Not Mutually exclusive

The last project in the Welsh government’s Mutual Investment Model (MIM) pipeline has been tendered. But there is good reason to hope for more after May’s elections

Last week, a contract notice was finally tendered for the Velindre Cancer Care mutual investment model (MIM) project.

It has taken at least seven years to get to this point – although as anyone involved with the project will explain, this has had much more to do with issues over the location of the project than the procurement model being proposed. After all, the two other schemes in the Welsh government’s MIM pilot pipeline have reached financial close, with work beginning on the A465 road project and the first schools scheduled to be open by September 2023.

The tendering of the Velindre scheme (pictured) marks the end of the MIM programme’s pilot pipeline, with no more projects currently earmarked to use the procurement model. It is understood that there are a number of organisations interested in bidding for the scheme, although others have previously told Partnerships Bulletin  that the lack of a pipeline of privately financed deals across the UK at present has made it hard for them to justify bidding.

Meanwhile, the Scottish Futures Trust was instructed to investigate whether MIM could work for some of Scotland’s projects, but as yet has not produced any pipeline of deals.

So could Velindre be the last hurrah for a model that has been long in the making and relatively short in the implementation?

Well to begin with, we probably shouldn’t discount the SFT just yet – it is still working on the next iteration of investment in Scottish infrastructure, so may well end up using MIM (or a Scottish variant) in the future.

In Wales, however, the outcome of the Senedd (Welsh Assembly) elections could result in a new wave of MIM investment.

Ever since the Assembly was established in 1999, it has been ruled by one party: Labour. While support for the party has waxed and waned over the past two decades, it has always managed to retain power, albeit occasionally in coalition with Welsh national party Plaid Cymru or, in the current arrangement, with the support of the one Liberal Democrat member (Kirsty Williams, who was given the Minister for Education role in return for supporting Labour to give the party a majority).

This could be good news for MIM, not least because current Welsh Labour leader (and First Minister) Mark Drakeford has been a strong supporter of the model, helping to create it when Finance Minister. If Labour does triumph again – and some recent polls suggest it could do at least as well as last time out – Drakeford would be in a strong position to cement his legacy by expanding the MIM programme with a new round of investment.

But what if Drakeford’s Labour was to fall short?

Whenever a new party takes office, there is always a danger that it will quickly jettison policies attached to its predecessors, regardless of their benefit. Just consider what happened in Westminster in 2010.

But in Wales, things might be different. Plaid Cymru, although unlikely to win anything approaching a majority, could end up positioning themselves as kingmakers, with another coalition with Labour – as happened in 2007-11 – not necessarily out of the question.

A recent Opinium/Sky News poll puts Labour on 29 seats – the same as it currently has – with the Conservatives second on 19. That would be an increase of eight seats for the Tories, thanks largely to the fall in UKIP support since the last election in 2016. Plaid Cymru, with 10 seats, sit third, while the LibDems remain on one, with UKIP holding onto a single seat. So a small swing from the poll in almost any direction could see Plaid Cymru once again being courted by Labour.

Interestingly, Plaid is the only major party running in the Senedd elections to refer to MIM in its manifesto.

While Labour talks of investing more in infrastructure and points to the need for a new Infrastructure Investment Plan, it is Plaid Cymru that pledges “appropriate use” of MIM and “adapting its use to additional areas”. This is the party’s fallback position, in the event that Westminster will not provide it with additional investment and borrowing powers – something that those in the Treasury appear to have little appetite for.

So should Labour stumble, and Plaid be in a position to take advantage, it seems the future for MIM could be secured from an unlikely source. After all, it was only in December that Plaid Cymru's South Wales East Senedd member Delyth Jewell described the cost of the A465 MIM contract “extortionate” and a “waste of public money”.

What the party means by “appropriate” use of MIM is, of course, the critical question in its infrastructure policy. Was the A465 contract not appropriate in its view, and if so, what would meet that threshold? We will have to wait until after 6 May to find out.

It is a critical time for MIM, and what comes next will largely depend on the make-up of the next Welsh government.

In an ideal world, of course, the Welsh and Scottish governments would work together on a pipeline of MIM projects in both countries that would be big enough to create interest from major players once more – and avoid the issues facing Velindre as bidders don’t want to be exposed to bid costs on losing projects that they have no chance of recouping by winning other deals.

Whether that is realistic will depend as much on the Scottish elections also taking place on 6 May as it does on what happens in Wales. After all, the Scottish National Party (SNP) is no longer the all-conquering political force it once was. A recent Savanta ComRes poll for The Scotsman suggested Nicola Sturgeon’s party would miss out on a majority by just two seats – significantly hamstringing the party when it comes to programmes of private investment in infrastructure.

Even if the SNP was to achieve a slim majority, it might be less willing to launch a bold programme of investment than in previous years, when it could confidently push through plans without constantly worrying about whether it had the votes.

Opinion polls have proved notoriously unreliable over recent years, of course. But whatever happens on 6 May, it is likely to have significant reverberations for MIM – and potentially private finance of infrastructure more broadly – both in wales and Scotland.