Wales politics

Film studio deal with Pinewood a 'catalogue of errors'

Pinewood Studio Wales
Image caption Pinewood rented the Wentloog location for free for two years

A deal by Welsh ministers that would have paid Pinewood studios £2.5m to boost TV and film production in Wales has been criticised by AMs.

Ministers hoped Pinewood Studios Wales, opened in 2015 in Cardiff, would generate £90m for the Welsh economy.

The Welsh Government admitted last year that the figure was unlikely to be met.

A committee of AMs has now criticised "inaccurate, incomplete and poor quality" civil service advice that resulted in a "catalogue of errors".

In 2017 the Welsh Government ended the deal with Pinewood and now pays the company a fee to run the facility.

On Thursday, ministers said they were considering the report, by the Public Accounts Committee (PAC).

PAC's chairman now wants a review of civil servants' ability to negotiate big deals.

When plans for the 180,000 sq ft studio complex were unveiled by the then First Minister Carwyn Jones in 2014, he said it was a "priceless opportunity to promote Wales as a world-class location for film and television production".

Pinewood had a track record of creating more than 1,500 films in more than 75 years, including the James Bond franchise and the Carry On series.

Under the deal the Welsh Government bought the site, in Wentloog, Cardiff, to develop as a studio and leased it to Pinewood.

The government established a £30m investment fund for film and TV projects and sponsored Pinewood to promote the studio and the fund.

But PAC's report said the contract lacked detail and ignored potential conflicts of interest, while a building with a leaking roof was bought without a structural survey carried out.

Image caption Nick Ramsay: "We need a proper review of the capacity limitations within the Welsh Government"

The report highlighted "inaccurate, incomplete and poor quality advice provided to Welsh ministers on a number of occasions".

AMs also raised concerns officials did not realise VAT would have to be paid on the Welsh Government's sponsorship deal with Pinewood.

The agreement meant the government would pay Pinewood £483,000 per year to promote the studio.

However, the deal did not include VAT, which cost a further £87,600 per year, meaning Pinewood would be paid £2.63m over five years.

The report added: "We are very concerned about the omission of VAT from the original sponsorship agreement, as this brings into question both the robustness of due diligence work and also the failure to obtain specialist advice on VAT implications."

There was also concern, highlighted in other reports, that only £18m of a projected £90m would be recouped from the Welsh Government's £30m investment in the film and TV sector.

PAC chairman Nick Ramsay said: "There needs to be a review of the capacity within the Welsh Government, within the civil service, of the capability of the sort of people there.

"Have those people that have been recruited got the knowledge, the appropriate skills set to do those contracts with the private sector?

"In this case it was Pinewood, it was to do with the film industry. It could be any other area of Welsh life.

"But there is a common theme running through all this; we need a proper review of the capacity limitations within the Welsh Government."

Image caption Kancoat created 12 jobs but ran into difficulties when it struggled to maintain its supply of steel

Last year it emerged more than £5m of public money was lost supporting a Swansea steel firm which went bust.

Kancoat received £3.4m from the Welsh Government, despite a review warning it had a weak business plan.

It later went into administration and the government has told an assembly committee surrendering the lease on the building would cost an additional £2m.

In 2016, a senior civil servant said the investment panel that recommended the support got its decision wrong.

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