At the meeting of the Welsh Affairs Committee on 22 March 1999 Mr Chris Ruane MP asked me if I had seen a letter from Mr Mark Lewis to Mr E Lake dated 7 June 1995 referring to a potential shortfall of£2.5 million in the funding of the 1994-95 capital programme.

  I said that as part of my investigations I had come across several memos between the two individuals regarding financing issues. Paragraph 84 of my public interest report refers to a memo dated 7 June 1995 in which Mr Lewis raises concerns about the financing position of the 1995-96 capital programme.

  I informed the Committee that I had questioned Mr Lewis in detail about this memo. He told me that he did not have any specific concerns about the availability of finance and had never identified a funding problem on tourism schemes that would have prompted him to report independently to members in line with his statutory duties.

  Mr Lewis said that the issues in the memo relating to the 1994-95 capital acounts had been resolved before the accounts had been closed. He received a memo dated 21 August 1995 from Mr Lake, that identified additional grant funding. In a memo to Mr Lake dated 31 August 1995, Mr Lewis acknowledges receipt of additional information relating to grant receipts from the Welsh Development Agency and European Regional Fund.

  Mr Lewis' memo of 31 August states "I have now amended the Capital Accounts to reflect these sums and in addition have provided additional revenue resources of the order of £600,000 to balance off the shortfall of capital financing for the 1994-95 financial year. This now brings us to a position where the capital accounts are balanced and all the expenditure has been financed."

  The memo also raises the issue of capital debtors and urges that outstanding sums be actively pursued. When questioned Mr Lewis informed me that this reference related to cash flow implications and the need to submit claims for grant income already accrued in the accounts.

  I also questioned Mr Lake separately about Mr Lewis' memo regarding the financing of the 1994-95 capital programme. He informed me that these issues had been resolved before closure of the accounts and he referred me to his memo of 21 August 1995.

  It should also be noted that in 1994-95, Rhuddlan had balances of useable capital receipts, provisions and reserves of over £1 million which could have been called upon to help fund the capital programme if required.

  I hope that the above provides a fuller answer to Mr Ruane's question.

25 March 1999