Growth deal could be 'unchecked drain' on public cash

Aberthaw Power Station, Vale of Glamorgan, is being demolished to develop a new green energy site

One Welsh growth deal has delivered "very little" while another risks becoming an "unchecked drain" on public finances, a committee has warned.

There are four in Wales and each is aimed at creating jobs and attracting private investment, with the Welsh and UK governments and local authorities working together on them.

But a Senedd committee warned that two are falling short of expectations and risk failing to deliver on their economic promises.

The Economy, Trade and Rural Affairs Committee said the North Wales growth deal had delivered "very little" so far, while the Cardiff Capital Region's project to redevelop Aberthaw Power Station risked becoming an "unchecked drain" on public funds.

The Welsh government said it continued to support and monitor growth deals alongside the UK government.

Ambition North Wales is the body tasked with delivering the North Wales growth deal, coordinating local authorities and universities to manage investment and oversee projects.

It is responsible for turning government funding into tangible economic outcomes, but the committee said progress had been slow and key targets were being missed.

It said the decision not to develop small modular nuclear reactors at Trawsfynydd, Gwynedd, which had accounted for 40% of the north Wales deal's investment target, and 12.5% of its job creation goal, had left a major gap in the deal's portfolio.

Ambition North Wales representatives told the committee they were now having to remove or reclassify projects and create a reserve list to maintain flexibility.

Funding uncertainty also emerged as a key issue.

In a statement, they said delivery of the growth deal had been slowed by unforeseen challenges including Covid-19, inflation and planning delays.

While only one project was operational at the time of the Senedd review, six were now in progress, which it said represented just over £55m of growth deal investment.

Trawsfynydd's former nuclear power station is in the process of being decomissioned

The committee said it was "disappointed" to hear that Ambition North Wales had not received its annual funding drawdown for two consecutive years.

It also said it was now seeking clarity from both governments as to whether the full £240m originally allocated would still be available.

Committee chairman Andrew RT Davies MS said: "The four city and growth deals should be a key driver for economic growth in Wales and be creating a bright economic future.

"While there are promising signs, particularly in Swansea Bay, we must address serious concerns particularly in North Wales and Cardiff Capital Region, and we are asking the Welsh and UK government for urgent clarity about the funding available for the North Wales deal.

"Proper monitoring and consistent leadership are essential to ensure all deals are supported to reach their ambitious targets and deliver on the significant public investment.

"Transparency, clarity, and long-term vision are essential."

A deal for Swansea was praised for helping former Port Talbot steelworkers

The Cardiff Capital Region (CCR) city deal came under scrutiny over its redevelopment of Aberthaw Power Station.

The committee heard that the site, purchased for £8.6m, required £30m for demolition and could need over £1bn to fully redevelop.

A procurement dispute earlier this year led to the CCR paying a £5.25m settlement, and while the committee acknowledged there was strong investor interest in the site, it warned of a "reputational risk" and the danger of the project becoming an "unchecked drain" on public finances.

The committee also raised concerns about a lack of clarity around job creation figures.

Nine years after the Cardiff deal was signed, just 1,537 direct jobs had been created.

CCR told the committee that it was "more than on track" to ultimately reach its target of creating 25,000 jobs.

Cardiff Capital Region leaders said they were disappointed by the Senedd committee's concerns.

In a statement, they said the deal had delivered strong results since 2017, including more than 4,300 jobs, £236m in co-investment and support for hundreds of SMEs.

They said Aberthaw was just one of 27 projects, and its redevelopment is expected to attract significant private investment.

An independent review into the site's procurement process is under way, and CCR said its officials were seeking assurances that lessons would be learned.

The Swansea Bay city deal was praised for its progress, and the committee welcomed its support for workers affected by the closure of Tata Steel's blast furnaces in Port Talbot.

The Mid Wales growth deal, which is still in its early stages, faces unique economic challenges including limited access to private investment and a less diverse economy.

The committee said the decision to remain outside the corporate joint committee model should be closely monitored to assess its impact on delivery.

The Welsh government said it continued to support and monitor all Welsh growth deals alongside the UK government.

On the Cardiff deal, it said the Capital Region acts independently in its investment decisions, including the Aberthaw site, and confirmed that an independent review into the procurement process is under way, with officials seeking assurances that lessons will be learned.

The UK government said: "The UK government invested £790m to create growth deals, supported by a similar investment from Welsh government, to drive prosperity in every part of Wales.

"They have already delivered thousands of jobs and significant individual projects including the regeneration of Swansea city centre, the development of Pembroke Dock, the expansion of KLA in Newport, the creation of Porth Transport Hub and investment in the Enterprise Engineering and Optics Centre in Wrexham.

"Economic growth is our number one priority and we expect each growth deal to deliver for the people of Wales."