Bid to Privatise Finance Wales Raises Doubts over EU Funding; WAG Says No Sector Is Denied Access to European Finance
Byline: Si'n Barry
A BID to reclassify the Welsh Assembly Government's investment bank, Finance Wales, as a private entity, has left a question mark over its current funding from the European Investment Bank.
As reported by the Western Mail earlier this month, about pounds 97m of Finance Wales borrowings have been scored on the Welsh Assembly Government's budget at the behest of the Treasury - for which a new supplementary budget was published yesterday.
The pounds 97m has been accounted for from reserves and now appears on the balance sheet of the department for the Economy and Transport.
The Welsh Assembly Government has been in discussions with the Treasury with a view to having Finance Wales reclassified as being in the private sector - which would see the pounds 97m effectively being taken off WAG's balance sheet as a cost The decision on reclassification will be made by the Office for National Statistics and is expected shortly.
Finance Wales is currently investing from its biggest ever fund - some pounds 150m, of which pounds 75m is a commercial loan from the EIB Its also includes some pounds 60m of non-repayable funding from the European Regional Development Fund - which with the EIB loan and legacy investments for previous Finance Wales funds has been badged together under the so-called Jeremie Fund.
The ERDF funding is not being seen as part of the Assembly's block grant from the Treasury, as since 2006 this has been treated as additional.
Finance Wales being reclassified as private, whether through a management buy-out or potentially through financial institutions being invited to bid for elements of its current funding portfolio, faces two challenges.
One is whether the structural funding (ERDF) element would be allowed to be transferred over from a public sector to a private sector vehicle.
In a statement the Welsh Assembly Government said: "No sector is restricted from accessing European structural funds in Wales.
"The Welsh European Funding Office are able to continue to support projects where the sponsor organisation has been reclassified to a different sector, following an evaluation in line with European regulations.
When pressed on what kind of evaluation they added: "The evaluation would involve checking that the organisation is still able to deliver the activity for which it was approved (eg. against project and selection criteria) and to ensure it continues to meet the EU regulatory requirements.
"The project sponsor would not have to re-bid for funding."
But what of the EIB funding position. …