Friday, 22 April 2011

New Developments at the Council

Whilst I was putting together my list of things that I found as lead councillor that the previous Labour administration did that I thought were possibly illegal, were at a minimum iffy and some of them clearly had the smell of dubious practice about them, I had a dig through my old emails from the good old days when I used to get told what was going on.

There was one interesting one detailing the setting up of an independent investigation that the new administration demanded after finding serious discrepancies in the allocation and spending of section 106 receipts by Labour.

I have a very simple question. Where is this report? The terms of reference were sent on the 4th February. It was due to report the first week of March. It's been awfully quiet hasn't it.

Why? Is someone trying to protect the previous administration by withholding it until after the election so that, as Labour hope, it can be quietly buried with a nothing to see here and secrecy? Does it embarrass council officers who would prefer to keep the whole matter quiet?

I have always suspected that Labour used this money as a helpful source of cash to balance their notoriously piss-poor administration where massive variances to the published budget were the order of the day and money had to be sloshed around from one department to another because they just could help overspending at every opportunity.

Now we know officer knew something was wrong because there had already been a report about how they administered Section 106 money in March 2009 which found one Critical and two Essential management actions required because to be honest the system in place was a complete and utter shambles. It was also practically impossible to work out where the money was being spend. The Parks department at least kept a spreadsheet but even that showed money being spend on legally dubious activities like fixing the roof of the Hexagon. Section 106 money cannot be used for maintenance, it has to be spent on capital programmes linked to the development.

An internal investigation was meant to get to the bottom of things, but if anything it threw up even more questions. The figures still didn't add up. Section 106 cash was being allocated to projects that it wasn't intended for and decision book and cabinet reports detailing where the money was going to be spent were overridden or it would seem deliberately ignored. If the opposition are scrutinising decisions and reports in the belief that they were correct only to find later that in some cases the money was being spend elsewhere isn't that maladministration?

The money was instead moved around in a way that meant that it was not practically possible to audit the spend and hypothecate it to the receipt. Education didn't even keep track of the money and it looks like £0.5 million allocated to education use disappeared into Labour's pixie pot of gold and may not have been used for the purpose it was intended.

And what plan did they come up with to "correct" these little accidents... reissue the audited accounts with corrections!

A cunning plan when you are in control of the council and the opposition don't have full access to information. However, slightly prone to going tits up if you ever lost control of it. I'm beginning to think that why Labour never wanted to form a coalition with the Lib Dems - they had far too much to hide.
So what do you do when faced with a denial that there is something that looks dodgy going on? Correct at the back, good to see you have been paying attentioon - commission an independent report. So the new administration did and asked Wokingham Borough Council to do the work. I have a copy of the Terms of Reference.
Terms of Reference
1. To note the report of the May 2009 carried out by the Reading Borough Council’s Internal audit section a copy of which is annexed in Schedule 1
2. To note the briefing paper entitled Use of Section 106’s produced by ***********, **************** which is annexed in Schedule 2

3. To note the report by ******************** contained in Schedule 3

4. To establish and thereafter review the current practice regarding how section 106 receipts are assigned to, and spend approval obtained for, individual projects and how this corresponds with the Council’s Capital Programme and spending priorities. This should also include a comparison between the purpose of S106 and how it is spent. The review should consider how the Council’s year-end closing processes could be enhanced to optimise the use of S106s and ensure compliance and transparency, whilst providing assurance to councillors and services that local amenities that need to be improved because of developments will get improved.

In particular, the review should:
  1. Investigate difference between Decision Book and Cabinet Report spend approvals, and actual spend. Please find examples in Schedule 4.
  2. Investigate the issue of the Multi Use Games Area (Muga). This should include consideration of:
    • Planning Report and unilateral agreement 
    • Cabinet reports re spend approval 
    • Actual funding by allocation of Section 106 receipts
  3. Investigate the mismatch between published, planned spends by the Parks Service and the final allocation of relevant S106 receipts to other, less local schemes.
  4. To review and make recommendations regarding the above procedure
5. Request a legal view on the appropriateness of use of Section 106 receipts for "maintenance" of community facilities such as leisure venues and educational buildings. Please find examples in Schedule 5

6. Request a legal view on the legality or otherwise of correcting errors in the allocation of S106 receipts in the Council’s Accounts.

7. Request a legal view on the current methods used to allocate spend. This may require a number of schemes to be identified or random sampling to be undertaken

8. To make recommendations for implementing future processes if and where appropriate.
It is the report based on these terms of reference that has mysteriously gone quiet, conveniently just before the local elections. If, as I suspect is the case. the council has the report they should publish it now. After all the report was meant to be delivered over 6 weeks ago and it was budgeted as being 14 days work.

Unless it is made public, some may start suspecting a cover up... to save either officer embarrasment or Labour's . Oh, and before Labour go trying to gag me by threatening me with the Standards Board (again) over compromising officers inpartiality, I haven't named anyone so if anyone is feeling hot and bothered perhaps that's a good thing. And if Labour don't like me stating that there are a small number of officers acting against the interests of the administration perhaps Councillor Orton would like to name the individual who gave him a copy of a draft internal options paper and I'll happily withdraw that comment.

The more you look at how Labour ran RBC either it was a totally hands off council with the officers doing as they pleased or fiscally mismanaged. There are instances where events seem to back up both options as being eminently plausible. Take your pick. you have a 50:50 chance of being right.

And as for the clean bill of health Labour keep claiming from the auditors... the accounts wouldn't need to be rewritten if the auditors scrutinised to the level required to uncover this sort of thing. They do little more than check the columns add up.

Audits don't uncover things unless they know what they are looking for. Enron got a clean bill of health from their auditors... and Harringay was passed as "Good" wasn't it Mr. Ruhemann?

1 comment:

Jonathan said...

I am an auditor, and the approach I would take is:

Get a list of the S106 payments for the period you want to look at.
Ask what, if anything it has been spent on.

For example, in an earlier post, you gave the example of the development at Bugs Bottom. Either that S106 money is still sitting in a bank account, it has been spent on the new primary shool, or it isn't there any more. If it isn't there any more, it has been transferred to the general (unrestricted) fund, which should not happen. Trying to trace precisely where in the general fund it has been spent is pointless and probably not possible to do.