Welsh councils face £5.25m power station pay-out
Earlier this year a High Court judge declared that a contract to demolish Aberthaw Power Station for the Cardiff Capital Region was awarded unlawfully.
At a Senedd committee the chair of the consortium, Mary Ann Brocklesby, said the region will 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, that an independent review handled by accountancy firm Deloitte is underway.
The region's director Kellie Beirne assured Members of the Senedd (MSs) the region will take steps to ensure it does not happen again.
Ms Beirne admitted it had caused "a lot of pain and anguish for many, many people".
Under the region's plans the site, which hosted a coal fired power station until 2019, will be used to support the production of renewable and green energy projects.
The region says the legal settlement has been funded from "commercial returns on interests" generated, and that no further public money is required for it.
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A company set up by the city region - a consortium of a number of local authorities including Cardiff and the 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, High Court judge Justice Jefford declared that the procurement "was unlawful" and that 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 added that the region was "taking this extremely seriously - we recognise the gravity of it."
She indicated the body was in touch with 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 that the figure was "final", but said there were "legal processes that we need to go through".
Andrew RT 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. £38.6m is being invested on acquiring, clear and remediating the site.
Davies said: "Taxpayers will pick up this £5.25million 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."
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