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| A number of land sales by an arms-length Welsh Government body have raised concerns about transparency. Is this an innocent business deal? Or something sneakier? (Pic : BBC Wales) |
The backstory
The Regeneration Investment Fund for Wales (RIFW) was set up by previous Economy Minister, Ieuan Wyn Jones (Plaid, Ynys Mon). Its goal is to market and sell Welsh Government owned property to match European Union funds used for regeneration projects in the Objective One area. It's an "arms-length" public body, but is ultimately responsible to the Welsh Government. To date it hasn't done very much.
16 parcels of land across Wales were sold recently by RIFW - total value of approximately £20.6million. The parcels include land in Wrexham, Llandudno Junction, Pyle in Bridgend and land around Cardiff.
Byron Davies AM (Con, South Wales West) referred the sales to the Wales Audit Office a few weeks ago. More on this at Inside Out, Daily Post, and BBC Wales.
So RIFW is doing its job?
By the look of things, yes. Land has been sold, and presumably the money will be used in regeneration projects in the future, though as I said RIFW don't appear to have done much with it so far.
The controversy surrounds land price speculation, lack of transparency and tax avoidance. Byron Davies is an ex-detective, and might've picked up the scent of something more serious too.
What's Cardiff's LDP got to do with it?
Before May's local elections, the ruling Lib Dem-Plaid Cardiff Council coalition ruled out developing "greenfield land" for housing - instead wanting to build all houses on urban "brownfield" land. This got them into trouble with the Welsh Government, as population projections showed that there was a need for signifcant housing development in Cardiff. The council were told to rip up their Local Development Plan (LDP) and start again.
The incoming Labour administration didn't mention plans to build on greenfield sites in their local election manifesto. That's probably sensible - they wanted to wait and see. However, Labour vehemently denied they had any plans to "concrete over greenfields" and accused those who suggested such of lying.
Within months of winning back control of Cardiff Council, the Labour administration leaked plans (Carwynisation of Cardiff's LDP) forconcreting over greenfields 40,000+ new homes in
the pre-proposals for the new LDP.
As you might expect, the value of the land set aside for these housing developments will have risen dramatically. Those who bought the land will be sitting on a nice little earner once the developers come knocking.
One of those lucky buyers was South Wales Land Developments (SWLD) - who were sold land in the Lisvane area by RIFW (as well as all the other parcels mentioned above) before Cardiff Council's "leak". The value of land sold to SWLD in Cardiff alone will have risen from (using quoted figures from the BBC) £1.8million to around £120million.
To avoid accusations of hyprocrisy, I've said on several occasions that opening up some greenfield land for housing in and around Cardiff is the right thing to do – I still think it is - but not under questionable circumstances like this.
Why is this "dodgy"?
SWLD (despite the name) are based in Guernsey, which has low business taxes. In these times of austerity, you have to question why a Welsh Government body will have sold land to them knowing how it would look.
There might be a reason.
The only information that has come out of SWLD so far has been from a former director and company secretary of Cardiff Hub Ltd – Langley Davies – who's involved in other property-related businesses too. That's not to single him out. Considering the company name, I imagine many of the other people involved will have similar business interests. However, there are scant details on SWLD, who appear to have been set up suspiciously quickly and quietly.
Cardiff Hub have/had ambitious plans for a business park and transport interchange in the St Mellons area. At the time, the plans were trumpeted by the Welsh Government and Cardiff councillors, including Lib Dem ward members and current Cardiff Council cabinet member for planning and transport, Ralph Cook.
It's not a big stretch of the imagination that a notional £100million+ could go some way towards funding Cardiff Hub or different projects.
It suggests someone - whether in local government, Welsh Government or RFIW's fund managers - might've "tipped off" SWLD - and SWLD alone - about the land and Cardiff's LDP revisions.
That might qualify as a form of market abuse ("insider dealing"). In extreme cases, it's punishable by up to seven years in prison or an unlimited fine. It might not be illegal when it comes to land sales as far as I know, but it certainly stinks, as land should be sold on the open-market to developers directly.
You also have to question why so many parcels of land were bundled into one deal with one company.
Overvalued land:
What happens next?
The Wales Audit Office will probe what Byron Davies has brought to them and issue their own assessment.
The most likely proposition is that this was a poor (or knowingly poor) sale by RIFW. SWLD could be acting as a legitimate "land bank" and couldn't believe their luck when they saw the parcels on sale for a low price, knowing "instinctively" that Cardiff Council would need the land for housing as soon as they changed the LDP. That still doesn't explain how only SWLD seemed to be interested in such an obvious opportunity.
My hunch is that the Welsh Government are in the clear. There's claw back arrangements should land values rise. But the heart of the matter is that RIFW/Welsh Government (and by extension, the Welsh public) may well have been diddled out of a potential £100million windfall deliberately.
When you look at it like that, you have to wonder why the Welsh Government have been so coy? Is it embarrassment at having "overseen" a really bad deal? That's my guess. Or is it plausible deniability?
Here's a more outlandish tin-foil-hat suggestion. The Welsh Government - in cahoots with someone with a keen interest in RIFW funds, or a friendly Labour-run Cardiff Council - saw an opportunity to raise money for RIFW projects in Wales – Swansea for instance - while at the same time helping a private company raise funds to invest in Cardiff or elsewhere (because some EU funds can't be used outside the Objective One area).
That's still sleazy, but admittedly it's clever too. There's plenty of opportunities there for Welsh Government ministers and council cabinet members to be photographed in hard hats "saving the economy", plenty of new houses would be built in Cardiff and they can pat the backs of company directors "investing in Wales". Just don't mention the tax-dodging. Perhaps I'm giving them too much credit and going down the route of Machiavellian conjecture there.
Whichever way, someone should be in hot water, and my guess is it's someone at the local government end – whether that's Cardiff or somewhere else.
I wonder who they could be?
The Regeneration Investment Fund for Wales (RIFW) was set up by previous Economy Minister, Ieuan Wyn Jones (Plaid, Ynys Mon). Its goal is to market and sell Welsh Government owned property to match European Union funds used for regeneration projects in the Objective One area. It's an "arms-length" public body, but is ultimately responsible to the Welsh Government. To date it hasn't done very much.
16 parcels of land across Wales were sold recently by RIFW - total value of approximately £20.6million. The parcels include land in Wrexham, Llandudno Junction, Pyle in Bridgend and land around Cardiff.
Byron Davies AM (Con, South Wales West) referred the sales to the Wales Audit Office a few weeks ago. More on this at Inside Out, Daily Post, and BBC Wales.
So RIFW is doing its job?
By the look of things, yes. Land has been sold, and presumably the money will be used in regeneration projects in the future, though as I said RIFW don't appear to have done much with it so far.
The controversy surrounds land price speculation, lack of transparency and tax avoidance. Byron Davies is an ex-detective, and might've picked up the scent of something more serious too.
What's Cardiff's LDP got to do with it?
Before May's local elections, the ruling Lib Dem-Plaid Cardiff Council coalition ruled out developing "greenfield land" for housing - instead wanting to build all houses on urban "brownfield" land. This got them into trouble with the Welsh Government, as population projections showed that there was a need for signifcant housing development in Cardiff. The council were told to rip up their Local Development Plan (LDP) and start again.
The incoming Labour administration didn't mention plans to build on greenfield sites in their local election manifesto. That's probably sensible - they wanted to wait and see. However, Labour vehemently denied they had any plans to "concrete over greenfields" and accused those who suggested such of lying.
Within months of winning back control of Cardiff Council, the Labour administration leaked plans (Carwynisation of Cardiff's LDP) for
As you might expect, the value of the land set aside for these housing developments will have risen dramatically. Those who bought the land will be sitting on a nice little earner once the developers come knocking.
One of those lucky buyers was South Wales Land Developments (SWLD) - who were sold land in the Lisvane area by RIFW (as well as all the other parcels mentioned above) before Cardiff Council's "leak". The value of land sold to SWLD in Cardiff alone will have risen from (using quoted figures from the BBC) £1.8million to around £120million.
To avoid accusations of hyprocrisy, I've said on several occasions that opening up some greenfield land for housing in and around Cardiff is the right thing to do – I still think it is - but not under questionable circumstances like this.
Why is this "dodgy"?
SWLD (despite the name) are based in Guernsey, which has low business taxes. In these times of austerity, you have to question why a Welsh Government body will have sold land to them knowing how it would look.
There might be a reason.
The only information that has come out of SWLD so far has been from a former director and company secretary of Cardiff Hub Ltd – Langley Davies – who's involved in other property-related businesses too. That's not to single him out. Considering the company name, I imagine many of the other people involved will have similar business interests. However, there are scant details on SWLD, who appear to have been set up suspiciously quickly and quietly.
Cardiff Hub have/had ambitious plans for a business park and transport interchange in the St Mellons area. At the time, the plans were trumpeted by the Welsh Government and Cardiff councillors, including Lib Dem ward members and current Cardiff Council cabinet member for planning and transport, Ralph Cook.
It's not a big stretch of the imagination that a notional £100million+ could go some way towards funding Cardiff Hub or different projects.
It suggests someone - whether in local government, Welsh Government or RFIW's fund managers - might've "tipped off" SWLD - and SWLD alone - about the land and Cardiff's LDP revisions.
That might qualify as a form of market abuse ("insider dealing"). In extreme cases, it's punishable by up to seven years in prison or an unlimited fine. It might not be illegal when it comes to land sales as far as I know, but it certainly stinks, as land should be sold on the open-market to developers directly.
You also have to question why so many parcels of land were bundled into one deal with one company.
Overvalued land:
- Could lead to more houses being built than expected
- Could create an "asset bubble" where house prices are set artificially higher to recoup building costs
- Could result in communities being planned "on the cheap" with a lack of proper facilities (i.e green space)
- Impacts a developer's ability to deliver things like affordable housing
What happens next?
The Wales Audit Office will probe what Byron Davies has brought to them and issue their own assessment.
The most likely proposition is that this was a poor (or knowingly poor) sale by RIFW. SWLD could be acting as a legitimate "land bank" and couldn't believe their luck when they saw the parcels on sale for a low price, knowing "instinctively" that Cardiff Council would need the land for housing as soon as they changed the LDP. That still doesn't explain how only SWLD seemed to be interested in such an obvious opportunity.
My hunch is that the Welsh Government are in the clear. There's claw back arrangements should land values rise. But the heart of the matter is that RIFW/Welsh Government (and by extension, the Welsh public) may well have been diddled out of a potential £100million windfall deliberately.
When you look at it like that, you have to wonder why the Welsh Government have been so coy? Is it embarrassment at having "overseen" a really bad deal? That's my guess. Or is it plausible deniability?
Here's a more outlandish tin-foil-hat suggestion. The Welsh Government - in cahoots with someone with a keen interest in RIFW funds, or a friendly Labour-run Cardiff Council - saw an opportunity to raise money for RIFW projects in Wales – Swansea for instance - while at the same time helping a private company raise funds to invest in Cardiff or elsewhere (because some EU funds can't be used outside the Objective One area).
That's still sleazy, but admittedly it's clever too. There's plenty of opportunities there for Welsh Government ministers and council cabinet members to be photographed in hard hats "saving the economy", plenty of new houses would be built in Cardiff and they can pat the backs of company directors "investing in Wales". Just don't mention the tax-dodging. Perhaps I'm giving them too much credit and going down the route of Machiavellian conjecture there.
Whichever way, someone should be in hot water, and my guess is it's someone at the local government end – whether that's Cardiff or somewhere else.
I wonder who they could be?
