£53m agricultural funds awarded without ensuring they would deliver value for money

Monday, June 29, 2020 - 4:42pm

Welsh Government should improve controls for awarding rural development funding 

Key aspects of the design, operation and oversight of the Welsh Government’s Rural Development fund were not effective enough to ensure £53 million of grant awards would deliver value for money. This is according to a new report  by the Auditor General for Wales.

The Rural Development Programme aims to promote strong, sustainable rural economic growth in Wales and comprises £522 million of European and £252 million of domestic funds. Grants are usually awarded to projects following a process of open competition between applications, which helps to ensure the best projects receive funding.

Today’s report found that between January 2016 and January 2019 the Welsh Government adopted an approach of granting funds without competition and, in some cases, without taking any alternative steps to ensure the projects would deliver value for money. 

£68 million of grants were awarded through a process of ‘direct applications’, where officials invited applications for funds without competition. Auditors examined £59 million of these grants, and found that the Welsh Government was unable to provide any evidence that it had taken appropriate steps to ensure value for money in the absence of competition for £28 million of the funding awarded.

Within the Rural Development Programme, a further £62 million of additional funding had been awarded to existing projects. Awards totalling £30 million were checked and for £25 million of these, there was no evidence of proper checks being made before the additional funds were awarded.

This means that grants totalling at least £53 million (£28 million of direct applications and £25 million of additional awards) were awarded by the Welsh Government without taking steps to ensure these funds would deliver value for money.

The report makes several recommendations for improvements, including:

  • Strengthening controls for appropriate oversight, review and challenge
  • Improving officials’ recording of judgements, actions and decisions so they can demonstrate compliance with controls,
  • When awarding additional funding to existing projects, Welsh Government needs to evaluate the delivery track records of those projects
     

Speaking about the report the Auditor General, Adrian Crompton, said :
tax-payers need confidence in their government’s use of public funds. Applying the principles of good governance, value for money and sustainability is fundamental in creating and preserving this confidence. Where management processes and checks for making grant awards are relaxed or neglected, then unless the resulting risks are managed properly, delivering a successful outcome could be more the product of luck than sound judgement, and the likelihood of wasting public money is increased.

My report has found that the Welsh Government awarded £53 million of grant funding with insufficient regard to ensuring value for money. My recommendations are intended to strengthen controls so that all Rural Development grants are well-governed and likely to deliver value for money, particularly where awards are made without competition.

Notes to Editors:

  • To 31 August 2019, the Welsh Government has awarded grants totalling £598 million from the Rural Development Programme.
  • The report focuses on the Welsh Government’s processes and controls for awarding grants made between January 2016 and January 2019. We did not evaluate the delivery performance of the individual projects that received the funds.
  • The Auditor General is the independent statutory external auditor of the devolved Welsh public sector. He is responsible for the annual audit of the majority of the public money spent in Wales, including the £15 billion of funds that are voted on annually by the Welsh Parliament. Elements of this funding are passed by the Welsh Government to the NHS in Wales (over £7 billion) and to local government (over £4 billion).
  • The audit independence of the Auditor General is of paramount importance. He is appointed by the Queen, and his audit work is not subject to direction or control by the Welsh Parliament or government.
  • The Wales Audit Office (WAO) is a corporate body consisting of a nine member statutory Board which employs staff and provides other resources to the Auditor General, who is also the Board’s Chief Executive and Accounting Officer. The Board monitors and advises the Auditor General, regarding the exercise of his functions.
  • Audit Wales is the umbrella name for the Auditor General for Wales and the Wales Audit Office. Audit Wales is a registered trademark, but it is not a legal entity in itself.