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.
Halfway to Paradise
PARLIAMENT had its first opportunity to discuss the unsurprising revelation that the seriously wealth retain their serious wealth by means of aggressive tax avoidance schemes on Monday (Nov 6).
With the Chancellor of the Exchequer engaged elsewhere, questions were fielded by Financial Secretary to the Treasury and MP for Mid Devon, Mel Stride.
It appeared that Mr Stride was unprepared to admit that anything was at all untoward with tax avoidance schemes that only the rich and shameless can afford.
Adopting a startling line – prefigured by briefings to the right wing national media – Mr Stride averred that there was no ethical difference between a retail investment available to all UK residents, namely the ISA, and Apple sending out a questionnaire to British Crown Dependences asking them whether or not they would be so kind as to allow Apple to use a brass plate in one of them to ensure it did not have to pay that pesky tax on hundreds of billions in profits.
Never mind brass plate: Mr Stride’s stance had the appearance of brass neck.
In fact, he made great play of the fact that Labour – last in government seven years ago – had done nothing to close the tax loopholes the party now complained of during thirteen years in power. And he was helped in repeatedly avoiding – or perhaps evading – the main issue by being given the opportunity to underline that point by a number of tame questions posed by Conservative backbench stooges.
Shadow Chancellor John McDonnell, presented with the opportunity to make a decent and succinct point on the subject attempted to ask questions of Mel Stride, specifically with regard to investments made by the Duchy of Lancaster – whose current chancellor is Conservative MP Patrick Loughlin – on the Queen’s behalf in offshore tax vehicles.
He may as well have tried nailing jelly to the wall.
David Lammy invited the minister to explain the legitimate reasons for funnelling money offshore to avoid tax, when two-thirds of UK taxpayers are subject to PAYE and have no choice in the matter.
Mr Stride’s response was as remarkable for ducking the question as it was for its content.
“It may be that I want a trust for my children and I do not want it to be known publicly exactly how that trust will operate, for reasons of confidentiality,” Mr Stride suggested, indicating that all was preventing the average worker from availing themselves of the opportunity was a lack of ingenuity and the odd £10m knocking around to make such a vehicle worthwhile.
Jonathan Edwards’ question and its answer deserve full repetition to underline the extent to which the Financial Secretary to the Treasury was prepared to be candid.
Jonathan Edwards asked: “After nearly a decade of austerity, and with living standards facing their biggest squeeze in nearly a century, the public will, quite rightly, be outraged by the most recent revelations. The Treasury cannot run with both the foxes and the hounds on this, so will it back either the ordinary working people or the super-rich? Which will it be?”
So, the question is whether the government back the wealthy over the poor and acknowledge the outrage of those with no choice but to hand over their money to the Treasury.
Mr Stride’s response suggests he heard an entirely different question.
“The hon. Member talks about our having to live within our means, and it is, of course, right that we do that. He talks about the amount of money we need to bring in. What has been most unhelpful is that the previous Labour Government were so ineffective at bringing in tax, the tax gap became so high they cost our country over £40b. If they had had the same average level of tax gap in their last seven years in office as we have had in our seven years, we would be about £45 billion better off.”
An answer to the question actually posed was absent.
It was that sort of performance. Brazen, shameless, partisan, and deliberately obstructive.
Mr Stride will go far on that sort of form.
New leader for Welsh Liberal Democrats
JANE DODDS has been elected by Welsh Liberal Democrat Members as the party’s new Leader, beating Ceredigion candidate Elizabeth Evans in a keenly-fought contest.
Jane Dodds, Montgomeryshire Candidate and child protection social worker, takes over the role from Acting Leader Kirsty Williams immediately.
The result was announced to an audience of members in Cardiff by returning officer Lord German.
Jane Dodds, the new Welsh Liberal Democrat Leader, commented: “It is an honour to have been elected as the next leader of the Welsh Liberal Democrats – to focus my energy on bringing like-minded people together to rebuild our party and to re-establish the Welsh Liberal Democrats as the radical, progressive force of Welsh politics.
“I’d like to thank Liz Evans for running an excellent campaign and giving members a vital opportunity to discuss our next steps as a party. I’d also like to pay tribute to Mark Williams and Kirsty Williams for their unwavering commitment to our party.
“Wales needs the Welsh Liberal Democrats now more than ever. Wales needs the progressive, pragmatic, and reforming voice of Welsh Liberal Democrats in the Assembly and in Westminster to give us an exit from Brexit, a fresh look on creating more and better paid jobs, protecting our environment, and delivering on Kirsty Williams’ education reforms.
“We have been down, but we aren’t out, and I’m confident of what lies ahead for my party.”
Kirsty Williams AM, Welsh Liberal Democrat Cabinet Secretary for Education said: “The Welsh Liberal Democrat membership had two fantastic candidates to choose between. Two proud Welsh women with long records of standing up for their communities.
“What has become clear over the last few years is that nothing can be taken for granted. We must fight tooth and nail for the values that we liberals hold dear.
“I know that the Welsh Liberal Democrats will be safe in Jane’s hands. I know she has the skills, drive and energy as we look to rebuild this great party.”
Impact of Brexit on Wales discussed
PARLIAMENTARY questions last Thursday (Oct 26) were not easy for Secretary of State for Exiting the EU David Davis.
Nailed to the spot about pronouncements he had made to a committee of MPs the previous day which had rapidly been contradicted by the Prime Minister, he managed to combine apparent certainty that there was no tension between his position and government policy (whatever that turns out to be) with an unwillingness to acknowledge that anyone could conceivably be concerned about Parliamentary sovereignty being bypassed by the refusal to give it a vote on Brexit’s terms.
For those who backed Brexit on the principle that parliamentary sovereignty and the ability of the House of Commons to make and scrutinise legislation was of paramount importance, it was uncomfortable listening.
Bluster and bloody-mindedness, it is rapidly turning out, are no substitute for the ability to master a brief, understand it, express it, and stick to it.
In fact, the position was rendered even worse by statements made by the Ministers of State in Mr Davis’ own department the previous day that they had not even bothered to read, let alone understand, briefing papers prepared for them by their own civil servants on the potential impact of leaving the EU. You might suppose that ignorance is bliss and, if it is, the Minister wished to share its blessings widely by refusing others the opportunity to examine that of which they remain willfully – and, no doubt ecstatically, ignorant.
After being offered sympathy by Labour’s shadow Brexit minister Sir Kier Starmer for the difficulties in which he found himself, Mr Davis was successively hit by a series of exasperated questions – some from his own colleagues – to which he offered increasingly snappy and impatient answers.
Plaid Cymru’s Jonathan Edwards, who has the misfortune of seeming to be more familiar with Mr Davis’ brief than Mr Davis does himself and doomed to try to educate pork as a result, attempted to get a straight answer on whether or not the UK Government would seek endorsements for the Brexit deal – if any – from devolved administrations.
Jonathan Edwards reminded MPs that national and regional Parliaments within EU member states will all be consulted on the final withdrawal deal and that six months have been allocated for that process.
Mr Edwards asked Brexit Secretary David Davis that ‘in order to ensure that the future relationship works for every part of the British state’ did he agree that ‘the formal endorsement of the National Assembly for Wales, the Scottish Parliament and the Northern Ireland Assembly should be sought before any final deal is reached—or is it going to be a case of “Westminster knows best”?’
In response, Mr Davis again failed to guarantee Wales a voice in the deal, stating ‘this is a treaty for the United Kingdom’.
Bearing in mind the continued absence of any commitment to discuss with ministers within the devolved administration on any substantive points, it seems that the UK Government is increasingly determined to go its own way and drag the other nations of the UK along behind it.
Speaking after Mr Davis’ shambolic and ill-tempered performance, Jonathan Edwards said: “As I and my Plaid Cymru colleagues have said before: the British Government is using the Brexit process as a means of re-centralising power in Westminster, rolling back the progress we have made towards self-government in order to reinstate Westminster-rule.
“In his answer to me this week the Brexit Secretary once again fails to guarantee our democratically elected representatives in the Welsh Parliament a formal role in influencing the deal with the European Union. This is particularly concerning when we consider the profound economic differences between Wales and England.
“The position of the British Government is even more insulting when we consider that devolved governments within the other EU member states will have an opportunity to influence and effectively veto the deal. The British government needs to say why it refuses to afford the same right to the devolved governments here.”
However, on Monday (Oct 30) the UK Government made an effort to – at least partly – assuage those concerns.
First Minister Carwyn Jones met with Theresa May in Downing Street in an attempt to at least break down the conflict between the Senedd and Westminster on how a way forward might be found in relation to what Mr Jones had previously described as ‘a constitutional crisis’.
Speaking to BBC Wales after the meeting, Mr Jones said: “Progress is now being made in making sure there is agreement as to the way forward, not imposition. But that progress needs to continue. We’re not in a position yet to support the bill.
“The bill needs to change so the warm words that we hear are reflected on the face of the bill, and that means making sure that powers meant to come to Wales do come to Wales.”
Secretary of State for Wales Alun Cairns said: “I’m optimistic that the Welsh government will be able to respond to the new powers that they’ll get, but also that we’ll have a common framework around the UK that will work for business and for stakeholders and for investors.”
A No 10 spokesperson said Mrs May and Mr Jones ‘spoke about constructive dialogue at the recent Joint Ministerial Committee and the progress made on working together to establish principles on common frameworks’.
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