Question
All of us in public life share a common duty to protect our local taxpayer’s interest which is critical for sound financial management and key to ensuring that every pound spent by local government is used to support the communities they serve.
At Exec I asked to see the business case for the purchase of the care home on Barkham Road including all the costs incurred by the Borough Council.
The reply I was given stated as the Borough Council had signed a non-disclosure agreement I could not have that information.
There are councils which have got into serious financial difficulties over external investment and have effectively gone bankrupt.
Keeping a tight rein on such spending would appear to be right and proper hence my interest in all external investment not just this one.
My question is how does this council with due diligence manage its checks and balances on investments such as this to ensure the Councils are properly protected.
Minutes:
Question:
All of us in public life share a common duty to protect our local taxpayer’s interest which is critical for sound financial management and key to ensuring that every pound spent by local government is used to support the communities they serve.
At Exec I asked to see the business case for the purchase of the care home on Barkham Road including all the costs incurred by the Borough Council.
The reply I was given stated as the Borough Council had signed a non-disclosure agreement I could not have that information.
There are councils which have got into serious financial difficulties over external investment and have effectively gone bankrupt.
Keeping a tight rein on such spending would appear to be right and proper hence my interest in all external investment not just this one.
My question is how does this Council with due diligence manage its checks and balances on investments such as this to ensure the Councils are properly protected.
Answer:
Executive and Council prescribed the criteria and process, including those that must be involved in decision-making, for the use of the Property Investment Fund, known latterly as the Community Investment Fund, for acquisitions made within this programme. In all cases external professional expertise has also been used to inform the decision and the strength of Investment. This supplements the opinion of internal subject matter experts.
Performance is reported publicly through O&S performance reporting, quarterly on the Council Website and at high level through Revenue Monitoring and Capital Monitoring (e.g. an exception to expected delivery is a budget variance). Both Internal Audit and External Audit have reviewed our activity and have provided strong assurances on our approach and practices, including compliance with the arrangements approved by Executive and Council. Furthermore, there has been specific scrutiny by O&S on the investment activity.
Given the commercially sensitive nature of the negotiations on these acquisitions, at times an (often temporary) non-disclosure requirement is in place, to enable these negotiations to conclude in a timely and commercially sensitive way and ensure they represent best value to the Council. A non-disclosure agreement is currently in place with regards to the care home on Barkham Road. The purchase price for the home will become publicly available following the sale, which is expected to complete in September.
Meanwhile, I understand that the Executive Director of Adults, Children and Health has offered to talk you through the Business Case, including the cost of acquisition but this would obviously need to protect the current commercial sensitivities.
Supplementary Question:
The LGA commented on Woking Borough Council’s financial position with debts of £1.8 billion and rising. The LGA went on to say that the investments failed to deliver returns, resulting in unaffordable borrowing, inadequate repayment plans and high value irrecoverable loans. The LGA also said that Local Authorities must not forget their primary purpose is regeneration, for property development it is not. The skills needed by Local Government Leaders must match the challenges and expectations of the public, not just the skills and professional capabilities of the officers but also the skills of elected Members to offer challenge and to understand risk. The Chartered Institute of Public Finance Accountability point out in their lessons learnt from reporting previous Section 114 notices that if Members are not informed enough to make decisions and challenge effectively they are more likely to take easy routes. Members need to be engaged and financially literate to understand all aspects of the plans and issues that come before them. If there is no challenge, then Members may not recognise how serious the situation is.
My question is, how can this be achieved when elected Members are asking questions that challenge decisions are denied requested information? I must also point out that as elected Members are not to be trusted, it would appear, is this approach a train wreck waiting to happen?
Supplementary Answer:
Thank you Gary, I will turn around and say that I do expect that this requires a further written answer, but I will make a comment. The question challenges the precept that you were informed that the information was subject to a non-disclosure arrangement, that an offer was made for you to discuss it. So I would say that you have had the opportunity to challenge the purchase and to ask questions about it, but that it can’t be publicly declared at the moment.
Written Supplementary Answer:
The constitution sets out the formal governance and decision-making arrangements, which as in the case of the care home, has been followed thoroughly and included detailed reports to advise and assist the right decision. Any variances in the delivery of that decision would again be subject to the appropriate governance and decision making, including where appropriate through the Committee system.
Outside of formal arrangements, officers will meet relevant members to assist with any further detail or questions they may have – as was offered in this case. As with all commercial activity across all sectors, there will be times where detail cannot be shared more widely.
You will be aware that the Council has over a period of time sensibly and successfully invested in Borough, including the Town Centre, Housing and Leisure facilities. Performance on these investments is included in the Treasury Management reports that are reported through to Council (and as part of the Treasury Management Strategy agreed by council annually).