Auditors criticise Welsh Government land sell off

15 Jul 15

A Welsh Government regeneration fund set up to promote sustainable housing development across the country may have sold land at below its market value, a report by the Auditor General for Wales has concluded.

The Regeneration Investment Fund for Wales was launched in 2009 by the government to create a pipeline of investment to kick start Wales’ struggling construction sector through the sale of public land.

But auditor general Huw Vaughan Thomas said flaws in the way the RIFW was established meant  the government could not show how value for money was achieved from land sale transactions.

The need for RIFW to sell property assets was a distraction from its core investment purpose, the report stated. It was not supported by independent valuations or open marketing and there were gaps in its information and weaknesses in its professional advice. Government also lacked oversight of RIFW’s activities because of ambiguities and governance limitations within the arrangements for implementing the fund.

Vaughan said although the concept of RIFW was innovative and exciting, the reality was that much of its potential investment has not materialised.

“I am deeply concerned that the Welsh Government cannot provide public assurance that RIFW achieved value for money from the sale of its land and property portfolio. If some of the sites had gone to market at a later date, they could have achieved significantly higher prices and thereby generated greater funds for regeneration investment across Wales,” he said.

During 2009 and 2010, Welsh government officials prepared a list of known projects, intended to provide the RIFW investment and fund managers with an “investment-ready” series of schemes. However, following their appointments, the investment and fund managers identified through their diligence processes that many of the projects were relatively immature and not as investment-ready as the Welsh Government had anticipated.

Responding to the report, a Welsh government spokesman said: “We accept the WAO findings that whilst adequate arrangements were not put in place during 2010 to provide accountability and oversight of the fund to ministers, subsequent actions taken by Welsh Government Ministers were appropriate.

“The WAO acknowledges the complexities involved in determining whether RIFW could have generated a higher sales price for the land.

“Today’s report is an important step in clearing the uncertainty that has hung over the fund in recent years. We can also now start to release the £30m which has remained within RIFW for the duration of the investigation. We will be looking to invest this funding in projects which benefit the people of Wales.”

  • Judith Ugwumadu

    Judith Ugwumadu joined Public Finance International and Public Finance online as a reporter after stints at Financial Adviser, Global Security Finance and The Sunday Express. Currently, she writes about public finance, public services and economics.

    Follow her on @JudithUgwumadu_

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