The performance of growth and city deals in Wales, which over the long-term promise to leverage hundreds of million of pounds in private sector investment and create tens of thousands of new jobs, has been questioned by a Senedd committee.
With joint funding from the Ƶ and Welsh governments Wales has two city deals for the Swansea Bay and Cardiff Capital city regions. There is also a growth deal covering the six local authorities of North Wales, under the banner of Ambition North Wales, as well an emerging deal for Mid Wales. The deals for North Wales and the Cardiff Capital Region come under their statutory bodies, via their respective corporate joint committees.
A report from the Senedd’s cross-party Economy, Trade and Rural Affairs Committee says the North Wales Growth Deal is significantly behind target on job creation and leveraged private sector investment It added that the decision of Great British Nuclear not to pursue Trawsfynydd as a site for small modular nuclear reactors has had a major impact, with the project originally accounting for 12.5% of job targets and 40% of investment goals.
Ambition North Wales reported to the committee only 35 jobs created to date and just £1.8m in private sector investment. The committee said it was “disappointed “to learn that Ambition North Wales was having to seek clarity from the Westminster and Cardiff Bay governments on whether they would still receive the full £240m. It calls for the position to be urgently clarified.
In response Ambition North Wales said at the time of giving evidence to the committee in June only one of its projects was operational with six now in delivery. It said that when factoring in construction roles, the number of jobs created and supported is now far higher.
The committee’s report also raises concerns over one of the city deal projects for the Cardiff Capital Region with plans to redevelop the former RWE coal-powered energy plant at Aberthaw in the Vale of Glamorgan.
Earlier this year the city region abandoned its legal defence over how a £30m contract to demolish the former coal-powered station was awarded. The successful legal challenge came from demolition specialist firm Brown and Mason Group, after it lost out in the competitive tendering process to rival Erith, The committee report cites a legal cost incurred by the city region of £5.25m .
However, the total bill, after accounting for legal costs and an independent review by Deloitte into how the procurement process was undertaken by subsidiary city region business, CCR Energy, will be significantly higher . A final figure is expected to be made public in the autumn. The committee said it also has concerns about the scale of funding required for redevelopment of the Aberthaw Power Station, and the impact it could have on public finances.
However, it has and remains the intention of the city region that any projects taken forward at the 500-acre site, including renewable related or small modular nuclear reactors, will be delivered by the private sector.
The Cardiff Capital Region said it was disappointed by the committee’s report saying it was proud of its achievements since 2017 and that Aberthaw , which it maintains has long-term commercial potential, is just one of 27 within its city deal portfolio of projects.
The Cardiff Capital Region City Deal of £1.2bn, is now close to being fully invested. Around half its near £500m wider investment fund is in the form of loans and equity investments. This has created a current positive balance sheet of more than £19m from interest and capital payments on debt, which has been used to cover the costs of the legal case and the review by Deloitte.
The procurement issues faced shouldn’t be seen as the defining assessment of the performance of the city region to date. However, it would be fair to conclude that CCR Energy didn’t have the required competencies in a case of ‘trying to run before it could walk’ - although in awarding the decommissioning contract it also relied on the procurement input of one its local authority members, Cardiff Council, and the advise of a legal firm.
There is also a potential from the commercialisation of the huge pulverised ash cloud at Aberthaw created when RWE’s power station was operational. While not all of it will be viable, the region is confident of a potential sale running into tens of millions of pounds from the ash cloud for alternative use, including in the making of concrete.
The report also fails to highlight notable successes of the Cardiff Capital Region in securing innovation focused funding from the Ƶ Government and its backed agencies. Its most recent win, although the other regions in Wales were not invited to bid, was £30m from the Ƶ Government’s Local Innovation Partnerships Fund and delivery of a £160m new investment zone.
Around half of the Cardiff Capital Region’s City Deal for £1.2bn was ring fenced £1bn rail electrification the core Valley Lines, which is being delivered by Transport for Wales.
Over a 20-year period the city deal is expected to create 25,000 jobs with the Cardiff Capital Region saying that it is now on track to exceed 27,000. However, the committee critiicsed the failure to provide a breakout on what the impact of the South Wales Metro project - delivered by Transport for Wales - will be on the overall jobs target To date the projects in the deal have created and safeguarded more than 4,000 jobs
The committee welcomes the progress of the Swansea Bay City Deal - covering the local authorities of Pembrokeshire, Carmarthenshire, Neath Port Talbot and Swansea - with 896 jobs created and £133m in private investment secured for its projects. Members praised the deal’s support for Port Talbot and Tata Steel workers. However, concerns were raised about inflation impacts and the lack of flexibility in funding compared to other deals in Wales.
A deal for Mid Wales has just entered its delivery phase. The committee noted its unique economic challenges and its decision not to transfer management to a corporate joint committee. Chair of the Senedd committee, Tory MS Andrew RT Davies, said; “The four city and growth deals should be a key driver for economic growth in Wales and be creating a bright economic future. While there are promising signs, particularly in Swansea Bay, we must address serious concerns particularly in North Wales and Cardiff Capital Region, and we are asking the Welsh and Ƶ Government for urgent clarity about the funding available for the North Wales deal.
“Proper monitoring and consistent leadership are essential to ensure all deals are supported to reach their ambitious targets and deliver on the significant public investment. Transparency, clarity, and long-term vision are essential.”
In response to the report chief executive of Ambition North Wales, Alwen Williams, said: “The growth deal has faced significant unforeseen challenges over recent years, including the impacts of Covid-19, the cost inflation crisis, and project-specific planning and funding delays. These challenges were reported to the Senedd’s Economy, Trade and Rural Affairs Committee in June.
“These factors have inevitably affected growth deal delivery, resulting in projects progressing more slowly than we had originally planned. At the time of the committee’s review, only one project was fully operational, which meant job creation numbers were still relatively low. It is also important to note that construction-related jobs are only reported once projects are completely operational – meaning that these figures naturally accumulate later in the overall timeline.
“That said, the past year has seen significant progress across many of our Growth Deal projects. Six projects are now in delivery, representing a combined investment of just over £55m from the Growth Deal. These include our first construction project, the new CanfodAU development at Wrexham University, which is due to formally open in November.
"Other key projects are driving improvements in digital connectivity, strengthening and future-proofing our tourism and hospitality sector, expanding research capability to support green growth with Bangor University, and investing in crucial low-carbon energy initiatives – from tidal stream projects to the launch of our own Clean Energy Fund which will help businesses across sectors to decarbonise.
"Other key projects are driving improvements in digital connectivity, strengthening and future-proofing our tourism and hospitality sector, expanding research capability to support green growth with Bangor University, and investing in crucial low-carbon energy initiatives – from tidal stream projects to the launch of our own Clean Energy Fund which will help businesses across sectors to decarbonise.
"Recognising the need to accelerate delivery, and mitigate the impact of projects that have been slow to start, we have also established a Reserve List of projects. Progress on these projects has been particularly strong, with four business cases already submitted for consideration early next month.
“We have until 2036 to deliver on our Growth Deal objectives, and we are now on a clear and upward trajectory. A number of projects are scheduled for completion, and new ones commencing on-site, within the next 18 months, and as these complete, the number of jobs created will increase significantly. Together with our partners, we remain fully committed to driving these projects forward and securing the jobs and investment that will underpin North Wales’ future prosperity.”
Chair of the South East Wales Corporate Joint Committee Mary Ann Brocklesby (leader of Monmouthshire Council) and vice chairs Anthony Hunt (Torfaen and Huw Thomas (Cardiff), said in joint statement on behalf of the city region: “We are disappointed that the Senedd inquiry into city and growth deals by the Economy, Trade and Rural Affairs Committee has expressed concerns around the Cardiff Capital Region City Deal, given our strong performance since 2017.
“In that period, we have created and safeguarded more than 4,300 jobs, generated £236m in leverage and co-investment for projects and provided support to 735 SMEs across the region. Cardiff Capital Region (CCR) is a driver of innovation and investment and is the only Welsh region to have secured two ƵRI Strength in Places awards, totalling £100m; awarded a £160m Investment Zone; and, recently, a Local Innovation Partnership Fund (LIPF) of at least £30m.
"We work closely with both Ƶ and Welsh governments, with the city deal subject to rigorous ongoing assessment by both. As part of the most recent Ƶ Government review in 2024, an independent panel concluded that the CCR City Deal was on track and highlighted the strength of our project development, alongside the use of our expert advisory boards.
"One of the unique features of our approach is the return on investment delivered by city deal projects, with £19.1m of returns by the end of 2024/25 and this is projected to rise to over £30m by the end of 2025/26. Our varied portfolio enables CCR to secure returns that unlock future opportunities and lever more investment into the region, creating jobs and growth for those living in our ten local authority areas.
"The former Aberthaw Power Station site is one of 27 projects within the CCR city deal portfolio. When we acquired this large and complex asset, the £38m of city deal funds allocated was for acquisition, demolition and partial remediation only. Our plan was, and continues to be, to secure private sector investment to ensure the site reaches its full potential, delivering on regional and national ambitions. This is fully in accord with the target set by the Ƶ Government to leverage £4bn of private investment over the life of the city deal.
"With a potential gross development value estimated to be approximately £750m, Aberthaw represents an opportunity to turn a former coal-fired power station into a national destination for renewable energy innovation. With its national grid sub-stations, 18 million tonnes of fuel ash and tidal range, the site offers a unique opportunity. The project has already captured international attention, with partners recognising its potential as a world-class centre for energy solutions and homegrown energy capability.
"We are proud of what has been achieved since 2017. As a new public body, we always act with probity and transparency and give account to our multiple government stakeholders and our governance framework of statutory sub-committees and advisory boards. Our organisation has evolved significantly in recent years, and we remain totally focussed and committed to delivering positive change as a regional public body. “
