The people of Wales lost out on £155.5 million of public funding due to “poor account management” by First Minister Mark Drakeford’s Government, a Senedd committee has claimed.
A report published on Monday by the Senedd’s Public Accounts and Public Administration Committee (Papac) claims “significant funding was lost to Wales” as a result of the Welsh Government’s £155.5 million underspend in 2020-21.
This figure is the result of the difference between the balance of the Wales Reserve on April 1 2021, £505.5 million, and the Wales Reserve’s limit of £350 million.
The Welsh Government said the Chief Secretary to the Treasury had rejected its request to carry forward funds in excess of the Wales Reserve limit, according to Papac.
As a fiscal devolution measure, the Wales Reserve was established for Welsh Government to deposit any resource or capital funds which can be drawn down to fund future spending.
The reserve is held within the UK Government and is capped at £350 million.
Papac has now questioned why the Welsh Government “waited so long to be told it could not do as it wished with the underspend, and why such a request was made retrospectively”.
It said the Welsh Government “appears to have assumed, based on previous HM Treasury decisions, that it would be granted flexibility to use the funding”.
The committee said this raises questions as to whether making a request sooner may have enabled the funds to be used, as it warned “lessons must be learnt to ensure such vital funding is not lost from Wales again”.
Chairman of the Papac, Mark Isherwood, a Conservative Member of the Senedd for North Wales, said: “Our report highlights a number of serious issues within the Welsh Government’s Consolidated Accounts 2020-21, which was not only significantly delayed and signed nine months later than the timetable originally agreed, but qualified by the Auditor General on three separate issues.
“We are very concerned that significant funding was lost to Wales as a result of the underspend in 2020-21.
“This money could have been used to fund essential services and it is especially frustrating now when there are such pressures on public funding.
“It is one of many examples where poor record keeping and mismanagement of public accounts has cost the people of Wales.”
A Welsh Government spokesperson said: “The Finance Minister has made clear that the actions of the UK Treasury on this issue were wholly unacceptable.
“We stayed within our overall control total but the UK Government refused a switch between revenue and capital budgets, a process which has been agreed many times before.
“Our underspends during the exceptional 2020-21 financial year were very significantly below those of UK Government departments and our focus on achieving value for money meant we didn’t have the scandals of PPE contracts as we saw in England.
“The Treasury’s arbitrary application of its guidance in this instance was deeply regrettable and left Wales deprived of £155 million.”
The spokesperson added: “We welcome the Public Accounts and Public Administration Committee’s ongoing scrutiny of the Welsh Government’s 2020-21 annual accounts.
“We continue to work constructively with both the committee and Audit Wales, and will respond to their recommendations in due course.”
The Treasury has been approached for comment.
