Labour defiant on £9.9m grant for Leeds Arena

A FORMER Minister has denied that Labour acted improperly by approving a £9.9m grant for Leeds Arena against the will of a top civil servant.

The funding deal became the centre of controversy after it was revealed to have been one of five major spending decisions this year to which civil servants lodged formal objections.

The Permanent Secretary at the Department for Business, Simon Fraser, requested a letter of direction from former Business Minister Pat McFadden after disagreeing with his decision to allow regional development agency Yorkshire Forward to part-fund the arena.

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The Yorkshire Post has learnt that civil servants were not convinced the project justified having so much public money, rather than relying on private investment, and queried the value it would represent in terms of the number of jobs which would be created and the impact on the economy.

But former Yorkshire Minister Rosie Winterton, who was also responsible for regional economic development, has rejected suggestions by the new Government that Labour spending in the dying days before being thrown out of power was irresponsible.

She said: "Leeds Arena was supported by Yorkshire Forward and by the Conservative-Liberal Democrat Leeds Council as extremely important for the local economy, especially in light of the economic downturn.

"If Conservatives and Liberal Democrat Ministers are going to allow themselves to be dictated to by Whitehall civil servants – and give up the right to take decisions within the proper boundaries – it's going to be bad news for Yorkshire.

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"There is always the ability for Ministers to take decisions if they believe that it's the right thing for a local area. It would be very bad news if the Conservative and Liberal Democrat Government gave up the ability to take decisions in the best interests of an area."

The Department for Business, Innovation and Skills has said that Mr McFadden over-rode the civil service advice because of the "wider social and economic benefits" of the arena. It is expected to create 528 jobs, in construction and staff working there, and inject more than 25m into the local economy.

But the revelation that it required a Ministerial Direction – seen as a last resort for Ministers adamant to approve spending when civil servants disagree – has prompted fresh anger from MPs in South Yorkshire, who lobbied against the grant because of concerns the venture will have a negative impact on Sheffield Arena and the city's economy.

Sheffield South East MP Clive Betts said: "I think it's rather surprising it was deemed to be so important, but Ministers have to come to a view of whether they think spending was appropriate in all circumstances.

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"I have a difference of opinion to Yorkshire Forward, who I think generally do an excellent job for the region. I think they got it wrong on this one and I think ministers got it wrong on this one, but there's nothing we can do about it now."

Questions were raised over recent projects when Chief Secretary to the Treasury David Laws warned that some recent Labour spending "may not represent good value for money" and said in some cases "decisions seem to have been made against accounting officers' advice".

Comment: Page 10.