Welsh Housing Quality Standard

Jan 022017
 

It’s difficult to know where to start with this rather complex story. Maybe we should go back to 2008 and the Welsh Housing Quality Standard, presented as an attempt to improve the standard of social housing. The WHQS was in fact nothing more than the Decent Homes Standard that operated in England. Another example of ‘Welsh’ legislation being just renamed and repackaged English legislation. Though in this instance, there was one very important difference, to be found in this National Assembly document, which says . . .

If the ‘Welsh’ Government can fund housing associations and also fund councils that retain their housing stock, then surely it can find the money for ALMOs? To argue otherwise doesn’t make sense. Limiting the choice to those options might make sense though to those in the social housing sector who saw WHQS as a weapon that could be used to get local authorities to hand over their housing stock. But do housing associations really exert such influence?

Well, consider this. The umbrella body for housing associations in Wales is Community Housing Cymru (CHC). From July 2006 until July 2014 the group chief executive of CHC was Nick Bennett. Prior to that he’d been a Spad for a few years until October 2002 and in between he’d been a director of Cwmni Cyfathrebu Bute Communications. Another director of this long-defunct company was Alun Davies, who had not long before switched his political allegiance from Plaid Cymru to Labour, and would be elected as a regional AM in 2007.

So Nick Bennett was in business with a rising star in the Labour Party – who’d already stood for the party in Ceredigion in the 2005 UK election – and this would have done him no harm when he applied for the post of group chief executive of Community Housing Cymru in 2006. Bennett’s strong links with ‘Welsh’ Labour also explain why he got the job of Public Service Ombudsman for Wales in July 2014.

In addition, many housing associations, particularly in the south, are stuffed with Labour Party members and supporters, and the party goes out of its way to help these associations. A recent example would be the takeover of Cantref by Wales and West. I’ve written about this disgraceful episode a few times, my posts can be traced back from Cantref: ‘Welsh’ Labour Takeover Challenged?

Cantref is a housing association based in Newcastle Emlyn, operating in a bilingual area with bilingual staff. It hit a rocky patch and a scavenger soon appeared in the form of Wales and West Housing, whose chief executive is Anne Hinchey, wife of Cardiff Labour councillor Graham Hinchey. Business is now conducted in English only and ‘Welsh’ Labour has an important beachhead in an area where it has very little electoral support.

The latest example of the influence housing associations exert over the Labour Party and its ‘Welsh’ Government comes with the news that, “In September (2016), the Office for National Statistics (ONS) announced housing associations should be considered part of the public, not private, sector. But the Welsh Government promised to take “whatever steps are necessary” to reverse the change, following concerns.”

The key to understanding what’s going on here is, firstly, that these “concerns” come from housing associations and their umbrella organisation Community Housing Cymru. I am not aware of anyone – other than CHC’s fifth column inside the ‘Welsh’ Government – who believes that housing associations becoming public bodies is a bad thing.

The reason given for opposing the ONS initiative is, “Community Housing Cymru (CHC) said it could affect their (housing associations) ability to borrow money and to build new homes.”

Let us look at the first of those claims that, if reclassified as public bodies, housing associations would find it more difficult to raise private funding. Which suggests that housing associations are now borrowing considerable sums from banks and other financial institutions. But are they? In my investigations into housing associations I have found little evidence that they rely on commercial loans. So where does housing associations’ income come from?

The largest and most obvious source of income is rents from their housing stock, most of which they inherited from local authorities. Yes, these properties have to be maintained and improved, up to Welsh Housing Quality Standard, but as we’ll see below, the ‘Welsh’ Government – i.e. you and me – pays for it all! And there are other funding streams, as I explained in Housing Associations – The Great Deception. (Nov 17, 2015.)

As I said back then, “One of the facts unearthed is something called Dowry Gap funding, paid to certain housing associations for them to use in upgrading the housing stock they’ve inherited from councils under voluntary transfer (i.e. through a vote by tenants). This funding is currently being paid to ten housing associations and in 2015 – 16 the total cost will be £43.8m. Tai Ceredigion Cyf’s ‘Dowry’ will be paid at the rate of £1.6m a year for 30 years. If this 30-year term applies to the other, larger housing associations, then the total cost will be £1.3bn.

This Dowry Gap funding seems to complement the Welsh Housing Quality Standard legislation, which demanded that all RSL properties be up to WHQS standard by 2012. This deadline – and its funding of £108m a year – has now been extended to 2020. Introduced in 2004 and running to 2020, £108m a year totals up to £1.7bn.

Adding the two we get a total figure of £3bn for ‘improvements’. Seeing as Wales has 143,790 RSL properties, this works out at almost £21,000 per property! (Is this right? Will somebody please check the figures.) That is a lot of moolah for windows and doors, especially when we accept that many of the dwellings inherited from local authorities were in good condition, certainly not needing ‘refurbishment’ to the tune of 21 grand per property.”

Another lucrative source of ‘Welsh’ Government funding for housing associations is the Social Housing Grant. The latest figures I have tell us that between 2008 and November 2015 £771,708,622.59 was paid in Social Housing Grant.

We are talking billions of pounds of public funding going into social housing. Perhaps four billion pounds by 2020.

The second part of housing associations’ objections to becoming public bodies is that they claim it could affect their ability “to build new homes”. Why? They’d still have the income from their rents, and they’d still receive public funding. This claim is just baseless scaremongering done to hide the real objections those running our housing associations have to them becoming public bodies.

As things stand, housing associations, or Registered Social Landlords as they’re also known, have the best of all possible worlds. They operate as private companies, but with massive advantages over what we would normally consider to be private companies.

To begin with, most of them inherited their housing stock for nothing when council tenants were given a vote (often after receiving misleading information). Then, as I’ve just explained, they receive staggering amounts of money from the public purse, despite, with their assets, being able to raise private funding just like other businesses. Being registered as Industrial and Provident Societies with the toothless Financial Conduct Authority means that they are not covered by the Freedom of Information Act – yes, despite all that public funding! Finally, oversight and monitoring by the ‘Welsh’ Government is non-existent.

This last fact explains how we can have a situation in which a publicly-funded RSL like Pembrokeshire Housing can set up and fund a subsidiary, Mill Bay Homes, for it to build and sell homes on the open market to retirees and investors (with of course Mill Bay Homes having an unfair advantage over independent house builders in the county).

When Pembrokeshire Housing will get back the millions of pounds it is has ‘loaned’ to Mill Bay Homes is anyone’s guess . . . but why should you worry when nobody in the ‘Welsh’ Government seems in the least concerned by this bizarre arrangement. I have written about Pembrokeshire Housing and Mill Bay Homes many times. Work back from Welsh Social Housing, A Broken System (Oct 23, 2016) to Mill Bay Homes and Pembrokeshire Housing 2 (June 14, 2016).

Those of you who enjoy a good read should settle down with this report into the workings of the Pembrokeshire Housing Group compiled by a concerned member of the public. (No, not me.) It has been circulated to interested parties, too many of whom seem to believe that if they whistle and look elsewhere the embarrassment will disappear.

But there are so many other problems with housing associations.

The most recent stock transfer seems to have been in Gwynedd, in 2010, when the council transferred its housing stock to Cartrefi Cymunedol Gwynedd (CCG). Among the first things CCG did was to hand over the maintenance contract for its properties to English company Lovell, which then brought in sub-contractors from north west England. I saw this first-hand in my village, and wrote about it in The Impoverishment of Wales (Aug 26, 2014).

Another issue I recently unearthed was that of housing associations leasing properties from shady offshore companies, the biggest of which is called Link holdings (Gibraltar) Ltd. I wrote about it in a piece entitled, unsurprisingly, Link Holdings (Gibraltar) Ltd (Oct 10, 2016). Equally unsurprising is that the ‘Welsh’ Government’s civil servants don’t want to talk about this scandal, ‘All a long time ago . . . leases taken out by previous incarnations . . . stop bothering us’. But nothing changes the fact that Welsh housing associations in 2017 are putting a lot of public money into companies hiding in tax havens. Should public money be used in this way?

A long-standing problem with housing associations, perhaps more visible in rural areas, is that in order to appear busy, to pretend there’s a demand in order to keep the funding coming, they will often bring into Wales misfits and petty criminals. This was certainly an issue with Cantref. Note the reference in the information below to “young tenants from the hostel”. I’m told that Cantref brings in from England young tearaways and within a very short time extended families of scruffs and roughs are wandering Aberteifi. Other housing associations do the same, because it pays well.

One of the worst cases in recent years was the gang of paedophiles and rapists housed in Kidwelly by Grwp Gwalia. I wonder how much Grwp Gwalia was paid to inflict these creatures on a small Welsh town? Were those responsible ever reprimanded or sacked? Did Grwp Gwalia compensate the victims?

It was in attempting to get information on this case that I realised housing associations are not bound by the Freedom of Information Act. Because when I asked for details a door was slammed in my face . . . a heavy and expensive door paid for with public money.

Finally, before leaving this section, let’s ask ourselves exactly who is complaining about the ONS proposal to make housing associations open and honest public bodies? Well we can be sure that the minions employed by our RSLs don’t have a direct line to Stuart Ropke, Nick Bennett’s successor as Group Chief Executive at Community Housing Cymru. The opposition is coming from much further up the food chain.

From people like the £150,000 a year chief executive of RCT Homes. After that bit of bad publicity RCT Homes rebranded itself as Trivallis. Most people in the Central Valleys are still trying to figure out what Trivallis means, and how much it cost to change everything. But, hey, it’s only public money, and there’s plenty more where that came from.

With social housing we have bodies operating in a Twilight Zone that allows them to pretend they’re private companies, free from bothersome FoI requests and any worthwhile official scrutiny, yet enjoying assets they did nothing to build up while having their finances constantly topped up by the public purse. With overpaid CEOs pretending they’re part of the business community.

Registered Social Landlords are part of the Third Sector, that monkey that we must shake from our backs if we are to build up a healthy economy and a prosperous country. Wales is over-dependent on hand-outs, but instead of using even that funding wisely, far too much of it is passed on in further hand-outs. This is trickle-down economics Welsh style.

The fundamental problem with the Third Sector in Wales is not that it exists – for there will always be shysters looking for some ’cause’ to exploit in their own interest – but that it is so interwoven with the ‘Labour movement’; which in itself might not be a problem were it not for the fact that ‘Welsh’ Labour is the recipient and distributor of the handouts.

We should be thankful to the Office for National Statistics for giving us this chance to clean up the expensive mess that is social housing in Wales. We should grasp this opportunity with both hands and make our housing associations public bodies, open to public scrutiny.

The worst possible outcome would be for the ‘Welsh’ Government to be swayed by individuals like Nick Bennett, Stuart Ropke, the £150,000 a year CEO of Trivallis, and too many others with a vested interest in maintaining the indefensible status quo.

To maintain that status quo would be to pander to a selfish, sectional interest against the national interest. Of which we have seen far too much since 1999.

♦ end ♦

P.S. Here is my submission to the Public Accounts Committee for its Inquiry into the Regulatory Oversight of Housing Associations.

Nov 172015
 

REMEMBERING BUDDY HOLLY

Back in January I posted a piece, Let’s Be Honest About Housing Associations, that began in nostalgic-humorous mood before going on to make more serious points about the provision of rented accommodation. The fundamental point I tried to make was that up until about a century ago rented accommodation was provided by the private sector, employers, charities and other bodies, not by local authorities or any other social housing provider. I asked, in view of changes taking place in the housing market, whether we could now be moving back towards that situation, how it might be done, and what benefits it might offer.

In my January piece I made a number of points about the changing nature of housing provision in Wales and, especially, how the proportion of people living in the private rented sector (PRS) was growing, almost unnoticed and, certainly in Wales, unplanned. I used the table below to show the dwelling stock percentages in the four categories: local authority, registered social landlord (RSL), owner-occupier and PRS.

Houses by tenure

I am now able to follow up that January piece thanks to a regular source who has drawn my attention to a recently published report examining the advantages of giving a greater role to the PRS in the provision of social and rented housing. The report is produced by the Public Policy Institute for Wales (PPIW) and is entitled The Potential Role of the Private Rented Sector in Wales. I advise you to open the report in another window or browser in order to follow the points I shall pick up on later in this article. But before that, let’s take a fresh look at the RSL sector, using information not previously available to me.

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WAY OUT WEST

For much of this new information I am indebted to another contact who has looked into the workings of the RSL sector in Ceredigion, an investigation that has unearthed a number of disturbing issues, prompting him to submit important questions to the ‘Welsh’ Government. Unsurprisingly, the civil servants acting as the ‘Welsh’ Government refuse to answer his questions, so he has now taken the matter to the Public Service Ombudsman for Wales.

Alas, the PSOW is Nick Bennett, former head of Community Housing Cymru, the umbrella body for housing associations, so I have warned my contact not to expect any help from that quarter. (Bennett’s appointment was a pre-Sophie Howe illustration of how incestuous and corrupt public life is in modern Wales.)

One of the facts unearthed is something called Dowry Gap funding, paid to certain housing associations for them to use in upgrading the housing stock they’ve inherited from councils under voluntary transfer (i.e. through a vote by tenants). This funding is currently being paid to ten housing associations and in 2015 – 16 the total cost will be £43.8m. Tai Ceredigion Cyf’s ‘Dowry’ will be paid at the rate of £1.6m a year for 30 years. If this 30-year term applies to the other, larger housing associations, then the total cost will be £1.3bn.

This Dowry Gap funding seems to complement the Welsh Housing Quality Standard legislation, which demanded that all RSL properties be up to WHQS standard by 2012. This deadline – and its funding of £108m a year – has now been extended to 2020. Introduced in 2004 and running to 2020, £108m a year totals up to £1.7bn.

Adding the two we get a total figure of £3bn for ‘improvements’. Seeing as Wales has 143,790 RSL properties, this works out at almost £21,000 per property! (Is this right? Will somebody please check the figures.) That is a lot of moolah for windows and doors, especially when we accept that many of the dwellings inherited from local authorities were in good condition, certainly not needing ‘refurbishment’ to the tune of 21 grand per property.

Then there seem to be two funding streams for capital projects, i.e. new-build housing, the Social Housing Grant and the Housing Finance Grant. I knew about the first, and I submitted an FoI last year to the ‘Welsh’ Government asking how much had been dished out under the SHG. I used the answers to compile the table below (click to enlarge). It shows that the figure for the six years 2008 – 2013 is £692.5m. (The explanation for the declining amount paid out in SHG can be found below in other, newer funding streams.)

Social Housing Grant 1

But at that stage I knew little about the Housing Finance Grant. Now I know a little more.

Even though I’m a regular and consistent critic of housing associations one feature of their operations that I have always regarded as commendable is that they raise funding from banks and other commercial lenders. Which means they are not entirely reliant on the public purse. Well, that’s what I thought; the reality is very different, as I learnt from my enquiries into the Housing Finance Grant.

The system works thus: Yes, housing associations find commercial lenders prepared to give them large loans – but then the ‘Welsh’ Government – i.e. you and me! – repay those loans over 30 years to the lenders, M&G Investments and Affordable Housing Finance, the latter being funding guaranteed by the UK Department for Communities and Local Government.

(And as the DCLG website puts it, “Borrowers will need to be Registered Providers (or equivalent in the devolved administrations) and classified to the private sector”. Which suggests that housing associations are not public bodies. Or maybe they are, in which case why is a Conservative government putting so much money into public bodies in order for them to build up valuable assets . . . unless they are being fattened up for full privatisation?)

Housing Finance Grant clip

The system of repaying lenders also applies to the ‘Dowry Gap’; housing associations take out loans, paid in lump sums, and the ‘Welsh’ Government repays those loans over 30 years. This explains why Tai Ceredigion has now completed its programme of upgrading its properties but will continue to receive the ‘Dowry Gap’ funding every year. The money is repaying Tai Ceredigion’s loan, which seems to be itemised in the latest financial statement at £23m.

It is even suggested that ‘Dowry Gap’ and WHQS funding is being used – improperly – for capital projects, but financial oversight of housing associations by the ‘Welsh’ Government is so lax that there’s no way of proving or disproving this claim.

All of which means that housing associations, despite the flim-flam about ‘new ways of doing things’ are old-fashioned Statist creations, entirely dependent on the public purse, which explains why they are favourites of the anti-business parties, Labour and Plaid Cymru.

Their only assets, their only other source of income, is of course their housing stock – either inherited from local authorities or built with public funding. So, again, at no cost to them. It’s a ‘new way of doing things’ only in the sense that it’s more opaque than straightforward dollops of public funding.

Seeing as housing associations are entirely dependent on the public purse it’s worth asking, again, why they are not covered by the Freedom of Information Act? Maybe the duplicitous and very expensive way they’re funded provides the answer.

Another point, one that I have raised before – dealt with in my January post, and also here – is the scandalous amount of this public funding that our ‘Welsh’ housing associations spend over the border. In the case of Cartrefi Cymunedol Gwynedd it was the insanity of giving its total maintenance contract to English firm Lovell which, from its Cheshire base, recruited its sub-contractors exclusively from north west England.

I’m sure Tai Ceredigion uses local firms to do its work, but I still question why a firm operating on Cardigan Bay should have external auditors based in Birmingham (Mazars LLP) and internal auditors in Hampshire (TIAA Ltd). Both may have offices in Cardiff, but neither is a Welsh company. There are genuine Welsh companies closer to and even in Ceredigion that could and should be doing this work that is paid for with Welsh public funding.

Tai Ceredigion auditors

‘Welsh’ Government funding should carry the stipulation that as much as possible of that funding remains in Wales. This can only be achieved if the funding reaches genuinely Welsh firms, not outside firms with an office in Wales funnelling profits back to HQ, or those seeking to capitalise on the public funding bonanza with a hastily set up ‘Welsh branch’ that is little more than a post-box and a telephone number.

Of course, it would be easy to argue that none of this really matters because all the funding comes, in one form or another, from London. But only part of the Housing Finance Grant comes directly from London, the rest is raised commercially, and the other funding streams – Social Housing Grant, Welsh Housing Quality Standard and ‘Dowry Gap’ funding – seem to be ‘Welsh’ Government initiatives.

Which is worrying, because it gives us a situation in many parts of Wales, perhaps especially in rural areas, where housing associations are on a treadmill of growth and expansion fuelled by this funding – yet there is often little or no local demand for more social housing.

Housing associations are perhaps the ultimate manifestation of the Third Sector, the shadow world that those buffoons down Cardiff docks want us to believe is an economy, but it’s all smoke and mirrors, all underpinned by public funding. And all unnecessary. As I shall now explain by delving a little more into the Public Policy Institute for Wales report I mentioned earlier.

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‘THE POTENTIAL OF THE PRIVATE RENTED SECTOR IN WALES’

Before diving into the report it might be worth just pausing to see what kind of an organisation the Institute is. It was formed in January last year to “provide the Welsh Government with authoritative independent analysis and advice.” If you look through the names to be found in ‘The Team’, ‘The Board of Governors’, and the ‘Executive Group’, you get the impression that the PPIW is very much a cross-border outfit, containing – on the Board of Governors – people who know Wales such as Gerry Holtham, along with people, such as Will Hutton, who may be very clever and a Newsnight regular but know little about our country. ‘The Team‘, presumably those running the PPIW day-to-day, is disappointingly top-heavy, to the point of capsizing, with apparatchiks and people from the Third Sector.

The Executive Group “is made up of representatives from the organisations that formed part of the consortium that collaborated in the development of the PPIW”. These are ‘our’ universities (including Liverpool but not Glyndŵr!) and Victoria Winkler of ‘Welsh’ Labour’s very own think-tank, the Bevan Foundation.

The report set out to answer three questions, found below.

PPIW report aims

Some Report Findings

The PPIW report confirms that the PRS is growing in every single local authority area, though predictably, Cardiff, with its vast student population and other young singles, outstrips all other areas. In fact, the report tells us that in Cardiff, “owner occupation has actually fallen compared to renting in both absolute and proportional terms”. Table 6 shows that 22.1% of Cardiff’s dwellings are privately rented. The next highest local authority area is Ceredigion with 17.5%, and then in third place comes Denbighshire with 16.5%.

PRS changes

The figures for both Cardiff and Ceredigion are influenced by the student presence while the ‘Rhyl factor’ explains the Denbighshire figure, correlated in Table 1, which tells us that Sir Dinbych lost 870 private households between 2001 and 2011 while the same period saw an increase of 1,468 in the PRS. Other areas saw a decline in the number of private households but nowhere was the fall as dramatic as in Denbighshire.

Staying with Table 6, in percentage and absolute terms Carmarthenshire saw the highest increase in private households due mainly to the saturation housing strategy devised by the Planning Inspectorate and eagerly implemented by those running the council. The same designed-to-attract-English-buyers process can also be observed at work in Powys. (N.B. A ‘household’ can be a person living alone or a family of 10.)

Table 9 tells us that rents in the PRS are always higher than the RSL sector though this varies from area to area. In Blaenau Gwent the average social rent is £61.68 per week, or 89% of the PRS, whereas in Wrecsam, Swansea and Cardiff the percentage drops to 67%, though the average PRS rent in Wrecsam is lower than the two southern cities.

Poor PRS

Of course there is a downside to this unplanned and largely unchecked growth in the PRS, especially in decaying coastal towns like Rhyl, and areas of our cities taken over by students. That downside is the breakdown of community life and an increase in various forms of criminality and anti-social behaviour.

It could even be argued that there is a case to be made for paying compensation to long-term residents of such neighbourhoods. Compensation to be paid by the ‘Welsh’ Government or the local authority, whoever was responsible for not guarding against such decline or refusing to implement the legislation that could have prevented it.

A Better Way

Happily, the report also makes clear that there are alternatives to endlessly pumping public money into secretive, unaccountable and amateurishly run housing associations, or otherwise allowing the growth of ghettoes of cross-border criminals and misfits housed by slum landlords. To avoid these outcomes the report draws our attention to institutional investment such as pension funds to provide rented and other property, coupled with more imaginative and varied housing options.

In the Appendix the report’s authors look at three examples in the south where the ‘Welsh’ Government is in partnership with the Principality Building Society in a venture called Tai Tirion (or Tirion Group Ltd, Co. No. 08891823) to build over a thousand new homes on brownfield sites in Cardiff, Newport and the Rhondda. Though that said, there is not a lot of progress being made. Not really surprising, seeing as the ‘Welsh’ Government is involved . . .

I say that not out of malice, it’s just the way things are. Institutional investors such as pension funds are viewed with suspicion by Statist ‘Welsh’ Labour. As the report puts it – refer to ‘three questions’ panel above – “the Minister confirmed that the emphasis of the project should be concentrated mainly on (i) and (ii)”.

PRS minister response

To remind you . . . Question iii reads, ‘If the PRS is to be a long term tenure of choice, whether it is likely to be possible to interest institutional money and professional management in the market (i.e. what are the barriers to large scale investment?).’

On reading that you can almost imagine a ‘Welsh’ Labour politician or apparatchik having an involuntary evacuation of the bowels . . . “‘institutional money’! . . . ‘professional management’! . . . people who might understand business! . . . what about our friends in the Third Sector, how are they to sustain their muesli-weaving, skinny latte lifestyles? . . . oh, no, we can’t have that!

So the ‘Welsh’ Government prefers to let the private rental sector grow in a reckless and uncontrolled manner through the activities of Buy to Let ‘investors’ and people who buy dilapidated hotels in Colwyn Bay to house Scouse junkies.

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CONCLUSION

It is surely obvious that if housing associations are the answer, then the question must have been, ‘What is the most expensive (to the public purse) and least efficient way of delivering rented social housing?’ In the hope of disguising this monumental error we are now encumbered with secretive, unaccountable money pits.

Which would be bad enough if they were at least spending the money on housing Welsh people, but due to the Englandandwales allocation system into which our housing associations are locked a Welsh family is all too likely to discover that the Family from Hell has been given the house next door . . . ‘Hell’ in this case will be Birmingham, or Stoke-on-Trent, or Sheffield, or . . .

Consequently, there is no justification for pouring any more money into housing associations. Especially given that the Conservative government in London is almost certainly planning to do away with them. Or does the ‘Welsh’ Government think this is a devolved matter? Maybe it is, but that won’t count for anything if Westminster forces change through by cutting the block grant. And further undermines the sector with selected benefit cuts.

So my advice to the ‘Welsh’ Government is this: realise that housing associations are an expensive failure. Then, get ahead of the curve by taking control of the social rented sector nationally and looking for the kind of investors mentioned in the Public Policy Institute for Wales report, pension funds and others looking for the kinds of large-scale investments that individual housing associations and single sites cannot provide.

To take advantage of this private funding, and to save the public purse a hell of a lot of money, you, the self-styled ‘Welsh Government’, need to put aside your congenital hostility to business and real money and, for a change, prioritise the best interests of the Welsh people. It’s what you were elected to do – remember?

END