Welsh council body faces £5.25m power station pay-out

There are serious questions to answer over why a legal row over a defunct power station has left a group of 10 Welsh councils footing a bill in the millions, a senior Tory has said.

Earlier this year a High Court judge declared a contract to demolish Aberthaw Power Station for the Cardiff Capital Region was awarded unlawfully.

At a Senedd committee the chairwoman of the consortium, Mary Ann Brocklesby, said the region would pay a settlement of £5.25m to a rival company that lost out.

Andrew RT Davies, Conservative MS for South Wales East, said it was "frankly unacceptable".

Brocklesby told the Senedd's economy committee, which Davies chairs, an independent review handled by accountancy firm Deloitte was under way.

The body's chief executive Kellie Beirne admitted the legal row caused "a lot of pain and anguish for many, many people".

Under the region's plans the site, where a coal fired power station was located until 2019, will host renewable and green energy projects.

The region said the legal settlement had been funded from "commercial returns on interests" generated, and that no further public money was required to pay it.

A company set up by the city region - a consortium of a number of local authorities including Cardiff and Vale of Glamorgan - awarded a contract for the demolition of the power station last year to a company called Erith in 2023.

Cardiff council, which had run the procurement, admitted liability in court after lawyers for a rival company, Brown and Mason Limited, challenged the contract.

According to a court document from February, High Court judge Justice Jefford declared "the defendant's conduct of the procurement was unlawful" and the claimant would have otherwise been awarded the contract.

Brocklesby, who is also Labour leader of Monmouthshire council, told the economy committee "the amount of the settlement... was £5.25m".

"I'm not able to say much more at this point, because we are undergoing an independent review, which we commissioned as political leaders," she said.

Ms Beirne said the capital region was "taking this extremely seriously - we recognise the gravity of it."

She indicated the body was in touch with spending watchdog Audit Wales "throughout this process".

The director added: "When that review concludes and we have findings, we'll be able to be much more open about what happened and take steps to ensure that this can't happen again."

Brocklesby added the figure was "final", but said there were "legal processes that we need to go through".

Davies, who chairs the committee, questioned the pair on how the region was securing "hundreds of millions" needed to seek the project through.

He asked how the body was "giving confidence to the private sector, and the independent sector more generally, to come in as partners in light of what's gone on".

Brocklesby said the future of Aberthaw "does actually look very bright, and we're not feeling any effects from the impact of this highly regrettable procurement issue".

Challenged on that point by Davies, she added: "I wouldn't be so foolish as to say that there is no risk to reputation or to Aberthaw. What I am saying is that we are mitigating it in various ways".

Bernie said that "maybe bigger figures" than "hundreds of millions" could be needed for Aberthaw.

A total of £38.6m is being invested on acquiring, clearing and remediating the site.

Davies said: "Taxpayers will pick up this £5.25m bill thanks to the Labour-run Cardiff Capital Region's bungled handling of this contract.

"This is frankly unacceptable, as this cash should be going towards improving our public services.

"CCR's Labour leadership have serious questions to answer."

A statement from the region said: "A legal challenge was made following a procurement exercise for the demolition contract relating to the Aberthaw Power Station, which was awarded in July 2023.

"A mediated settlement with the claimant has now been reached and an independent review of the procurement arrangements is underway.

"The settlement has been fully funded from commercial returns on interest generated on balances held, with no impact on core programme budgets or any requirement for further public funding.

"In line with Cardiff Capital Region's commitment to transparency and accountability, the independent review will examine the procurement process in full in order to ensure that all issues are identified and acted upon.

"While the independent review is being conducted and until that process is concluded, we are unable to comment further.

"This matter does not affect the wider work of Cardiff Capital Region or the progress of the Aberthaw project. The redevelopment of the site into a flagship green energy park is progressing at pace."