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| Arts venue cost plan 'was flawed' | |
| (about 1 hour later) | |
| A £13.5m bail-out of the Wales Millennium Centre followed "severe deficiencies" by assembly officials and ministers, an official report says. | |
| "Wholly inadequate record-keeping" by the assembly government added to its lack of understanding of the venue's finances, said the Wales Audit Office. | |
| But Labour former Culture Minister Alun Pugh claims he inherited a "flawed" plan from his Lib Dem predecessor. | |
| The assembly government said it would consider the report into the venue. | The assembly government said it would consider the report into the venue. |
| The Queen, accompanied by the Duke of Edinburgh and Prince of Wales, officially opened the £109m performing arts centre in November 2004, when it was described as an icon for Wales. The assembly government did carry out detailed reviews of the WMC's business plans, which highlighted several key risks... but crucially, it then stopped short of assessing and addressing these problems Paul Davies AM, Conservative | The Queen, accompanied by the Duke of Edinburgh and Prince of Wales, officially opened the £109m performing arts centre in November 2004, when it was described as an icon for Wales. The assembly government did carry out detailed reviews of the WMC's business plans, which highlighted several key risks... but crucially, it then stopped short of assessing and addressing these problems Paul Davies AM, Conservative |
| Three years later there were warnings from auditors that it was in danger of insolvency. | Three years later there were warnings from auditors that it was in danger of insolvency. |
| The assembly government announced in 2007 that as well as clearing the centre's debt it was also trebling its annual revenue funding from £1.2m to £3.7m. | The assembly government announced in 2007 that as well as clearing the centre's debt it was also trebling its annual revenue funding from £1.2m to £3.7m. |
| Now Auditor General Jeremy Colman's report has said the assembly government's failure in record-keeping meant it only became fully aware of the risks involved in funding the centre at that time. | |
| The centre, in Cardiff Bay, had become reliant on a loan from HSBC, originally £10m and intended for the building work, which it became unable to repay. | |
| The report notes that officials lacked the records needed to properly understand the assembly government's financial exposure. | The report notes that officials lacked the records needed to properly understand the assembly government's financial exposure. |
| The report states: "In particular, in 2005 and 2006 the assembly government continued to extend its loan guarantee [to HSBC] without fully assessing whether the WMC could pay back the loan, despite the fact that the WMC was incurring much larger than anticipated losses". Mr Colman notes that after clearing the debt and increasing the subsidy for the venue, officials then failed to examine the WMC's audited accounts for 2006, which were available to the public. | |
| The lack of information obtained by officials also extended to details of ticket sales. | The lack of information obtained by officials also extended to details of ticket sales. |
| The assembly government claimed the centre refused to provide it with the details because it was worried that commercially confidential information could then be revealed to anyone requesting it using the Freedom of Information Act. | The assembly government claimed the centre refused to provide it with the details because it was worried that commercially confidential information could then be revealed to anyone requesting it using the Freedom of Information Act. |
| However, the WMC disputes this version of events, and Mr Pugh also denied he had been frustrated in trying to obtain key figures such as ticket sales. | |
| He told BBC Radio Wales: "In fact we had regular details, of not just of the overall top line figure of the budget in terms of ticket sales, but at the level of individual shows. | |
| "We knew exactly which shows were selling well, which shows weren't doing particularly well. | |
| "I had a very good working relationship with the chair and chief executive. We knew what the problems were. The problems were that original business plan simply wasn't capable of being delivered." | |
| The Queen officially opened the Cardiff Bay venue in November 2004Mr Colman said: "The standard we would expect the assembly government to come up to would be that of any prudent business person with that kind of financial exposure. | The Queen officially opened the Cardiff Bay venue in November 2004Mr Colman said: "The standard we would expect the assembly government to come up to would be that of any prudent business person with that kind of financial exposure. |
| "If you have lent someone or guaranteed a loan of £10m, that's a lot of money and you'd expect to be keeping a close eye on the situation." | "If you have lent someone or guaranteed a loan of £10m, that's a lot of money and you'd expect to be keeping a close eye on the situation." |
| 'Fair and accurate' | |
| Mr Colman did praise the handling of the centre's construction. | Mr Colman did praise the handling of the centre's construction. |
| Mr Pugh, who was the minister when the venue opened, put the blame on his predecessor, Lib Dem AM Jenny Randerson, the minister in the former Lab-Lib Dem coalition. | Mr Pugh, who was the minister when the venue opened, put the blame on his predecessor, Lib Dem AM Jenny Randerson, the minister in the former Lab-Lib Dem coalition. |
| Mr Pugh said: "The original business plan, that's the one that the whole assembly voted on, and the one that the previous culture minister recommended to the assembly, was inherently flawed: you could not run the centre at that level of cost that was in the plan." | |
| Mr Pugh denied that he did not act earlier for political reasons, with an assembly election on the horizon. | Mr Pugh denied that he did not act earlier for political reasons, with an assembly election on the horizon. |
| He said: "Absolutely not. The issue was I didn't have £16m spare money sitting round in the arts budget. | He said: "Absolutely not. The issue was I didn't have £16m spare money sitting round in the arts budget. |
| "There was certainly no way I going to raid community arts venues in the valleys or, for example, re-impose admission charges in Welsh museums." | "There was certainly no way I going to raid community arts venues in the valleys or, for example, re-impose admission charges in Welsh museums." |
| Judith Isherwood, chief executive of the WMC, said: "We have no comment to make other than to say that we believe the report is a fair and accurate picture of the facts as they relate to Wales Millennium Centre's business. | Judith Isherwood, chief executive of the WMC, said: "We have no comment to make other than to say that we believe the report is a fair and accurate picture of the facts as they relate to Wales Millennium Centre's business. |
| "We appreciate the work of the Wales Audit Office in the preparation of this report." | "We appreciate the work of the Wales Audit Office in the preparation of this report." |
| Conservative culture spokesman Paul Davies said: "This is a damning report that highlights in no uncertain terms the failings of the assembly government. | Conservative culture spokesman Paul Davies said: "This is a damning report that highlights in no uncertain terms the failings of the assembly government. |
| 'Difficult questions' | 'Difficult questions' |
| "The report clearly states the assembly government did carry out detailed reviews of the WMC's business plans, plans which highlighted several key risks. | "The report clearly states the assembly government did carry out detailed reviews of the WMC's business plans, plans which highlighted several key risks. |
| "But crucially, it then stopped short of assessing and addressing these problems. This beggars belief." | "But crucially, it then stopped short of assessing and addressing these problems. This beggars belief." |
| He said the assembly government "effectively washed their hands" of the centre once it had been built, and added: "The assembly government have now got some very difficult questions to answer." | He said the assembly government "effectively washed their hands" of the centre once it had been built, and added: "The assembly government have now got some very difficult questions to answer." |
| An assembly government spokesperson said: "The Minister for Heritage [Alun Ffred Jones] will consider the Wales Audit Office report on the Wales Millennium Centre, and the recommendations made, and will respond in due course." | An assembly government spokesperson said: "The Minister for Heritage [Alun Ffred Jones] will consider the Wales Audit Office report on the Wales Millennium Centre, and the recommendations made, and will respond in due course." |