west*wales*news*review

West Wales News Review — analysis with a sustainability slant

Archive for the category “Public spending”

How Sustainable is Our NHS?

Questions from an amateur

Here in Wales, can we still afford the National Health Service on which so many of us depend? Is it really sustainable in the hard-up future to which we seem to be speeding?

All the time that the Welsh Government depends on financial allocations from Westminster to fund the NHS, every year the answer edges closer to ‘No’.

Take the Hywel Dda University Health Board, looking after the NHS in West Wales — Carmarthenshire, Ceredigion and Pembrokeshire. Hywel Dda is in the middle of an intense series of consultations about its planned reorganisation. A main purpose of the proposed changes is to reduce over-spending.

Three proposals are on the table. Here’s a short summary of plans for the main hospitals, but the detailed options, at www.hywelddahb.wales.nhs.uk, are well worth reading and responding to, before the deadline of July 12th 2018.

Proposal A

Two main hospitals – the existing Bronglais, Aberystwyth, and a new-build for urgent and planned care, somewhere on or just off the A40 trunk road between St Clears (Carms) and Narberth (Pembs). Withybush at Haverfordwest, Glangwili at Carmarthen and Prince Philip, Llanelli, would be downgraded from general to community hospitals, without accident and emergency or acute admissions.

Proposal B

Three principal hospitals – Bronglais, the proposed new hospital in the Carmarthenshire-Pembrokeshire borderlands, and Prince Philip.

Proposal C

As B, except the new hospital would be for urgent care only, and Glangwili would be a centre for pre-planned operations and procedures.

Anxiety and agitation

Community and town councillors at a consultation evening in Carmarthen on April 25th were far from quietly accepting the plans. They worried about long journeys to A&E, distant down the A40 (between 30 and 40 miles for my community in north-east Carmarthenshire, depending on the eventual site). They agitated that ambulances would get stuck in traffic jams, especially at holiday times. They praised the Wales Air Ambulance, but knew that it operates for 12 hours a day, not 24, and depends entirely on voluntary fund-raising. They were concerned that public transport services are, and will continue to be, inadequate to take patients and visitors to and from a new hospital.

At the same time, I sympathise with Hywel Dda, squeezed between the rock of rising demand and the hard place of not enough money, and so far unable to attract enough highly skilled, permanent medical staff. The upshot is that the board spends heavily on agency and locum staff, which as well as being more expensive than permanent personnel, can deny continuity of care to patients.

West Wales can feel quite remote, which is an attraction for holiday-making visitors but not necessarily for medics with partners wanting to work and children needing education, because in West Wales there isn’t much choice of schools or employment, and until the mainline railway is electrified, the region will not feel well connected to urban South Wales or onward to England. But in 2017 Prime Minister Mrs May vetoed the electrification plan.  Could it be that the money had to feed the Democratic Unionist Party in Northern Ireland instead?

For mature consultants with grown-up children, it may be that West Wales is attractive for its landscapes and tranquillity, but younger medics often have different priorities. Hywel Dda knows this, of course, and the intended ‘Wellness Village’ at Llanelli could be a step towards raising the medical profile of the region…. if, and a very big if, there is enough investment from the private sector.

Frayed shoestring

The health board’s budget for 2017-18 was £743.95 million, but that was not enough – an extra £69.6 million was spent, a total of £813.55 million. This was almost £2,119 for each of the 384,000 people living in the Hywel Dda area. The budget limit was £1,937 per head.

We are trying to run an advanced, comprehensive health service on a frayed shoestring that will soon break. All the time that Wales depends on largesse (or stinginess) from the UK Government, and the present Welsh Government continues its uninspired administration, this depressing state of affairs is set to remain. Yet if Wales were independent, would the Minister for Health have enough taxation revenue to channel more resources into a next-generation NHS? Given Wales’ relative poverty – gross disposable household income per head of £15,835 in 2016 compared with £19,878 for England as a whole and £27,151 for London (1) – the answer looks negative. Household members with an average of £15,835 left after taxes and National Insurance have been deducted, and with social security benefits added, are not likely to have had much tax liability in the first place.

Take as an example the median remuneration of the 8,053.7 full-time-equivalent employees at the Hywel Dda health board, which in 2016-17 was £26,483 (2). Just for illustration, in 2018-19 income tax on this nominal amount would be £2,926.60 and National Insurance, £2,167.08, leaving £21,389.32 before other deductions such as student loan repayments and pension contributions. That doesn’t leave much leeway for higher taxes.

Better elsewhere? Not really

It could be time to change expectations of what the NHS does for us. Costs of healthcare per head in the UK are already low compared to other ‘rich’ countries – in Switzerland the amount is 90% more, and in Norway almost 60% more, to take just two examples. The USA’s hugely expensive and far from universal system costs nearly two-and-a-half times more per head (and could be forced on the UK in a post-Brexit trade deal!).

New Zealand spends, per head, about 85% of the UK total. How efficient is their system, and could we adopt it? In New Zealand there are charges to see a GP, and a two-tier system with usually much longer waiting lists for publicly funded treatments than for private appointments. How about Spain, spending around 77% of the UK amount per head?  That’s a creaking system too. As Pablo Avanzas, Isaac Pascual and César Moris write in ‘The great challenge of the public health system in Spain’ (3):

“In all EU countries (including Spain), during most of the second half of the 20th century, health expenditure has been growing faster than national income. The same is happening in all member countries of the OECD, so this situation calls into question whether the economic sustainability of healthcare systems, most of which were created and developed in times of greater prosperity, will be guaranteed in the future. In the context of a worldwide economic crisis, the impact of financial difficulties of healthcare systems has become particularly evident in Spain, where unemployment rate is one of the highest in the European Union.”

They also said:

“There are basically three ways to guarantee the financing of a quality public health system with universal coverage and free of charge: to increase the efficiency and effectiveness of the health provision system, prioritize health spending in relation to other public policies and/or increase income taxes for that purpose.”

In Wales, even if there were freedom to do so, there is very little scope to raise universal taxes, because of the country’s relatively low incomes.

Hywel Dda health board cannot prioritise health spending over other public policies, because health is its remit. The Welsh Government could do so only to a very limited extent, because in essence it is a distributor of monies authorised by the UK Treasury. The present Westminster Government has shown no interest in assisting Wales. So Hywel Dda is tackling the only available option, to increase efficiency.

There comes a point when ‘increasing efficiency’ means the system is too emaciated to work at all, but Hywel Dda could give itself a little breathing space if more permanent staff could be attracted to West Wales, to cut the £4 million plus a month or so costs – amounting to some £50 million a year – for ‘variable pay’ to agency personnel and locums, and for staff overtime.

Over the longer term, though, the questions will be even harder, and a new hospital between St Clears and Narberth is unlikely to be the answer. It will be new, and as such attractive to accountants (low maintenance costs) and recruiters (a magnet for staff) only for a very short time.

Surely the emphasis has to be on turning the system inside out from a focus on cures to prevention of illness, accompanied by infrastructure improvements – such as rail electrification – to help diversify and expand the economy of West Wales.

If that does not happen, when we are ill or injured the likelihood of receiving the most effective treatment will diminish, and rationing for those who cannot pay will become the order of the day.

 

(1) ONS Statistical Bulletin, Regional Gross Disposable Household Income 1997-2016, May 2018.

(2) The full-time equivalent was 8,053.7 people, 6,202.12 female and 1,850.58 male. The total headcount was 10,975 – 8,574 female and 2,401 male. Hywel Dda University Health Board annual report for 2016-17.

(3) Journal of Thoracic Disease, May 2017, 9 suppl 6, S430-S433.

PDR

 

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Gelli Aur signs off

Signs pointing to the closed Gelli Aur Country Park, Golden Grove, have been removed or painted over despite the award in 2015 of a grant of £989,000 from the Welsh Government, payable over three years, to improve public access.  (Carmarthenshire Herald, September 16, p.2)

The signs have been taken away or blotted out by Carmarthenshire County Council in response to complaints from members of the public who followed the signs only to find the park closed.

Cllr Hazel Evans, the county council’s executive board member for the environment, said: “The brown tourism signs for Gelli Aur have been removed as they are out of date and we have had complaints from visitors who followed the signs to a facility that was not open.”

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 August 28 2016 — on the A476 between Llandeilo and Cross Hands, one of the few remaining signs to Gelli Aur Country Park

The grant from the Welsh Government was agreed in 2015, to be paid to the Golden Grove Trust over three years. A year ago, on September 28 2015, the Welsh Government said “The first phase of the work is to enable public access to the historic parkland and gardens with associated amenities such as tea rooms, play area, educational activities and trails”.

September 12th 2016 -- same spot, but the sign has been painted over

September 12 2016 — same spot, but the sign has been painted over

The Trust said that the park would be open on Fridays, Saturdays, Sundays and Bank Holidays while the restoration work was in progress, but several people have complained about finding the park shut when they have tried to make weekend visits.

The country park, which was valued and used by thousands of people over the years, is being erased.

PDR

Plan to axe majority of mobile library stops

See also the Carmarthenshire Herald, July 22nd, p.4

Public consultation ends on July 29th 

Drastic changes in Carmarthenshire’s mobile library service have been proposed. The library van would stop for longer in each location – but the number of stops would be dramatically cut from over 100 to 22.

None of the 22 stops are east of Llangadog. The remoter rural areas would lose heavily. Caio, Cilycwm, Cynghordy, Myddfai , Ffarmers, Pumsaint and Talley would be omitted from library routes., as would Llanybydder, Llanwrda, Llansadwrn, and other villages all over the county.

The county council says that the mobile library service is under-used and not cost-effective.

The idea now is to carry computers, photocopier and printer on board, as well as books, so people can use the internet, print forms and photocopy important documents. The lower number of stops would enable the library vans to stay longer in each place, giving customers time for tasks such as searching for jobs and applying for benefits.

The proposed stops are Bancffosfelen, Brechfa, Cwmffrwd, Cynwyl Elfed, Ferryside, Hendy, Laugharne, Llanboidy, Llandybie, Llangadog, Llangeler, Llanllwni, Llannon, Llansteffan, Manordeilo, Meidrim, Mynyddcerrig, Nantgaredig, Pencader, Pendine, Peniel and Trimsaran.

The special service for housebound customers is being reviewed, too, but the council aims to “ensure that all existing and new users are offered a first class service in their home”.

Public consultation on the plan closes on Friday July 29th. To complete the survey online, go to http://ilocal.carmarthenshire.gov.wales/consultations/mobile-libraries/

PDR

Loss-Making Private Hospital Link to Llanelli’s Planned Wellness Centre

Carmarthenshire enters exclusive agreement with Kent Neurosciences

A chain of companies and directors link the proposed Wellness Centre in Llanelli to a private hospital in Maidstone and to the tax haven of the British Virgin Islands.

The chain includes Kent Neurosciences Ltd, potentially a partner for Carmarthenshire County Council in the Wellness Centre planned for Delta Lakes.

The council’s Executive Board unanimously resolved, on May 23rd, to enter into an exclusivity agreement with Kent Neurosciences Ltd “with a view to ensuring the aspirations of the Wellness and Science Village within Carmarthenshire”.

Kent Neurosciences Ltd is one of a clutch of companies with various directors in common, now or in the recent past. Kent Neurosciences Property Ltd, KIMS Hospital Ltd, KIMS Property Co Ltd, and KIMS Property Holdings Ltd, have been variously concerned with the development, construction and operation of a private hospital in Maidstone, Kent – the KIMS Hospital, KIMS standing for Kent Institute of Medicine and Surgery.

KIMS Property Company Ltd owns the hospital, which is leased to and operated by KIMS Hospital Ltd. KIMS Property Holdings Ltd is the parent company of KIMS Property Company Ltd, and the ultimate parent of KIMS Property Holdings Ltd is Mercury Management Enterprises Corp, a company registered in the tax haven territory of the British Virgin Islands.

Here we enter the world of the leaked Panama Papers, which show that Mercury Management Enterprises Corp is a shareholder of Petrel Investing Ltd, also in the British Virgin Islands, and Petrel is a shareholder of Mercury. Petrel Investing has connections with other offshore companies – OMNI Capital Assets Ltd, OMNI Management Consultancy FZE, ONTARIO Inc, Sarama Beta Ltd – and an individual, Alexander Timofeev of Toronto, Canada, in linkages that are visible to the public only because of data breaches.

Private hospital required £20 million refinancing deal

The private hospital, which opened in 2014, has been struggling. Original estimates of income from the NHS and self-paying patients were over-optimistic. The initial management team – Franz Dickmann and James Dickmann, solicitor Steven Bernstein, and chief executive Jayne Cassidy – departed from the hospital operating company and new personnel took over. In March 2016 the Kent Messenger newspaper reported[i] that in its first-year, to April 2015, the hospital’s losses were over £15.2 million, nearly twice as great as the revenues, and so a refinancing was urgently sought from its major investors, Realta Investments Ireland Ltd and Regional Healthcare Ltd. Realta Investments Ireland had negative net worth of nearly €5 million in 2014. Regional Healthcare Ltd in the UK was dissolved in April 2015 (but a Cyprus company of the same name remains active).

The hospital refinancing, worth around £20 million in total, included a rent holiday until April 2019, so the intended rent recipient, KIMS Property Company Ltd, will itself have a big income hole to try and fill.

KIMS hospital pioneer Franz Dickmann, and Phyllis Holt (who is also consultant cardiologist Dr Phyllis Holt Dickmann) are the major shareholders in Kent Neurosciences Ltd, according to Companies House on June 1st, with 8,535 and 9,040 shares respectively. Consultant neurologist Dr Mun Seng (Sam) Chong and ASB Law each owned 2,500 shares, and Richard Gullan, consultant neurosurgeon, and Alan Day, retired professor, owned 1,000 apiece.  ASB Law, a legal firm operating in Sussex and Kent, is the company secretary, and Dr Sam Chong, Richard Gullan and Alan Day are all current directors of Kent Neurosciences Ltd.

Head of Swansea’s Business School was on board of Kent Neurosciences

Why should Kent Neurosciences be interested in a start-up venture in Llanelli? There is a link in the accomplished person of Professor Marc Clement, Head of the Business School at Swansea University’s School of Management. Llanelli-born Professor Clement was a director of Kent Neurosciences between December 16th 2014 and August 21st 2015.

Currently Professor Clement, holder of patents relating to medical devices, is a director of nine companies, including four based at Technium 2 in Swansea – Cyden Ltd, Ipulse Direct Ltd, Ipulse Ltd, and MC500 Ltd, concerned with the supply of medical and dental instruments. The other five companies are Life Sciences Hub Wales Ltd, Arthurian Life Sciences Ltd, Swansea Innovations Ltd, WWII Ltd and Calon Cardio-Technology Ltd.

Swansea University is part of ARCH – A Regional Collaboration for Health – alongside Hywel Dda University Health Board and Abertawe Bro Morgannwg University Health Board. ARCH is behind the plan for a Wellness Centre at Llanelli, a venture for which Carmarthenshire County Council would provide the land. The ball-park cost of the project is £60 million, money which has to be raised. Abertawe Bro Morgannwg (ABM) University Health Board reckoned, in a press release dated December 2nd 2015, that “funding could come from the EU but also from private investment and match funding in various forms”.

The Wellness Centre would probably include a new leisure centre, a “wellness education centre”, hub for out-of-hours GP services and various therapies, a hotel and conference centre, and a Hywel Dda branch of Swansea University’s Institute of Life Science, which is based in the College of Medicine. The Institute of Life Science is a partnership between the university, the Welsh Government and ABM University Health Board.

ARCH itself “breaks free from an outdated healthcare system designed over 50 years ago and replaces it with an accessible one specifically planned for today’s needs”, according to ABM University Health Board’s December press release.

The practical benefits for the people of Carmarthenshire are not yet clear.

Echoes of Technium?

A millennial plan for entrepreneurship centres – called Techniums — throughout Wales did not live up to the original aspirations. Wales used to have 10 Technium centres, modelled upon the first, which was set up by the now-defunct Welsh Development Agency (WDA) and by Swansea University in 2001. They were small science parks, intended to foster local innovation and entrepreneurship in a programme which cost around £111 million, but the majority were not a success and in November 2010 the Welsh Government decided to close six of them, including one for performance engineering based in Llanelli, which Carmarthenshire County Council took over and renamed the Beacon Centre. It is now a conference and meeting centre.

Four Techniums remained, two in Swansea, including Technium 2 (the address for four of the companies on which Professor Clement sits as a director), and one each in St Asaph and Cwmbran.

An evaluation by property consultants DTZ indicated that each job created under the Technium programme cost, on average, £190,000 from public funds.[ii]

The inspiration for the Technium project came from a small group of people including Swansea’s Professor Clement and Professor Ken Board, and the WDA’s Gareth Hall (who was the Agency’s final chief executive, between 2004 and closure in 2006).

Professor Clement’s own role in higher education finance expanded in 2007, when he became pro vice chancellor – the chief executive — of the University of Wales, which at the time represented nine higher education centres in Wales. The University of Wales was raking in £ millions from accrediting degrees overseas, in a much-criticised programme which prompted half a dozen leading vice-chancellors to call for the University of Wales to be abolished. In 2011 the University of Wales was subsumed within the colleges of Saint David, Lampeter, and Trinity, Carmarthen, and Swansea Metropolitan University, in a sort of reverse takeover. Professor Clement returned to Swansea University, to be Executive Chair in the Institute of Life Science.

Now, his jobs include board membership of the ARCH programme.

The concept of a medical research centre in Llanelli, raising the profile of Wales as a country of scientific excellence and innovation, has a definite allure. Even so, and allowing for  Professor Clement’s recent involvement with Kent Neurosciences, is this company – full of medical expertise but light on proven business success in the ‘wellness’ arena – the most appropriate partner for Carmarthenshire County Council in the Wellness Centre project?

And, perish the thought, could the Wellness Centre be a conduit for public money to flow through networks of companies into far-away entities registered in the British Virgin Islands and other tax havens?

 

PDR

 

 

 

 

 

 

 

 

[i] ‘KIMS Hospital in Maidstone sought £20m hand-out after making huge loss’. by Chris Price, March 11th 2016.

[ii] ‘What we can learn from £100m and 10 years wasted on the Technium programme’ by Dylan Jones-Evans, Wales Online, June 1st 2013.

Yesterday the Cost of Calling the Fire Brigade was a State Secret, Today it Is Not

UPDATE January 25th

£28,896 — that’s the approximate cost of putting out the Maesybont tyre and timber blaze, according to a standard formula used by the Mid and West Wales Fire and Rescue Service, which today opted to release the information.

The Fire and Rescue Service had a change of heart and released the figure, after earlier claiming it would be against the Data Protection Act, “in the interest of good will”, and because the questioner had argued that the information would be in the public interest.

The figure is based on a formula, based on one appliance and one crew at an hourly cost of £344. The fire lasted for just over 12 hours, so a single crew would have cost £4,128. As the bill was £28,896, seven times more, by implication there were, on average, seven crews tackling the fire.   

Amy Richmond, Democratic Services Officer, explained: “Please note that at present the information we record when attending incidents is not detailed enough to allow us to cost incidents accurately. Therefore we are only able to provide an approximate rate for call-outs. This is calculated on the basis of one appliance, plus one crew for the duration of an hour. On this basis we calculate the approximate cost of a call-out as  £344 per hour. This formula is used for all categories of incidents. 

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The original post

Think the Freedom of Information Act will provide you with hitherto unreleased knowledge?

Not necessarily so.

A huge fire at Maesybont, Carmarthenshire, on Bonfire Night – November 5th 2015 – left several local people with unanswered questions.

The fire, at a smallholding off the B4297 Gorslas to Llanarthne road, was a conflagration of timber and tyres lasting for more than 12 hours. When the Mid and West Wales Fire and Rescue Service tweeted about the blaze, the message advised nearby residents to keep their windows closed for “the next few hours”.

According to press reports at the time, up to 35 firefighters were tackling the burning pile, and a team from Morriston initiated their new Cobra  Coldcut  high-pressure water lance, which under very high pressure sprays water infused with tiny pieces of metal[1] which can cut through plastic, wood, metal and even concrete.

Tyres were a major element of the blaze, and it is odd that they were stored on what is described as a ‘smallholding’. So the question, asked under the Freedom of Information Act 2000, ‘Was the owner/occupier of the property in possession of a valid licence to store tyres on the site?’ is surely very relevant.

Yet the reply from the Mid and West Wales Fire and Rescue Service, relayed by Amy Richmond, Democratic Services Officer, is as follows:

“Under Section 1 (1) (a) for the Freedom of Information Act 2000, I can state that Mid and West Wales Fire and Rescue Service do not hold, or record any information on whether the occupier of the property was in possession of a valid licence to store tyres on the site. Therefore we are not able to provide the information you have requested.”

Maybe the Fire Service cannot identify premises with licences to store hazardous flammable goods — but wouldn’t public safety be better served if it did know?

The Fire Service is equally reticent about the cost of putting out the fire:

“I can confirm that we hold this information but it is exempt from disclosure, section 40(2) of the Freedom of Information Act (FOIA) applying. ‘Personal Data’ is any information on a living individual (the ‘data subject’ as defined in the DPA[2]) which is stored by reference to a unique identifier that can be matched back to the data subject by the processor of the data, where those data are of a private or biographical nature.”

If the cost to the public of extinguishing a major fire cannot be revealed for fear of breaching the Data Protection Act, then it is more than time to amend the Act in the interests of knowledge, understanding – and the democratic right to know.

Should the cost of calling the Fire Brigade really be a State Secret?

PDR

[1] Fire magazine, ‘Lincs first to introduce new Cobra Coldcut equipment’ by Mara Schapiro, May 17th 2013

[2] Data Protection Act 1998

Impossible Cuts: Carmarthenshire’s Schools Told to Slash Budgets

Are We Seeing the End of Effective State Education?

Time to speak up, loudly, if you want to protect education in Carmarthenshire’s state schools.

New proposals out for consultation appear to suggest that by 2019, the average annual cost per pupil across all the county’s schools could fall from about £4,060 to £3,362 – a cut of 17.2%.

What sort of education would this provide, when independent schools charge vastly more? Llandovery College’s day fees range from about £8,625 in Reception to £16,800 in Year 13. At St Michael’s, Llanelli, parents of Reception children pay about £4,962 and for parents of Year 13 students the annual cost is around £11,890. Before any extras.

How on earth are children in state-maintained  schools supposed to experience a broad and deep education when the amounts spent on them would be so paltry?

The county council’s executive board is consulting on a colossal cut in the budgets delegated to schools, which run their own finances. Schools are being asked to slash £18.28 million from their budgets over the three years to 2018-19, more than half of the £36.23 million total savings which the council is seeking.

Losing £18.28 million would be a 13.85% cut, from £109.844 million in 2015-16 to about £94.634 million by 2018-19. If schools also had to shoulder staff redundancy costs, at current estimates this would increase the cut to 14.4% — and it is more than possible that, given such huge savings to achieve, many more staff would be made redundant.

At the same time, numbers of pupils are expected to rise. Welsh Government forecasts indicate that between 2015 and 2019 the number of children aged between 0 and 15 in the county will rise by 3.3%. If this is accurately reflected in the numbers in maintained schools, the 27,055 pupils in January 2015 would increase to 27,948.

The proposals take account of future inflation, but only to a modest extent. The council expects general inflation to be 0.6% in 2016-17, 1.4% in 2017-18 and 1.8% in 2018-19. It is assumed that electricity and gas will rise by 3.0% a year, and that fuel costs will fall 12.5% in 2016-17 before rising by 3.0% in each of the two subsequent years. Pay inflation is calculated as 1.0% a year.

By even suggesting such a draconian cut in schools’ budgets, the county council seems to be implying that head teachers and their staffs are profligate spenders, but parents of my acquaintance know this is not true.

How can schools provide a better education with much less money per pupil? They can’t. Not even a monolingual education — and Carmarthenshire is a bilingual county, requiring teachers to be proficient in Welsh and English as well as in their specialist subjects.

Soon that could be, Carmarthenshire was a bilingual county.

Carmarthenshire was a county offering a good education.

It won’t be in future, unless school budgets are protected.

PDR

Scarlets Update: Another Big Loan

UPDATE October 15th 2014

Exactly a month ago, Carmarthenshire County Council’s Executive Board allowed Scarlets Regional Ltd to borrow another £900,000. The new loan is from the Welsh Rugby Union, and is at least interest-free. The loan can be taken in three stages, to a maximum tranche size of £325,000, and the final tranche should be taken in September 2016.

The county council could have stopped the Scarlets from accepting the loan, because of the terms of its own financial agreement with the company. The Scarlets owe the council £2.614 million (and rising), after all.

The directors are required to provide security of up to £180,000, 20% of the maximum loan, and the WRU takes a “fixed and floating charge over the assets of the club with the exception that there is no fixed charge over the club’s stadium, barn or track”, in the words of the report to the Executive Board. The stadium premises belong to the council anyway and are leased to the Scarlets.

Currently, there is clearly insufficient net worth to provide security for additional loans because, as the latest published accounts show, as at 30th June 2013 the company had an excess of liabilities over assets of £3,568,287.

Will the extra £900,000 spark a financial revival? A long run of sporting success would help greatly, but currently the Scarlets rank seventh in the Guinness Pro12, below their near neighbours the Ospreys, who are top, then Glasgow, and all four Irish teams. There is a crumb of comfort in the mid-table position — it’s a lot better than propping up the bottom. The next few months will be interesting.

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Original post

Loans from directors and from Carmarthenshire County Council are just about keeping the financial wolves away from the battered body that is The Scarlets rugby region, but for how long?

The Scarlets are central to the self-image of Llanelli in particular and of importance to West and North Wales in general. One of the four professional teams in Wales, and with the largest geographical area, the Scarlets are the modern incarnation of Llanelli RFC, which for so long played at Stradey Park inside Llanelli.

The Scarlets’ six-year-old stadium, outside Llanelli at the retail estate Parc Pemberton, seats 14,870 but the average gate, reported in newly available financial statements for 2012-13, was “over 8,000”. That gate is good for a town like Llanelli, population 35,000 according to the town council, but it’s not enough to keep the club solvent. Two particular problems are evident: the Ospreys rugby region is only just down the road at the Liberty Stadium in Swansea, and the Ospreys attract fans from the lion’s share of what is becoming a single Neath-Swansea-Llanelli conurbation. The Scarlets look to sparsely-populated West and North Wales for their fans, but these are areas with ageing and less-and-less mobile populations.

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Parc y Scarlets stadium: costing the game? Photo from Wikimedia.

Stradey Park had a capacity of 10,800. Parc y Scarlets is a lot bigger, more anonymous, and seats are further away from the play. Maybe it will acquire character in time.

Meanwhile, the shareholders found themselves more in the red at end-June 2013 than a year earlier. Their investment in the club was a negative £3.568 million, compared with negative £3.243 million the year before.

The auditors, Grant Thornton, resigned in March 2014, just before the 2012-13 accounts should have been filed with Companies House. The financial statements for the year were eventually audited by James & Uzzell Ltd of Swansea Vale, and filed with Companies House after the chairman’s report was signed on July 31st.

The auditors say: “The company incurred a net loss of £690,701 during the year ended 30th June 2013 and, at that date, the company had an excess of liabilities over assets of £3,568,287.

“These conditions along with the other matters explained in the accounting policies to the financial statements indicate the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern.”

The value of the company’s dominant asset, the stadium, is reported as £10,073,345. More than £10 million. Would it be worth that much if the company folded? Who would be willing to pay over £10 million for a 14,870-seater stadium on a retail park outside Llanelli? There could well be a buyer, but intense competition for the property is rather unlikely.

The director with most invested in the company’s shares at the year end, according to the financial statements, was Nigel Short, owner of 3.17% of the columns of red ink. Philip Davies owned 1.95% and Nednil Ltd, of which Mr Davies is a director, owned 1.46%. As well as investing in shares, the directors have been generous with interest-free loans. Just in 2012-13 Nigel Short advanced £340,000 and Nednil Ltd £200,000. At the year end, directors Huw Evans, Granville Wise, Tim Griffiths and Nigel Short were owed £3.179 million, £1.541 million, £1.003 million and £440,000 respectively. Nednil Ltd has loaned a total of £2.047 million, and Welsh Whisky Co Ltd, a business interest of Mr Short, lent £100,000.

Carmarthenshire County Council’s outstanding loan to the company increased by £100,000 from £2.514 million to £2.614 million. This is secured by a “floating charge over the company’s assets”, to quote from the financial statements. The main asset is of course the stadium, which could not realistically have been built – the Carmarthen Journal reported that the development cost £25.4 million —  without a grant of £10.3 million from the county council, plus £5.56 million in ‘Section 106’ money from the developers who received planning permission to build homes on Stradey Park. The council’s grant more or less equals the stadium’s present value.

The county council issued a 150-year lease to the Scarlets, at nominal rent, and part of the car park on this leased land was sold to pub company Marstons for £850,000. Only £200,000 of this made its way into county council coffers, although a fairer split would have been 50:50.

Scarlets Regional Ltd is a privately owned company and some people feel that Carmarthenshire County Council might have broken European Union regulations about handing state aid to commercial concerns. The council argues that it has not broken any rules.

Certainly no one appears to be making profits from the council’s largesse.

The Scarlets’ financial performance in 2012-13, as presented in the accounts, was rather better than in 2011-12. Turnover rose 0.15% from £7.980 million to £7.992 million, but this lagged behind inflation. The cost of sales soared 13.1% to £6.153 million, but net operating expenses fell over a third from £3.647 million to £2.395 million. No worries about corporation tax, for there was no profit. And although the loss on ordinary activities almost halved from £1.297 million to £690,701, the losses carried forward rose by this amount to £12.673 million.

Servicing debt is feasible at present, because interest rates are so low, and in addition the Scarlets are benefiting from many interest-free loans. During the year to June 30th 2014 Scarlets Regional were due to pay bills and repay loans totalling over £5.272 million, a tall order. The next accounts will show if this was achieved. The average gate at home games in 2013-14 was 7,218, a little down on 7,478 in 2012-13, according to calculations from figures on the Scarlets website.  The company put the 2012-13 average gate at over 8,000, which could well be correct if absent season-ticket holders were counted in.

More than 4,300 people had season tickets in 2012-13, a respectable total. A standard season ticket for the current season costs £215, with more expensive variants up to £590 for a Carwyn James Patron ticket, and lower prices for students and children. Better public transport to and from Parc y Scarlets could entice additional season ticket purchasers, but that seems an unrealistic wish. Charging a lot more for season tickets is also unrealistic. Greatly increased income from TV rights would help. Couldn’t the Welsh Rugby Union be more generous? According to David Moffett, group chief executive of the WRU from 2002 to 2005, the regions are being starved of WRU funding because the union opted to repay early £16.6 million of debt.

A few big matches – against the All Blacks, Australia or South Africa, maybe – could be life-prolongers. On October 31st 1972, the then Llanelli RFC played the All Blacks on the old ground at Stradey Park – and won. There would be little doubt about the Scarlets being a going concern if rugby was still played at Stradey.

The gloomy finances at Parc y Scarlets are also emphasised by the fact that Scarlets Regional Ltd lost its auditors in March 2014, and in August 2014 company secretary Nick Gallivan resigned after just over two years in the post.

That stadium is just TOO BIG and TOO EXPENSIVE for a club which needs to devote more resources to RUGBY.

 

Scarlets latest: £12.673 million losses to carry forward

UPDATE October 15th 2014

Exactly a month ago, Carmarthenshire County Council’s Executive Board allowed Scarlets Regional Ltd to borrow another £900,000. The new loan is from the Welsh Rugby Union, and is at least interest-free. The loan can be taken in three stages, to a maximum tranche size of £325,000, and the final tranche should be taken in September 2016.

The county council could have stopped the Scarlets from accepting the loan, because of the terms of its own financial agreement with the company. The Scarlets owe the council £2.614 million (and rising), after all.

The directors are required to provide security of up to £180,000, 20% of the maximum loan, and the WRU takes a “fixed and floating charge over the assets of the club with the exception that there is no fixed charge over the club’s stadium, barn or track”, in the words of the report to the Executive Board. The stadium premises belong to the council anyway and are leased to the Scarlets.

Currently, there is clearly insufficient net worth to provide security for additional loans because, as the latest published accounts show, as at 30th June 2013 the company had an excess of liabilities over assets of £3,568,287.

Will the extra £900,000 spark a financial revival? A long run of sporting success would help greatly, but currently the Scarlets rank seventh in the Guinness Pro12, below their near neighbours the Ospreys, who are top, then Glasgow, and all four Irish teams. There is a crumb of comfort in the mid-table position — it’s a lot better than propping up the bottom. The next few months will be interesting.

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Original post

Loans from directors and from Carmarthenshire County Council are just about keeping the financial wolves away from the battered body that is The Scarlets rugby region, but for how long?

The Scarlets are central to the self-image of Llanelli in particular and of importance to West and North Wales in general. One of the four professional teams in Wales, and with the largest geographical area, the Scarlets are the modern incarnation of Llanelli RFC, which for so long played at Stradey Park inside Llanelli.

The Scarlets’ six-year-old stadium, outside Llanelli at the retail estate Parc Pemberton, seats 14,870 but the average gate, reported in newly available financial statements for 2012-13, was “over 8,000”. That gate is good for a town like Llanelli, population 35,000 according to the town council, but it’s not enough to keep the club solvent. Two particular problems are evident: the Ospreys rugby region is only just down the road at the Liberty Stadium in Swansea, and the Ospreys attract fans from the lion’s share of what is becoming a single Neath-Swansea-Llanelli conurbation. The Scarlets look to sparsely-populated West and North Wales for their fans, but these are areas with ageing and less-and-less mobile populations.

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Parc y Scarlets stadium: costing the game? Photo from Wikimedia.

Stradey Park had a capacity of 10,800. Parc y Scarlets is a lot bigger, more anonymous, and seats are further away from the play. Maybe it will acquire character in time.

Meanwhile, the shareholders found themselves more in the red at end-June 2013 than a year earlier. Their investment in the club was a negative £3.568 million, compared with negative £3.243 million the year before.

The auditors, Grant Thornton, resigned in March 2014, just before the 2012-13 accounts should have been filed with Companies House. The financial statements for the year were eventually audited by James & Uzzell Ltd of Swansea Vale, and filed with Companies House after the chairman’s report was signed on July 31st.

The auditors say: “The company incurred a net loss of £690,701 during the year ended 30th June 2013 and, at that date, the company had an excess of liabilities over assets of £3,568,287.

“These conditions along with the other matters explained in the accounting policies to the financial statements indicate the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern.”

The value of the company’s dominant asset, the stadium, is reported as £10,073,345. More than £10 million. Would it be worth that much if the company folded? Who would be willing to pay over £10 million for a 14,870-seater stadium on a retail park outside Llanelli? There could well be a buyer, but intense competition for the property is rather unlikely.

The director with most invested in the company’s shares at the year end, according to the financial statements, was Nigel Short, owner of 3.17% of the columns of red ink. Philip Davies owned 1.95% and Nednil Ltd, of which Mr Davies is a director, owned 1.46%. As well as investing in shares, the directors have been generous with interest-free loans. Just in 2012-13 Nigel Short advanced £340,000 and Nednil Ltd £200,000. At the year end, directors Huw Evans, Granville Wise, Tim Griffiths and Nigel Short were owed £3.179 million, £1.541 million, £1.003 million and £440,000 respectively. Nednil Ltd has loaned a total of £2.047 million, and Welsh Whisky Co Ltd, a business interest of Mr Short, lent £100,000.

Carmarthenshire County Council’s outstanding loan to the company increased by £100,000 from £2.514 million to £2.614 million. This is secured by a “floating charge over the company’s assets”, to quote from the financial statements. The main asset is of course the stadium, which could not realistically have been built – the Carmarthen Journal reported that the development cost £25.4 million —  without a grant of £10.3 million from the county council, plus £5.56 million in ‘Section 106’ money from the developers who received planning permission to build homes on Stradey Park. The council’s grant more or less equals the stadium’s present value.

The county council issued a 150-year lease to the Scarlets, at nominal rent, and part of the car park on this leased land was sold to pub company Marstons for £850,000. Only £200,000 of this made its way into county council coffers, although a fairer split would have been 50:50.

Scarlets Regional Ltd is a privately owned company and some people feel that Carmarthenshire County Council might have broken European Union regulations about handing state aid to commercial concerns. The council argues that it has not broken any rules.

Certainly no one appears to be making profits from the council’s largesse.

The Scarlets’ financial performance in 2012-13, as presented in the accounts, was rather better than in 2011-12. Turnover rose 0.15% from £7.980 million to £7.992 million, but this lagged behind inflation. The cost of sales soared 13.1% to £6.153 million, but net operating expenses fell over a third from £3.647 million to £2.395 million. No worries about corporation tax, for there was no profit. And although the loss on ordinary activities almost halved from £1.297 million to £690,701, the losses carried forward rose by this amount to £12.673 million.

Servicing debt is feasible at present, because interest rates are so low, and in addition the Scarlets are benefiting from many interest-free loans. During the year to June 30th 2014 Scarlets Regional were due to pay bills and repay loans totalling over £5.272 million, a tall order. The next accounts will show if this was achieved. The average gate at home games in 2013-14 was 7,218, a little down on 7,478 in 2012-13, according to calculations from figures on the Scarlets website.  The company put the 2012-13 average gate at over 8,000, which could well be correct if absent season-ticket holders were counted in.

More than 4,300 people had season tickets in 2012-13, a respectable total. A standard season ticket for the current season costs £215, with more expensive variants up to £590 for a Carwyn James Patron ticket, and lower prices for students and children. Better public transport to and from Parc y Scarlets could entice additional season ticket purchasers, but that seems an unrealistic wish. Charging a lot more for season tickets is also unrealistic. Greatly increased income from TV rights would help. Couldn’t the Welsh Rugby Union be more generous? According to David Moffett, group chief executive of the WRU from 2002 to 2005, the regions are being starved of WRU funding because the union opted to repay early £16.6 million of debt.

A few big matches – against the All Blacks, Australia or South Africa, maybe – could be life-prolongers. On October 31st 1972, the then Llanelli RFC played the All Blacks on the old ground at Stradey Park – and won. There would be little doubt about the Scarlets being a going concern if rugby was still played at Stradey.

The gloomy finances at Parc y Scarlets are also emphasised by the fact that Scarlets Regional Ltd lost its auditors in March 2014, and in August 2014 company secretary Nick Gallivan resigned after just over two years in the post.

That stadium is just TOO BIG and TOO EXPENSIVE for a club which needs to devote more resources to RUGBY.

 

Maria Miller and Mark James: tales from loophole land

News that Culture Secretary Maria Miller MP could take advantage of a legal loophole to avoid capital gains tax on the sale of her former ‘second home’ in Wimbledon, London, strikes a chord with recent events in Carmarthenshire and Pembrokeshire, where in both counties the cuts-bedevilled local authorities spent thousands of pounds and hours of staff time devising special, favourable pension arrangements for top officers.

In Carmarthenshire, there is also the matter of the Libel Indemnity — council funding to enable Mark James, chief executive, to counter-sue blogger Jacqui Thompson for libel. The whole libel debacle, the determination to silence a vocal critic of council practices, resonates with the efforts of Maria Miller’s entourage to block the investigation into the mortgage interest she reclaimed for her ‘second home’, and to halt the work of a journalist, Holly Watt, who was working on the story for the Daily Telegraph. Attempts to silence the critics, and with public money too, are a dangerous aspect of modern Britain.

So far, the Prime Minister has publicly backed the Rt Hon Maria Miller, MP for Basingstoke, against the Parliamentary Standards Commissioner, and by so doing he seems to condone the use of legal loopholes for personal financial gain. The story about Mrs Miller became even more serious yesterday, when Holly Watt and James Kirkup reported in the Daily Telegraph that the ‘second home’  became the ‘main residence’ before Mr and Mrs Miller sold it in February this year, for £1.47 million. This was about £1,232,500 more than the purchase price back in 1996.

Taxable capital gain? Not if Her Majesty’s Revenue and Customs accept the Wimbledon house as Mr and Mrs Miller’s main home at some point during their ownership, because one’s main home is exempt from capital gains tax, which is otherwise levied at the rate of 28% for higher-rate taxpayers. Of course, the Wimbledon residence was the ‘second home’ when Mrs Miller was claiming parliamentary allowance for it, but according to HMRC the ownership test is not onerous, only that “the property must have been your only or main home at some time during the time that you owned it”.

Tax regulations are fiendishly complex, and experts derive their livelihoods from finding and exploiting arguable loopholes in them. Loopholes might be legal, but in practice they enable people wealthy enough to employ experts to increase the financial distance between them and the rest of the population. At public expense, Carmarthenshire and Pembrokeshire county councils engaged Tim Kerr QC to counter the findings of the Wales Audit Office that both councils had spent money unlawfully, for the benefit of their top officers. In London, Mrs Miller — who as Maria Lewis was brought up in Bridgend and attended Brynteg Comprehensive School — appears to have been able to claim mortgage interest  on a variable amount mortgage which in May 2005 was £425,000 (£187,500 more than the original purchase price, incidentally) and then to redesignate the property as her main residence and thus avoid capital gains tax on a property purchased for £237,500 and sold for £1.47 million.

It may be legal, but is it ethical? The Prime Minister, for one, seems to think Maria Miller’s expense claims are perfectly OK.

In our legalistic society, loopholes and ambiguities are there to be exploited for private benefit.

See also Britain’s Dangerous Social Divide on http://www.ecopoliticstoday.wordpress.com

Money for New Traffic Scheme in Quiet Rural Village, but Not Enough Cash to Keep Excellent Recycling Centre Open? Council’s Odd Priorities

Solutions in search of a problem?  The changes to Llangadog under consideration by Carmarthenshire County Council, for “safety” and “enhancement” include triple traffic lights, restricted parking, pedestrian crossing points, and narrowing of the roadway.

Yesterday, the county council thoughtfully staged an exhibition of the five separate options drawn up for them by design consultants Parsons Brinckerhoff, a US firm acquired by the UK’s Balfour Beatty construction and infrastructure group in 2009. Parsons Brinckerhoff are not exactly local but they do have an office in Cardiff, which is one of their more than 150 offices on five continents.

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The exhibition was well-attended by local people taking a close interest in the proposals

“Why do this?” I wondered, thinking about the costs of ‘safety and enhancement’ works in the village of Llangadog, which is neither a notorious accident blackspot not overwhelmed with traffic jams. During the 25+ years of my frequent trips to and through this historic village, which comes complete with its own council-designated Conservation Area, I have on several occasions had to wait a few seconds for a bus or big van to make its way down Church Street, but have never experienced a significant delay. When crossing the road, I have never thought ‘When will this traffic ever stop?’

The exhibition was accompanied by a questionnaire, asking residents to rank, from 1 to 5, the most serious traffic-related problems in the village, from a list of 13. The questionnaire is, in my view, changing the normal day-to-day issues of traffic flow into ‘problems’ requiring (probably expensive) remedial works.

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The questionnaire invites residents to rank the five most serious traffic problems

The first of the five options began with doing the ‘minimum’ – less on-street parking, narrowing the roadway to 5.5 metres, putting in three pedestrian crossing points, extending throughout the village the 20mph speed restriction which currently applies outside the primary school, and improving the pavements.

Another option adds priority direction road signs for vehicles between the community hall and the village centre, where the road is narrow. Two more options include traffic signals at three locations, one set on each of the three roads into the village, and zero parking or loading in the village centre. The final option is for ‘shared space’, the roadway level with pedestrian paths, and no parking in the centre of the village.

Obviously views on the proposals will be varied, from ‘good ideas’ to ‘waste of money’, and in this respect the effort that has already gone into preparing the plans suggests that this is not a money-saving exercise. The Welsh Government is providing finance, via the Local Government Borrowing Initiative. It does seem strange that traffic management in Llangadog has been given such high priority when, a few hundred yards down the road, the same council has said it cannot afford to renew its waste recycling contract with All Waste Services, the local business which accepts domestic waste and which recycles between 80% and 85% of the ‘rubbish’ it receives, a rate far better than the Carmarthenshire average of 53% in the final three months of 2012.

Could there be a connection between the ongoing works to strengthen the bridge over the river Sawdde, between Llangadog and Felindre, and the proposed ‘safety and enhancement’ works in the centre of Llangadog? Could the county council be preparing for significant extra traffic through Llangadog and on through Felindre and Bethlehem, down to Ffairfach?

Lorries, may be? Buses? School buses…..?

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Plan showing one option for ‘safety and enhancement’ works in Llangadog, Carmarthenshire

by Pat Dodd Racher

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