Today Sir John Bourn, the Auditor General for Wales, reports to the Assembly about the Cardiff Bay Barrage. His report says that the progress made with the project to construct the Barrage and create a freshwater lake in Cardiff Bay represents a creditable achievement, particularly on the part of the Cardiff Bay Development Corporation. The project is large and complex and the main contractors, Balfour Beatty-Costain, had to contend with difficult physical conditions in building the Barrage.
The report notes that in March 1995 the Secretary of State set a budget of £191 million for the project. This was increased in March 1999 and again on 28 March this year and now stands at £213.4 million. The increase was needed to meet, for example, unavoidable, additional costs, in establishing the Gwent Levels Wetland Reserve and as a result of the need to deal with unforeseen ground conditions in constructing the Barrage that had not been picked up by earlier ground condition surveys.
At this stage it is not clear what the final cost of the project will be. This is mainly because some contractual claims have not yet been settled and work on some aspects of the project has not yet been completed. In addition, some elements of the project relating to water quality in the Bay have been postponed to later years and are not provided for within the revised estimate of £213.4 million. The best current estimate is that the capital investment needed for water quality measures will be between £6 million and £7 million, suggesting an overall cost for the project of some £220 million.
Bringing the Bay into operation and management arrangements since 1 April 2000
The original target date for creating the freshwater lake was August 1998. In December 1999 this was revised to March 2001 because of the need to resolve issues relating to water quality. One consequence of this is that it will be necessary to take steps to protect the Barrage structure during this period. The cost of this is estimated at £1.1 million.
Following the wind up of the Development Corporation on 31 March 2000, Cardiff County Council assumed responsibility for the operation, maintenance and management of the Barrage, the inland Bay and the outer harbour and associated responsibilities. Since 1 April 2000, a new Harbour Authority which is part of the County Council has been discharging these responsibilities. In addition, the Countryside Council for Wales assumed responsibility for the Gwent Levels Wetland Reserve.
In 1997, the estimated annual cost of running the Barrage and the Bay stood at £5 million. This has increased. For 2000-01, the Assembly made a net provision of £21.4 million for the cost to Cardiff County Council of meeting the responsibilities which it had inherited from the Development Corporation. The net funding to be provided by the Assembly is forecast to reduce and from 2002-03 the overall gross provision for the Harbour Authority will be £9 million a year. In addition, the obligations attached to the creation of the freshwater lake will bring with them significant responsibilities (such as ensuring water quality) and some potential liabilities (for example, repairing damage to properties around Cardiff Bay resulting from any alteration to groundwater levels caused by the Barrage).
The Report notes that the successor arrangements that have been put in place mean that Cardiff County Council will have permanent responsibility for managing and operating the Barrage and the Bay. Although this is expected to be cheaper over the next three years compared with other options, it will be important that the Assembly develops ways of controlling costs and ensuring continuing value for money. The Report suggests that the Assembly will need to create some further competitive tension at the end of that period, including exploring options that would provide some form of incentivisation for the County Council to discharge its responsibilities as efficiently and economically as possible.
Having completed work on this Report, the National Audit Office Wales is now undertaking a separate examination of the arrangements put in place for the wind up of the Cardiff Bay Development Corporation.
Sir John said
"I am very pleased to report to the Assembly about the construction of the Cardiff Bay Barrage, a major piece of civil engineering, and the other key elements of the project to create a freshwater lake in the Bay. The report points to useful lessons for the management of projects of this kind. The report also sets out unresolved issues and the environmental obligations linked to the project. It will be essential for the Assembly to ensure that these are dealt with in a way that minimises the risk of incurring significant liabilities and other substantial unplanned costs."
The Queen appointed Sir John Bourn as Auditor General for Wales for a two year term starting in June 1999. Sir John is also the Comptroller and Auditor General, responsible for the audits of central government organisations elsewhere in the UK.
The report was prepared for Sir John by the National Audit Office Wales and will be considered by the Audit Committee of the National Assembly for Wales on 13 July. The National Audit Office employs some 35 staff in Wales and is totally independent of Government.
The Welsh Office administered central government spending in Wales prior to the Assembly being established. On 1 July 1999, the majority of its responsibilities were transferred to the National Assembly.
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