the senedd in cardiff bay
The Senedd in Cardiff Bay Credit: Senedd Cymru / Welsh Parliament

Natural Resources Wales is not out of the woods after making £10m cuts, slashing 250 jobs and receiving a £19m loan to cover an unexpected tax bill, a committee heard.

Llŷr Gruffydd, who chairs the Senedd’s climate committee, warned Natural Resources Wales (NRW) has been in a constant state of evolution and flux for many, many years.

David Henshaw, who chairs the board, said: “We can’t carry on as we are,” with NRW having agreed a target of cutting £10.9m from its budget by April 1.

He told Senedd members NRW’s massively committed workforce has found the “case for change” process really tough, with 256 posts removed and vacancies unfilled.

But he stressed: “Our duty is to face the challenge and actually deal with it.”

‘Heavy heart’

Appearing before the committee for scrutiny of NRW’s 2023/24 annual report on March 12, Sir David warned: “It’s going to be a rough old 12 months or so.”

Ceri Davies, acting chief executive, described NRW as being at a pivotal point, with a renewed focus on climate and nature.

She told the committee NRW has been trying to focus more on areas where it is uniquely best placed to deliver such as flood risk, biodiversity, water quality and regulatory work.

“It’s with a heavy heart that we give up some things,” she said.

Ms Davies added that NRW implemented a recruitment freeze, to minimise redundancies as far as possible, which has impacted on current staff.

“But we’re coming out of that now,” she said. “We’re supporting our staff through that and … we will be very shortly releasing opportunities for us to reinvest and to take on new staff.”

‘Road to recovery’

The Conservatives’ Janet Finch-Saunders questioned why NRW has an interim chief executive and a chief executive, asking how long the situation will continue.

Sir David replied that chief executive Clare Pillman has been off sick, saying: “She’s on the road to recovery, I think, so that’s why Ceri has been wonderfully acting up for us.”

Ms Davies has been acting up in the £150,000-a-year role since at least November, according to board papers.

Asked about funding in 2025/26, finance director Rachael Cunningham said NRW will have a total forecast budget of £298.3m – representing an annual increase of about £32.5m.

Carolyn Thomas, who chairs the petitions committee, raised public concern about NRW’s plans for its Nant yr Arian, Coed y Brenin and Ynyslas visitor centres.

‘Big lossmaker’

Her Labour colleague Julie Morgan said the visitor centres are “much more than just a cafe”.

Sir David stressed: “These forests and places are not being closed, let’s be clear … what’s been looked at is the closure of cafes and shops which cost about £1m a year.”

He added: “We weren’t doing massive business in these shops and cafes, they were a big lossmaker … given the challenges of the budget,  we had to look very seriously at it.”

On a 6% cut to enforcement, Ms Davies explained NRW has instead prioritised prevention. “When we’re in the enforcement territory, the damage has already been done,” she said.

She told the committee NRW will continue to take action on significant offences as a deterrent, with a 30% increase in enforcement in 2023/24.

‘£19m tax bill’

Pressed about the Welsh Government having to cover an estimated £19m tax bill for NRW due to off-payroll working, Sir David said a long list of public bodies face a similar situation.

“It’s an issue which has been very difficult for us,” said Sir David, a former chief executive at Liverpool Council. “And there are some questions we need to ask ourselves.”

He added: “Should we have been more aware earlier? Probably, yes. But actually would it have made much difference…? Probably not. We’ve made clear that in terms of employment now, we have none of the issues … so that’s been settled.”

Ms Cunningham declined to provide detail on the extent of liability accepted by NRW following February’s board meeting “because that’s in the hands of HMRC”.

But she suggested it is in the region of the £19m paid on account by ministers. She said NRW will see a budget reduction in future years to repay the loan over a decade.