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Cardiff Airport purchase wasted millions, Welsh Tories claim Cardiff Airport purchase wasted millions, Welsh Tories claim
(35 minutes later)
Ministers have been accused of wasting tens of millions of pounds buying Cardiff Airport for around double an accountants' valuation of £20m-£30m.Ministers have been accused of wasting tens of millions of pounds buying Cardiff Airport for around double an accountants' valuation of £20m-£30m.
Welsh Tory leader Andrew RT Davies accused Labour of a "stunning failure to safeguard taxpayers' money" in paying £52m for the airport in 2013.Welsh Tory leader Andrew RT Davies accused Labour of a "stunning failure to safeguard taxpayers' money" in paying £52m for the airport in 2013.
The estimate by accountants KPMG is in a report by the Wales Audit Office.The estimate by accountants KPMG is in a report by the Wales Audit Office.
The Welsh government said BBC reports based on those figures were "entirely selective and misleading".The Welsh government said BBC reports based on those figures were "entirely selective and misleading".
The decision to buy Cardiff Airport from its Spanish owners Abertis followed years of concern about its performance and long-term viability.The decision to buy Cardiff Airport from its Spanish owners Abertis followed years of concern about its performance and long-term viability.
Months after KPMG gave its estimate, the Welsh government offered Abertis £41m, increasing the offer to £55m following another valuation from consultants Arup, before agreeing on a sale at £52m.
First Minister Carwyn Jones defended the deal at the time as a means of securing the airport's future as "a vital gateway to Wales", to be run at arm's length from government.First Minister Carwyn Jones defended the deal at the time as a means of securing the airport's future as "a vital gateway to Wales", to be run at arm's length from government.
Bristol Airport chief executive Robert Sinclair had claimed the purchase price was well above market value, while the Welsh Conservatives demanded proof that "nationalising" the airport was value for money. Publishing its report on Wednesday, the Wales Audit Office said it acknowledged time constraints but pointed to "some weaknesses" in the preparation of the business case for the deal.
Reacting to the revelations on Wednesday, Mr Davies said it was "unforgiveable", following Tuesday's apology from Mr Jones for the handling of land sales to raise money for regeneration. On the purchase price, the watchdog noted that "commercial valuations can vary greatly depending on the assumptions applied".
"This is yet another example of the Welsh Labour government's stunning failure to safeguard taxpayers' money, with tens of millions of pounds going to waste - despite clear, professional advice which should have told them that the price they were prepared to pay for the airport was over the odds," the Tory leader said. It said the Welsh government had undertaken a "rigorous" process of due diligence, but it said the airport's need to borrow money was "greater than forecast at the time of acquisition", and that growth had been slower than predicted.
"At a time when councils, hospitals and schools are facing a financial squeeze we have two clear examples of Labour wasting huge sums of money." Auditor General Huw Vaughan Thomas said: "Turning the Airport around is proving more challenging than the Welsh Government expected at the time of the acquisition, despite some positive developments."
Welsh Tory leader Andrew RT Davies said it was "unforgiveable" for the Welsh government to have paid so much for the airport.
"This is yet another example of the Welsh Labour government's stunning failure to safeguard taxpayers' money, with tens of millions of pounds going to waste - despite clear, professional advice which should have told them that the price they were prepared to pay for the airport was over the odds," he said.
Welsh Liberal Democrats economy and transport spokesperson Eluned Parrott added: "This is another huge blow to the Labour government's already tattered economic reputation."Welsh Liberal Democrats economy and transport spokesperson Eluned Parrott added: "This is another huge blow to the Labour government's already tattered economic reputation."
A Welsh government spokesman said: "The BBC has taken a single set of figures from an 80 page report to wrongly suggest that the Welsh Government paid more than it needed in acquiring the airport. 'Public value'
"This is entirely selective and misleading. KPMG modelled a range of scenarios during the due diligence process. The resulting valuations varied greatly depending on the cost of capital applied to the calculations. A Welsh government spokesman said reporting of the £20m-£30m valuation was "entirely selective and misleading".
"KPMG modelled a range of scenarios during the due diligence process," he said.
"The resulting valuations varied greatly depending on the cost of capital applied to the calculations.
"After taking further professional advice including a public asset valuation from Arup, the Welsh government concluded that a valuation of around £55m would be reasonable from a commercial perspective."After taking further professional advice including a public asset valuation from Arup, the Welsh government concluded that a valuation of around £55m would be reasonable from a commercial perspective.
"The public asset valuation of £472m [taking into account its wider value to the Welsh economy] also justified the price paid on public value for money grounds. "The public asset valuation of £472m [taking into account the airport's wider value to the Welsh economy] also justified the price paid on public value for money grounds."
"We do not anticipate the Wales Audit Office will challenge this approach when it is published." Analysis by Brian Meechan, BBC Wales business correspondent
The revelations came as airport chairman Roger Lewis called on the UK government to give Welsh ministers the right to cut air passenger duty as a means of boosting the airport's fortunes. The public spending watchdog, the Wales Audit Office, says ministers undertook appropriate due diligence before buying the airport.
This means they'd undertaken all the sensible measures expected of people when they take over a company.
Valuations, though, are not straightforward and depend on the assumptions of the buyers.
The issue is that something is worth what someone is willing to pay for it.
The Welsh government made it clear that it thought the airport was an embarrassment to Wales and it wanted to take it over.
It faced a seller who was happy to keep hold of the site. That in itself would push the price up.
It's a widely held view in the business community that the Welsh government did overpay for the airport.
However, since it has taken over at Cardiff, it's certainly seen passenger numbers increase and facilities improve.