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The Welsh Government has announced it will axe an industry body after a damning analysis from the auditor general for Wales uncovered accounting irregularities.

Economy secretary Rebecca Evans confirmed Industry Wales, which runs forums in the aerospace, technology, net zero and automotive sectors, will be dissolved next year.

The decision comes after Adrian Crompton, the auditor general, took the “highly unusual” step of disclaiming his opinion on Industry Wales’ 2023/24 accounts.

He warned of a breach of procurement rules and insufficient evidence for more than £1m in assets, including an £836,000 packing line that may have a “significantly impaired value”.

Writing to the Senedd’s public accounts committee earlier this year, the auditor general said: “The impact is so significant and pervasive… that I am unable to give an opinion at all.”

Mr Crompton noted a potential conflict of interest, saying the owner of the company awarded the packing line contract was a former director and senior adviser to Industry Wales. According to an audit report, the adviser was excluded from discussion of the decision.

‘Deplorable’

The auditor general’s findings were raised in the Senedd in March when former Tory group leader Andrew RT Davies described the situation as deplorable.

In response, First Minister Eluned Morgan told the chamber her understanding was the packing line was part of a rapid response to the pandemic. She said Industry Wales had implemented all the recommendations of the auditor general’s report.

But her economy secretary has now confirmed the firm – which is wholly owned by ministers – will be dissolved after March 2026 following a separate, government-commissioned review.

Ms Evans accepted the review’s findings in full, concluding “it is time for us to consider a different approach” in a written ministerial statement on October 2.

Industry Wales – which is the trading name of Sector Development Wales Partnership Ltd – has received about £10.6m from the public purse and paid out £1.1m in directors’ remuneration since being set up in 2013, according to its accounts.

Ms Evans wrote: “The economic and financial situation has changed so dramatically, the review concluded the status quo could not be maintained.”

‘Going forward’

She added: “The Welsh Government will, at the end of the current term of government agreement, remove itself as sole guarantor for Industry Wales and dissolve the company.”

Ms Evans stated the Welsh Government would work with the four industry forums to decide their future over the next six months. Options include transferring them to a new parent body, providing direct grant support or stopping funding if they are self-sufficient.

She said: “These specific plans are already under way… and we remain committed to receiving unfettered sectoral advice from membership organisations going forward.”

“I want to place on record my sincere thanks to Industry Wales, to the chair, Professor Keith Ridgway, and the forums and their respective boards and board chairs (past and present).

“I am very aware of the impact that this decision will have.

“We will work closely with Industry Wales, the forums and stakeholders to put in place the appropriate support, without limiting options for a future government.”

‘Clean bill of health’

Industry Wales pointed out that the minister’s statement made no connection between the decision to scrap the body and the auditor general’s concerns. The company added that it expects to receive a clean bill of health from Audit Wales on its latest set of accounts.

In a statement, the board said: “Since 2013, Industry Wales has worked closely with our forums – Aerospace Wales, the Welsh Automotive Forum, Technology Connected and, more recently, Net Zero Industry Wales – to deliver on our remit of supporting Welsh manufacturing and providing unfettered advice to government ministers.

“Together, we have helped showcase Welsh expertise, connect businesses to opportunities and strengthen supply chains at home and abroad.

“From mobilising PPE and ventilator supply chains during the Covid-19 pandemic, to supporting companies after the closure of Tata Steel in Port Talbot, to more recent work on apprenticeships, floating offshore wind and advanced nuclear technologies, Industry Wales has been central to delivering this impact.

“We thank everyone who has contributed to this work over the past 12 years – our staff, forum members, partners and board members past and present.”