Friday 4 January 2013

State Aid and the Stadium

The Western mail reports today that Carmarthenshire Council could possibly be in breach of EU State Aid rules in their controversial funding of the Scarlets and the stadium, Scarlets Regional Ltd.
Cllr Sian Caiach has raised the question before and has been told by the Chief Executive that a 'legal opinion'  had been sought in 2007 which had apparently confirmed that the council were exempt on this issue. So far, a copy of this 'legal opinion' has been elusive and Cllr Caiach has now had to resort to the Freedom of Information Act.

She said;
"There are strict EU rules as to how much any arm of government, including councils, can give to private companies called the EU state aid rules. The purpose is to prevent government subsidies from allowing private institutions unfair trading advantages. 
The huge amount of public money used to help the Scarlets appears to be well over the amounts normally allowed and the regulations seem to include private sporting clubs. For over two years I have formally asked many times, in writing and in council meetings, for information on whether these transactions do or do not contravene EU state aid laws as the Scarlets are certainly a private company. 
The total subsidy amounts to many millions of pounds, depending on exactly what is assessed as a contribution to the club. I think most residents of Carmarthenshire would agree that however important rugby is, considering the magnitude of our support, the millions were not worth it, especially in view of our dire financial situation today."
(Western Mail article here)

I mentioned this back in December (The Council, the rugby club and the stadium - back door subsidies?) when my own FoI request revealed that, through rent, hospitality. conference fees. grants and expenses, Scarlets regional Ltd were also receiving around £1000 per week in income from the council.

The issue of State Aid was raised last May over the council's £1.4m funding of the Towy Community Church, again a private company, for the 'bowling alley'. The Wales Audit Office were, like Cllr Caiach, told of a similarly favourable 'legal opinion'. As for the controversial funding of the Stadium, any scrutiny by the Wales Audit Office has been conspicuous by it's absence. Back in 2007 the Audit Commission in England investigated the continuing cost to the taxpayer of a similar long running stadium saga, which, while no blame was apportioned, found 'significant shortcomings' in the way the project was handled.

I see that Cllr Winston Lemon's attempt to break Llanelli away from Carmarthenshire Council was rejected by the Town Council. The practicalities and cost of establishing a new Authority would have been difficult to overcome but I think the principle of local decision making would have been welcome. Investment by the county council in the town has been, by and large, a series of vanity projects benefiting multi national development companies, and out of town retail centres all offering low paid jobs. Cllr Lemon was, I believe, making a stand against the real danger that the spending habits of County Hall could leave Llanelli with the economic legacy of expensive facades like a cowboy town of the old wild west.

Update 4th February; I have learned that Cllr Caiach's request for the legal advice concerning the State Aid rules has been refused. The 'legal privilege' exemption has been used. The advice was supposedly given in 2007, six years ago, the funding of the stadium has also been a point of contentious debate - on those two grounds alone I'd conclude that the exemption had been misapplied. Either that or the senior officers are not comfortable with the 'legal opinion' itself or there wasn't any in the first place.


Tessa said...

Blimey. I thought the councillors' only "crimes" were sheep-like stupidity and gross negligence with public money - and these were certainly bad enough. Especially since the last audited accounts for Scarlets suggested they may be going tits-up. But a breach of EU rules? How the hell did that happen? And if so, the responsibility for such a monumental and enormously expensive mistake, if it is found to be such, must lie with the officers mustn't it? Time to bow out with massive golden handshake? Golden two-fingers, without the gold, more appropriate.

Anonymous said...

Why should they receive golden handshakes for getting it so wrong!

Anonymous said...

But shouldn't it cause senior Scarlet officers to start dusting off their contingency plans for when Carmarthenshire Council support gets dramatically cut back?

Anonymous said...

Tessa, beware of sheep in wolves clothing!

Anonymous said...

Wolves in sheeps clothing more like it !!