Ruthin Castle hotel grant: Welsh Government loses £494,000

Only £5,000 of a £500,000 Welsh Government grant to a Denbighshire hotel which went into administration will be recovered, Economy Secretary Ken Skates has said.

Ruthin Castle Ltd was given the cash at the start of 2012 to fund improvements.

The Conservatives said it was "frittered away" - but Mr Skates said the business had been improving when the application was made.

The hotel was sold and continues to operate under a different company.

The government sought to recover the cash from Ruthin Castle Ltd as it did not meet job creation criteria set at the time the money was awarded.

Mr Skates told Welsh Conservative leader Andrew RT Davies in answer to a written question that the firm was awarded £500,000 in January 2012, but went into administration in June 2014.

In June 2015, the Welsh Government received £5,469 from administrators, Mr Skates said.

"No further recovery is possible given that the company in question went into administration," he added.

"However, the hotel continues to operate as a four-star establishment, making an important contribution to the local economy."

'Little thought'

Mr Skates said that, at the time of the application in the 2011/12 financial year, its "performance was improving and the proposed upgrade... to create a four-star destination hotel and spa was seen as a strategic tourism priority".

He said four-star grading for the hotel was again confirmed in June 2016.

However, the Welsh Government's most senior civil servant, Sir Derek Jones, told an assembly committee earlier this year that job targets that were part of the grant criteria were not met.

"I'm not writing off the possibility that the jobs target will be met in future, but we don't have a claim against the liquidated company anymore," he said.

The matter was included as a £494,531 loss in the Welsh Government accounts for 2015/16.

Welsh Conservative tourism spokesman Russell George said: "This is sadly yet another example of cash being frittered away with little thought to outcomes or to the risk of investing in a business on the verge of insolvency, and comes off the back of a series of bad financial decisions."

A Welsh Government spokesman said: "The improvement work for which the funding was awarded to Ruthin Castle Ltd was completed to plan, achieving and sustaining a four-star quality."

He added: "From 2011 to 2015 we supported over 100,000 jobs in the Welsh economy and latest figures show the survival rate of companies supported by Welsh Government is above the UK average."