Dawnus: Claim that councils should have been alerted sooner to problems

One school in Welshpool has been left partly built

Local authorities should have been warned sooner about financial problems at a troubled construction firm, a report to Powys councillors claims.

Swansea-based Dawnus Construction, which went into receivership in March, had three school projects in Powys.

The Welsh Government confirmed then it had lent the firm £3.5m in 2018.

But John Brautigam, vice-chairman of the council's audit committee, claimed company assets were already "in hock" when Powys signed its contract in 2017.

One school in Welshpool has been partly built but another in Welshpool and one in Machynlleth are still at the planning stage, according to the Local Democracy Reporting Service.

Presenting a report to councillors, Mr Brautigam said he "had suspicions that more might have been known than has been admitted" after being briefed about the Welsh Government loan.

Ysgol Bro Hyddgen in Machynlleth is due to open in September 2020 but is still at the planning stage

The retired business consultant said he went through the firm's accounts and found a number of debentures - a type of loan - taken out with banks and the Welsh Government on company assets.

"When Powys County Council signed the contract on July 18, 2017, Dawnus equipment was either in hock or being sold off, together with much of their other assets," Mr Brautigam said.

He added: "They [the Welsh Government] admit that no information was passed to local authorities. Their rationale was commercial confidentiality.

"In my view the rights or needs of the taxpayer trump any commercial confidentiality."

• Local firms could finish school build work

• Dawnus got public money amid cash trouble

• Building company goes into administration

A Welsh Government spokesperson said: "We worked closely with Dawnus, HSBC Bank and the Development Bank of Wales over many months to try and prevent the unfortunate decision by the Dawnus Board.

"We always put the interests of the Welsh public first, which is why we, and banks, worked hard in a bid to ensure the company continued to operate.

"We are working with local authorities to ensure contingences are in place to minimise impact."