%. At the turn of the century, the gearing for the whole university sector rose as high as 40%. The university’s borrowing may look bad at 10%, but the sector was borrowing at 40%. The issue of capital was not important.
113. There was also a premium to build at Springvale, which the University of Ulster, rather than Government, was expected to fund. The university was so committed to Springvale that it was willing to take on that commitment to find extra funding, which it would not have had to do had the expansion been elsewhere. The premium is about the extra cost of the campus, which the university and the BIFHE were expected to find. The issue was not about capital, but rather the recurrent loss that we could not have sustained, as it would have gone on for evermore.
114. Mr Lunn: Dr McGinley, in response to Mr Dallat, you mentioned governance and management among the three areas where the Department oversees the activities of universities. Why did the Department allow the financial strength of the University of Ulster to deteriorate in such a way? Was the situation not monitored?
115. Dr McGinley: Absolutely, Mr Lunn. In the context of what the vice chancellor has outlined, HEFCE in England advises the Department on higher education in Northern Ireland. Along with the HEFCE, the Department monitored the financial position of the university. At no stage was there a concern about the gearing capacity of the university to raise the funds.
116. Mr Lunn: In paragraph 2.39 of the report, the financial forecast review:

"identified increasing concerns about the University’s financial position."

1. That seems to suggest that there were concerns about the university’s financial position, yet you are saying that there were no real concerns.
2. Dr McGinley: The Department brought in HEFCE, as any company would if it was looking at the books. HEFCE gave the Department an assurance that the University of Ulster’s financial pattern was very similar to that of the rest of the UK because of underinvestment in the university sector. As the costs of the project did not come within the parameters and benchmarks that were used against other universities, they were not a matter for concern. However, the Department identified the issue and addressed it with HEFCE.
3. Mr Lunn: You and Professor Barnett both agree that the dramatic downturn over a period of years — which seems to have continued — was not a source of worry for the university and that it did not impact on the decision that we are here to discuss.
4. Dr McGinley: The Department has a memorandum of understanding with the university — in fact there have been three in the period of time that we are discussing — that clearly lays out the terms and conditions of the relationship and what the Department expects of the university. One issue concerns financial arrangements. There is a two-year period in which deficits are allowed, as university funding is quite often erratic due to particular programmes and projects that have been undertaken. That is why the Department uses HEFCE to forecast.
5. Therefore, the Department was not concerned by this particular blip, and I think that Professor Barnett will tell you that the University of Ulster’s resources are now quite significant and that its reserves have grown again.
6. Professor Barnett: The deficits continued up to when the Audit Office stopped reporting, which is two years beyond the period of time relevant to the report and short of where the university is now. As I said, the university has generated a recurrent surplus over the past three years. Borrowing, which was recorded at 15·7 million — the highest that it reached and still only a gearing ratio of 10% — was under 5% in the last financial year. The gearing ratio of that is about 3%, which must be among the lowest in the sector as a whole.
7. Mr Lunn: In the 10-year period from 1994 to 2004, the net funds went from £21 million in the black to a deficit of £14 million, and there was a gradual slide all round. In 2000-01, the change was quite dramatic compared to the previous year: from £3·7 million in the black to £5·7 million in the red. That is a difference of almost £9 million, which occurred during the period in which the crisis took place. Did the Department not have an opportunity to ask the university to commit to what it had agreed to over the years?
8. I still do not really understand why the project stopped. We have been told that it was due to affordability issues. Was it due to ongoing costs and the prospect of never making any money or was it simply because of a complete change of will, which, at the moment, seems to be the favourite reason? What was the real reason?
9. Dr McGinley: The Department is quite clear that it was the latter reason: the financial issues came to bear, as did the non-monetary concerns. However, the change of will was an issue. We have stated that publicly and in the report.
10. Ms Purvis: The project was crucial to the community in north and west Belfast to address economic regeneration and educational underachievement. It is stamped all over with failure: failure to deliver; failure for the community; a failure to acknowledge the commitment of those from the community and voluntary sector.
11. Party and community colleagues of mine had high hopes that the project would address some of the difficult issues faced by the communities in north and west Belfast, especially in the Shankill area. At that time, only 0·4% of the population of the Shankill area continued onto further education and higher education. I do not know whether comparison figures for the Shankill area are available, but I imagine that that percentage remains constant and that there has been little impact on the ability of people in that area to get into further and higher education.
12. Dr McGinley, you said that the Department funded the economic appraisals, and that they were rigorous and robust. However, paragraph 3.19 of the NIAO report concludes that the appraisals of the Springvale project were "unduly optimistic" and therefore "misleading". Surely it was for the Department to inject a dose of reality into those assessments. Why did it not do so?
13. Dr McGinley: To reiterate, we operated to the standards of the time. That is why I said that the process was rigorous and robust against those standards. Current standards contain a stricter element. For example, a 10% contingency bias was built in to the economic appraisal; that was not necessarily standard practice. Today, optimism bias ranges from 5% to 20%, so it is not unreasonable to say that the 10% bias that was built in at that time allowed for some reality. The Department took advice from professional, independently commissioned appraisals and dealt with any issues that arose.
14. I have spoken to members of the community about the feeling of having been let down. From the outset, the sense of goodwill was evident in the promoters, Government and the community. It is unfortunate that the project ran into the situation that it did.
15. Detailed comparison figures are available. In the Shankill ward, there has been an improvement in combating educational underachievement. I hope that that sense of aspiration continues. We will never know whether that improvement could have been greater had the main campus opened as planned. The investment made as a result of the review that the Springvale board signed off in 2003 shows continued investment, particularly at community level. There are 294 projects in the community, including the Shankill Women’s Centre, initiatives in schools on suicide prevention and so on. There is a wide range of projects in the community tackling the issues that lie there.
16. People undoubtedly agree that a main campus would have raised aspirations higher; however, at least the pathways to progression have been created. It was not a matter of: "That’s it; we’re gone"; rather it was a case of: "What else can we do?" The Springvale board identified that. The amended project was approved by the Springvale board, which included representatives from the community and from the promoters. At least there was a way forward.
17. Ms Purvis: I would appreciate some comparable figures of the number of people getting into third-level education, rather than figures that deal solely with educational underachievement at primary and secondary level.
18. The early financial appraisals, contained in appendix 1 to the report, all state that the project was both viable and affordable. Later appraisals concluded that the project was neither viable nor affordable. Where is the consistency? Can there be any confidence in financial appraisals carried out by DEL? The essence of the project did not change between 1998 and 2002, yet the conclusions of the appraisals changed. That is not conducive to good financial management.
19. Dr McGinley: In effect, the reason for including the addendum was a significant change in the context. The original economic appraisal in 1998 considered the York Street campus, which was included in the figures. The Millfield option had changed quite substantially also. Furthermore, on the positive side, the comprehensive spending review (CSR) decision to provide a further 600 places, and the change in student numbers that Professor Barnett outlined earlier, came into play. Therefore there were iterations of that.
20. Although it is correct that the vision and the three objectives that overarched the whole project, and the outcomes and the intent of the project, did not change, the actual mechanics — the context — changed quite dramatically. The appraisal process took that into account. That might make it appear inconsistent; however, it was not comparing like with like. The Department had to alter its appraisal process so that it measured what was apt at the time.
21. Ms Purvis: In May 1999, the decision was taken to retain the York Street campus, but a further appraisal carried out in September 1999 concluded again that the project was affordable and viable.
22. Dr McGinley: The addendum to the 1998 economic appraisal took place in September 1999. That is the point that I am making. The issues of viability and affordability did not come into play until the outline business case commenced, which started to hone down and go into more detail on the project.
23. Ms Purvis: Should that not have been done at an earlier stage, given that DEL was the major funder of the project, investing £40 million of public money? Surely the onus was on the Department to make sure that the appraisals were right from the outset.
24. Dr McGinley: If the viability had been examined at an earlier stage, the outcome may well have been altered. Again, I apologise; the Department used the processes available to it at the time.
25. Ms Purvis: From 2001, the university based its appraisals on income from 600 students rather than from 1,500 students. Did the Department challenge that approach?
26. Dr McGinley: With regard to the 600 student places, the Department gave the CSR figure. The outlook examined the variations, as can be seen in one of the appendices. The figures for a student population of 1,500 and 600 were both considered. Ms Purvis is correct: that was a key issue for viability. The Department discussed with the University of Ulster its decision to change the number of students. Mr McAuley may want to add something to that.
27. Mr McAuley: The 1999 addendum was predicated on a growth in university numbers. Those numbers were delivered upon, in the sense that the Department made the places available and they were taken up. That all happened in an atmosphere of expansion and optimism in higher education. However, the appraisal and the addendum to it were not overly optimistic about student numbers.
28. Ms Purvis: In your opinion, what was the correct method: to calculate income based on 1,500 students or to calculate income based on 600 students?
29. Dr McGinley: That was a matter for the university. To calculate income on the basis of an enrolment of 1,500 students would have made the project more viable. However, the twin issues of where those 1,500 students were to come from and how many of them would be new students had to be considered.
30. Ms Purvis: Which set of calculations should have been used in the appraisal? Should they have been based on income from the enrolment of 600 students or from the enrolment of 1,500 new students? Do you not agree that the Department should have reinforced its opinion through the internal appraisals and that the same approach should have been used consistently throughout the life of the project?
31. Dr McGinley: The figures arose from a changed context, so the appraisal examined what was on the table at that point. That was what was appraised. I do not know whether that answers your question. The change came about during the appraisal of the outline business case, when the university informed the consultants who were working on the outline business case that the figure to work with was now 600 places. As the university was the promoter, that was the figure that was used.
32. Ms Purvis: Why did the Department not challenge that figure, given that the previous four appraisals, which are listed at appendix 1 to the report, were all based on a figure of 1,500 students?
33. Dr McGinley: It was up to the university, as the promoter, to determine the number of enrolment places at the new campus. The university came up with the figure as a result of its internal reports.
34. Ms Purvis: I understand that, but the Department was the major funder for the project and was investing £40 million of public money. Surely the onus was on the Department to ensure that the appraisals were correct.
35. Dr McGinley: Yes, but the appraisals could only appraise what the promoters presented, so that is what was appraised. As a result of its internal investigations, the university, as the key promoter, changed the figure to a commitment of 600 student places, and that number was appraised in the outline business case.
36. Ms Purvis: The Department simply accepted that?
37. Dr McGinley: Again, we asked for that figure to be appraised. The outline business case was never finally completed, nor did the Department ever formally receive it. The draft final business case highlighted issues. That would have been the stage at which to challenge the viability of the numbers, but, at that point, the university had already withdrawn from the project.
38. Ms Purvis: Looking at the Audit Office report and the appraisals, it seems that, in the early days of the project, the will was there and that the economic appraisals met that will. Sometime between September 1999 and June 2001, the will to continue with the project had gone, and the economic appraisals were designed to suit that absence of will. Reading the report, I sense that the will to pursue the project had completely disappeared — both that of the Department and of the university.
39. Dr McGinley: I can account only for the Department in this instance, and I assure you that the will had not disappeared. The Department’s opinion on the university’s will for the project to continue is on record.
40. Ms Purvis: There is no evidence in the report that the Department bent over backwards to try to pursue the project. There is no documentation to show that it tried to find another funder, partner or university to join the project once the Department realised that the University of Ulster was going to withdraw.
41. Dr McGinley: I realise that it appears that way, because the Audit Office report does not show the full record. I have perused the files, and I can assure the Committee that correspondence between senior officials, Ministers and others involved clearly shows that the will to do something existed. I have already apologised and admitted that the Department should perhaps have alerted the community and BIFHE, the other partner, earlier.
42. When the matter came to a head, the Department quickly stepped in and established a review to assess what could be done and to assess whether the main campus could be retained. The Department worked closely with the Springvale board and others to establish that review. Therefore, Government did not walk away when the university withdrew. In fact, they took the project to a further stage.
43. Ms Purvis: In 1999, the private donor asked the incoming vice chancellor to give a personal commitment to the Springvale project. Was that commitment given?
44. Professor Barnett: I understand that to have been the case.
45. Ms Purvis: Does Professor Barnett know why it was not honoured?
46. Professor Barnett: Is the member asking why the project did not go ahead?
47. Ms Purvis: There was a personal commitment given to the Springvale project by the incoming vice chancellor. Does Professor Barnett know why that commitment was not honoured?
48. Professor Barnett: I believe that the commitment that was given to the donor was that the project would remain high in the university’s priorities. As I have mentioned, the issue that arose for the university was the letter of February 2000 in which the Minister set out the preconditions for the project for the first time. One of those preconditions concerned financial viability. A lot of earlier discussion in the university had concerned affordability, and that is a matter of record.
49. There was also discussion in the university about the extent to which it would be willing to cross-subsidise the project if it were not financially viable. The Minister’s letter of February 2000 ruled out the possibility of cross-subsidy by any other university campus, including Magee College or the University of Ulster’s Jordanstown campus, because the project had to be viable in its own right. The letter changed the conditions at that point.
50. The loss of the private donor’s money was unfortunate, but the university did raise £6 million of private funding that has gone towards building the £4 million community outreach centre. The university raised the full cost of the community outreach centre, which is currently being run by BIFHE, from private funders.
51. Ms Purvis: I will return to the issue of viability later.
52. Dr McGinley: It may be useful for the Committee to have a copy of the letter that the Minister wrote on 25 September 2002, which showed the terms of reference for the review and the position of Government officials at that time. The Department would be happy to furnish that.
53. The Chairperson: OK.
54. Mr Hilditch: The introduction to the NIAO report states that the project aimed to address the particular educational, cultural, social and economic needs of north and west Belfast. To what extent were those factors taken into account when the project’s viability and affordability were being considered?
55. Dr McGinley: The member has quite rightly highlighted the fact, and it remains the case, that north and west Belfast contains areas of deprivation. Of the 37 smaller geographic areas in Springvale, 30 are in the top 10% of the most deprived areas in Northern Ireland, and seven are listed as the worst deprived areas. Those factors would have been taken into account during the appraisal process. Qualitative factors were taken into account when the most expensive option was selected.
56. Mr Hilditch: Does Dr McGinley accept that the decision to not proceed was a massive blow to those areas?
57. Dr McGinley: Absolutely. [Interruption.]
58. The Chairperson: Please ensure that mobile phones are turned off as they interfere with the recording system.
59. Mr Hilditch: Following on from Ms Purvis’s question, I would like to deal with appendix 1 of the NIAO report, which presents the outcome of the financial appraisals. It appears that there was a pattern, in that when the university wanted the Springvale project it was affordable and viable, but in the later stages the university had a change of heart and the project became unaffordable and unviable.
60. Ms Purvis teased out the issues fairly well, but perhaps it is time to suggest, in a stronger way, that the appraisals were manipulated to get the results that the university wanted at that time. I direct that question to Professor Barnett.
61. Professor Barnett: The financial appraisals reflected the changing circumstances under which the project was potentially going ahead, and the final appraisals were certainly carried out on that basis.
62. Looking at the project from the university’s perspective, getting only 600 students was very important. The university was being told that the project had to be financially viable. However, what project was being offered to the university at that time? It was that the university would get only 600 additional students, and that for those additional 600 students it would be offered £40 million by the Government, not as an upfront payment, but in the form of a public finance initiative on which there would be an annual charge.
63. The project’s terms were such that the university would transfer 900 students from other campuses and would have to raise £8 million in the form of a premium to pay for the resulting social benefits. The university may have appraised the project on that basis — those were the terms of the project from the university’s point of view.
64. The project may have been appraised rather differently from the Government’s point of view — a project for the university campus as a whole, involving all 1,500 students. However, from the university’s perspective, there were never 1,500 students involved; there were only 600. Had the university counted all 1,500 students in the Springvale campus, it would have had to recast the accounts for all the other campuses and discount 900 students from the Magee, Jordanstown and Belfast sites, because that is where the students were coming from. Therefore there were differences of approach. With economic and financial appraisals, it is important to ask from whose perspective the appraisal is carried out: from the Government’s perspective or the university’s? The difference is significant.
65. Mr Hilditch: I ask the question again: were the appraisals manipulated in order to get the results that the university wanted?
66. Professor Barnett: They were not. The appraisal was carried out on the terms on which the project was offered.
67. Mr Hilditch: There appears to have been a four-year period during which appraisals were not updated. What was the Department doing during that period?
68. Dr McGinley: A long time span is involved. The university first approached the Department in 1993 with a proposal for a single, standalone campus, costing £91 million. That proposal was appraised, but, even before an interdepartmental committee was established to consider it, it was deemed poor value for money and an expensive way to provide higher education places in the area. There was, however, recognition of the social value of such a project. That was in 1996.
69. Before any formal decision was taken on that proposal, the university deferred it. Originally, the university had come forward as the promoter of that project, but, subsequently, it began work with BIFHE. A year later, in 1997, the university came back to the Department with its first proposal for a three-part campus comprising a main campus, the applied research centre and the community outreach centre.
70. Economic appraisal of that project went on throughout the following year. The subsequent addendum was published the year after that. Much of those four years elapsed during the early stages of the project, when the university effectively went back to the drawing board to decide what else was possible and to negotiate with other partners.
71. Mr Hilditch: It is established that no updates were carried out during that period. Does Dr McGinley accept that, in hindsight, that was a mistake?
72. Dr McGinley: There was nothing to update. The project that the university submitted was appraised and found to be neither affordable nor value for money. The university recognised that fact and withdrew the proposal even before it received the Government’s decision. The university then entered into negotiations with BIFHE. That accounts for the whole time span. As soon as the university came back with a new plan, the Department started a process of appraisal.
73. Mr W Clarke: Go raibh maith agat. I draw the Committee’s attention to paragraph 2.17 of the Comptroller and Auditor General’s report, which notes the Department of Education for Northern Ireland’s (DENI) comments in 1998 on the joint procurement:

"nobody had so far succeeded in carrying through such a joint project to a conclusion".

1. Given that that approach had not succeeded before, was it not ill advised to proceed with it at Springvale? Did the alarm bells not begin to ring in 1998?
2. Dr McGinley: That comment reflects the unique nature of the project, in that it was a first. The Department was pragmatic in responding in a way that recognised that both promoters were taking on huge challenges, and we were supportive of them in that attempt. It would have been seen as a lost opportunity had the Department responded to credible promoters by stating that, because such a project had never been attempted, it did not think that it would work. Both of the promoters had long track records of delivering projects of that scale and were experts in delivering higher education.
3. Instead, the Department’s response was cautious. We said that we recognised the scale of the challenge that the promoters were taking on and that it was not going to be easy. That was one of the issues that arose later: differences between the two sectors and issues arising from those differences. The Department’s commentary therefore reflects our pragmatism and wish to give the project every chance.
4. Mr W Clarke: The second point is for Professor Barnett to answer. Paragraph 3.8 of the NIAO report says that most of the £37 million capital expenditure undertaken by the university in the four years to March 2002 was financed through earmarked public and private funds. Those funds would not have been made available for the Springvale project. What was the precise amount of the £37 million that was not earmarked?
5. Professor Barnett: In one sense, it is artificial to take a period such as those four years. Over that period, the university began the new library at Jordanstown. That was a five-year project, and it cost £7·5 million, of which £5·3 million was raised externally. However, more than £1 million was included as part of that period because of the upfront costs. On average, 50% has been raised from externally earmarked sources, and the rest has come from the university’s general funding. Not all the £37 million was spent on new building; some of it was spent on general maintenance. In one year, £3·6 million was spent on maintaining the standards of the teaching rooms and £2·5 million and £1·6 million was spent on that in other years. The university substantially underinvested in general maintenance in those years.
6. Mr Craig: Paragraph 2.7 of the NIAO report summarises the findings of the 1997 Dearing Report. Dearing estimated that an outflow of students from Northern Ireland cost the economy around £45 million a year. That has been reinforced by several comments that local politicians of all shades of opinion have made. Do you agree that the fact that there are no university courses offered on the Springvale campus, as had been planned, does not help that situation? The project started off with a great political fanfare: there are no higher endorsements than those from the President of the United States. Therefore the political will to build the Springvale campus existed from the top down. The project was politically acceptable because it would have benefited north and west Belfast, but was there total agreement between the Department and the university that that was the right strategy to reduce the £45 million drain on the economy? You have already hinted that it was not; it was one of the most expensive strategies, and it did not deliver the number of students that was originally envisaged.
7. Dr McGinley: The most recent figures, from the 2001 census, show a reduction in the outward flow of students over the past 10 years from 38% to 28%. Admittedly, 28% is still a substantial amount, but it is a move in the right direction, and there is less of an outflow now than there was before. You are correct to consider the impact that a university campus at Springvale might have had on reducing those numbers further. Springvale was chosen for the socio-economic impact that it would have had on its locale and on deprivation; that was the clear objective from the outset. However, the appraisals show that it was an expensive way of delivering higher education. There has been a growth in the numbers of students in higher education since the introduction of the comprehensive spending review.
8. Mr McAuley: That was not the only action taken by the Department.
9. Under the comprehensive spending review, a further 3,000 higher education places were made available in that period. Those were divided between Queen’s University Belfast, the further education sector and other campuses of the University of Ulster. It was, therefore, part of the strategy, not the only strategy.
10. Mr Craig: I understand that it was part of the strategy. However, between September 1991 and 2001, as has been mentioned, the will in the University of Ulster — and this ties in with a strange change in its management — dried up. The University of Ulster no longer had the will to drive the project, and it put that in writing. I see no evidence that the Department was forcing the issue. I may be wrong; but if I am, prove it.
11. Professor Barnett: I will return to your initial question. A serious number of students leave Northern Ireland involuntarily: they would prefer to be in higher education here, but they cannot get a place. The Government have addressed that issue in the past, and I hope that the devolved Assembly will do so in future. One might ask whether Springvale, as part of an overall package, was effective. It was not cost-effective, and that was always made clear — hence the Springvale premium and the additional cost of providing higher education places in that area compared with others.
12. There follows the political judgement of whether that additional cost is worth paying because of the other benefits that would flow from higher education provision being made available in that area rather than somewhere else. It was decided that it was a price worth paying, and due to the economic and social benefits — over and above the narrow educational benefits — I agree.
13. However, I find it odd that although the Government thought throughout the 1990s that the area would benefit not merely from the higher education places themselves but from the social benefits that would attach to them, they thought that the University of Ulster should pay, not the Government. Therefore the premium had to be paid by the university and not the Government, even though Governments often proceed with projects that do not pay their way simply because of the social benefits that they bring. However, the university accepted the Government’s decision.
14. Throughout the late 1990s, the finances of the university sector deteriorated, so the university had that to contend with. Professor Smith was an enthusiastic supporter of the Springvale project and continued to promote it — and he would do the same today. However, he was not faced with the letter of offer, which stated that the project had to be financially viable.
15. What would have happened had there not been a change of vice chancellor? That brings us into the realm of conjecture: we do not know. Perhaps a different vice chancellor would have gone to the Government and told them that the university was unable to meet the conditions and asked them what they could do to relax them. I do not know whether that would have happened. However, a condition was set that the university could not meet, and hence, it withdrew. Someone else might have told the Government that the condition was unfair and that the university was unable to meet it and asked the Government what they could do to help. However, that question was never asked, and the Government did not offer to answer an unasked question.
16. Mr Craig: That is revealing, because people sat at this table and said that there was huge political will to see the project develop. However, it seems that if politics is not turned into cash, projects will not happen. We have heard an admission that the university did not ask for assistance and that the Government did not offer any.
17. Mr McLaughlin: Did Professor Smith, or Lord Smith of Clifton as he is now, not recently say that his retirement and the emergence of Professor McKenna as the vice chancellor brought about a seismic change in the university’s commitment to the project?
18. Professor Barnett: I cannot say whether that is Lord Smith’s view, but I can say that he was clearly an enthusiastic promoter of the project and that, with the change of vice chancellor, it was given much more critical and effective evaluation than before. However, I come back to the point that Professor Smith never had to make the decision when the precise conditions were set out by the Government, because those conditions arrived only after he had departed from office. We do not know what his reaction would have been in a situation that he did not face.
19. Mr McLaughlin: I want to develop that point, as it links into my earlier line of questioning on the management of the project. The opinion that was subsequently expressed by Professor Smith — Lord Smith, as he is now — gives the clearest indication that his commitment would have been undiminished and that he would have found a way of addressing the problems. I think that Jonathan Craig invited comment on that issue earlier.

Paragraph 2.67 of the NIAO report states: "The Institute’s Governing Body was informed of the University’s decision to withdraw from the project at its meeting on 21 October 2002. The Governing Body recorded its "deep concern and disappointment at how the University is behaving as a partner"."

1. Does that explain why no representatives of the institute are here today? If we had asked them, would they have said that on record today?
2. Dr McGinley: From my conversations with senior officials in the Belfast Institute of Further and Higher Education, I know that they were content not to be present today — they felt that I could respond. However, the statement that has been quoted continues to be the institute’s position.
3. Mr McLaughlin: I suppose that that is already a statement of record, which is helpfully recorded in the NIAO report.
4. I also have a concern that we should not be dumping on the university. As Professor Barnett said, the university was presented with a dilemma because the project was, on the face of it, economically unviable. Instead of a base of 1,500 fee-paying students, it was going to have only 600. That affected the economic appraisal. Those realities were obviously in the mind of the Department and the Government when making the decision. In addition, Professor Barnett has indicated that, despite the difficulties and the challenges that were presented, the university accepted that paradigm.

Paragraph 20 of the executive summary of the NIAO report states that, during the conduct of the Audit Office investigation, the Department said: "its analysis at the time was that the University had lost the will for a joint equity venture and wished to constrain its role at Springvale."

1. Does that not contradict the evidence that we have heard from the accounting officer today? The NIAO report indicates that the Department’s view was that the university had lost the political will, but she suggested that the university’s commitment had continued right up until the outline business case was produced.
2. Dr McGinley: That is the point that I made earlier about mixed messages. On the one hand, the university wrote to us about its concerns in November 2001, and that letter is reproduced in appendix 4 of the NIAO report. We had a meeting — a very robust meeting — with the university in December, and we felt that we had to give it time to resolve the issues. However, on the other hand there was evidence in the subsequent months that the university would continue with the project as originally agreed.
3. As the outline business case was the means by which we would appraise the eventual project pre-PFI, we gave the promoter the opportunity to try to resolve the issues. However, as the vice chancellor has pointed out, we were never approached for additional subsidy. As part of the CSR settlement, the university was awarded ring-fenced places for Springvale and additional places for its other campuses, and, in theory, it was within the university’s gift to apply those places wherever it wished. When the university came back to us after carrying out its internal enquiries and when the outline business case showed that the project was not affordable or viable, we had to decide where we should go next. We made that decision quickly with the Springvale board.
4. Mr McLaughlin: The outcome shows that the Department ended up sharing the university’s view — if it did not already — and it also lost the will to proceed and threw in the towel.
5. Dr McGinley: It is not the Department’s prerogative to force a university to do something that it does not want to do.
6. Mr McLaughlin: That is not my point. No one around the table argued that. Let us not shift the focus. Did the Department fulfil its responsibility, given the political priority, to deliver on Springvale?
7. Dr McGinley: Yes.
8. Mr McLaughlin: We are not undermining or changing the terms of reference of the autonomy of the university.
9. Dr McGinley: Absolutely. The letter of 25 September 2002 will show that there was still a very strong, continued, political will to try to make the project work.
10. Mr McLaughlin: Therefore we end up with a £4·5 million project instead of a £70 million project.
11. Dr McGinley: It will eventually amount to £17 million plus, and, in the past five years, £7·5 million of recurrent expenditure has been allocated to the district.
12. Ms Purvis: Professor Barnett talked about viability. He said that the £8 million was a problem and that the recurrent loss was a problem. However, subsequent to 1999, the private donor asked the university to come back if it had difficulty raising the funding for the Springvale project. In 2002, did the university go back to the donor when it was experiencing — or becoming aware of, for want of a better term — financial difficulties? Did you ask the donor for additional funding?
13. Professor Barnett: I do not believe that the university went back at that point, but I would have to check.
14. Ms Purvis: That lends further evidence to the assumption that there was no will to pursue the project, because, quite clearly, the donor had offered the university and the institute the opportunity to come back if there were funding difficulties. That says to me that if money could have been found elsewhere, there was no will to pursue the project.
15. One of the appendices in the NIAO report states that there could be a possible deficit of between £0·5 million and £1·5 million a year. Within the context of the £120 million budget, that is tiny. If that were taken in the context of the Magee, Coleraine and Belfast campuses running at a deficit, the university could have chosen to incur those costs to make the project affordable.
16. Professor Barnett: First, as I have said, the university is not making a deficit now and has not done so for several years: it is making a surplus. However, not all the university’s projects are financially viable. It is a strategic decision for a university to invest in some areas that do not pay their own way. That is what it is all about, and that is why we have an overall budget. Clearly, through time, if the university invests in a new project that does not pay its way initially, it will work towards how that project will pay its way through time. There are many instances where the university has invested in projects and, initially, they have not paid their way, and that is fine.
17. The important issue is that the university was offered specific funding for the Springvale project, and a precondition of that was that the project had to pay its own way. Following the letter of 25 September, it was not an option for the university to say that because the project was not paying its way, it would be subsidised. The Department would not have let the university go ahead on that basis, because the outline business case shows, and the Audit Office agrees, that the project was not financially viable.
18. The university has freedom and leeway with projects that it generates internally, but the Springvale project was externally funded, and a condition of the main funder was that it had to be financially viable. The funder did not give the university the option of cross-subsidy.
19. Ms Purvis: The university could have chosen to incur the costs.
20. Professor Barnett: No; the university would not have been given the money.
21. Ms Purvis: The university could have pushed that issue with the Department, and it chose not to.
22. Professor Barnett: You are correct: that issue was not pushed with the Department.
23. Ms Purvis: Given the failures with funding, what, in practical terms, did the Department do to encourage the university to raise more private funding?
24. Dr McGinley: Two letters of offer were sent; one in April 1998 and another in February 2000. Both those letters included the condition that the University of Ulster and BIFHE each had financial contributions to find, and both partners confirmed that they would fulfil that condition.
25. I understand the point about the project being a journey in which the context changed. As we were told, the University of Ulster subsequently discovered that the funding environment had changed, particularly in the United States of America. However, the Department received signed commitments from both promoters that they would find funding for what was known as the Springvale premium.
26. Ms Purvis: Although there was a lack of will on the university’s part in 2002, it seems to have been matched by a lack of will in the Department for Employment and Learning to pursue the project. The lack of will is stark in the mind of the community. On 26 September 2002, the day after the Department’s decision to initiate a review, the university issued a statement saying that: "Whatever the outcome of the review, the University will continue to work with its partners in further education to provide a seamless network of educational provision…to address the educational underachievement in West and North Belfast… and to accelerate the process of entry to university for the people of the area".
27. Twenty days later — on 16 October 2002 — the university announced that it was withdrawing from the project. That was a shock to the local community. There was no consultation whatsoever. That was absolutely scandalous.
28. Professor Barnett: I can only apologise again. I have apologised for the way in which the university behaved throughout that period. It was wrong.
29. Mr Beggs: Mr McAuley said that some 3,000 additional higher education places had been created during the period in question. One of the economic appraisals contained in appendix 1 of the report reveals that an enrolment of 1,500 students at the Springvale campus would be viable. In another appraisal, an enrolment of 1,500 students showed a slight deficit of £280,000 a year, which the university might have been able to manage. It was obvious that the 600-place model, which was the final offer made to the university, was uneconomic, yet the appraisal declared both arrangements not operationally viable.
30. Aware that an uneconomic offer was on the table that would have been a drain on its resources, the university appointed a new vice chancellor, changed direction and developed interests in biosciences and linkages with industry. Given the choices offered by the Department for Employment and Learning, I can understand why the university made that decision. Why did the Department not insist that, of the 3,000 new places, 1,500 went to Springvale — if that was the Department’s priority?
31. Had the Department determined that the project was not in the overall best interests of the Northern Ireland economy? Why did the Department not insist that those 1,500 places had to go to Springvale? Had the Department recognised that it had created unrealistic expectations? In hindsight, would it not have been better to create a state-of-the-art further education campus with good linkages to further education? That would have delivered a realistic expectation to the people of west Belfast — to the Shankill, the Falls and further afield — by delivering more easily accessible local further education places with good linkages to higher education.
32. Dr McGinley: Mr McAuley will address the issue of enrolment numbers. However, the Department’s commitment was demonstrated by the fact that it ring-fenced 600 places for Springvale. The autonomy of the university to —
33. Mr Beggs: The 600-place model made the project economically unviable. The fact that 600 places were ring-fenced means nothing.
34. Dr McGinley: The choice was there with the additional places. The university was able to choose how it applied the 1,500 places across the four campuses. It had a financial decision to make, as well as an academic one. I am entirely in agreement with you, Mr Beggs, given the view in hindsight.
35. I hope that what is emerging on the Springvale site is access to higher education through further education. The journey has been a long one, by a different and potentially more complex route, but the Department for Employment and Learning’s general investment in linkages between further and higher education in the years since this episode have been significant.
36. Mr Beggs: Mr McAuley, you were head of the higher education division from September 2001. Admittedly, a bad hand was dealt to you when you arrived, because it appears that many mistakes were made before then. However, if a significant number of places had been directed specifically towards Springvale, the project would have been economically viable and would have proceeded. Why did it not happen?
37. Mr McAuley: I answered a question earlier about whether the 600 places for Springvale were the sole contribution to meeting the need for expansion in higher education. That was the context in which I made that point. Those places were absorbed by the university over time from 1998 and allocated elsewhere.
38. Mr Beggs, you asked why the Department did not insist that enrolment places be directed specifically towards Springvale. I reiterate Dr McGinley’s point that the Department was not in a position to insist on how a university allocates places across its campuses. The Department had not decided that another model at Springvale could not work. The Minister’s review letter in September 2002 invited the Springvale board to come back with an option that combined higher education and further education on the site if possible.
39. Mr Beggs: I wish to pursue this matter, because the 1,500 places would have required additional capital expenditure, buildings, course lecturers, administration, etc. If it had been determined that those 1,500 enrolment places would all be located on one site, the project would have proceeded. However, the Department, or you, personally, decided that that would not happen. Surely that means that the will did not exist. Why not? Why did you allow the universities to do whatever they wanted? Did the Department determine that it was not in the best interests of the Northern Ireland economy for the project to continue?
40. Mr McAuley: The places were allocated as part of a drive to expand higher education. It was for the recipients of those extra places to allocate them as they chose. The University of Ulster could have allocated some of them to Springvale, but the Department, apart from the 600 places that were ring-fenced, was not in a position to direct that that happen.
41. Mr Beggs: Are you saying that the Department provides the money yet has no say in what happens with it?
42. Dr McGinley: As I outlined, there is autonomy in the relationship. The Department does not dictate the business of the university. It is for the university to determine where its resources are used. Obviously, there is a business-planning process and agreed academic plans and so on, but —
43. Mr Beggs: However, presumably, the Department could have come up with a different arrangement for providing the finance? It could have left so many places for the university to be flexible with and dictated that a certain amount of money went into capital and new-build programmes at a certain site. Was that not an option for the Department?
44. Dr McGinley: The ring-fencing of the 600 places was a manifestation of that.
45. Mr Beggs: But we have established that that was meaningless.
46. Mr McAuley: The offer that was made in February 2000 was accepted. It was not until the outline business case was presented in the middle of 2002 that the Department became aware that the university considered, at that stage, that it could not cope with the financial consequences.
47. Mr Beggs: I have made my point.
48. Mr Dallat: The evidence session is probably drawing to a close. This inquiry has been useful, and I am already thinking about the recommendations that the Committee might wish to make as a result. The key lessons to be learned have been identified on page 44 of the Audit Office report.
49. The word "autonomy" has arisen several times towards the end of the meeting. Given that the University of Ulster, and other universities, will play an increasing role in our future economic lifestyle — they are the catalyst for the delivery of intellectual knowledge and the skills and training that is needed to promote Northern Ireland as a place where well-paid secure jobs can be found — it worries me that the university’s autonomy has been used several times in the past half hour to explain why certain things did not happen.
50. I wonder what lessons need to be learned for the future. Without wishing to be repetitive, I acknowledge the enormous role that the University of Ulster has played in the lives of people in Coleraine, Derry, Jordanstown and Belfast. We cannot underestimate that, and its role will be even more important in the future. What lessons can the Department learn?
51. On the one hand, the Department must respect the university’s autonomy. At the same time, however, it must have the confidence and trust of the university to ensure that, outside the campuses, it will benefit the lives of all the people of Northern Ireland.
52. Dr McGinley: Over the years, and particularly in the past couple of years, a very good relationship has developed between the Department and both universities. As Mr Dallat pointed out, the universities are increasingly becoming the engine room of social and economic development in the region.
53. Both universities, through the Economic Development Forum, produced a joint response to the Department’s skills strategy, which was launched last year and which encompasses higher education and further education. The joint response outlined how the universities will develop work on the Department’s skills strategy. They are examining innovation jointly. The Department is acquiring a more strategic role.
54. Mr Dallat is right that the Department must strike a balance between giving universities the autonomy to become world-class leaders in research, development, teaching and learning and equal with their peers on the world stage while bearing in mind that 50% of their resources are provided by public money, which must be accounted for. That is not an easy balance to maintain.
55. However, the Department and the universities have worked hard to ensure that we are on-message in supporting the economic development and social inclusion strategies. That is starting to pay off considerably.
56. Mr Dallat: I regard that as a significant contribution to the inquiry. I hope that it is reflected in the report and in everything that follows it.
57. Mr Lunn: The discussion keeps returning to a lack of will. I wonder whether it was a lack of will on the part of the university to continue with the project or to continue co-operating with BIFHE. Ms Purvis mentioned paragraph 2.67:

"The Governing Body recorded its ‘deep concern and disappointment at how the University is behaving as a partner’."

1. In its agreement to participate in the review, the university said in paragraph 2.64 that its:

"commitment… to the economic regeneration of the area through such as incubator units… is undiminished."

1. A few months later, the university was criticised by BIFHE for its behaviour. It informed the institute that it no longer wanted to be involved with management or ownership of the plan for the applied research centre, which would have been instrumental in the establishment of those incubator units. What was going on? To use the vernacular, that was "putting the boot in".
2. Dr McGinley: I assure the Committee that there is a very good working relationship between the university and BIFHE, despite what happened in the past. Indeed, a high level of quality provision is being provided through foundation degrees. The development of a practical working partnership has not been hindered. I assure the Committee that BIFHE would be the first to say that it welcomes its proactive relationship with the university.
3. Mr Lunn: As other members said, I wish that a representative from BIFHE had been present to confirm that. It certainly was not the case in October 2002 when, clearly, there were bruised feelings. The university said that its commitment to economic regeneration was "undiminished"; yet, a couple of months later, it withdrew completely from the project, having already withdrawn its support for the overall concept. However, the university had said that it would maintain that part of the project, which was at least an effort to salvage something from the wreckage. How does the university’s decision demonstrate a commitment to economic regeneration?
4. Professor Barnett: I have worked with the colleges for many years. The university’s relationship and partnership with BIFHE and with the other regional colleges, particularly as they merge into the six new super-colleges, is of great importance. It is also of great importance to the future skills development of Northern Ireland. I assure the Committee that, for as long as I am vice chancellor of the university, that good relationship will continue and will be developed.
5. I accept and appreciate what BIFHE’s governing body said at the time. The institute was a key partner in a key project. The university wrote private and confidential letters to the Department stating that it had problems working with its partner, but the university did not share those concerns with the partner. That was an unacceptable way for the university to behave in such an important project. I accept that and apologise for it. The sentiments that were expressed by the governing body were quite understandable.
6. Mr Lunn: You have been honest. I thank you very much for that.
7. The Chairperson: No other members have indicated that they wish to ask questions, so I will conclude the evidence session by making a few comments — first, my own opinions, then my conclusions as Chairperson of the Committee.
8. I opened my remarks by saying that BIFHE should have been represented at this meeting, and a number of colleagues have supported me on that. That is worth reflecting on, Dr McGinley. The witnesses will have realised from the intensity of the Committee’s questioning that the project has been taken seriously.
9. In my view, the failure of the project centres on a lack of will to succeed. It is credible that the university was not prepared to take on an ongoing deficit, but, given the political goodwill towards the project, if the university had gone to political representatives across the spectrum, a lobby would have been formed to ensure that that money came forward. I have no doubt about that — the US President and the British Prime Minister do not just open up any old university. The community was 100% behind the project, as were the political representatives. Why did the university not approach political representatives? Why was a case not made?
10. As for the Department’s failure to let anyone know the state of affairs earlier, I have a similar suspicion. If people had known about that earlier, there would have been a political lobby that the Department could not have ignored because of the importance of the scheme to some of the most deprived wards not only in the North of Ireland, but in Europe. Those communities were completely let down. As an individual — not as the Chairperson of this Committee — I have strong suspicions as to why that was the case. Unfortunately, as the Chairperson of the Committee, I cannot include suspicions in a report. We follow a paper trail, and the evidence that is required to support those suspicions will not have been written down or be in any paper trail anywhere.
11. In moving on to my conclusions as Chairperson, I thank the witnesses and acknowledge the apology from Professor Barnett for how the university dealt with the community. Dr McGinley also apologised at a later stage. It is up to the community that was let down by failure of the project and their political representatives to decide whether that apology is worth anything, but at Committee level, we acknowledge and accept it.
12. I thank you for appearing before the Committee. There are several points that you have promised to follow up in writing. Mr McGlone had wished to ask a couple of questions, but he cannot be here for valid reasons. I believe that his questions have been answered, but we will present them to you in writing to ensure that his points are covered.
13. As I have said, the Committee will return to the evidence that we heard today, and, as you are aware, Dr McGinley, you are accountable to the Committee in your role as the Department’s accounting officer. When our report is published, we hope that — although we may never get to the crux of why the project failed — you will ensure that such a situation never arises again. Thank you for your time.

Appendix 3

Correspondence

Chairperson’s letter of 15 June 2007 to Dr Aideen McGinley, Accounting Officer,
Department of Employment and Learning.

Chairperson’s letter of 22 June 2007 to Dr Aideen McGinley, Accounting Officer,
Department of Employment and Learning.

Correspondence of 29 June 2007 from Dr Aideen McGinley, Accounting Officer,
Department of Employment and Learning.

Correspondence of 10 July 2007 from Professor Richard Barnett,
Vice Chancellor University of Ulster to Dr Aideen McGinley, Accounting Officer,
Department of Employment and Learning.

Correspondence of 18 July 2007 from Dr Aideen McGinley, Accounting Officer,
Department of Employment and Learning to Professor Richard Barnett,
Vice Chancellor University of Ulster.

Correspondence of 6 July 2007 from Belfast Institute of Further and Higher Education
(now known as Belfast Metropolitan College).

Correspondence of 2 August 2007 from West Belfast Partnership Board.

Correspondence of 17 August from North Belfast Partnership Board.

Correspondence of 25 September 2002 for Mrs Carmel Hanna,
former Minister for Employment and Learning.

Chairperson’s letter of 15 June 2007

Public Accounts Committee
Parliament Buildings
Room 371
Stormont Estate
Belfast
BT4 3XX

Tel: (028) 9052 1208
Fax: (028) 9052 0366

Northern Ireland Assembly
Public Accounts Committee

Date:15 June 2007

Dr Aideen McGinley
Accounting Officer
Department of Employment and Learning
39 – 49 Adelaide Street
Belfast
BT2 8FD

Dear Dr McGinley

Re: Public Accounts Committee meeting on 14 June 2007

Further to the evidence session at the Public Accounts Committee yesterday, please provide the following additional information which members requested at the meeting:

1. Numbers of students from West and North Belfast who study at the University of Ulster in 2007, compared with 2002.
2. At the time when the Springvale project failed, only 0.4% of the population in Shankill Ward reached further and higher education. Please provide details of what percentage of the population in Shankill Ward reached further and higher education in the current year.
3. The private donor asked the University of Ulster to come back to him if difficulties were experienced in raising the funding for the Springvale project. Did the University go back to the private donor explaining that they were experiencing difficulties?

The following questions were to be asked by Mr McGlone who was unable to attend the meeting:

1. At paragraph 2.14 we see that the Department decided that the assessment of project viability under Higher Education Funding Council for England (HEFCE) procedures could wait until the external funding was in place. The external funding was secured by March 2000 (paragraph 2.31), yet the viability assessment was not carried out. Why did you not insist on this important step?
2. Paragraph 2.26 sets out the University’s first assessment of viability in March 1999. This estimated that 1,500 students would bring in £5.5 million a year, which would more than meet the annual costs of £3.4 million. But it must have been obvious to those compiling the report that if they counted only the income from the 600 new students, Springvale could never break-even. Was it not clear to everyone from the outset that Springvale, on this basis, was never going to be financially viable?

The Committee would appreciate this information by 29 June 2007.

Yours sincerely

John O Dowd
Chairperson, Public Accounts Committee

 

Chairperson’s letter of 22 June 2007

Public Accounts Committee
Parliament Buildings
Room 371
Stormont Estate
BELFAST
BT4 3XX

Tel: (028) 9052 1208
Fax: (028) 9052 0366

Northern Ireland Assembly
Public Accounts Committee

Date:22 June 2007

Dr Aideen McGinley
Accounting Officer
Department of Employment and Learning
39 – 49 Adelaide Street
Belfast
BT2 8FD

Dear Dr McGinley

Re: Public Accounts Committee meeting on 14 June 2007

I refer to my letter of 15 June 2007.

You indicated in your evidence that "statistics from the most recent census show that there has been a 73% increase in the number of young people from the Springvale area who have gone on to study for a first degree". Members have requested that you provide the base figure relating to the above statement.

The Committee would appreciate this information by 29 June 2007. I apologise for the short timescale.

Yours sincerely

John O Dowd
Chairperson, Public Accounts Committee

Correspondence of 29 June 2007 from
Dr Aideen McGinley

From The Permanent Secretary
Aideen McGinley

 

Adelaide House
39-49 Adelaide Street
Belfast BT2 8FD
Tel: 028 9025 7833
Fax: 028 9025 7878
email: permanent.secretary.office@delni.gov.uk

John O’Dowd Esq MLA
Chairperson
Public Accounts Committee
Northern Ireland Assembly
Parliament Buildings
Stormont Estate
BELFAST
BT4 3XX 29 June 2007

Dear Mr O’Dowd

Public Accounts Committee On 14 June 2007

Thank you for your letter of 15 June 2007. The additional information requested is as follows.

Q1. Numbers of students from West and North Belfast who study at the University of Ulster in 2007 compared to 2002?

The figures for the number of full-time undergraduate students from West and North Belfast^[1] studying at the University of Ulster in academic years 2001/02 and 2006/07 are:

	2001/02	2006/07	% change 2001/02 to 2006/07
West Belfast	578 (0.7%)	666 (0.8%)	+15.2%
North Belfast	412 (0.5%)	478 (0.6%)	+16.0%
Total	990 (0.6%)	1,144 (0.7%)	+15.6%

Figures in parentheses represent the number of students studying at the University of Ulster expressed as a percentage of the relevant total population. Population figures for 2001/02 and 2006/07 are based on the most recent and up-to-date NISRA population projections for 2002 and 2005, respectively.

Q2. At the time when the Springvale project failed, only 0.4% of the population in Shankill Ward reached further and higher education. Please provide details of what percentage of the population in Shankill Ward reached further and higher education in the current year?

DEL statisticians have been unable to confirm the figure of 0.4% as quoted in your correspondence dated 14 June 2007. However the following table for the years 2001/02 and 2005/06 sets out the percentage of higher and further education enrolments from the Shankill Ward.

Enrolments	2001/02	2005/06
Further Education	99	165
Higher Education	20	33
Total	119 (3.1%)	198 (5.3%)

Figures in parentheses represent percentage of total Shankill Ward population

Notes

• HE enrolments include those on HE courses within FE colleges
• FE enrolments figures are sourced from the Further Education Statistical Record
• HE enrolments figures are sourced from HESA
• 2001/2002 total population figures for the Shankill Ward are based on the 2001 Population Census
• 2005/2006 total population figures for the Shankill Ward are based on the most recent available NIRSA estimates, 2003.

Q3. The private donor asked the University of Ulster to come back to him if difficulties were experienced in raising the funding for the Springvale project. Did the University go back to the private donor explaining that they were experiencing difficulties?

In his response to this question at the Public Accounts Committee evidence session, Professor Barnett stated that he "did not believe that the University went back at that point". Having checked its records, the University of Ulster can find no formal evidence to confirm that a further approach was made to the private donor at that point.

Q4. At paragraph 2.14 we see that the Department decided that the assessment of project viability under Higher Education Funding Council for England (HEFCE) procedures could wait until the external funding was in place. The external funding was secured by March 2000 (paragraph 2.31), yet the viability assessment was not carried out. Why did you not insist on this important step?

The guidance by the Higher Education Funding Council for England (HEFCE) at that time recommended that institutions’ appraisals of potential capital projects should consider the impact of such proposals on the viability of the institution as a whole. The 1999 Addendum to the Economic Appraisal concluded that the proposed project was viable in that sense. It was therefore in line with the HEFCE guidance. Neither that guidance nor current HEFCE guidance recommends a commercial appraisal of the viability of a project on a stand-alone basis. A further, detailed appraisal would have been undertaken when the promoters submitted their outline business case to the Department. However, as outlined in paragraph 2.45 of the report, the promoters withdrew before submitting the outline business case.

Q5 Paragraph 2.26 sets out the University’s first assessment of the viability in March 1999. This estimated that 1,500 students would bring in £5.5 million a year, which would more that meet the annual costs of £3.4 million. But it must have been obvious to those compiling the report that if they counted only the income from the 600 new students, Springvale could never break-even. Was it not clear to everyone from the outset that Springvale on this basis, was never going to be financially viable?

The University of Ulster has supplied the following response:-

"The March 1999 assessment was based on inter alia the following:

(i) Academic years 1999/2000 to 2001/2002 an additional 800 fully-funded student places to the University of Ulster following the outcome of the 1998 Comprehensive Spending Review;

(ii) A further 600 fully-funded places agreed and ring-fenced for the Springvale Educational Village; and

(iii) An assumption that over the period 2002/2003 to 2008/2009 a further 900 fully-funded places would be made available to the University.

By 2001/2002, when the Outline Business Case was being compiled under the terms of the Minister’s Letter of Offer, it was clear that the assumption under point iii) was not going to be realised and the basis of the 1999 assessment was thus invalidated".

The Department did not receive a copy of the University’s March 1999 assessment. The Department’s conditional offer of February 2000 was accepted by the promoters as a basis on which to begin work on the Outline Business Case. It was expected that, following detailed appraisal of the Outline Business Case, the Department would have made a final offer. The Outline Business Case was never submitted to the Department because the University decided to withdraw. The February 2000 conditional offer was predicated on the September 1999 Addendum to the Economic Appraisal, which proposed that, in addition to the 600 new students, 900 student places would be provided from the University’s overall allocation and concluded that Springvale could be viable on this basis. This was reasonable because, although the University had by then decided not to close the York Street campus and transfer places from it to Springvale, as part of the 1998 Comprehensive Spending Review, the University of Ulster had been allocated an additional 900 fully funded student places plus 600 places ring-fenced for Springvale. The Department did not expect viability to be achieved solely from the income derived from the ring-fenced 600 additional places. This latter approach by the University to the assessment of viability arose for the first time in the draft Outline Business Case, which had been prepared for the promoters. For the information of the Committee the forecast in the 1999 Addendum that overall student numbers at the University of Ulster would increase to 18,665 by 2002/03 was slightly exceeded at 18,791.

Thank you for the opportunity to provide this further information.

Yours sincerely

Aideen McGinley

[¹] The figures are set out by Ward within the Assembly/Westminster constituencies of West and North Belfast:

West Belfast: Twinbrook; Collin Glen; Poleglass; Kilwee; Whiterock; Shankill; Ur Springfield; Glen Road; Ladybrook; Glencairn; Glencolin; Highfield; Andersonstown; Clonard; Falls; Falls Park; Beechmount.

North Belfast: Valley Newtownabbey; Whitehouse; Dunnaney; Coole; Abbey; Woodvale; Water Works; Legoniel; Fortwilliam; Chichester Park; Cliftonville; New Lodge; Bellevue; Crumlin Belfast; Duncairn; Castleview; Cavehill; Ardoyne; Ballysillan.

Correspondence of 10 July 2007 from Professor Richard Barnett,
Vice Chancellor University of Ulster

Dr Aideen McGinley
Permanent Secretary
Department for Employment and Learning
39 - 49 Adelaide Street
Belfast
BT2 8FD
10 July 2007

Dear Aideen,

Public Accounts Committee meeting on 14 June 2007 - response to supplementary question

Further to your request for a response from the University to Mr O Dowd’s letter of 2 July seeking further clarification on our earlier reply to question 3 namely:

Could you please inform the Committee if any approach was made to the private donor at any time?

The University can respond:

"It is understood that the then Vice-Chancellor, Professor McKenna, met personally with representatives of the private donor’s organisation to inform them of the University’s position and the reasons for its withdrawal from the Springvale Educational Village project. Neither the precise date of this meeting nor the nature and substance of the exchange are known to any officers currently at the University. However, it is further understood that Professor McKenna may have asked the private donor’s organisation at that time if it might be able to look favourably upon maintaining all or some of its funding commitment for any other educational project at Springvale that might come out of the Springvale Board’s review initiated by the then Minister for Employment and Learning. It is, again, understood that the private donor’s organisation was unable to so commit. As stated in our earlier response, there is no formal evidence available to confirm or refute this.

The University has subsequently received capital and recurrent grants from the same private donor earmarked for specific developments at its existing campuses. The most significant of these was the major Specific Programme for University Research (SPUR) initiative funded jointly by the Department for Employment and Learning and the private donor."

I trust that this response adequately addresses the supplementary question but, if you need further assistance please contact my office.

In closing, I would wish to register the University’s deep concern at the Department’s response at question 5 to the Public Accounts Committee’s initial request for additional information. The final paragraph of your letter of 29 June 2007 to Mr O’Dowd refers. As the Department’s records will show, the additional funded HE student places made available following the 1998 Comprehensive Spending Review were allocated to the universities through a bidding process under strict criteria set by DEL relating to regional skills-shortage subject areas. The University bid for, and was allocated by DEL, additional places across its campuses for increased or new provision in these subject areas. This included, for example, further Information Technology places at Magee which it could not, and indeed would not, have transferred to Springvale if had gone ahead. Therefore we find it disingenuous of the Department to imply that the University could have used these places for Springvale or have costed them into the Outline Business Case for Springvale which, as I advised the Public Accounts Committee during the evidence session, was prepared in accordance with the conditions set out in the Minister’s Letter of Offer - that the Project had to be viable.

I’m sure you will understand that, in view of this concern, we are copying this correspondence to the Public Accounts Committee directly.

Yours sincerely

Richard Barnett

Correspondence of 18 July 2007 from
Dr Aideen McGinley

From The Permanent Secretary
Aideen McGinley

 

 

Adelaide House
39-49 Adelaide Street
Belfast BT2 8FD
Tel: 028 9025 7833
Fax: 028 9025 7878

email: permanent.secretary.office@delni.gov.uk

Professor Richard Barnett
Vice Chancellor
University of Ulster
Cromore Road
Coleraine
BT52 1SA 18 July 2007

Dear Richard

Public Accounts Committee Meeting on 14 June 2007 –
Response To Supplementary Question

Thank you for your letter of 10 July 2007.

I am surprised that you found our contribution to the reply to Question 5 disingenuous. The question refers to the University’s first assessment of viability in March 1999 and relates to the judgements made at the outset about the viability of the joint venture project. I take the view that we should each explain to the Committee our respective understanding of the position at that time. Evidently these differ; I have therefore set out a fuller explanation below of the position from the Department’s perspective.

The September 1999 Addendum to the Economic Appraisal refers at paragraph 2.3 to the CSR additional places and at paragraph 2.5 states that these places will generate additional income and improve financial stability within both institutions. Paragraph 4.6 of the same document concludes that "a marginal operating surplus is achievable when Springvale is added to the existing four campus structure of the University and that the additional recurrent cost of the human, physical and technical infrastructure required for the University’s share of the Village can be provided from anticipated income streams."

The Minister’s letter of February 2000 was predicated on this. It did not require the Springvale campus to be viable on a stand-alone basis, stating that a formal letter of grant would "reiterate the expectation that the campus development will take the form of a PFI contract; the need for certain other specific clearances in line with guidance from the Department of Finance and Personnel in relation to the Outline Business Case and financial viability;…" This guidance does not require an Outline Business Case to demonstrate that a project is viable on a stand-alone basis. Rather, it requires an Outline Business Case to conform to Green Book appraisal standards and to demonstrate that the promoters can afford the proposed project.

This explanation is necessary to give the Committee a full answer to its question. Equally, in accepting the Department’s conditional offer as a basis on which to begin work on the Outline Business Case, the promoters must have accepted that it was possible for the project to be financially viable as set out in paragraph 4.6 of the Addendum, as quoted above.

I trust this further clarifies the points made and I am copying to the Committee for their information.

Yours sincerely

Aideen McGinley

Correspondence of 6 July 2007 from Belfast Institute of Further and Higher Education

From the Director
Mr W Brian Turtle CBE, MSc, FCA, FRSA

The Gerald Moag Campus
B1 L2 09
125-153 Millfield
Belfast
BT1 1HS

6 July 2007

Ms Cathie White
Clerk to Public Account Committee
NI Assembly
Parliament Buildings
Room 371
Stormont Estate
Belfast
BT4 3XX

Dear Ms White

Springvale Educational Village Project

I refer to your letter of 25th June 2007.

In response to your specific questions I would wish to make the following response.

At the time the Institute was shocked at the decision of the University to pull out but notes and accepts the apology made during the proceedings of the hearing at your committee.

1. While at the time considerable concern and annoyance was expressed at the withdrawal, this changed to a commitment to sustain the Millennium Community Outreach Centre (MCOC) and compliment it with the Workforce Development Centre which will provide opportunities for students to gain employability skills through industry specified project work, progress these projects where appropriate to pre-incubation self-employment activities, provide a venue for support for SMEs and provide access for pupils in local schools to industry standard equipment through the vocational training through the entitlement framework.
2. The MCOC centre provides a location for such crucial bodies as the West Belfast and Greater Shankill Employers Forum, the Employment Services Board and Enterprise Council as well as North West Trust Training facilities.

The Workforce Development Centre or E3 as it is to be called (Education, Enterprise and Economic Development) is at an advanced stage of planning with funding in place through DEL and IFI.

In addition both centres provide significant employment for local people.

The Institute believes that these facilities which it has planned and developed as a result of the failure of the partnership project will do much to help lift the skills of local people.

Yours sincerely

W B Turtle
Director and Chief Executive
Director Designate, Belfast Metropolitan College

Correspondence of 2 August 2007 from
West Belfast Partnership Board.

Introduction

The West Belfast Partnership Board welcomes the opportunity to make this submission to the committee and particularly the opportunity to put on record the experience of the communities in North, West Belfast and greater Shankill throughout the 10 years of the development of the Springvale Educational Village proposal.

We welcome this as the first real opportunity the communities have had to put on official record their experiences of this project and the decision by the University of Ulster to unilaterally collapse the project. The Audit office while carrying out its investigations did not seek the communities views but they are undoubtedly the people that were directly affected by this decision and it has had, we believe, a long-term impact on the social and economic regeneration of these most deprived areas of the north.

The NI Audit Office stated:

‘One of the most significant points to emerge from our review is the considerable amount of time and resources which have been committed periodically since 1993 to the development of a campus at Springvale......Moreover there has been an important and very substantial voluntary commitment from the local partnership boards and the wider community. It is particularly disappointing to all concerned therefore that the larger part of the project did not proceed as planned.

While this sums up what happened in relation to the project it does not begin to capture the immense amount of work, human and financial resources put into the development of this project by the local communities. We hope that this paper will give a flavour of some of that effort.

Context

While examining the impact of both the proposed campus and the decision by the University of Ulster a decade later to collapse that proposal it is important to recall the social and political context in which the proposal was initially made and developed. In 1990 British Minister Richard Needham announced the Springvale Development Scheme that was to be the first major regeneration scheme ever proposed for West Belfast. It was proposed, as the relocation of Mackie’s Foundry from one side of the Springfield Road to the other would free up substantial acreage for housing, infrastructure and industrial development. At this stage the community lobbied strongly for the Scheme to be given the same profile and resources as the Laganside Corporation. Of course this never happened and the entire scheme suffered as a result of this lack of coordination and a Board to champion the development of the area. The Scheme was the responsibility initially of the DOE who prepared the lands for building and refurbishment. The Business Park and roads were designed and built and parcels of land then allocated to the IDB, Housing Executive and DSD. One of the premises of the Development Scheme was that the community would be directly involved at all stages of the development and indeed were encouraged to develop their own proposals i.e. for Site A between Springfield and Avenue and Springfield Drive. The community, at that time, through the Foundry and Forth River Trusts sought to ensure that the community was involved in all decisions that would affect their lives. As a core element of community involvement in the Springvale development Scheme, two Trusts had been established in Greater West Belfast and the Shankill. These were the Foundry Regeneration Trust and the Forth River Trust. Both were established and funded to ensure community involvement in all elements of the scheme. Initially both Trusts employed a core staff of two people. By the time the Trusts were closed by Belfast Regeneration Office in 1998 the Foundry Regeneration trust had a core staff of 5 people and had established a child care provision in the are employing a further two staff. The work of the two Trusts was to develop community proposals for the Springvale area and to facilitate consultation on the core areas of the Springvale development Scheme i.e. housing, physical infrastructure, industrial development and social and economic regeneration. From 1993 the Springvale campus proposal took up an inordinate amount of staff, management and the communities time.

The community was therefore heavily involved in consultation on the housing redevelopment in Beechmount and Clonard as well as the front of the Springfield Road. Springvale Training Centre was also built as an integral part of the Scheme. Community representatives also took advantage of the opportunities to meet with potential investors and funders to promote the area for inward investment and to seek to develop indigenous businesses that the Scheme provided space and opportunity for.

All of this took place prior to the first IRA ceasefire so the community was working in a difficult and often hostile environment and trying to redress decades of discrimination and government neglect. This was the community that at that time had been labeled the ‘terrorist community’ by British Ministers.

West Belfast at that time, and indeed as it is today was the most deprived constituency in the north of Ireland according to objective measures of Deprivation.

In 1991 Professor Pete Townsend produced his Index of deprivation for the north of Ireland[1]. This followed on from the Robson Index of the 1980’s. The following graph shows the wards in West Belfast as measured by the Townsend Index.

Figure 1

In 1991 the Poleglass or Twinbrook wards did not exist but the graph gives a picture of the where the most poverty and deprivation lay in the area with Falls, Whiterock and Upper Springfield being the most deprived wards and Andersonstown, Ladybrook and Highfield being the least deprived.

Figure 2

The tables below show the rank of Multiple Deprivation Measures for West Belfast and Lisburn wards in 2001 and 2005. There are 582 wards in the north of Ireland altogether with 1 being the most deprived and 582 being the least deprived.

Table 1

Ward	Rank 2001	Rank 2005
Andersonstown	124	86
Beechmount	29	37
Clonard	20	18
Falls	2	2
Falls Park	99	81
Glen Road	71	29
Glencairn	35	24
Glencolin	48	42
Highfield	76	73
Ladybrook	171	89
Shankill	10	1
Upper Springfield	11	8
Whiterock	3	3
Colin Glen	38	21
Kilwee	75	88
Poleglass		133
Twinbrook	28	20

The first deprivation measure shows 12 of the 17 West Belfast Parliamentary Constituencies have increased their level of Multiple Deprivation, these wards are Andersonstown, Clonard, Falls Park, Glen Road, Glencairn, Colin Glen, Highfield, Ladybrook, Shankill, Upper Springfield, Colin Glen and Twinbrook. Beechmount and Kilwee wards have decreased in rank and Falls and Whiterock have stayed the same, with Poleglass ranked at 133 on the scale.

Ladybrook has shown the greatest increase in levels of multiple deprivation. It was ranked at 171 in 2001 and is now placed at 89, moving up the scale by 82 points. This is hugely significant as this ward was the only West Belfast ward which was outside the top 50% most deprived wards in the north of Ireland. Andersonstown also increased its levels of multiple deprivation. It was ranked at 124 in 2001, it has moved by 38 points and is now ranked at 86. Other wards have increased their level also, i.e., Beechmount, Glencairn, Shankill and Kilwee. These wards have increased between 8 and 13 points therefore showing further multiple deprivation.

However, the Beechmount and Kilwee wards have decreased in rank. Beechmount was ranked at 29 in 2001 to 37 in 2005 and Kilwee was ranked at 75 in 2001 to 88 in 2005 therefore showing slight improvement, could this be due to regeneration?

Falls and Whiterock wards remained the same with Falls ranked at number 2 and Whiterock at 3. These wards have shown no sign of improvement and are still ranked extremely high on the scale. In 2001, the most deprived ward was Crumlin, however, in 2005 Shankill was the most deprived ward, moving from number 10 to number one on the scale.

Nine of the West Belfast and Lisburn wards are included in the top 10% most deprived. These wards are, Beechmount, Clonard, Falls, Glen Road, Glencairn, Glencolin, Shankill ranked at 1, Upper Springfield and Whiterock.

In summary a comparison of the objective measures of deprivation in 1991, 2001 and 2005 shows that in the West Belfast constituency:

• Levels of deprivation have remained the same
• There has been very little shift in the position of the worst off wards in the area.
• Levels of poverty remain the same
• There are fewer government-sponsored jobs in the area.
• There is only half a job per person of working age in the area
• Housing need remains the same
• Suicide is reaching epidemic proportions.

Springvale Educational Village Collapse

The Community Perspective

West Belfast Partnership Board

‘The Springvale Educational Village means many things. It will directly address the problems of educational underachievement at all levels in a deprived are; provide much needed employment skills for participants of all ages; help to attract inward investment; develop indigenous industry by nurturing start up incubator companies as a foundation for the future and provide a bridge, real and symbolic, between the two communities.’ Professor Gerry Mc Kenna February 2000

‘The Springvale project, a pioneering initiative that seeks to address educational underachievement and social marginalisation in a unique way, owes much to his visionary drive and deep commitment to social inclusion and to people from all communities in Northern Ireland’. Professor Gerry Mc Kenna March 2002

‘This is a huge boost for further and higher education in general, and for this area of north and west Belfast in particular. It shows clearly that the Executive is working effectively for all the people of Northern Ireland. It is a vote of confidence in our future and is entirely in keeping with our goal of providing the widest possible access to higher and further education, as we seek to create the knowledge based society that will be essential for economic success in the 21st century.’ Sean Farren Minister for Higher and Further Education, Training and Employment. 2002

Those are the word of the then Vice Chancellor of the University of Ulster, the same vice chancellor who, while he was uttering these words publicly, was privately working to pull the university of Ulster out of the Springvale project.

The Springvale Educational Village project at a cost of £70m was to represent the biggest ever-single investment in the north and west Belfast areas. At the time that the University walked away from the project the timetable for completion of the various elements of the campus was as follows:

• Community Outreach Centre          February 2002
• Applied research centre                April 2003
• College buildings                          September 2003
• Completion and commission          2004

From this timetable, which was made public by the two institutions at the time of the collapse, the main project should have been only a year from completion and the Community Outreach centre was completed and opened. It remains the only element of the project sitting on an otherwise derelict 30-acre site.

The University of Ulster first announced the Springvale campus in September 1993, one full year before the first IRA ceasefire and five years before the signing of the Good Friday Agreement. The community did not initially welcome the proposal with open arms as it was proposed to build on land zoned for industry and to create much needed employment in the area. The community had at that stage been working for three years full time developing proposals to ensure maximum regenerative benefit for the people of North and West Belfast from the Springvale Scheme. It has to be said that the University of Ulster arrived into the area with grandiose proposals that ignored everything that had gone before and certainly took no account of the impact on people of the area. For instance the very first map produced at the first meeting with community representatives shoed a heavy red line drawn from the M1 motorway at Broadway through businesses and homes in Beechmount into the back of the Springvale Business park to enable staff and students to get in and out of West Belfast without having to encounter ‘the natives’. At one stage there was even a suggestion that high walls a la West link should be built to protect this road. Given the public reaction from people in the area this idea was consigned to the dustbin of history.

After a very hard sell by the University of Ulster and many hours of consultation within the community the local communities in West Belfast gave their conditional support to the campus proposal on condition that it met the social and economic needs of the local community and tackled educational underachievement in the area thereby making a major contribution to the regeneration of the most deprived constituency in the north.

The community, after much deliberation, felt that a campus with a proposed student and staff population of approximately 4,500 would have an impact in North and West Belfast in terms of:

• Job creation, expansion and retention;
• Improved access to resources and amenities;
• Natural spin-offs in terms of investment plans by indigenous and inward investors;
• Overall social and economic regeneration of the area
• Enhancement of quality if life for local people.

Anyone following the progress of this project will be well aware that it was not plain sailing and was the subject of many depressing headlines.

From its announcement the British Tory Government was vociferously opposing the project. In 1998 Richard Needham the former British economy Minister admitted to the media admitted to the media: ‘The whole basis behind Springvale was to suck in the supporters of Sinn Fein and Sinn Fein itself into realizing what were economic opportunities rather than just constantly making unrealistic claims, criticisms or requests which never going to be fulfilled.’

Between June 1994 and March 1998 two different feasibility studies costing over £100,000 were carried out into the proposal. Touche Ross stated: ‘A new campus for Springvale offers the potential to support three major and different policy aims- as a site to accommodate part of the University’s strategy for expansion in response to growing demands for higher education; as a focus for economic and community regeneration in a deprived inner city area; and as a bold measure to cut across the sectarian divide in perhaps the most sensitive area of Belfast.... Translating this potential into reality requires a major effort of detailed planning, backed by whole hearted commitment from the University, the government and the local community.’

January 1994.

The local community through the Foundry Regeneration Trust held the first major consultation conference on the proposed campus. Over 200 people attended and the debate was energizing. Workshops were organized on a range of topics including, education, housing, infrastructure, employment etc. The community’s responses to every proposed stage of development of the campus are all on record and were carried out in an open and transparent way.

During this period the community was extremely active in organising conferences, seminars, meetings with local people who would be directly affected by the physical presence of the proposed campus, with potential funders, investors and politicians both at home and abroad to discuss the proposal and to lobby for the maximum benefit for local people. There was a lot of contact between local community representatives and the US Commerce Department and other US organisations to maximise the economic opportunities that arose from both the Scheme itself and the proposed campus. It is impossible at this stage to attempt to quantify the hours spent by the community in these endeavours.

The community worked with personnel in the University of Ulster and economic development agencies to develop local labour clauses that could be included at all levels of development of the campus as well as the development of the community chest proposals to directly benefit people from deprived areas and to open up opportunities for business supply chain for the proposed campus. NONE OF THESE EVER CAME TO FRUITION. All were blocked either by the University of Ulster itself and/or by civil servants who did not wish to see these opportunities exploited in these areas.

The Springvale proposal was effectively binned by the British Tory government, prompting the University of Ulster to threaten to pull out of the project in 1996. At this stage the project had been on the table for three years consuming a lot of time and energy on the part of the local communities engaging in consultation and lobbying for the proposal.

June 1994

Touche Ross submit their final report on the feasibility of the campus to the British government. The conclusions stated: A new campus for Springvale offers the potential to support three major and different policy aims- as a site to accommodate part of the University’s strategy for expansion in response to growing demands for higher education; as a focus for economic and community regeneration in a deprived inner city area; and as a bold measure to cut across the sectarian divide in perhaps the most sensitive area of Belfast..... Translating this potential into reality requires a major effort of detailed planning, backed by whole hearted commitment from the University, the government and the local community.

July 1994

Springvale proposal was effectively shelved by the British government.

November 1996

University of Ulster submits a proposal to the Millennium Commission for the Building of a Community Outreach Centre at Springvale. The success of this project was dependent on proven support from the local communities and on its proposed cross community benefits and opportunities for transformational change in areas that had suffered most as a result of the conflict. Once again the community was not found wanting.

At this stage the University was threatening to pull out of the proposal but they were not averse to seeking meetings with the community to urge them to lobby to save the proposal. The community responded in good faith and put inordinate efforts into lobbying both at home and abroad to save the proposal for the area.

November 1997

By 1997 a new Labour government was in place in Britain and for Springvale it meant new support, first from Tony Worthington and then from Mo Mowlam who actively supported the proposal and attempted to push it forward to a final decision.

DTZ Pieda Consulting were appointed to carry out a second economic appraisal of the proposed campus. By March 1998 the Pieda report was submitted to the Department of Education. In April 1998 British Secretary of State Mo Mowlam gave the campus the go ahead. Headlines such as ‘An Investment for Peace’ heralded the news. Making the announcement Mo Mowlam said: We worked very hard with many community groups to make sure Springvale responds to peoples local needs as well as the broader community in the whole of Northern Ireland...I am confident that today will mark a turning point in the way this level of education is provided in Northern Ireland.’

October 1997

With the publication of the Dearing Report the community was faced with yet another change in the proposals for the future campus.

Belfast Institute of Further and Higher Education and the University of Ulster submitted a proposal to the Department of Education for an Educational Village at Springvale. The communities lobbied for further " and seminars to discuss the issue with local people. As a result of collaboration and consultation a new proposal, Post Dearing, was developed, one which the communities believed would provide a seamless route for local people through further and higher education.

November 1997

DTZ Pieda Consulting was appointed to carry out a second economic appraisal of the proposed campus. In this report and the emergence of the new proposal, the number of proposed FTE students rose from 4,500 to 6,000. Given that option one was expected to employ 250 fulltime academic/research staff; 250 administration and clerical staff and 100 full time craft and manual posts as well as up to 400 indirect jobs in the purchase of goods and services with a proposed capital development programme creating a further 375 jobs in each year of construction the community expected that the new proposal would have been in a position to create more full time posts and create more opportunities for direct employment. The community lobbied at that time to ensure that the student numbers would be new ones and not relocation of existing ones. Given the employment profile of the two areas the community accepted that local employment opportunities in the higher professional jobs would be limited but felt that local jobs could be created if both institutions were prepared to take affirmative action to provide jobs for local people. The communities lobbied for an affirmative action strategy to be put in place from early on in the proposal. This never happened.

By this stage an element of cynicism was creeping into the local communities about the project given the lack of progress, the lack of information and the fact that the only information they were being given was when the University wanted community representatives to attend meetings with funders etc. there was also cynicism about the lack of political will to date that had been shown towards ensuring substantive positive investment in these two areas of Belfast. There were real issues of concern about the nature of partnerships and consultation.

May 1998

President Bill Clinton announced that he would work with Congress to make $5m available for Springvale. He also asked the US Information Agency to support the Springvale Project through its range of educational programmes, including Fulbright Scholarships and the International Visitor and Citizens Exchange Programme. ‘The President has also asked the Agency to foster links between Springvale and one or more American Universities to promote co-operation between their faculties and establish long term ties.’

Other US funders after much lobbying from the University and the community agreed to provide funding for the Community Outreach Centre. During this period the community representatives attended many meetings with the Millennium Fund, the IFI, government departments, architects, planners and other consultants to ensure that the Community Outreach element of the proposal came to fruition.

September 1998

U.S President Bill Clinton and British Prime Minster Tony Blair performed the official ground breaking ceremony for the Springvale campus. Bill Clinton said of the project:

‘I want to say that, above all, the people who deserve recognition today are people on both sides of the peace line who need the work that will be done here. Here there is a site, there is a design, there are resources; but more than that there is a glimpse of the future, that people so long torn apart will create something together that will benefit all.’

Indeed, the future has begun. And clearly the best path to a future that involves every citizen of every circumstance in every neighborhood is a strong education. Springvale Educational Village will help you get there. It will be a living, breathing monument to the triumph of peace. It will turn barren ground into fertile fields cultivating the worlds most important resources: the minds of your people -- providing opportunity not just for the young but for those long denied the chance for higher learning, creating jobs in neighborhoods where too many have gone without work for too long, bringing more technology and skill so that Northern Ireland at last can reap the full benefits of this new economy, creating unity from division, transforming a barbed wire boundary that kept communities apart into common ground of learning and going forward together.

Now you have, in the words of Seamus Heaney, a chance to know the incomparable and dive to a future. You have dared to dream of a better tomorrow, now you dare to build one. That is even better. On this site and across this aisle, what once seemed impossible is now becoming real. Don’t stop. Thank you very much.’

March 1998

Pieda report submitted to the Department of Education. An early decision from the Department was expected.

April 1998

British Secretary of State Mo Mowlam gave the Springvale campus the go ahead. ‘What is proposed is a break from the traditional form of provision in further and higher education. This project will weld together the strengths of the two sectors in ways, which will ensure the most positive experience for students at all stages of their careers. Working together with other education and training institutions in the area the project will offer a new approach to tackling both the low level of qualifications and unemployment.’

January 1999

The Springvale Village Council was officially launched. This was the consultative body for the development of the campus comprising representatives of BIFHE, UU and the local communities through the area Partnership Boards of west, North and Greater Shankill.

The Village Council was established with an agreed terms of reference. Representatives on the Village Council and its sub committees were nominated through the local area partnerships. The Shankill partnership in particular went through an open election process to elect its representatives. There were a number of sub committees including physical infrastructure, community outreach, economic development, education and training. At one time when the council was operating fully there were almost 40 community representatives from North and West Belfast working directly to the Council and its sub committees. This does not include all the other representatives who attended the meetings and local people who gave up their time voluntarily to participate and to organise consultations in their local areas. During the village council process, staff and consultants were paid for the participation and facilitation. None of the community representatives were paid for their time or expertise or for the other resources they put in to this process.

February 2000.

After a lot of deliberation between the two institutions DEL Minister Sean Farren confirmed that the departments £40m for the Springvale campus ‘was in place’.

The Springvale Board appoints its Chairperson. In reality the University of Ulster and BIFHE appointed the chairperson. The community representatives had no involvement in the recruitment or appointment procedure nor had they been given any say over who was appointed. This was just one prime example of the way in which community representatives could be excluded on a whim when they were not deemed necessary by the institutions.

By this time the community was becoming convinced that the project was indeed going to happen and lobbied Belfast Regeneration Office for funding for full time community representatives to ensure adequate consultation and community involvement as this project developed. This was refused by BRO at a meeting attended by the University of Ulster. It later emerged that the University had privately lobbied BRO for funding for private consultants to carry out a weekends work at the cost of £60,000. This would have covered the costs of two full time community representatives for a full year. Value for money this was not but it was an indication as to how the University of Ulster was prepared to undermine the community for its own gains.

August 2000

The Draft Academic Plan for Springvale as prepared by UU and BIFHE was put out for consultation. By February of the following year the report into the consultation found that communities had universally slated the University of Ulster course proposals. They were found to be already existing courses and the cutting edge of IT and Health Technologies had disappeared off the agenda. There was widespread agreement within the communities that the academic plan should reflect the original aims of the campus and retain the proposals for courses in the following areas:

• Entrepreneurship
• Creative industries
• Business development
• Community development
• Internet and Information technology
• Bio medical subjects

There was serious concern within the communities that there were attempts by the University of Ulster to dilute the potential impact of Springvale and to steer cutting edge courses away from Springvale and towards Magee campus in Derry and Jordanstown. This eventually proved to be the case.

The West Belfast Task Force report also commented on the proposed Academic Plan and made the following recommendations:

• The curriculum content should seek to broaden the range of academic and vocational choices available to local people and to complement rather than duplicate or compete with existing provision in the area.
• Where specific critical skills/educational gaps emerge in West Belfast and which could be considered within the mandate of the campus, the curriculum should be capable of developing appropriate courses.

West Belfast and Greater Shankill Task Force

The community was of the firm opinion that as part of the educational village concept the new campus should be an important element in the holistic development of the overall area. It should have greatly enhanced other proposals in business, industry, housing, retail and recreational developments i.e. Conway Mill, the Gaeltacht Quarter etc. the community felt that the campus should act as a catalyst for future inward investment and a combined strategy of research, training and investment would be successful if the campus matched these to existing or potential growth industries i.e. the Health technologies. As such the Springvale campus became a major focus of the Task force work and the eventual report. The proposals for the Springvale campus merited a chapter of its own in the Task Force report published in February 2002. In the Task Force report it was seen as crucial to the development of a lot of its objectives

• The SEV can contribute in multiple ways to the achievement of the Task Force objectives:
• Its SEV centre will open access to further education to the unemployed of West Belfast- its incubator and business start up support will directly stimulate technology based local business
• Its mainstream educational curriculum will provide convenient access for West Belfast residents to 3rd level education
• The emergence of a college campus with 4,000 full and part time students will generate a large volume of extra spending and demand for local goods and services.

June 2001

A major consultation weekend on Springvale Campus was held in Brunswick Street. For this purpose London based consultants arrived for the weekend at a cost of almost £60,000 to work for two days and draw up a report. The community sector representatives provided their skills and expertise for free; in fact these representatives carried the bulk of the work for the weekend both in terms of preparation and during the consultation. The final report was produced and the kindest thing that can be said about it was that it was printed.

September 2001

The construction of the Community Outreach centre was complete and the public launch organised.

September 2002: The project goes into freefall

By this stage the Springvale Board comprising representatives from North, West Belfast and Shankill had not been called together to meet for over a year raising concerns within the community that the project was about to collapse. There were three community representatives on the Board each reporting directly to their area partnership Boards. The representatives for the duration of the existence of the board were Billy Hutchinson, Una Gillespie and Tom Lovett. The community were never treated as full members of the Board and the community were never permitted to be directors of the SEV Ltd, the legal entity drawn up by the two institutions. The Board met regularly initially and then as the community representatives became aware of the problems arising between the two institutions over management and legal liability the meetings became more infrequent. The Chair of the Board was being paid £18,000 a year for his services; the community representatives were giving theirs for nothing.

DEL Minister Carmel Hanna announced a review of the Springvale campus. University is the only one of three partners to welcome the review. ‘I have learned recently that progress with a major element of the Springvale Project has become problematic In these circumstances I would ask you and your Board to undertake a major review of the Campus project’. Carmel Hanna Minister for Employment and Learning September 2002.

This review came out of the blue for the community representatives on the Springvale Board. No problems or concerns regarding finance had ever been raised by the University at any of the Board meetings.

While the Board was hastily brought together to be informed of the University’s decision, the Minister was at the same time briefing the press. The community representatives were given the exact same courtesy as the general media. At no stage were they informed of the decision before hand or briefed about problems as Board members.

October 2002

The Springvale Board met for the first time in over a year. Community representatives were given less than 24 hours notice of the meeting. The University of Ulster admitted it wanted to renege on its moral and financial responsibilities regarding the Springvale campus. The University wanted the entire project including the Community Outreach Centre and the Applied research Centre to be reviewed. It emerged that the decision by the Minister to go into review was based on information received on the basis of an economic Appraisal by Price Waterhouse Coopers. The University of Ulster supplied the figures for the appraisal to them. The Springvale Board has never seen this report and has never been given the opportunity to make comment on it.

At no stage of this process did the communities receive any apology from the University for the decision, the manner in which it made the decision or the fact that it had conned people for ten years. At no stage did Gerry Mc Kenna attend any of the Board meetings and he never attended the meeting at which the review was announced. The community was also appalled at the manner in which the Civil Servants in DEL were only too willing to do the University’s dirty work for them. We believe that the Minister at that time was manipulated by the University of Ulster and senior Civil Servants into making the announcement and proposing the review.

A comment from DEL contained in the NI Audit Office report stated: ‘In the Departments view the real nub is that in 2002, the will to make the project work disappeared in the University of Ulster.’

This is precisely what happened but the additional disappointment to the community was that the Department , knowing this to be the case, became the willing pawn in the University’s strategy for getting itself off a moral and financial hook.

November 2002

University of Ulster and BIFHE renegotiated the terms of UU’s withdrawal from the project and the implications for BIFHE. The University finally admitted that it wanted out of its responsibilities for the entire project and that they would not be going head with the Applied Research centre. There were current liabilities of £700,000 that could rise to £2m and there was a possibility of claw back of financial commitments from other funders to the project. To add insult to injury the University then wanted to make BIFHE 50% liable for the debts incurred as a result of the University’s decision to pull out. The community vociferously opposed this attempt to make BIFHE liable for the University’s decisions. BIFHE made a commitment to take on full responsibility for the Community Outreach Centre.

At the Springvale Board meeting in December the community representatives on the Board reluctantly agreed to a review based on a number of conditions. Those conditions are that the process was open and transparent, that it revealed the truth about what happened to bring us to this situation and that future models would be open to consultation and above all that the University of Ulster was not engaged in the process of exploring new models. At that stage the University had been stating its desire to be involved in the discussions about the development of future proposals.

Longer Term Impact

1. The loss of the biggest single investment proposal for a deprived area. Local community representatives had long been arguing for the need for a massive investment in the area and Springvale was to represent that.
2. The Springvale campus was to be the hub of a social and economic regeneration programme that had the potential to act as the catalyst for addressing the statistics of poverty and deprivation in these constituencies across a range of indicators not least of which would be education.
3. The loss of other investment projects and development that could have been put in place if the University of Ulster had not chosen to deceive these communities. Other employment and development opportunities probably went elsewhere in the intervening years given the amount of acreage the Campus proposals was due to take up.
4. While ten years of prevarication that came to nothing other areas of Belfast saw major proposals made and developed. In the years that the community in West Belfast was wasting its time supporting a project that was never going to come to fruition the Laganside area was developed and established. The Waterfront Hall was proposed and built, the Odyssey arena was proposed and built, the Titanic Quarter has been proposed and under way, the Cathedral Quarter has been proposed and underway, the Maze project has been proposed etc. West Belfast remains comparatively an economic wasteland.
5. The proposals from the West Belfast Jobs Task Force of which Springvale have been integral have had to be revisited and some of have never come to fruition. The proposals directly relating to the Springvale Campus were:

• The funding of a pilot exercise to develop a method of accumulating credit in relation to SEV programmes which is inclusive of certain educational programme provision in the community. This will provide an enhanced opportunity to enter higher education through an alternative education route, which originates in this community.
• Views the SEV education programmes as adding valued options to the interventions available to assist local people to develop their talents and develop their careers.

The Task force viewed the campus as an opportunity to directly create jobs ad business opportunities both during its construction and in the run of its business. The task force therefore recommended that:

• The SEV works closely with the proposed West Belfast Employment Services Board so as to maximise recruitment of local people.
• The SEV ensures the introduction, implementation and monitoring of local labour clauses within contracts.
• The promotion of local sourcing of goods and services by SEV
• The terms of reference for the construction of the college under a Public Private Partnership arrangement should reflect the objective of encouraging maximum local content and sourcing.

In terms of the proposed Applied Research Centre the Task force sought to ensure that the 45,000 sq ft of incubator units for technology based companies would be harnessed to its maximum potential to stimulate new technological companies, which could then move off campus and relocate somewhere else in the Task Force area. The Task Force believed that the Applied Research Centre would contribute to a dynamic local business sector for the majority of new jobs. ‘The Task Force considers it imperative that arrangements are put in place for the transition of the campus companies, after the two year incubation period, to suitable premises within the SEV catchment area including the West Belfast Task Force area. There should be a seamless progression route for companies, which enables growth business firms to be retained in West and North Belfast through R&D, start up and growth. Otherwise these companies will be lost to the area.’

The Task Force believed that the presence in the area of the Educational Village with a technological or science based content would add to the attractiveness of the area for inward investment.

The Task force therefore recommended:

• That the SEV will be a distinct additional asset to the attraction of knowledge based inward investment in the area. It also regards the campus as a possible home for the proposed West Belfast Inward Investment Team.

Overall, in terms of delivery the Task Force:

• ‘Welcomes the development of the Springvale Educational Village as a symbol of confidence and investment in West Belfast. The new campus has the potential to increase educational levels, provide direct and indirect employment and stimulate new business through allied research and development. The challenge for all involved is to maximise the benefits for the communities of North and West Belfast.’

To ensure that this happened the Task Force recommended the following:

• A more cohesive development of the Springvale Educational Village and clearer focus on the delivery of its economic regeneration mandate is urgently needed:
• A President or Director of the Springvale Educational Village should be appointed immediately to develop the ethos and role of the new campus and to take overall executive responsibility for its evolution. This role would, for example, be quite distinct from that of the governance role of chair of a governing body;
• Representatives of local and foreign industry should be appointed to the board of SEV to reflect the economic regeneration mandate. They would have an input on ways in which the SEV could maximise its local economic impact, the evolution of the Applied Research centre and the relevant of the education programmes to the development needs of the catchment area;
• The provision of the main educational campus needs to be pursued with a high degree of urgency and with specific target dates. While the capital funding is likely to be available for the project there is an urgent need to have funds allocated for making appointments now which are crucial to the economic and community roles e.g. Manager, Local Learning Advisors, economic development expertise and community consultation.

None of these were ever fulfilled.

It is important to note that while the University of Ulster was participating in the Task Force and working to agree these recommendations they had already been going to the Department saying that they wanted out of the project.

Summary

1. This process had been going on for ten years and had been a very difficult one, which met many political obstacles. All of these were overcome by sheer tenacity and community support.

2. For the University of Ulster to pull the plug on what was originally their project is the ultimate example of bad faith and breach of trust. What is very telling is the fact that the University appeared to have been planning this withdrawal for at least thee years and to community representatives all the indications were there. This fact was proven when the community received information from the DEL under the Freedom of Information Act which confirmed that the University had been meeting with civil servants in the department stating their wish to pull out over a year before the announcement. Community representatives also became concerned about the future of the project when Professor Wallace Ewart announced that he would be retiring in September of that year. Why would someone who had been so publicly associated with the project over the last decade suddenly retire when the project was about to come to fruition?

3. In public the University continued to work on the draft academic plan and the capital projects as well as all the structures that had been put in place i.e. the Village Council and the Springvale Board. It also continued to be involved in the work of the Task Force and to make recommendations for the integration of the Springvale project into the Task Force recommendations.

4. If the University really found it difficult to pay £1.5m per year for the project and they wished to ensure that the project could continue and that they had, as they publicly claimed, a commitment to the social and economic regeneration of North and West Belfast why was the whole process clouded in secrecy and back door dealing? Why did the University not come clean about financial difficulties and allow the Board to suggest solutions? Why did they go to the Department of Employment and Learning with a secret document that the Board had never seen? Why did they refuse to inform the Board of progress in negotiations? Why did they try to make BIFHE liable for debts accrued because of the University’s bad management and bad faith? Why did they not inform funders of the impending crisis or work with funders to ensure that promised funding would not be put in jeopardy by their decision? Why had the Vice Chancellor of the University not had the common courtesy and decency to come to North and West Belfast and apologize to the people for breaking their promises and commitment?

5. UU reps arrived at the Board meeting to announce that they could not find their £8m allocation. They were not even prepared to borrow it. This from an Institution that in the previous 18 months has spent £145m on capital projects at Magee and Coleraine as well as making commitment for the refurbishment of the Art College in York Street.

6. This project had been on the table for 10 years. Why was the finance required not ring fenced? The annual repayment the University of Ulster would have had to make was £1.67m. The University had not even considered options for seeking funding for this. No Peace 2 applications were done. No mention of the need to seek alternative sources of that finance was made to the Board to enable the Board to seek solutions. The decision was taken arbitrarily by the University’s governing body and presented to the Springvale Board as a fait accompli.

7. When asked if the University would reconsider its decision to withdraw from the project in the light of the discussion at the Board they stated that their preferred option was not to have any involvement in the capital project and instead franchise courses to BIFHE. In reality this meant no responsibility for buildings and making a profit from the student numbers attending the courses. For this institution to try and make a profit out of the most deprived constituency in the north after breaking promises made for 10 years is reprehensible.

8. The announcement by the University had serious implications for the rest of the capital project. The UU did not even have the courtesy to inform the private donor or the IFI that the nature of their involvement was changing. No doubt they heard about it through the media like the rest of the community. Their approach to this issue was not only unprofessional it was immoral.

Correspondence of 17 August from
North Belfast Partnership Board.

Ms Catherine White
Clerk to Public Accounts Committee
Parliament Buildings
Room 371
Stormont Estate
Belfast BT4 3XX

17 August, 2007

Dear Ms White

Re Public Accounts Committee Springvale Educational Village Project

I write further to your letter of 25 June, 2007, to Mr George Mackey, Chair of North Belfast Partnership.

Thank you for facilitating some additional time within which to make a written contribution to the deliberations of the Public Accounts Committee.

This additional time allowed the opportunity to reflect within the Partnership, with colleague Partnerships in West Belfast and Greater Shankill, and with current and past Board members and others involved in the broad Springvale initiative.

I would comment as follows formally on behalf of North Belfast Partnership.

(i) North Belfast Partnership was formally represented on the Springvale Board by Professor Tom Lovett. Professor Lovett was not a member of the Board of North Belfast Partnership but agreed to represent the Board and the broader North Belfast community.

(ii) Paul Roberts, Company Secretary to this Partnership, was co-Chair of the Springvale Village Council.

(iii) Miscellaneous Partnership staff (and others associated with the Partnership) – primarily its Chief Executive, Murdo Murray, and Development Programmes Manager, John McCorry – were involved in attempting to coordinate the Partnership’s participation in the different aspects of the Springvale initiative development – with increasing involvement, unfortunately, towards its demise and the establishment of the BIFHE - led Springvale Community Outreach Initiative associated activities.

(iv) Despite such representation on the Board and the Village Council – and noting the significant contribution made by Professor Lovett and Paul Roberts - North Belfast Partnership – and indeed the communities of North Belfast generally – tended to be involved on the relative periphery of the mainstream Springvale development – because of the geographical location of the campus and because any associated physical regeneration activities were only likely to benefit primarily the communities most geographically adjacent to the proposed campus.

(v) Nevertheless, this Partnership was fully committed to the proposals and the potential of the Springvale initiative – across all its dimensions – the establishment of a "local" and more accessible academic institution; recognition and validation of greater flexibility in academic and vocational progression routes and qualifications; employment creation in both the building and operational stages of the campus; access to the professional, academic, vocational, and technical services of a locally committed academic institution; and benefits, incidental and direct, from the physical and economic development regeneration potential of the new campus.

(vi) North Belfast Partnership felt greatly let-down and ill-used in both the manner and the timing of the University of Ulster’s withdrawal from the Springvale initiative. It took a mammoth investment of sensitive community development intervention to encourage and sustain local community interest and participation in – and expectation from – the Springvale campus – particularly at times of great inter-community strife around Drumcree and the Holy Cross Girl’s Primary School.

The University of Ulster gave no thought to the community relations, community development – and indeed community strife – implications of its unilateral withdrawal.

(vii) This Partnership continued to make a significant and sustained contribution to the Springvale initiative – on its Board, the Village Council, and in the exhaustive community consultations (particularly around the "Planning for Real" community planning workshop) – right up until the eleventh/twelfth hour.

(viii) Inevitably, the University of Ulster’s actions and the demise of the Springvale campus confirmed to many local people that agencies of Government were not to be trusted. Such cynicism and apathy made and continue to make very great difficulties for anyone attempting to promote Government/community engagement.

(ix) North Belfast Partnership, nevertheless, made what contribution it could to the remaining substantially reduced Springvale Community Outreach Initiative – BIFHE (as was), BELB, NWBHSST and others deserve credit for attempting to salvage something from the original Springvale ashes – and continues to do so, formally in its management and operationally through its local delivery.

(x) Finally, what were the main "consequences" for "withdrawing" and "failure to deliver"? -

• A renewed cynicism in Government and public agency administration and engagement at a time when we were all striving to make democratic and political progress through reconciliation between communities in strife and the establishment of new devolved political accommodation structures.
• And, of course, lost opportunities for job creation, employability training, cultural and tourism activities, sporting facilities, physical and environmental improvements, and overall economic development regeneration.

I hope the above comments are of some help to the Committee’s deliberations and thank you for affording the Partnership an opportunity to make a contribution.

Yours sincerely

Murdo Murray
Chief Executive

Cc George Mackey - Chair

 

Appendix 4

List of Witnesses who Gave Oral Evidence to the Committee

List of Witnesses who Gave Oral Evidence to the Committee

1. Dr Aideen McGinley, Accounting Officer, Department for Employment and Learning.
2. Mr David McAuley, Director of Strategy and Employment Rights Division, Department for Employment and Learning.
3. Professor Richard Barnett, Vice Chancellor, University of Ulster.

In Attendance:

4. Mr John Dowdall CB, Comptroller and Auditor General.
5. Mr David Thomson, Treasury Officer of Accounts, Department of Finance and Personnel.