2. Will the Cabinet Secretary make a statement on the A465 Heads of the Valleys road enlargement scheme, following reports that the long-term cost of the project could soar from £428 million to more than £1.2 billion? 68

Diolch, Llywydd. The capital value of the scheme is, as the Member said, currently estimated to be around £400 million. The business case is currently in development. Its detail will determine the final cost of the project.  

I was wondering if possibly the Cabinet Secretary could address the key point in the question, which is the concern about the soaring cost, potentially. In the interests of transparency, it is true, isn't it, that this is effectively a modified private finance scheme with a public sector equity stake, but the standard form that is being used was based originally on the Department of Health private finance initiative model standard form, which was then used for the Scottish not-for-profit distributing scheme that was called PFI by another name by his colleagues in Scotland. Can he say whether the operation and maintenance role for the road will cover those sections built under the mutual investment model contract only or will they also encompass the capital-funded sections as well? Are there other options available to us? Could the Welsh Government—it doesn't have the power currently to issue bonds itself, but local authorities do—back a joint local authority bond, say, I don't know, at 2.5 per cent interest with some degree of inflation indexation, marketed to public sector pension funds? And might that not be a better alternative than a private finance scheme, albeit a modified one as currently proposed?

First of all, Llywydd, let me say that I don't recognise the figures that were quoted in the original question. I don't think they are—they barely amount to speculation let alone anything that anybody should seek to rely on.

The mutual investment model, which the Member welcomed when I made a statement on it on 28 February, is a made-in-Wales model. It does retain some core elements of Scotland's non-profit distributing model, but it has a series of other innovations in it to make sure that it protects the Welsh public interest.

I look at every scheme that the Welsh Government proposes to see if there would be any more financially efficient way of financing that necessary investment, and we have certainly looked at the idea of bond issue. To date, I've not seen any convincing evidence that would suggest to me that bond financing would be a more effective way of securing the necessary investment to complete the dualling of the Heads of the Valleys road, but I can certainly assure the Member that the range of possibilities available to us is always under consideration and, if there were a way of doing this that provided better value to the Welsh taxpayer, we would not in any way be averse to considering it.

If I can just pick up on the last aspect of your answer there, Cabinet Secretary, on value, Adam Price focused very much on the overall cost of the scheme. I've had some experience recently within my constituency of the cost of the Clydach gorge part of the scheme, from Gilwern up to Brynmawr, and I attended a meeting of local residents and councillors who, though very supportive of the project in general and looking forward to the end goal where they have a fantastic new road, are concerned about—they described it as a slackness with the financial administration of the project.

The local impression is that road closures—sometimes necessary—are happening without the statutory notification that is required by law. Modifications are being made to the design of the scheme without the usual consultation process. One example is that an important flyover at Gilwern is behind schedule because of a water main issue that local people believe should have been sorted out a long time ago and is yet to be resolved.

Cabinet Secretary, there's often slippage, particularly in road projects. We accept that and we accept the need for this project long term, but can you look at the financial oversight that the Welsh Government is applying to the Heads of the Valleys scheme, specifically the Clydach gorge part but the rest of the scheme as well, to make sure that you are achieving your aim of value for money? At the moment, the perception at least in my constituency locally is that there is slippage beyond what is acceptable and that value for money is not being achieved.

I thank Nick Ramsay for drawing my attention to those points. I'm very happy to look at them. As far as the part of the road that was the subject of the original question goes, I want to be clear that we are absolutely committed to doing all of that in a way that is consistent with the necessary legal permissions—draft Orders and an environmental statement for the section have recently been published, and we are part way through securing the necessary statutory consents, which would lead to the powers to build the road and complete the dualling of the A465. So, on that aspect, I can give him an assurance that we are determined to do everything in the best possible way.

In terms of the financial management of other aspects of the dualling, I'll look carefully at the points that he's raised this afternoon.

The finance Secretary said a moment ago that he didn't recognise the figures that were produced by the Member for Carmarthen East and Dinefwr. Can he tell us what figure, then, he would recognise in this context?

And, as regards value for money, when the Department for Transport did a study of the benefits of the dualling of the A465 several years ago, they suggested that they came out at £1.52 of benefits for every £1 spent. If there is a significant increase in the cost of the project, of course, that relationship will substantially worsen. The Department for Transport regards schemes as often low value for money if the benefits are below £1.50 for every  £1 invested. So, are we not in danger, if costs are not contained on this project, of ending up with another white elephant fiasco, and that's money that could've been applied in other ways to the benefit of the people of Wales?

Well, the general point that the Member makes is the obvious one—that, if costs go up, the cost benefit analysis alters. Do I think that completing the A465 road so that it can bring the necessary economic benefits to that part of Wales is a white elephant? No, I certainly do not. It's a very important part of the infrastructure that this Government is determined to bring to those parts of Valleys communities where connectivity is intimately connected to future economic prosperity.

As to the question of the figure that I do recognise, that is the figure that I gave in my answer, and that is that the capital value of the scheme is currently estimated to be some £400 million.

As Nick Ramsay alluded to, there are considerable cost overruns projected on the eastern side of the Heads of the Valleys dualling, and we've seen figures that obviously have indicated substantial cost associated with the final section on the western side. I think everyone supports these improvements, because, overall, they will drive economic activity along the Heads of the Valleys, but what is deeply concerning is the potential knock-on effects for other capital projects if some of these figures do become a reality being talked about for the two projects: the one at the eastern end, which is under construction at the moment, and the proposed final dualling on the western end.

As finance Secretary, are you committed to making up that shortfall that the department might find itself with, with these considerable cost overruns, so that other capital projects around Wales will not have a detrimental impact on the money that's available to them and the timeline for delivery of those important transport projects across Wales?

Can I begin, Llywydd, by thanking Andrew R.T. Davies for his expression of support for the scheme as a whole? And let me just say to him that, as the finance Secretary, I am always in conversations with my Cabinet colleagues, making sure that they are delivering the capital programmes that I have agreed with them in line with the costs that were originally identified.

I certainly don't write any blank cheques for anybody about picking up extra costs where they are incurred, but I'm always willing to talk to Cabinet colleagues about very important Welsh Government priorities and making sure that we manage our capital programme in a way that provides the maximum impact for Welsh citizens in transport, in health, in education and in all the important responsibilities that we discharge.

Thank you, Cabinet Secretary. The final question, Leanne Wood.