Item 4 on the agenda this afternoon is topical questions. The first topical question this afternoon is to be answered by the Cabinet Secretary for Energy, Planning and Rural Affairs. Lee Waters.  

1. What assessment has the Cabinet Secretary made of the Auditor General’s decision to qualify the accounts of Natural Resources Wales for the third year in succession? 207

Thank you. I was extremely disappointed to learn Natural Resources Wales's accounts have been qualified for a third year in relation to the sale of timber. I welcome the Wales Audit Office acknowledgement that the response from NRW has been constructive and there is clear leadership commitment to take action. I met this morning with the chair and chief executive of NRW to discuss the matter.

Thank you, Cabinet Secretary. Last year, the Public Accounts Committee criticised NRW for giving a £39 million contract to BSW Timber in Newbridge-on-Wye without competition. It did not represent value for money but it was justified on the grounds that the firm would invest in a new sawmill, which would benefit the industry overall. They didn't deliver on that deal. We now discover that NRW has done it again. The Wales Audit Office now tells us NRW has awarded 59 contracts where there's no evidence this has been done at market price, and some contracts were awarded without tender. Twenty one of these were to BSW Timber, the same company that had reneged on the last deal. What is going on in NRW? To have their accounts qualified for the third year running is unprecedented and frankly outrageous. I'm struggling to think of an explanation for why this might be. Might it be corruption or incompetence? But it does appear that the forestry section of NRW is out of control; the internal audit controls are not fit for purpose. Where is the board in all of this? After the woeful performance before the PAC, the previous chief executive, Emyr Roberts, left, albeit with a large pay-off, which does stick in the throat. I'm encouraged by the auditors' view that the new CEO, Clare Pillman, has responded in a way that suggests that she does take the issues, at last, seriously, but what about the chair, Diane McCrea? Where has she been? How could she let this happen again? She was in charge last year. I think this should give us pause for thought about creating large organisations like this. If this was any other organisation—if this was a local authority, we'd be putting them under special measures. So, I'd ask the Cabinet Secretary—. I think this is an extremely serious situation. I'm really quite angry and baffled that this has happened for the third year running, and I'd hope she takes this extremely seriously, and I think there should be accountability from the senior leadership at board level and at executive level of this organisation, which does seem to be out of control.

I am completely in agreement with you that this is a very serious matter. I met first the chair on Monday to discuss her tenure, the report and NRW's response to it, and I am reflecting on that conversation. I absolutely agree with you that it is a matter of great concern.

You referred to the fact that there is now a new chief executive in place, and I mentioned that I, along with the Minister for Environment, met with the new chief executive and chair this morning. I believe, following my discussion with the chief executive, that it's very clear that she too is taking these issues very seriously. I think she's given a very strong leadership commitment to take action to ensure that this does not happen again.

You mentioned that it had happened three years in a row, and I absolutely share your concern and your anger.

I think the commitment of the chief executive is absolutely illustrated in a recent letter she wrote to Nick Ramsay, the Chair of the Public Accounts Committee, where she updated on the action plan to address the issues identified previously by the Auditor General for Wales and the subsequent report from the National Assembly's Public Accounts Committee, and that letter included confirmation that Clare Pillman, the chief executive, is reorganising the commercial services function within NRW, including the appointment of a head of commercial services. The chief executive has also appointed Ernst & Young to carry out an independent review of the key commercial business areas and governance arrangements. And I just do want to assure Members that I will be keeping a very close watch on this.

There's not much I can add, really, to Lee Waters's excellent question. Speaking as Chair of the Public Accounts Committee, we are quite literally astonished, baffled—whatever description you want to give it—that the Auditor General for Wales has once again had to qualify the accounts of NRW for the third year running, and again on the basis of their transactions relating to timber sales, contracts, being irregular. We are disappointed that there is further uncertainty on whether NRW has complied with principles of public law, state-aid rules—the list goes on. The committee will be re-examining this issue during the autumn term to ensure that we are satisfied with the action being taken, and we're certainly going to monitor this.

We did hope that we wouldn't be—. Well, we assumed that we wouldn't be in this position again. It is, as Lee Waters said, quite extraordinary that we do find ourselves in this position. In terms of—. Well, I have two questions for you, actually, Cabinet Secretary. You said you had a meeting this morning, I think, with the chair or—

The chair and chief exec.

The chair and chief exec. So, clearly, you're—that was the right thing to do. At any point during this process, during the last year since we knew the previous problems existed, had they run by you what they were doing? Had they alerted you to the fact that they were dealing with the same timber company that failed to build a sawmill before? And 59 contracts were awarded—well, why 59? Have they given you any explanation at all as to why those 59 contracts were awarded and what the nature of them was? Because I share Lee Waters's bafflement. It is very difficult for us as members of the committee, and I'm sure for other Assembly Members, to begin to understand in the first instance just what on earth is going on.

Thank you, Nick Ramsay. I too had assurance from the previous chief executive that this would not happen again this year, so you can imagine how disappointed and concerned I am. I probably can't be any more specific about my annoyance in relation to this. I met the chair—what I said was I met the chair on Monday, and I met the chair and the chief executive this morning along with Hannah Blythyn, the Minister for Environment, where we did discuss matters around public law and state aid, because, clearly, those are two areas where there needs to be a focus and, again, I was reassured that the chief executive was taking this very seriously going forward. She's also strengthening the audit and risk assurance committee by appointing a non-board member with additional public sector governance and finance expertise also, and we have a planned recruitment going forward for the board. We have five new members that we'll be appointing this year also, which I probably should have said in my answer to Lee Waters.

I don't think I can add any more other than to say that I completely agree with what's been said by Lee Waters and Nick Ramsay. I said yesterday that I thought the governance of Natural Resources Wales was rotten and I had no faith in it: I repeat that just to get it on the record with you. I have no faith in the governance of this organisation at the moment. You know, making one mistake and a mistake carrying on for a second year you can kind of understand—it was a big mistake, mind you; heads should have rolled about that one—but then to do this on a number of contracts shows there's something fundamentally wrong.

Now, Lee Waters did mention corruption. I don't know whether that's true, but I've written to you with an evidenced case from a constituent of mine of how he believes a contract was constructed in such a way as to ensure that one contractor could win it, with Natural Resources Wales then paying extra on top of the contract because it had been done in the wrong way—so, the equipment was being bought separately, whereas my constituent had bid for it with the equipment as part of the contract—in other words, jobs for boys, or doing things for people that you know. I'd like you to reopen that correspondence that we've had because you, I have to be honest, gave me a brush-off and said my constituent should take it through the Natural Resources Wales complaints procedures. Well, of course he had—of course he had—and he's now taken it to the ombudsman and he's taken it to the BBC as well. But this is something seriously wrong, and these things don't happen through incompetence. You do it once or twice through incompetence. This is something that's much more fundamental. So, I want to push you even further than what you've just said. Really, can the chair continue? And, secondly, will you send in your own officials to examine these contracts, top to bottom, and make sure that every single one of them is not being done with any gifts and favours involved in them?

There were three additional questions there, which I'll answer. I'll certainly have a look at the correspondence again. Yes, I will be sending my officials in to monitor it. And I mentioned that I'd met with the chair on Monday, I discussed her tenure, I discussed the accounts, and I was reflecting on that conversation, and I don't think it's appropriate to say any more at this point.

I hope that the Cabinet Secretary will be impressed that there is a cross-party consensus on this, not only from Lee Waters in the highly commendable way in which he phrased his question, from the Conservatives and Plaid Cymru, but also from UKIP, and, as a member of the Public Accounts Committee, I don't think I'm alone in saying that the evidence that we've received in the past from Natural Resources Wales has been deeply unimpressive on a whole range of levels. When Natural Resources Wales was formed, there were built into its structure perhaps many conflicts of interest that cannot be remedied—on the one hand, it's a commercial operation; on the other hand, it's charged with acting in the interests of the public—and I raised a case at First Minister's questions, unconnected with any of this, only on Tuesday last week about a contract that Natural Resources Wales has let in relation to BikePark Wales near Merthyr Tydfil, which is now restricting public access to public land for private interest and is purporting to fine people for riding on their cycle tracks without permission. So, there's a lot wrong with Natural Resources Wales, not just in terms of financial governance, but also in terms of the public policy implications that often surface in constituents' correspondence. So, can I urge her, along with Simon Thomas, to leave no stone unturned in unearthing the rottenness at the heart of this organisation? And, certainly, a complete change of personnel seems long overdue.

I certainly recognise the cross-party consensus. I don't think I can add anything to my answers to the other three Members who have raised questions. As I say, we have had a new chief executive. I'm very reassured following my conversation with her just how seriously she takes this. I will be sending my officials in and I will be keeping a very close eye on it. 

Andrew R.T. Davies, briefly. 

Thank you, Deputy Presiding Officer. Cabinet Secretary, yesterday in First Minister's questions, we heard from the First Minister that, actually, the amalgamation of the three organisations that form Natural Resources Wales was a resounding success that the Welsh Government had instigated. You have highlighted a litany of failures on behalf of NRW here today, and we've heard from Members across the Chamber. Do you regard it as a success story?

I think there certainly have been some successes. I haven't highlighted a list of them. We were talking about one issue in relation to the accounts. As I've said, I absolutely can't express my disappointment and concern enough, and I hope, by the fact that I had the chair in on Monday, and I've had the chair and the chief executive in today, that Members will recognise the seriousness with which I take this. But I think there have been some highlights. Certainly, it's very difficult when you bring three organisations together, and I think there have certainly been issues—there have been issues around staff morale, for instance—that have made me keep a very close watch on it. I met with the chief exec and the chair regularly when I first came into portfolio. Obviously, it now sits within the Minister for Environment's portfolio; she meets regularly with them. So, I think there have been some successes, but clearly, this is not one of them. 

Thank you very much, Cabinet Secretary. The next topical question will be answered by the Cabinet Secretary for Education. Lynne Neagle.