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Welsh Government criticised for mismanagement of public accounts

27 Mar 2023 5 minute read
Chair of the PAPAC, Mark Isherwood MS Picture by Senedd TV.

The people of Wales lost out on £155.5 million of public funding due to “poor account management” by Mark Drakeford’s Government, a Senedd committee has claimed.

A report published on Monday by the Senedd’s Public Accounts and Public Administration Committee (Papac) claims “significant funding was lost to Wales” as a result of the Welsh Government’s £155.5 million underspend in 2020-21.

This figure is the result of the difference between the balance of the Wales Reserve on April 1 2021, £505.5 million, and the Wales Reserve’s limit of £350 million.

The Welsh Government said the Chief Secretary to the Treasury had rejected its request to carry forward funds in excess of the Wales Reserve limit, according to Papac.

As a fiscal devolution measure, the Wales Reserve was established for Welsh Government to deposit any resource or capital funds which can be drawn down to fund future spending.

The reserve is held within the UK Government and is capped at £350 million.

Papac has now questioned why the Welsh Government “waited so long to be told it could not do as it wished with the underspend, and why such a request was made retrospectively”.

It said the Welsh Government “appears to have assumed, based on previous HM Treasury decisions, that it would be granted flexibility to use the funding”.

The committee said this raises questions as to whether making a request sooner may have enabled the funds to be used, as it warned “lessons must be learnt to ensure such vital funding is not lost from Wales again”.

Serious issues

Chairman of the Papac, Mark Isherwood, a Conservative Member of the Senedd for North Wales, said: “Our report highlights a number of serious issues within the Welsh Government’s Consolidated Accounts 2020-21, which was not only significantly delayed and signed nine months later than the timetable originally agreed, but qualified by the Auditor General on three separate issues.

“We are very concerned that significant funding was lost to Wales as a result of the underspend in 2020-21.

“This money could have been used to fund essential services and it is especially frustrating now when there are such pressures on public funding.

“It is one of many examples where poor record keeping and mismanagement of public accounts has cost the people of Wales.”

A Welsh Government spokesperson said: “The Finance Minister has made clear that the actions of the UK Treasury on this issue were wholly unacceptable.

“We stayed within our overall control total but the UK Government refused a switch between revenue and capital budgets, a process which has been agreed many times before.

“Our underspends during the exceptional 2020-21 financial year were very significantly below those of UK Government departments and our focus on achieving value for money meant we didn’t have the scandals of PPE contracts as we saw in England.

“The Treasury’s arbitrary application of its guidance in this instance was deeply regrettable and left Wales deprived of £155 million.”

The spokesperson added: “We welcome the Public Accounts and Public Administration Committee’s ongoing scrutiny of the Welsh Government’s 2020-21 annual accounts.

“We continue to work constructively with both the committee and Audit Wales, and will respond to their recommendations in due course.”

The Treasury has been approached for comment.

Apologise

Following the publication of the report, Plaid Cymru Finance spokesperson, Llŷr Gruffydd MS, called on the government to apologise for “letting Wales down and undermining our Welsh democracy”.

“Our public services are close to breaking point. The Labour Government tell us they are doing all they can to protect services, and rightly criticise Westminster for its unfair funding rules.

But this report shows that £155.5 million could have been used to fund essential public services but, inexplicably, the Welsh Government allowed Westminster to claw it back. This is terrible complacency in such challenging times,” Mr Gruffydd said.

“Lack of transparency and poor record keeping in the transition from one permanent secretary to another will only fuel accusations of a cosy club that sees itself as being above scrutiny. There needs to be full accountability when it comes to the use of taxpayers’ money and the employment of leading officials.

“The Labour Government should apologise for letting Wales down and undermining our Welsh democracy. We need certainty that Ministers are taking steps to ensure this can never happen again.”

Inept

Welsh Liberal Democrat Leader Jane Dodds MS said: “This report highlights an inept approach to Wales’ public finances from the Labour Party which shows a failure to protect public services during the pandemic.

“£155 million is an extortionate amount for Wales to have missed out on.

“It is also clear that neither Labour nor the Conservatives can be trusted to tackle fraud and that Welsh Labour criticisms of the UK Government losses to fraud during the pandemic now ring hollow.

“Labour cannot continue to blame the UK Government for everything that goes wrong in Cardiff Bay, this failure lies firmly at the feet of Welsh Labour Ministers.”

Peter Fox MS, Welsh Conservative Shadow Finance Minister, said: “Throughout 2020 Welsh Conservatives were pushing the Labour Government to get money out the door to support families and businesses, and to think about how to kick start the Welsh economy post pandemic.

“Repeatedly they were told they were wrong and now this report makes it clear that they were right. However, this doesn’t stop the pain and hurt that was caused when grants were denied and livelihoods placed under more pressure.

“There are still many questions to be answered around the backroom dealings in the Labour Government and why they don’t believe the Welsh people deserve honesty and transparency. I hope this report acts as a wakeup call for action.”


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Mab Meirion
Mab Meirion
10 months ago

Cosy club of amateurs who are under the illusion they have jobs for life…

David
David
10 months ago
Reply to  Mab Meirion

Amateurs who have NEVER run even a small business!

Richard
Richard
10 months ago
Reply to  David

You will find MI has – including Regional Manager for a major Building Society both in this country and across the border.

Kerry Davies
Kerry Davies
10 months ago
Reply to  Mab Meirion

Yeah, if only Andrew RT were FM he could have joined his Westminster colleagues in giving £1.6Bn in PPE contracts to Tory donors and £4Bn for unusable PPE that same year.
The point about this £155.5M is that it went back to the UK taxpayer. If they had spent it on fripperies and luxury goods there wouldn’t be a problem. That’s the crazy thing about public finance budgeting, underspends are treated as some sort of felony.

Mab Meirion
Mab Meirion
10 months ago
Reply to  Kerry Davies

The ‘point’ as I see it is the fact that the messiah or a Moses to lead Cymru through the bwlch has not been born…unless she gives up her job in Westminster…

Dr John Ball
Dr John Ball
10 months ago
Reply to  Kerry Davies

This is the salient point.Whilst this might make good knock about by politicians who know nothing about finance, public sector accounting practices do not allow the “carry forward” of funds, which is why there’s aways a mighty panic to spend by April.
I’m no fan of government at both levels, but the problem here is archaic accounting rules.

hdavies15
hdavies15
10 months ago
Reply to  Kerry Davies

Kerry, Given that there remains a recurring need for spending on all sorts of critical areas – take your pick from health, education, infrastructure.. …… – anyone who “hands back” that kind of loot is not taking his/her job seriously, or lacks the ability to do it properly. John Ball points to the archaic nature of public sector accounting but in this instance it’s more a case of people not addressing needs in a structured and systematic way. It even undermines the default screech of “we don’t get enough money” that gets trotted out regularly.

Kerry Davies
Kerry Davies
10 months ago
Reply to  hdavies15

A moral question. Is it better to condone the corruption of spending for the sake of spending or of saving unnecessary expenditure of taxpayer funds?

If the common practise for years had been to transfer revenue funding to the capital budget or vice versa then the blame lies with the central authority that changed the practice without notice.

hdavies15
hdavies15
10 months ago
Reply to  Kerry Davies

Wasn’t ever a matter of spending for its own sake. There has been stacks of evident need not addressed by our Bay bunglers. Why wasn’t all or most of those funds deployed to deal with the real problems that are endemic in our communities?. That is the moral question.

Alun Gerrard
Alun Gerrard
10 months ago
Reply to  Kerry Davies

This was a felony and a cockup….

Y Cymro
Y Cymro
10 months ago

This reminds me when then Welsh Secretary John Redwood sent back millions of Welsh funding to the English treasury robbing those impoverished areas of Wales. But what I find ironic is the term “mismanagement” used seeing the Tory government in London wasted £65 billion on a failed Covid track & tace app, hundreds of millions on unusable PPE, and less said about furlough fraud the better. Also, the cost of England’s HS2 infrastucture build has spiralled out of control and is forecasted to reach well over £100 billion from the original £33 billion. Now that’s mismanagement on a mammoth scale.… Read more »

Ernie The Smallholder
Ernie The Smallholder
10 months ago

£155 million that could have solved the health service funding crisis and paid the staff what they are worth. Now, Is this an insurance policy Mr Drakeford ? You know what they are like in that UK system. Everyday you want our country to be subservient to that regime you are doing our people a disservice. It should be that our government elected by the people in a fair proportional representation system should be able to control our resources and raise our own taxes the way we want to and to allocate spending when and where it is needed. Of… Read more »

Glen
Glen
10 months ago

Remember the outrage when John Redwood did something similar?

Richard
Richard
10 months ago

Its very often worth listening to Mark as you will find it hard to come across a more decent MS. He is well thought of by the Third Sector and is not afraid to lift stones that others in his party would not. Seen by some as a bit of a ‘ head boy’ he researches always and the points he makes on this issue would have in the old days been taken up by the likes of Dr Phil Williams of Pliad or David Melding of the Torys or indeed David R T Davies ( i wondet what happended… Read more »

Mab Meirion
Mab Meirion
10 months ago

I bet that this was all the money meant for bypasses they thought they had tucked away, but they messed up…still no Llanbedr Protest Stroll report on here…

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