Regeneration investment fund on hold pending inquiry

Land near Lisvane, Cardiff Land worth £21m was sold to South Wales Land Developments Ltd in March

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The Welsh government has suspended a regeneration investment fund worth tens of millions of pounds and launched two internal investigations.

The Regeneration Investment Fund for Wales (RIFW) was already the subject of an inquiry into the sale of publicly-owned land worth more than £20m.

Opposition AMs were concerned there was no competitive bidding process.

The fund's only public investment so far has been a £13m redevelopment of Neath town centre.

A Welsh government spokeswoman said the Neath project, which will include shops and a new multi-storey car park, will go ahead. Work is due to start this year.

Eight other projects are in the pipeline for funding.

In a statement on Thursday, Regeneration Minister Huw Lewis said he was commissioning investigations into RIFW to minimise disruption to projects being supported by the fund.

An investigation by the public spending watchdog, the Wales Audit Office (WAO), is already underway.

Analysis

At the heart of this story is the way in which the parcels of land were sold.

Many of them had been in public ownership for decades. They were transferred from the Welsh government to the Regeneration Investment Fund for Wales to be sold to raise money for town centre redevelopments.

The sites, which vary from farmland in Gwynedd to former industrial land in the Cynon Valley and parts of a business park in Newport, were bundled together and sold in one transaction without an open tendering process.

The Welsh government defended the bundling up by saying it prevented the most valuable sites being cherry picked by developers.

On the tendering, it said a total of 16 developers and agents were approached about the sale.

The other critical issue is a claw back mechanism for the taxpayer to benefit from any increase in value in future.

This is an issue for some of the sites which are likely to be developed for housing.

At this stage we don't know how much the claw back is or which sites it applies to.

Concerns about the fund were first raised by opposition AMs after 16 plots of land around Wales were sold off for £22m without a competitive bidding process.

The money raised was used to fund RIFW, which operates at arm's length from the Welsh government and is also backed by EU money.

The land was bought by a Guernsey-registered company called South Wales Land Developments Ltd in March.

Land near Cardiff was sold weeks before a report was published by the local council on potential housing sites which could have boosted its value.

'Claw back'

The Welsh government has previously said that the sale included "claw back" arrangements in case the land rose in value.

The claw back contracts mean the taxpayer will share in any large increase in the price of the land due to planning decisions.

Of the reviews announced by Mr Lewis on Thursday, one will look at the way the sale of land was handled by the fund, while the second review will look at the running of the fund itself, and to see what can be done to resume its operations.

Welsh Conservative opposition leader Andrew RT Davies said: "I think for regeneration it's a real concern because the projects that had bid for the funds are in complete suspension.

"They don't know whether to go ahead, what their future is going to be."

He said AMs had been prevented from questioning ministers about the latest development as the Welsh government's statement issued on Thursday night came on the eve of the assembly's mid-term recess.

"Once again the Welsh Labour government is found wanting," he said.

Last September the WAO said an initial investigation had "identified a number of questions and concerns" which warranted a further in-depth audit investigation.

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