Welsh Government writes off £1.6m spent on maritime centre that went bust before it was built

Martin Shipton

The Welsh Government has written off more than £1.6m following the failure of a project it funded that was intended to create a Maritime Centre in Porthcawl.

A report by Audit Wales has highlighted basic failings in the way financial support was managed for the project.

Porthcawl Maritime Centre was meant to provide a range of public attractions, facilities, and services that would benefit the local population, attract tourism, highlight Porthcawl’s maritime heritage, and help regenerate the local area.

The centre would have included a coastal science and discovery centre, well-being facilities, a café and restaurant, group accommodation, and events space.

Warning signs

But Audit Wales concluded that clear warning signs and opportunities to prevent or reduce the likely loss to the public purse were missed.

In March 2016 and January 2017, the Welsh Government approved a total of £2.7m of potential funding towards a new Maritime Centre on the Porthcawl harbourside. The amount comprised both a European Regional Development Fund (ERDF) grant and domestic Welsh Government match funding.

Based on initial audit findings, matters relating to the Maritime Centre project and the involvement of Credu Charity Ltd in it, were referred to South Wales Police. The police investigation concluded at the end of 2024, with no charges being brought. With the police investigation complete, Audit Wales concluded its work and has now published the report.

Credu led the project, although it had worked closely with Bridgend County Borough Council in its development. In November 2020 Credu went into voluntary liquidation and the Maritime Centre was not constructed. Between May 2016 and March 2020, the Welsh Government paid out £1.6m to Credu for the project.

In August 2020, the Welsh Government withdrew ERDF grant funding from Credu and intended to recover all related grant payments. It did so amid concerns about rising project costs and progress with the project and its wider financing.

Risks

The Audit Wales report states: “In our view, the Welsh Government did not put proper arrangements in place to manage the risks associated with the Maritime Centre. If it had, it might have decided not to fund the project or, once funded, it would have identified that the project was failing far sooner. The liquidation of Credu is ongoing, but it looks unlikely that the Welsh Government will recover any of its claim.

“We found that a lack of clarity over roles and responsibilities between different parts of the Welsh Government – the Welsh European Funding Office (WEFO) and Visit Wales – contributed to ineffective monitoring and oversight. Due diligence for the Maritime Centre project was not rigorous enough and was too late, with public money committed to a project that did not have full match funding in place and was high risk. There were also weak controls around the processing of expenditure claims.

“We are not making specific recommendations in this report. In part, this reflects the time that has passed since the events we describe, while the grant funding landscape has changed following the UK’s departure from the EU. However, there are clear lessons to learn from this case.

“We set out at the end of this report action the Welsh Government has taken to address matters arising from our work since we shared our emerging findings. This has included an internal audit review of other grant funded projects being overseen by Visit Wales at the same time as the Maritime Centre project. It has also included some further development of grants management guidance and processes for the whole of the organisation.“

Weaknesses 

Auditor General Adrian Crompton said: “All grant funded projects involve an element of risk. But this is not the first time I, or my predecessors, have reported on weaknesses in the Welsh Government’s management of its support to charities or private companies. While time has passed since the events described in this report, there were basic failings in this case and the lessons from it remain relevant today.”

In a Written Statement to the Senedd, Rebecca Evans, the Cabinet Secretary for the Economy, Energy and Planning said: “I wish to inform Members that, in accordance with the principles enshrined in Managing Welsh Public Money, I have agreed to formally write off funds awarded to Credu Charity Ltd (formerly named Porthcawl Harbourside CIC) in 2016 and 2017 towards the development and construction of a new Maritime Centre in Porthcawl, to the value of £1,641,682 (£929,380 ERDF and £712,302 Welsh Government match funding).

“The Maritime Centre was one of 13 projects within the Welsh Government’s Tourism Attractor Destinations (TAD) operation, an EU funded programme, approved by WEFO in 2016 and delivered by Visit Wales/Tourism Development team under the 2014-2020 ERDF Programme.

“Funding was awarded to Credu Charity Ltd for both capital and revenue costs towards a Maritime Centre to accommodate a Coastal Science and Discovery Centre, residential and commercial activities, a learning café/bistro and restaurant and facilities for local community groups.

“In April 2020, Credu Charity Ltd representatives informed the Welsh Government (Visit Wales) that due to delays to the project, a projected overspend was expected. Following a review into the financial viability of the project, the Welsh Government notified Credu Charity Ltd that it would withdraw the remaining ERDF funding for the project and seek repayment of all ERDF funds previously paid.

“The remaining ERDF funds were reallocated to Bridgend County Borough Council for the construction of a smaller building at the Cosy Corner site originally designated for the Maritime Centre. This project was completed successfully and now provides space for local retail and start-up businesses in the tourism and hospitality sectors.

“Credu Charity Ltd entered into liquidation in November 2020 and it is unlikely that there are funds to repay creditors. As a result, the Welsh Government is required to record the full value of the funding as a ‘Claims Waived and Abandoned’ loss.

“The Welsh Government also conducted an internal review of the TAD programme which confirmed that whilst this was an isolated incident within the programme, there were broader lessons which could be learnt. This also informed the implementation of measures including additional checks on funding pre-conditions prior to payment and further monitoring and due diligence processes aimed at identifying any potential risks earlier in the project lifecycle and to strengthen expenditure controls.”

‘Waste of taxpayers’ money’

Welsh Conservative Shadow Cabinet Secretary for Finance, Sam Rowlands MS, said: “This is yet another example of the Welsh Labour Government losing complete financial control and producing another colossal waste of taxpayers’ money.

“The Auditor General’s review is clear: while some projects do fail, the Welsh Government did not put proper arrangements in place to manage the risks associated with this project.

“Welsh Conservatives will treat taxpayers’ money with respect, so that more money can be spent on frontline services and putting money back into people’s pockets.”

The Welsh Government said: “Though the ultimate reasons for the Maritime Centre’s failure were complicated and outside the scope of this report, we accept the conclusion from Audit Wales.

“Since the shortcomings in this case, some of which date back to 2016, we have introduced several wider changes to strengthen grant management.”