Councillors demand to know why Welsh Gov £50m funding for rail centre is a loan

Elgan Hearn, local democracy reporter

Councillors are demanding to know why funding for developing a train testing centre near Ystradgynlais has come in the form of a loan.

Earlier this year, the first part of a loan worth £50 million to develop a Global Centre of Rail Excellence (GCRE) was given to Powys County Council from the Welsh Government.

At the end of the 2020/21 financial year in March, £33 million had been handed over, and further £10 million will be received in this financial year and £7 million next year.

At a meeting of the Governance and Audit committee on Friday, July 30, councillors asked if receiving the substantial loan would come at a cost to the council, and decided to send the Welsh Government a letter on the matter.

Cllr David Thomas said: “I appreciate nothing has been finalised as to how this funding will be managed but it could potentially present some risk for this authority.

“Could we have some assurances that we’ll be told how it will be managed when it’s finalised.”

Head of finance, Jane Thomas said: “Absolutely, this is something we highlighted when this first came to the fore and we were considering accepting the funding at this early stage in the project.”

“We need to clearly understand what the risks are to the authority and how we can best mitigate that.

“We need to look at that as part of our due diligence.

“We haven’t got a detailed business case, but we are having regular discussion with Welsh Government as that project starts to develop.”

‘Worst-case scenario’ 

As a worst-case scenario, Ms Thomas explained that if the risk changes through the “life of the project” the council might have to set aside money in future budgets to repay any debt to the Welsh Government.

Cllr Roger Williams said: “What I’m not entirely sure is why the Welsh Government have picked this model for delivering this project.”

“This one of the very few infrastructure projects that the Welsh Government is going ahead with.

“Why is this model of financing through local authorities being used?”

Ms Thomas said: “We would have to ask Welsh Government colleagues why this mechanism is the appropriate one in this case.

“This was the best approach at the time from their perspective.”

Committee chairman, Cllr John Morris said: “I’m quite happy to write to the Welsh Government and ask for some clarity on that,”

The committee approved sending the letter, but Finance portfolio holder, Cllr Aled Davies stressed that the investment should be welcomed.

“It should be a positive letter not a negative one, said Cllr Davies.

Cllr Morris told Cllr Davies that the letter would be “about process.”

On Thursday, July 29, councillors on the planning committee backed an outline planning application for the scheme, which is estimated to cost a total £150 million.

The UK Government have pledged £30 million to the project to match £50 million from the Welsh Government.