THE WELSH GOVERNMENT has been accused of misleading the public, ambushing investors, and using the Circuit of Wales project as a political football intended to shore up its vote in the South Wales Valleys after refusing to back the project last week.
NO TO GUARANTEE
The Welsh Government had been asked to provide a loan guarantee of £210m to private investor, the insurance giant Aviva. Had the Circuit gone bust, the Welsh Government would have been left liable for the loan balance but Aviva would have retained ownership of the Circuit.
Last week, Economy Secretary Ken Skates announced that the Welsh Government had decided against backing the project by providing a guarantee to key investor Aviva, claiming that late in the day the Welsh Government had received advice from HM Revenue and the Office of National Statistics that financing the deal would amount to state aid and affect Wales’ capital grant from the Westminster Government.
Mr Skates claimed that the presence of the Circuit of Wales on the books would have meant education and health services would have had their budgets squeezed.
However, Mr Skates’ version of events has been met with withering scorn from opposition parties who say that the Welsh Government’s version of events is disingenuous nonsense and that the Welsh Government has twice delayed pulling the plug on the project for Labour’s own electoral benefit .
INDEPENDENT INQUIRY CALL
Both the Conservative Party and Plaid Cymru have called for an independent inquiry into the Welsh Government’s conduct of the Circuit of Wales deal.
Andrew RT Davies, the Conservative leader in the Assembly said: “The Circuit of Wales has been a Welsh Labour car crash of epic proportions.
“After so many years of uncertainty and false hope, it’s clear that Welsh Government have plenty of questions to answer.
“Whilst I have had longstanding concerns that the Heads of the Valleys Development Company may not be right vehicle for this project, it is hugely disappointing to see it crumbling away in such dramatic and overnight fashion.”
Plaid Cymru Shadow Cabinet Secretary Adam Price claimed that evidence has come to light that the First Minister may have misled the public.
Adam Price said there was ‘compelling evidence the Welsh Government has been guilty of serial mendacity ‘.
“Sadly this project has been characterised by a series of inaccurate and misleading statements made by the Government, ostensibly to justify its own position in the face of potential criticism ,” he added.
“An email written by an Aviva senior director – dated 14th July last year – pointed to the false assertion by the Welsh Government ‘that we requested a 100% underwrite a few days before the rejection (of the first proposal in April 2016), when in fact this deal had been worked up with the Welsh Government (through civil servants) for many months and nothing in our funding structure changed in the run up to the announcement’.”
Mr Price continued: “I have an email from Welsh Government presenting a proposal based on a Welsh public sector guarantee of the debt dated January 26th 2016, confirming Aviva’s assertion. And yet speaking in Ebbw Vale on April 11th last year, as reported by the Western Mail, Carwyn Jones repeated the falsehood when speaking about the rejection of the proposal: ‘It was in the last few days beforehand. We weren’t to know the guarantee would be inflated’.
“These are not isolated instances. They are part of a pattern of duplicity that have characterised the Welsh Government’s approach to this project throughout, constantly shifting goalposts and covering their tracks.”
Mr Price called for an independent inquiry to investigate the matter: “Since the First Minister himself can now be shown also to have misled the public on the Circuit of Wales – all the more pointedly as it was in Blaenau Gwent and in the middle of a keenly fought election campaign – it’s no longer appropriate that he makes this decision as he will now need to be a subject of that investigation, not its judge and jury.
“As things currently stand no-one – business, media, Parliament or public – can be confident our Government is being straight with us. Only a full independent inquiry can begin to rebuild public trust. “
HAMILTON SLAMS GOVERNMENT INSULT
Neil Hamilton AM, UKIP Group Leader in the National Assembly for Wales stated in the Senedd chamber: “Are we really expected to believe, that the government accounting conventions about whether something should be classified as public expenditure or private by the ONS and the Treasury have come as a blinding revelation yesterday, and the cabinet was totally unaware of these conventions hitherto?
“It is an insult to the people of Blaenau Gwent that such a shoddy excuse has been used and a disgrace that so much public money and time was wasted on this decision.
“The Welsh Government now plans to build a £100m automotive business park in Ebbw Vale. What we have now is a proposal from the government to spend £100 m over ten years. Shedloads of money to build a series of empty sheds,” continued Mr Hamilton
“Interestingly the Welsh Government announced this decision after the election; a decision beforehand would clearly have damaged Labour in the polls. What a cynical political decision, a terrible betrayal of the people of Blaenau Gwent and a shoddy excuse for what amounts to the replacement of the Circuit of Wales with a Scalextric set.”
Appearing before the Public Accounts Committee the day before the Welsh Government pulled the plug, a senior Welsh Government civil servant, James Price, told Committee members that he regarded the £9.3m as a fair price to pay for the due diligence that it had enabled the Welsh Government to undertake and suggested that the Auditor was wrong to decide that business risk assessments carried out before providing the money were deficient.
One thing that emerged from that Committee meeting was the broad agreement that due diligence had to take place before the Welsh Government exposed itself to further risk. It was surprising, therefore, that the following day in the Assembly one of those members who had been singing the praises of due diligence taking place committed a complete about face.
Deriding the Welsh Government’s involvement as being an exemplar of ‘the dead hand of government’, UKIP’s leader in the Assembly Neil Hamilton appeared to have forgotten his words of little over twenty four hours earlier: ‘Personally, I think it was a very reasonable punt you took (with the grant and loan). Now we’re talking about much, much larger sums of money, it’s right that a considerably greater degree of examination be undertaken’.
COMPANY DENIES GOVERNMENT CLAIMS
A spokesperson for the Heads of the Valleys Development Corporation (HVDC), the company behind the Circuit of Wales, said: “Along with my team and commercial partners, I am hugely disappointed and saddened that the Welsh Government has failed to support The Circuit of Wales, what would be a game changing development for Wales and in particular the people of Blaenau Gwent.
“We strongly disagree with the decision and the rationale behind it.
“We have always believed passionately, and continue to do so, in this project’s ability to transform and provide opportunities and hope to one of the poorest parts of the UK, not just Wales. The project is totally defined, finance is in place, and construction and hiring could start immediately.
“My team and I will now analyse the Welsh Government’s reasons not to support the development and are actively seeking additional clarification from them. We will then very shortly issue a detailed response before deciding on our next course of action.”
That detailed response, when it arrived, savaged the Welsh Government’s reasoning and claimed that the reasons given to the Senedd for refusing to back the deal were either wrong, specious, or had not been raised with the developer or its investors. In addition, the statement revealed that the Economy Secretary had not met with representatives of the company for over twelve months before making his decision.
A spokesperson for HVDC said: “ This is a real loss for the people of Ebbw Vale, the immediate community and a missed opportunity for Wales as a whole. This is a project that has been totally defined; it is fully financed (with finance in place) with construction and hiring ready to start immediately.
“At a time when the Welsh Government is trying to demonstrate that Wales is ‘ppen for business’, the rejection of this significant infrastructure project will do little to breed confidence within the private sector for future investment in the country.”
Most tellingly, perhaps, HVDC made a concerted attack on the Cabinet Secretary’s assertion there was a very significant risk that the full £373million debt of the entire Circuit of Wales project would be classified against Welsh Government capital spending.
The statement from the Company expressed amazement at the lack of notice given to it that any problem had arisen: ‘The company was never informed or made aware of this ONS and HM Treasury advice during the due diligence process. We were promised by Welsh Government officials that we would be consulted if any significant issues arose during due diligence and given an opportunity to respond.
‘We were not notified that this was a serious roadblock prior to Tuesday’s meeting and never given a chance to respond.
‘The Welsh Government has known about the latest structure of this project since well before February 2017 and could easily have obtained clearer guidance from Treasury and ONS prior to Tuesday’s meeting and informed us’.
The spokesperson continued: “We believe it is important for the people of Blaenau Gwent to have the details of these discussions with ONS and HM Treasury disclosed to the public. What were these discussions, who were they with and when were they undertaken?
“ We wholeheartedly disagree that the support for The Circuit of Wales would be on balance sheet and would require the Welsh government to limit its budget and compromise the building of schools and hospitals .”
The company also claimed that the £100m technology park – funded by public money – announced by Ken Skates as a sop to Blaenau Gwent was scheduled to cost £150m of wholly private money and be delivered in two years: not the ten announced by the Cabinet Secretary in the Senedd.
SCHEME UNDER SCRUTINY
However, the scheme has been the subject of scepticism for some time.
A BBC investigation for soon to be scrapped current affairs programme Week In Week Out, cast doubts on whether or not the company could achieve anything like the promises it had made either in terms of regeneration of Blaenau Gwent or in relation to delivering on its promises regarding the proposed facilities within the time and budget specified. Moreover, the same documentary revealed that £35,000 from HVDC – a company partly funded by the Welsh Government – had been used on landscape gardening on the home of the person fronting the scheme, Michael Carrick.
An investigation by the Auditor-General for Wales criticised the Welsh Government both for a loan guarantee a £7.3m provided to HVDC and a £2m grant provided as seed money. The Auditor discovered that part of the money had been used to acquire a small motorcycle manufacturing business in England and ruled that there had been insufficient regard as to whether the uses to which public money were being put were delivering value for money for the public.
Initial claims that 6,000 jobs would be created and claims of businesses flocking to set up working partnerships on the Circuit of Wales site had also come under scrutiny.
A reassessment of the project carried out by the University of South Wales as part of the due diligence process suggested that 2,000 jobs fewer than claimed would be created. In addition, jobs during the construction phase of the project would be temporary, with the Circuit ultimately employing around 150 full time staff, while the remainder of jobs would be created in spin-off enterprises over a longer period of time.
As this article was being prepared for publication, Michael Carrick, told BBC News: “We haven’t given up on it and I’m hoping government hasn’t.
“The project is too important to walk away. We’ve got the support of our investors, we’ve got the support of our development partners and we want to make it work for government and for the valleys.”
Whether Mr Carrick will be able to overcome the deep reservations of the Welsh Government and proceed with the scheme with their backing is open to question.
Whether the HVDC will be able to develop the Circuit of Wales on the scale planned – or at all – without that backing, is highly unlikely.
UK Government’s ‘considerable offer’ not enough
IN A speech delivered at Airbus’ Broughton HQ, Theresa May’s effective deputy, Cabinet Office Minister David Lidington, has attempted to allay fears of a Westminster power grab of devolved powers following the UK’s departure from the EU.
Mr Lidington, claimed the UK Government had made a ‘considerable offer’ to the devolved administrations with a commitment that the ‘vast majority’ of powers returning from Brussels will start off in Edinburgh, Cardiff and Belfast rather than Whitehall.
Mr Lidington, said his plans marked “a very big change to the EU Withdrawal Bill that is before Parliament and a significant step forward in these negotiations.”
He continued: “If accepted, this offer puts beyond doubt our commitment to a smooth and orderly departure from the European Union, in a way that doesn’t just respect the devolution settlements, but strengthens and enhances them.”
Mr Lidington warned that a “divided country at home” would be “weaker, less secure and less prosperous overseas.”
The problem with Mr Lidington’s words is that ‘the vast majority’ is not all powers currently vested in the UKs’ devolved administrations within the EU. Moreover, the clear message that the Westminster government wanted to maintain the unity of an internal market within the UK suggests that powers will have to be taken from the devolved governments and retained permanently by the UK parliament in order to make that arrangement work. However, the UK government’s stance on agriculture, a key issue for the Welsh Government, has been extensively trailed by Michael Gove and Defra ministers for months and cannot have taken it by surprise.
Mike Russell, the Scottish Brexit minister, said: “However they try to dress this up, the UK government is using Brexit to try to take control of devolved powers without the agreement of the Scottish parliament. It is totally unacceptable for the Tories to unilaterally rewrite the devolution settlement.”
First Minister, Carwyn Jones, said: “As currently drafted, the Bill allows the UK government to take control of devolved policy areas, such as farming and fishing, once the UK has left the EU. This is an unacceptable attack on devolution in both Wales and Scotland.
“We now need further progress that goes beyond warm words and I hope the ‘very big changes’ promised in the speech equate to sensible amendments to the bill which respect devolution. We will continue to work with the UK and Scottish governments to that end.”
Welsh Liberal Democrat Leader Jane Dodds commented: “Common frameworks in certain areas will certainly be important after Brexit and we would never want to put the UK’s common market at risk. However, it must be up to devolved Governments to decide if they want to enter common frameworks in devolved areas and to negotiate suitable frameworks. The UK Government cannot and must not impose frameworks on devolved Governments.
“Brexit will have huge implications for sectors such as agriculture. Brexit will cut our farmers off from their key markets and dismantle the financial support they rely on. Decisions on these vital areas must be made in Wales and address the unique needs of Welsh farmers.”
The Welsh Conservative spokesman on Europe, Mark Isherwood AM, said: “Welsh Conservatives have been steadfast in our belief that the devolution settlement must be respected with the necessary changes made to the EU Withdrawal Bill.
“As we’ve stated from the outset, we would also expect that leaving the European Union would not undermine the devolved settlement and would result in more powers making their way to the Welsh Assembly.
“It is vital that we now protect the UK’s single market and that’s why it is imperative the Welsh Government engages positively with the UK Government in this process to ensure the frameworks relating to devolved matters are agreed by all parties.”
Wales’ housing adaptation system ‘unfair’
THE CURRENT system for delivering housing adaptations needs to change in order to meet the needs of older and disabled people in Wales. That’s the conclusion of a report by the Auditor General for Wales.
Roughly, 70 agencies deliver housing adaptation services assisting over 32,000 people a year. Annually, over £60 million of public money is spent on these services to older and disabled people. They help restore or enable independent living, privacy, confidence and dignity for individuals and their families. Adaptations also offer an efficient and effective way of making the best use of the existing housing stock in Wales by supporting people to live independently.
The report concludes that high satisfaction ratings mask a hugely ‘complicated, reactive and inequitable system’.
The conclusions include:
Assessment processes are not streamlined or efficient, which lead to delays which can be the difference between people staying in their own homes or moving into specialist care;
The complex systems used to deliver adaptations make it difficult for people to get the help they need and often stops health professionals from using adaptation services;
There is not enough joined up working between agencies and local authorities which is making it harder for those in need to access services; and
The adaptations disabled and older people can receive are often determined by where they live in Wales and who they seek help from rather than their need;
Public bodies are not improving performance because of limited oversight of performance across Wales.
The Auditor General, Huw Vaughan-Thomas said: “Demand for housing adaptations is projected to rise. That’s why it’s so important that public bodies improve how they deliver adaptations and address the many weaknesses in the current complicated and inefficient system.
“People deserve the very best standard of service to help them live independently. Unfortunately, public bodies have failed to address some long standing weaknesses in current arrangements and disabled and older people are the ones losing out. This needs to change. My recommendations are aimed at helping kick-start much needed improvement.”
The Chair of the National Assembly’s Public Accounts Committee, Nick Ramsay AM, said: “Housing adaptations are important in helping older and disabled people maintain their independence, but today’s report shows that due to the complexity of the current delivery system, people get very different standards of service because of where they live and not what they need.
“The report’s findings highlight a range of weaknesses and highlights that the Welsh Government, local authorities, housing associations and their partners need to improve how they deliver services to some of the most vulnerable people in society.
“It is critical that action is taken now to ensure public money is spent wisely and vulnerable people are provided with the help they need.”
Meet Barry Gardiner
IT WOULD be very cruel to suggest that Jeremy Corbyn’s late conversion to Britain being members of a customs union with the EU post-Brexit was motivated by crude politicking.
Labour’s Shadow Secretary of State for International Trade, Barry Gardiner, has spent most of the last twelve months echoing the ‘Brexit means Brexit’ line and rejecting any form of customs union.
If Mr Gardiner was disappointed by his leader’s very public rejection of what he had every reason to believe was Mr Corbyn’s preferred policy he had every reason to be. Especially as he now has to sell the brave new policy to the media.
Writing in The Guardian last year, Barry Gardiner said: ”Some have suggested we should retain membership of the customs union, the benefits of which extend to goods rather than services, and establish common import tariffs with respect to the rest of the world. But that is not possible.”
He continued: ”Other countries such as Turkey have a separate customs union agreement with the EU. If we were to have a similar agreement, several things would follow: the EU’s 27 members would set the common tariffs and Britain would have no say in how they were set. We would be unable to enter into any separate bilateral free trade agreement. We would be obliged to align our regulatory regime with the EU in all areas covered by the union, without any say in the rules we had to adopt. And we would be bound by the case law of the ECJ, even though we would have no power to bring a case to the court.”
In other words, Mr Gardiner believes – or at least he believed then, or perhaps he believed his leader believed, or hoped against hope someone somewhere believed – that membership of a customs union was a non-starter.
He crystallised that sentiment in one pithy phrase: ‘The 52% who voted to leave the EU would consider it a con if Britain was out of Europe but still subservient to its laws and institutions’.
What a difference six months make.
On Tuesday, Jeremy Corbyn said: “We have long argued that a customs union is a viable option for the final deal. So Labour would seek to negotiate a new comprehensive UK-EU customs union to ensure that there are no tariffs with Europe.”
Mr Gardiner, a genial-looking chap, must have remarkable self-control not to jump up from his seat and bellow, “You what?!”
So, now we have a sort of clear sort of policy placed before the public as an alternative to the Conservatives’ vision for Brexit. Whatever that is.
In fact, Mr Corbyn’s speechwriters came up with a very nice line on the chaos within Conservative ranks: “Time after time with this government, anything agreed at breakfast is being briefed against by lunch and abandoned by teatime.”
However, it is now poor Barry Gardiner who must explain Labour’s long teatime of the soul on a customs union. Genial though he appears, Mr Gardiner’s patience is about to sorely tested.
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