Flaws in Welsh Government processes led to more than a million pounds being wasted on a derelict hotel – says National Assembly Committee
4 June 2013
Flaws in Welsh Government systems and processes led to more than a million pounds of public money being wasted on buying a derelict north Wales hotel, according to a National Assembly Committee.
The Public Accounts Committee found that successive ministers were largely unaware of the plan to purchase the River Lodge Hotel in Llangollen for £1.6 million and lease it to a social enterprise organisation for the purpose of creating a martial arts training centre and spiritual retreat.
The Committee was told that the offer to purchase the derelict buildings in 2007 was made before the valuation process was completed and that the price paid was not a good use of public funds.
The Committee was also told that the decision to purchase the hotel was made, in part, to use up leftover funds at the end of the financial year.
In its report, the Committee highlights the fact that the civil servant which suggested the hotel as a potential purchase opportunity was also a volunteer director of the organisation which wanted to lease it, was a conflict of interest.
It also states that the fact the civil servant’s line managers were aware of the situation and took no action was a failure of process.
The Committee has also raised concerns that the minister in charge of the department at the time, former Assembly Member Andrew Davies, was not clearly briefed on the project, while his successor, Ieuan Wyn Jones AM, was not informed of the project’s history when he took over and wasn’t given access to his predecessor’s briefing papers because he was a member of a different political party.
“This inquiry into the Welsh Government’s acquisition and action to dispose of the River Lodge Hotel has been one of the most illuminating and troubling ever undertaken by the Committee,” said Darren Millar AM, Chair of the Public Accounts Committee.
“The fact that over a million pounds of public money has been wasted as a result of the various decisions taken in the course of this troubled project is concerning enough in itself.
“But it is the flaws in civil service systems and processes which this inquiry has exposed, and which are coming to light in our wider inquiry into the Welsh Government’s grants management, which have left us deeply uneasy.
“We recognise that the Welsh Government has sought to overhaul many of its governance arrangements and management processes, however, we remained unconvinced that the Welsh Government’s revised processes would necessarily produce different results in future.
“The issues of high staff turnover, ministers potentially having no access to predecessor’s papers and limited handover arrangements between ministers leave the Welsh Government with the corporate memory of a goldfish.”
The Committee makes 21 recommendations in its report including:
The Welsh Government reviews its processes to minimise a risk that a rush to spend money before the end of a financial year will impede efforts to ensure value for money;
Welsh Government civil servants ensure that incoming Ministers are fully briefed on all aspects of their new portfolios, including on-going and outstanding correspondence; and,
The Welsh Government reviews its systems for handling Ministerial correspondence, so that concerns about a conflict of interest (or the conduct of an official) are not responded to by the person who is being complained about or their line manager.
Link to more information on the Public Accounts Committee
The inquiry by the Public Accounts Committee follows a report produced by the Wales Audit Office which can be found here.