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(Public Pack)Agenda Document for Public Accounts Committee, 02/03

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(Public Pack)Agenda Document for Public Accounts Committee, 02/03 ------------------------ Public Document Pack ------------------------ Agenda - Public Accounts Committee Meeting Venue: For further information contact: Committee Room 3 - Senedd Fay Bowen Meeting date: 2 March 2020 Committee Clerk Meeting time: 12.45 0300 200 6565 [email protected] ------ (The Committee agreed on 24 February 2020, a motion under Standing Order 17.42 to resolve to exclude the public from Item 1 of this meeting) (Private Pre-meeting) (12.45 - 13.00) 1 Scrutiny of Accounts 2018-19: Consideration of draft report (13.00 - 13.30) (Pages 1 - 52) PAC(5)-08-20 Paper 1 – Draft Report 2 Introductions, apologies, substitutions and declarations of interest (13.30) 3 Paper(s) to note (13.30) 3.1 Natural Resources Wales: Letter from Clare Pillman, Chief Executive and Accounting Officer, Natural Resources Wales (20 February 2020) (Pages 53 - 55) 3.2 Cardiff Airport: Letter from the Welsh Government (24 February 2020) (Pages 56 - 61) 4 Cardiff Airport: Evidence Session with Cardiff Airport (13.35 - 15.00) (Pages 62 - 127) Research Briefing PAC(5)-08-20 Paper 2 – A review of Cardiff Airport’s performance and prospects in the context of current UK regional airport economics (Report by Northpoint Aviation, Travel & Tourism Consultants) PAC(5)-08-20 Paper 3 - Cardiff Airport: current performance and business context (Report by Northpoint Aviation) Roger Lewis – Chairman, Cardiff Airport Deb Bowen Rees – Chief Executive Officer, Cardiff Airport Huw Lewis - Finance Director and Company Secretary Terry Morgan - Non-Executive Director, Cardiff Airport 5 Motion under Standing Order 17.42 to resolve to exclude the public from the meeting for the following business: (15.00) Item 6 6 Cardiff Airport: Consideration of evidence received (15.00 - 15.30) By virtue of paragraph(s) vi of Standing Order 17.42 Agenda Item 1 Document is Restricted Pack Page 1 Y Pwyllgor Cyfrifon Cyhoeddus / Public Accounts Committee PAC(5)-08-02 PTN1 Ein cyf/Our ref: CX2-030 Your Ref: Agenda Item 3.1 Ty Cambria / Cambria House 29 Heol Casnewydd / 29 Newport Road Caerdydd / Cardiff CF24 0TP / CF24 0TP Ebost/Email: [email protected] [email protected] Committee Chair Ffôn/Phone: Public Accounts Committee 0300 065 4453 [email protected] 20 February 2020 Dear Chair, Re: Natural Resources Wales progress Thank you for the letter from Darren Millar AM dated 31 January following NRW’s recent appearance at the Public Accounts Committee. I am pleased the committee recognises the progress we have made in addressing issues previously raised by Auditor General Wales. In your letter you asked for additional clarification relating to what mensuration data we hold and how we use it. Details of the methodology used by NRW to estimate the likely timber yields in coupes to be sold. We follow UK forest industry standard conventions for timber mensuration, and sell all produce by weight in tonnes. This approach ensures a standard methodology is understood by both customer and the forest grower, and the sale by weight ensures that all produce uplifted from the Welsh Government Woodland Estate (WGWE) is paid for by the custumer, to ensure we attain the market value at that time for all produce supplied. Whilst we transfer the risk to the customer of timber harvesting and obtaining the highest value products from each crop of trees sold, the sale by weight ensures that we obtain income from every tonne of timber produced, irrespective of the estimated measurement of timber to be derived from a site which is used at the sale point. Our current timber sale method is via open competition and thereby ensures we attain the highest current market value for the products sold at the time of sale. We use the industry measuring conventions as prescribed in Forest Mensuration, A handbook for practitioners (Second Edition 2006), Forestry Commission. This is the standard used in the UK and is the taught method for industry professionals. Our Timber Measurement Field Guide 2008 FC49 is an abridged version of this Handbook. We measure our clearfells using the Abbreviated Tariff AB6 method. Both Forestry England and Forestry and Land Scotland use the same AB6 method by default and also Tŷ Cambria • 29 Heol Casnewydd • Caerdydd • CF24 0TP Cambria House • 29 Newport Road • Cardiff • CF24 0TP Croesewir gohebiaeth yn y Gymraeg a’r Saesneg Pack Page 53 Correspondence welcomed in Welsh and English publish the measurement method in the sales particulars. This method gives a 95% confidence interval of +/-20% accuracy in volume and product assortment (p96). A B6 is one of the less accurate methods but is cheaper. The more variation in a parcel (species, age, yield class), the greater the chance of falling outside of the 95% confidence interval. A more expensive full tariff method will give a +/- 12% accuracy to 95% confidence. There is a slight variation in our approach to thinning measurement across NRW, but teams still use conventions as described in the Handbook. The reasons why the estimated timber yield specified in many Standing Sales+ contracts varied significantly from those achieved in practice (see paragraph 2.8 and Table 6 of the Supplementary Memorandum). Typically, timber chosen for standing sales plus contracts includes low value and poorer quality crops therefore the expense of tree measurement will have been less than for a higher value parcel of timber. This practice would further lower the confidence limits of accuracy. In respect of figures provided to Wales Audit Office on this subject in March 2019, the figures provided were a snapshot at that point in time and did not account for accruals within the finance system. Therefore, the anticipated volume and income for financial year 2019/20 were higher than the actual obtained during this current financial year. Only once the final settlement and despatch of timber from each contract is administered do we obtain a final figure to enable contract closure. This gives us assurance that we obtained the unit value of all timber sold for all timber harvested from a given site. The extent to which NRW’s approach to mensuration is industry standard, i.e. is the same methodology used by the Forestry Commission and Forestry and Land Scotland? As explained above, we use the same as both Forestry England and Forestry and Land Scotland. How is NRW doing to improve the quality of the mensuration data it holds. We have amended our new terms and conditions for timber sales contracts to offer an estimate of volume in a given stand of timber. The customer is responsible for satisfying themselves with regards to the quantity and quality of timber supplied, and so we transfer the risk to the customer, although we retain the assurance of being paid for every tonne of timber harvested from the WGWE. We have a dedicated all Wales team who undertake the timber measurement assessments and surveys, to ensure consistency of accuracy. Our all Wales team have already identified new technology and importantly some areas for improvement in respect of recording of data. Examples include sub compartment data base records and adoption of new technology such as measurement tree calipers. www.naturalresources.wales Pack Page 54 www.cyfoethnaturiol.cymru Page 2 of 3 In response to improving the timber mensuration and wider forest survey data, our All Wales survey team have undertaken a framework supplier tender for the provision of new survey technology and delivery of the timber mensuration demand on the WGWE. Without dismissing the long-standing traditional contract resource, the invitations to tender have been distributed wider to include the new technology such as light detection and ranging and satellite imagery. In the short term the intensity of timber measurement is now based on the predicted value of a given stand. The higher the value of timber the higher density of measurement of trees, and subsequent greater confidence in accuracy of measure. I hope this explanation is helpful and provides the necessary information you requested. Yours sincerely, Clare Pillman Prif Weithredwr, Cyfoeth Naturiol Cymru Chief Executive, Natural Resources Wales www.naturalresources.wales Pack Page 55 www.cyfoethnaturiol.cymru Page 3 of 3 Y Pwyllgor Cyfrifon Cyhoeddus / Public Accounts Committee PAC(5)-08-02 PTN2 AgendaGrwp yr Item Economi, 3.2 Sgiliau a Chyfoeth Naturiol Economy, Skills and Natural Resources Group Cyfarwyddwr Cyffredinol - Director General Nick Ramsay AM Chair – Public Accounts Committee National Assembly for Wales Cardiff Bay Cardiff CF99 1NA 24 February 2020 Dear Chair CARDIFF AIRPORT I am responding to your letter of 14 January in relation to the above. I understand you have kindly agreed to accept this response in lieu of receiving a separate evidence paper in advance of a further scrutiny session with Welsh Government officials on this subject, which is being arranged to take place in March. Firstly, I am sorry for any confusion caused by use of the “Commercial in Confidence” marking on my previous letter. While this is an appropriate precaution to take in relevant circumstances, we recognise much of the high level information contained in my previous letter is in the public domain in one form or another. While we were carrying forward work under that protected heading, I agree use of the Commercial in Confidence marking in that specific instance was unnecessary. Loan Facility As you know, at the end of 2019, the Minister for Economy and Transport agreed to provide an extended commercial loan facility to the airport of up to £21.2m. The loan refinancing will ensure Cardiff Airport (CIAL) is well placed to continue investing in areas like the airport buildings and infrastructure, its route development, and necessary upgrades to maintain regulatory compliance with changing standards in baggage screening and border security. For example, during 2022-23, CIAL will need to invest an estimated £5m to meet UK-wide regulatory change in the next generation of security screening.
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