'Poor' management of Welsh government accounts lost £155.5m - report

Wales missed out on significant funds at the height of the pandemic because of the Welsh government’s “poor” management of its accounts, a new report has found.

The report concluded that the country lost £155.5m – the equivalent of around two-thirds of one pence on the Welsh rates of income tax.

The Senedd’s public accounts and public administration committee noted its “disappointment” that the funding was lost due to an underspend in the 2020-21 financial year.

The committee says that this money could have been spent on public services in a time of “serious pressures on public funding”.

This comes only weeks after there were calls for Wales to get £5bn from HS2 by re-designating the high-speed rail project as England-only.

The £155.5m figure was the difference between the Wales Reserve which was £505.5m on 1 April 2021 and the Wales Reserve’s £350m limit.

The Wales Reserve is held within the UK government and separated into revenue and capital.

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The Welsh government said they made a request to the Treasury to carry funds on to the next financial year – but that request was refused.

It added that the Treasury’s actions were “wholly unacceptable”.

A Treasury spokesperson said: “The Welsh Government funding arrangements are set out in the Statement of Funding Policy and the Welsh Government Fiscal Framework.

“These arrangements were applied in the usual way in relation to the Welsh Government underspend.”

The committee said it did not understand why the Welsh government had waited so long to have its request rejected, accusing it of having assumed its request would be granted.

It added that had the request been made sooner, the government may have been able to use the funds and said that “lessons must be learnt” so that Wales did not miss out on “vital funding” again.

‘Frustrating’

Chair of the committee, Mark Isherwood MS, says: “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.”

Other concerns raised by the committee in its report include the level of “fraud and error” in the COVID-19 business grants scheme.

Plaid Cymru, who are part of a co-operation agreement with the Labour government on several key policy areas, has called for an apology.

The party’s finance spokesperson Llŷr Gruffydd said: “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.”

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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 £155m.”

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