Sunday, 24 February 2019

Wellness Business Plan -finally leaked..and much revealed

THE SECRET BUSINESS CASE RISES FROM THE SWAMP.

The lack of a business plan suitable to be shared with either the public or Carmarthenshire County backbench councillors has prompted rumours that the plan was seriously flawed. An article by Jon Coles, editor of the Llanell Herald who has been able to acquire the complete business case was published on February 22nd. This document has hundreds of pages and was submitted to the City Deal Board in November 2018, a rather curious fact as the project was supposedly practically up and running at this point.

WHERE IS THE MONEY COMING FROM?
The business case confirms that the project requires considerable private funding which must match or exceed the public funding for the scheme. Curious then that Council Leader Emlyn Dole appears to be considering "going it alone" and is said to have already borrowed over £200 million on behalf of the people of Carmarthenshire to fund this legacy project. Us locals are already paying the interest on this loan and there are plans to borrow much more to finance the entire build of the Deal. If it goes ahead, construction will take several years and the local population will be liable to pay back the whole of the costs if the project does not make a profit, This could mean cuts in Council Services and increases in council tax just to pay off this multi million debt.

STERLING HEALTH  - POOR BUT AMBITIOUS.

Where is the private investment to match fund this public borrowing? The Sterling Health Company which became the official "Private Partner" clearly had very little in the way of funds itself and although there was a suggestion that they would broker private finance to match fund the project, this may have just been more borrowing from private banks dressed up as "private business funding". It is not clear exactly why Sterling Health and Carmarthenshire County Council parted company last December. The firm had no staff, only directors , little in the way of assets, some debt and no sign of ready money to invest . So the mystery of how it came to be the Private Sector funding partner is another issue to put to the senior officers and councillors who decided to take them on. Any one can see they are a tiddler of a company, by looking at Company House records open to the public.

Perhaps it was just a pretence to allow the "City Deal" to go ahead and CCC were hoping that this company would not be "found out" as a partner with no money. However not having money did not seem to stop them from offering incentives to Swansea University employees based on the profits they were expecting in Llanelli.

The Delta Lakes area, owned by the public, was said to be worth a maximum of £400,000. When the project was announced the Magic Money Tree department  of the council claimed they had obtained a valuation of £35 million on the same land. All this depends on the planning permission, currently on hold, going ahead and developers being found for the scheme.

CARMARTHENSHIRE HAS FORM FOR GIVING AWAY PUBLIC LAND AND BUILDINGS IN LLANELLI

 Don't forget the case of the new Eastgate Town Centre development in Llanelli. The County Council generously gave ownership of the whole site over to the developers, Henry Davidson Developments, (HDD), a private company  who built the buildings and then sold the buildings on to Standard Life for £12 million, thus pocketing the value of considerable public funds and grants had been spent on site preparation and compulsory purchase by the Council. Standard Life then merged with Aberdeen Asset Management  to form Standard Life Aberdeen .
 Since this merger in 2007 the company, which merged with a valuation of £11bn, has lost £6.8bn, in asset value and is currently suffering something of a sell off and dip in share values. Our taxes used to support a developer and then our town centre sold for that developer's profit to a FTSE company whose board probably have little idea where Llanelli really is? If the Wellness Centre is built could this happen again?
Empty shop- Eastgate.

The Eastgate is still not fully let. An ugly building with empty units and rents well above the local commercial shop rents elsewhere. The County Council agreed to rent the first floor office space for £250,000 per year for at least 20 years. A large grant was given to the Scarlets  Rugby Club to keep open their shop in the Eastgate -£270,000,  but it still folded. It just is not a good commercial area as originally advertised. Too expensive to rent and not near enough to the old shopping centre to get good footfall.

In their business plan for the Wellness Project , thier plan claims the Council "will have to accept "charges"over the assets to encourage private investment". 

This sounds suspiciously like the deal which led to our town centre being sold off, with the buildings being given away without even a ground lease retained by the Council. HDD were not even a public company, a private leasing concern based in Nottingham. Similarly to Sterling Health the private partner seemed simply to be a friend of friends, just like Sterling Health, selected from a short list of one company. The perverse habit of using our money to subsidise  "favourite" private companies has to stop.
LLanelli Eastgate  -Statue representing tin workers.

SWANSEA UNIVERSITY WAS THE KEY TO OTHER PARTNERS

To qualify for a City Deal one needs a County Council, a University or Universities and one or more serious businesses willing to invest their own money. Inconveniently Carmarthenshire has not only lost the support of the "private partner" Sterling Health, but also Swansea University. There are now grave concerns over several  senior Swansea academics, and their links with the Wellness Project and Shifa'a in Kuwait. A desperate search to find either a new university and/or a new business partner for Carmarthenshire was not successful.  Hence the adoption of "going it alone" by Emlyn Dole.

CCC was to use the links of Swansea University to businesses such as Pfizer, Fujitsu, GSK, Microsoft,etc to recruit them to use various wellness project buildings and research, and any use or training of their medical staff or students at the Wellness project would need university approval. It's a big loss to the project but were the plans anything other than something to fill 40 acres of coastal land by a council desperate for jobs but a little too trusting of those who may have put greed before the welfare of local people?

WHAT WAS THE RESULT SUPPOSED TO BE?

More questions than answers. Where were the jobs? Where were the figures showing that private Wellness tourism would fill the hotel. With sea water levels rising should any more domestic housing be built on the coast?  How popular is shifting the new leisure centre out of town? Should a care home be built in an area which may be lost to the sea within decades?. The actual site has not been physically tested or fully geologically surveyed. It is frightening that the council seems keen to proceed with building without full information, The whole project is supposed to be finished by 2021 and I would be surprised if it makes it.

Only recently, north of the site, a new aquifer was discovered in the path of the Dwr Cymru Welsh Water Rain Scape tunnel under construction on its way to Delta Lakes. It will take months to pump out the water and engineer a way for drilling to proceed. WWDC are aware that is has to be done carefully to prevent any damage to surrounding roads and property from ground settlement. This is close to the Railway station and apparently was previously a totally unknown underground waterway.


WHAT HAPPENS TO WELLNESS NOW? 

As Mr Cole remarks, the new business Case planned for the "go it alone" project needs a massive re-write.

Much of the present business plan was to provide buildings for  Swansea University to use and an NHS hub for Hywel Dda. Recently as a councillor I listened to a presentation by Hywel Dda where they were clearly not informed that the University had withdrawn and were still  keen to use a promised Wellness building to offload GP services in some way. There is confusion as to what these NHS hubs should deliver and Hywel Dda plans to consult in the various localities as to what the public want. In the business plan Hywel Dda seem to promise financial contributions for 15 years. This is presumably some sort of rental agreement after their hub is built using the money borrowed by the County Council.

In the new plan, Councillor Emlyn Dole needs to firm up the returns from these buildings. The extra money needed to satisfy the environmental protection of wildlife and to keep floods away etc will have to be factored in when the Welsh Government Ministers report on the planning permission they have "called in ", a move which prevents building until the issues have been addressed.

As Emlyn Dole. the Council Leader, promises to fund the Council's borrowing from the rent and business rates of the properties to be built by Carmarthenshire, this can surely be calculated and published for all of us to see how the millions borrowed in our name will be used and payed back?

The original Swansea City Deal, inspired by Sir Terry Mathews, was that of an "internet coast" driven by high tech innovation and IT start ups, Somehow this original plan was dumped,, along with Sir Terry to encourage a project more suitable to Sterling Health, a company which under another name, Kent Neurosciences, had built a private hospital in Kent which had not made profits as promised and had to be sold on.

It is unlikely that the Wellness Project can or should be delivered as originally planned. The absence of real private investment is not a surprise when the whole business case does not have a clear and persuasive promise of commercial returns. Private investment needs a good chance of a decent profit, especially when hundreds of millions are involved. This was a project which should have never have been presented as a "City Deal" to attract UK and Welsh Government funds with no proper private business backing. It is, perhaps, fortunate, that the suspension of 4 members of Swansea University Staff ,on matters which the university investigated related to their involvement in the Wellness Village, alerted the public to the possible problems.

There are now numerous investigations by Police, the Wales audit Office and Auditor General, and the Welsh government and UK Government  who will withhold the City Deal funding until the facts are confirmed. Obviously no further funding other than further planned borrowing by Carmarthenshire County Council is likely until the allegations of wrongdoing are confirmed or disproved.

Carmartheshire  County Council should not proceed with spending more money under these circumstances The planning and business issues must be properly addressed. The use of pubic money, our taxes, is not to prop up "Dream" projects in  the face of allegations of wrongdoing, especially when they include financial impropriety,The site will still be there when the investigations have concluded and an informed decision can be made with a new and public business case for all of us to see and even finally be properly informed as to what is going on!?

IN SUMMARY :

The "Wellness City Deal" was a rehash of a previous scheme rejected by Welsh Government.. The Council supported it without proper scrutiny as the councillors were not made aware of the business case, risks and possible outcomes. The whole premise of the suitability of the "out of town" coastal site scheme and the theme of Commercial Neurosciences was never properly considered or explained. It could have been an extra campus for Swansea University but they were well over budget on their Bay Campus and  leading Swansea academics were flirting with Kuwait, rather than Llanelli, to bankroll the Universities' future and support the Wellness Deal.

The universities' Vice Chancellor, the Academic Boss of the university, Professor Richard Davies commanding a salary of more than £250,000, was suspended after an investigation. Vice Chancellors are rarely suspended and we can assume the reasons were unlikely to be trivial.

The full details of the unprofessional behaviour which precipitated the suspensions of staff and withdrawal of Swansea University from the City Deal are not yet released. They seem to include accepting promises of shares, discounted properties and other incentives provided via Sterling Health.

Since the revelations last November, Carmarthenshire County Council's chief executive Mark James has announced his retirement, leaving next June when he is 60 and can claim his pension.

 Professor Davies has announced he will leave Swansea later this year. The Stirling Health  companies have applied to be wound up and removed from the Company's  House Register and Stirling Health's agreement with Carmarthenshire County Council was terminated.  We now await the findings of the various investigating bodies. The planning permission is on hold until Welsh Government Ministers decide on environmental objections to developing parts of the site.

The Plaid/Independent Coalition who run the Council seem committed to a "go it alone" plan where the local authority continue to borrow £ millions and finance some or all of the project if the planning is approved. This also has yet to be discussed and shared by the Council as a whole, which the original plan definitely was not!

 Siân Caiach,

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