Statement on the National Botanic Garden of Wales

The Minister for Culture, Welsh Language and Sport (Alun Pugh): With your permission Llywydd, I wish to make a statement on Middleton, the National Botanic Garden of Wales. There has been a great deal of public comment about the National Botanic Garden of Wales over recent months, and some of it has been inaccurate and misinformed. I would, therefore, like to set the record straight today. Middleton is an independent organisation, which is managed by a group of trustees, who are independent of Government. By way of contrast, Kew Gardens is a body equivalent to an Assembly sponsored public body, with trustees appointed by Government, and working to a Government remit. Middleton was created by the trustees, as part of a successful bid to the Millennium Commission. Crucial to its bid was the clear understanding that following an initial inject of capital monies, there would be no further recourse to the public purse, because revenue from admission and other sources, would cover operating costs. It was always planned to break even by 2003.

If revenue had matched the forecast in that business plan, we would not be in this situation today. Visitor numbers have declined every year since Middleton opened. Visitor numbers over the peak summer period in the garden’s four-year history are as follows: 144,000, 129,000, 95,000 and 90,000. The collapse in visitor numbers is the root cause behind the trust’s financial crisis. Bills have been unpaid for months, there is a huge overdraft, staff have been made redundant, and there are millions of pounds owing in long-term liabilities. That is the financial reality. A comprehensive rescue package, taking the garden away from the independent trustees, and into public ownership, would cost this Assembly, and therefore the Welsh taxpayer, at least £20 million.

Over the past 15 months, the Welsh Assembly Government has worked closely and determinedly with the trustees of Middleton, and other key public sector partners, in a concerted effort to secure a long-term, sustainable future for the garden. We have backed that with a substantial injection of public funds to the trust. Since September 2002, the Welsh Assembly Government has invested more than £1.6 million to allow the trust to address visitor numbers and its financial circumstances. That funding demonstrated our commitment to ensuring that the trustees had every opportunity to secure the garden’s future. Unfortunately, despite that significant public injection of funding, Middleton still finds itself in financial crisis. The sad fact is that it is no closer to securing a long-term and sustainable solution to its future than when the trustees first approached the Welsh Assembly Government for support in the summer of 2002.

On 2 December, the trustees presented their recovery strategy to me. In doing so, they acknowledged that they had not been successful in developing the organisation in key areas. In particular, they now acknowledge that they should have focused resources towards the commercial reality of increasing visitor numbers, by enhancing the facilities that are provided for general visitors, as well as the facilities for those with a keen interest in botany.

The central feature of the recovery strategy is essentially the same as that of the previous business plan, which was submitted to the Welsh Assembly Government in August 2003. However, the new plan aims to achieve the same outcome at a lower cost. The key requirement is that the Welsh Assembly Government provide a multi-million-pound ongoing revenue subsidy. In the short term, in order to stabilise the organisation, the trustees are seeking an underwriting commitment from the Welsh Assembly Government of over £3 million—£1.132 million for the remainder of this financial year and all of next year, and a further £1.9 million of public money for the following three-year period. The trustees also aim to secure funding from other sources, which would, if achieved, have the effect of reducing the amount of funding required from the Welsh Assembly Government. However, these other organisations have given no commitments, and therefore there is no certainty about the deliverability of the trustees’ plans.

The strategy also explores many options for rationalising the organisational structure at Middleton, which include the possibility of entering into a management contract with a private sector partner that would be responsible for the garden’s commercial operations. A commercially based operator might bring better prospects of increasing income from visitors—it could hardly do worse. However, there is no escaping the fact that organisational change will not in itself resolve the immediate and pressing debt situation, which is currently in the region of £2.8 million.

On marketing, the revised proposals are in some ways more realistic in terms of broadening the target market for Middleton, but an effective marketing campaign would have a significant cost attached to it. The Welsh Assembly Government has already provided over £300,000 to support dedicated marketing staff and marketing activities over the past 15 months and, despite this additional money from public funds, visitor numbers have continued to decline. The trustees have acknowledged that during this time they failed to target new markets or to work effectively in partnership with other agencies. Therefore, it is difficult to see how the additional public funding proposed in the strategy would have a more positive impact on visitor numbers in the future.

To develop the product, the trustees have proposed a £3 million capital investment programme. They forecast that this investment would lead to an increase in visitor numbers from the current 120,000 a year to 233,000 by 2008-09. However, this is at odds with the previous business plan, in which it was argued that a capital investment programme of £8 million would be needed to generate these visitor numbers. Both plans are based on the garden’s own research and, given the widely different scale of the proposed investments, I remain to be convinced that the reduced level of investment that is proposed in the recovery strategy will deliver the planned increase in visitor numbers.

In terms of developing new partnerships and undertaking capital investment, the trustees have predicated the recovery strategy on the disposal of land and a number of buildings that they own as a charitable trust. If they were able to do this—and it is a big ‘if’—and if they could arrest the decline in visitor numbers, they might be in a position to clear some of the debts that are currently pressing for payment. However, this would not be a straightforward process, and it would require a number of agreements and permissions, including planning approvals. It is by no means certain that the trustees would be able to secure these approvals or realise the sums that are suggested in the recovery strategy. There is also a timing issue about securing financial support in the interim period, and I understand that the banks have ruled out increasing the trust’s overdraft limit.

We have listened to the trustees and given their proposals careful consideration, but, for the reasons that I have outlined today, the Welsh Assembly Government has decided not to provide the cash guarantees that the trustees have requested. I have written today to the chair of the board of trustees, informing him of this outcome and explaining the reasons for our decision in detail. In view of the widespread interest of Members in this matter I have placed a copy of my letter in the Assembly Library. This will be disappointing news for the trustees, but I must make clear the Assembly Government’s continuing commitment to helping secure the long-term future of the garden as a quality attraction that will draw visitors to the area and generate employment. Several potential investors have already expressed interest, and we stand ready, with our public sector partners, to work with any organisation that has viable proposals for the garden.