Today we publish another report – the latest in a long series highlighting weaknesses around grants management. This time it’s about what happened to the £5m invested into Penmon Fish Farm in Anglesey bit.ly/1c07J7M
It was a unique project which aimed to establish an environmentally-sensitive fish farm based on innovative technology – exactly the kind of project where grants are an ideal source of funding.
But, as with many grant projects, the set-up work fell far behind schedule. Costs escalated and, eventually, the company went into administration. The problems with delays and costs arose because the fish farm was a technically complex project. In particular, two key parts of the farm’s infrastructure didn’t turn out as planned– a power line for electricity was not installed and the artificial wetland of reeds to filter waste became unable to cope once production increased. The community began to suffer problems from noise and pollution.
Thankfully, in January 2012, a buyer was found for the farm and the new owner is addressing these problems.
So, what new things can we learn from this report – especially when many funders have improved their procedures since funding for the fish farm was first awarded back in 2002?
Well, for novel and complex projects like this which are much riskier than the norm, we recommend that funders should:
- adapt their terms and conditions to address specific risks and technical complexities;
- understand the relationships between related companies involved in the overall project in various ways; and once projects are underway,
- once projects are underway, monitor risks, value for money and also liaise with relevant regulators who ensure compliance with specific regulatory requirements, rather than merely looking at the expenditure incurred.
So, while a lot of efforts have been made to improve grants management in Wales, there is still a need for funders to learn from cases like this one and raise their game further.
The challenge continues.
Here at the Wales Audit Office, we will continue our efforts to support funders and grant recipients in all of this. We offer collective expertise in the areas of financial management, grants administration, value for money and forensic accounting. We remain in frequent contact with the ‘Grants Centre of Excellence’ at the Welsh Government which is now having considerable impact – they have just set new standards for how its grants will be managed in future.
We also have our own Grants Good Practice Guide on this website. And we are running ‘Shared Learning’ events for charity trustees to help them respond to funders’ newly-raised expectations for high standards of governance.
There is certainly a new culture for grants emerging here following our national study, ‘Grants Management in Wales’ in November 2011 and the subsequent inquiry by the Public Accounts Committee.
Keep watching what emerges!
About the Author:
Nick Davies is a manager at the Wales Audit Office, working for the Financial Audit Technical Group – with a particular specialisation in grants. He was the co-author of the Auditor General’s national study on ‘Grants Management in Wales’ and he compiled the web-based Grants Management Guide on the Good Practice Exchange section of our website.