Concerns over risk to public funds in £14 million TVR deal
Chris Haines, ICNN Senedd reporter
Taxpayers could face a multi-million-pound bill after the Welsh Government spent more than £14m on a failed attempt to attract sports car manufacturer TVR to Wales.
Adrian Crompton, the auditor general for Wales, said the Welsh Government spent £4.75m buying the former Techboard factory in 2021 and £7.6m on refurbishment.
TVR received a £2m five-year loan and a £500,000 investment from the public purse, with the aim of creating 150 jobs and building 2,000 sports cars in Ebbw Vale by 2020.
But at the turn of 2024, the carmaker confirmed it no longer wants to lease the factory – or locate production in Wales – after announcing a new base in Hampshire.
Mr Crompton, who oversees the annual audit of some £24bn of public money, said selling the building for a market value of about £7.5m would net taxpayers a loss of £4.85m.
‘No offers’
In a letter dated July 12, he told a Senedd committee that ministers have been trying to find an alternative tenant since November, with TVR paying a £322-a-month rent in that time.
Mr Crompton wrote that the 180,000 sq ft factory – which could generate an income of about £735,000 a year – has attracted some market interest but no formal offers.
Wales’ auditor general said Welsh Government officials’ advice was not to award a contract for the factory refurbishment in advance of a lease agreement with TVR
But he told the public accounts committee: “In August 2020, the minister wrote to TVR telling them the Welsh Government would progress refurbishment with or without them.”
Refurbishment of the factory, which was initially expected to cost £4.5m in 2017, was finally completed in July 2023 with the budget having ballooned to £7.6m.
Botched
Taxpayers could be on the hook for a botched investment in the company’s shares, the letter revealed, despite TVR being deemed a high-risk business at the time.
The Welsh Government bought 3.3% of the sports car manufacturer in 2016 but the public’s stake in the company has since more than halved to 1.6%.
TVR received a multi-million investment as part of a joint venture with Ensorcia, a lithium-mining business, which diluted the Welsh Government’s shareholding in 2021.
In May, ministers received external advice about the TVR stake – including a lower valuation than paid in 2016 – and secured an option to sell the shares back to the company.
Officials are now preparing ministerial advice for a decision on whether to sell the shares at a loss or retain the investment in the hope the price increases.
‘Breach’
Mr Crompton said TVR breached loan requirements in September 2016 because it had not secured a promised £5.5m private-sector investment to start production.
He added that TVR negotiated extensions to the Welsh Government’s loan default requirement, which otherwise would have led to early repayment in full
In April 2022, TVR paid the Welsh Government £4.3m, covering the £2m loan and accrued interest, which released the company from a requirement to base itself in Wales.
Mr Crompton wrote: “The Welsh Government had to extend the loan repayment period but still achieved a return on investment when TVR eventually repaid it….
“Full repayment has now removed the conditions that were originally attached to the loan.”
‘Risk’
In his briefing, the auditor general said he reviewed Welsh Government support for TVR after receiving correspondence that expressed concerns about the risk to public funds.
Mr Crompton pointed out that the public purse will have incurred further costs in terms of officials’ time over many years, external advice and professional fees.
Ministers’ attempts to woo TVR coincided with the failed £425m Circuit of Wales project
The proposals for a motor racing circuit in Blaenau Gwent collapsed in 2017, with Ken Skates, then-economy minister, refusing to underwrite a £210m loan.
In 2020, Mr Skates wrote off nearly £15m related to loans for the Circuit of Wales after failing to claw back taxpayers’ money.
Welsh Government response
A Welsh Government spokesperson said: “The equity investment remains in place and the Welsh Government loan to TVR has been repaid in full along with interest accrued over its lifetime.
“A Welsh Government-owned property in Ebbw Vale was the preferred location for TVR’s car production in Wales.
“Refurbishment of the property is now complete and it represents a fantastic opportunity for any business to acquire a modern manufacturing facility in the region.
“We have appointed a property agent to market it.”
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Always thought this was pie in the sky.
Welsh Government need some better negotiators. “TVR paying a £322-a-month rent” but also “the factory – which could generate an income of about £735,000 a year”. You can’t rent a bedit in Sblott for £322 a month. How do you generate £735k at £322/month?
And…”Wales’ auditor general said Welsh Government officials’ advice was not to award a contract for the factory refurbishment in advance of a lease agreement with TVR”
At what point do the ministers responsible get hit with a “Misconduct in Public Office” case, or similar? This was deliberate failure to safeguard public money.
Is there no end to the £millions of public money that has been spent by the Labour Welsh Government,during it’s time in power,on projects where it seems there is little input by the Welsh public?
Surely that £14 million would have been better spent in offering it to Davrian who are still operative in Wales. And while we’re about it, why not a resurrection of Gilbern, if the Welsh Government is so keen to have a car manufacturer here? Both TVR and Ineos have pulled out of plans to locate in Wales, that, along with fiascos such a the big LG failure and in earlier days the scandalous behaviour of Merryweather who came to Wales, took the grants and then one day when the grants were gone, so were Merryweather. When is the penny going… Read more »
Economic development is a long term project so find a decent tenant and hold on to the shares. Presumably once Labour sorts out our economic relationship with the continent TVR will bounce back from their Brexit woes.
You could not make this up £322 a month rent on a space that should be about £60k a month.
Politicians are so inept on commercial decisions or they had the same advisors who sold the farming land north of Cardiff for peanuts or £4m for a farm with a sitting tenant of a pair of ospreys.