Welsh Office 'loses track' of pounds 209m: Missing records lead to accounts being qualified for fifth year. Chris Blackhurst reports

SLOPPY book-keeping has led the Welsh Office and highway authorities in Wales to lose track of pounds 209m of public money.

The money was supposed to have been paid by the Government via the Welsh Office for road improvements. But the Welsh Office and local authorities are unable to produce documents showing where it went.

As a result, the Welsh Office's accounts have been qualified for the fifth year in succession. The accounts published today by the National Audit Office reveal that last year records could not be found for pounds 157m. This year, that total has risen to pounds 209m.

In his conclusion, Sir John Bourn, the Comptroller and Auditor General, writes that lack of records means there 'is material uncertainty' as to the Government's total spending in Wales. 'Accordingly, I have again considered it necessary to qualify my opinion in respect of this expenditure.'

After trying to find records for pounds 37m, officials at the Welsh Office, headed by John Redwood, the Secretary of State, told Sir John they 'cannot be located without extensive additional effort'. They concluded it would not be 'cost effective' to pursue the matter any further.

Inadequate documentation was to blame for the Welsh Office making incorrect payments to Training and Enterprise Councils of pounds 5.96m. The Welsh Office, writes Sir John, also miscalculated the amounts due to local authorities to compensate them for reducing the community charge. 'This resulted in erroneous payments made in March 1993 to four authorities totalling some pounds 963,000.'

This is the third embarrassment to hit the Welsh Office recently. Its handling of the Welsh Development Agency and the Development Board of Rural Wales provoked critical NAO and Commons Public Accounts Committee reports.

Alan Williams, MP for Swansea West and a member of the PAC, indicated that he would be asking the committee to look into this latest episode. He described as 'misleading' an explanation from a Welsh Office spokesman that qualification of the accounts because of missing documents was 'a technical accounting matter'.

The spokesman said there was no suggestion that the funds had been misappropriated. Mr Williams maintained that without the records it was impossible to know if the money had been used properly.

Rhodri Morgan, MP for Cardiff West, said the accounts and Mr Redwood's decision not to trace records for pounds 37m, 'blow sky high the Tories' reputation for sound finances'. Their move, he said, was 'a terrifying commentary on Mr Redwood's attitude towards taxpayer's money and to Wales'.

Mr Morgan claimed that the accounts had been the subject of six weeks of negotiations between the Welsh Office and the NAO. Those discussions 'exposed the inadequacy of a system where a Parliamentary watchdog wants to qualify a set of accounts but also has to abide by the convention that they must be agreed with the relevant department'.

He would be writing to Robert Sheldon, chairman of the PAC, to ask him 'to consider the pros and cons of asking the NAO to produce reports that were not in the technical sense 'agreed'. Sometimes it is vital we get to hear the unvarnished truth.'

It was pressure from the Welsh Office, he claimed, that led to the insertion of a paragraph in the report saying record-keeping had improved. These 'continuing efforts', writes Sir John, 'should ensure that advances are adequately controlled and accounted for promptly'.

A spokesman for the NAO said convention dictated that reports were agreed in advance with the department concerned. He could not comment on Mr Morgan's specific allegations.