Poor governance undermined Welsh Government relocation

24 Mar 14

A ten-year £92m project to disperse Welsh Government offices around the country suffered from poor governance and weak cost estimates and might not have been value-for-money, auditors said today

The Welsh Government’s 2002 Location Strategy recommended decentralising services away from Cardiff to bring them closer to the people of Wales.

As a consequence, more than 550 posts were relocated from Cardiff to three new offices in Merthyr Tydfil, Aberystwyth and Llandudno Junction. The programme was completed in December 2011 at a cost of £91.5m.

But in a report published today, the Wales Audit Office noted that the new buildings had cost more than was originally estimated in the business case, while there were no estimates of the costs of the entire programme. 

At no point in the project’s life was there a reassessment to confirm that construction of three regional offices remained the best option, the auditors said, and the Welsh Government is not monitoring all of the programme’s continuing benefits.

The report also highlighted governance weaknesses, finding that effective governance on the project was not established until 2008 following a series of critical ‘gateway’ reviews. 

However, there were some economic benefits. The WAO cited figures from a 2011 Bangor University study, which estimated that the net economic impact of the programme was more than £150m from the time construction started through to 2015. The scheme had also helped rationalise the Welsh Government’s estate, while the new buildings score excellently for their environmental performance.

Auditor General for Wales Huw Vaughan Thomas said: ‘The Welsh Government’s Location Strategy has delivered some clear benefits including efficiency savings, a good working environment for staff who have relocated, and economic benefits to the Welsh economy.

‘But the Welsh Government is unable to demonstrate the overall value for money from the programme, largely because of weaknesses in the way it was managed before 2008.’

Among the WAO’s recommendations for the government are: greater use of option appraisals and cost-benefit analyses; effective strategic overview of major projects backed by robust governance and financial controls; and clearly defined, realistic and deliverable benefits.

  • Vivienne Russell

    Vivienne Russell is managing editor of Public Finance magazine and publicfinance.co.uk

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