Surprise, surprise: the business people running Local Enterprise Partnerships are not attracting funding – from business people!

As Owl has been saying for YEARS – THESE EMPERORS HAVE NO CLOTHES!!!!! Neither do they have transparency or accountability.

It’s verging on the corrupt, definitely a conflict of interest and is certainly unethical – it means a very, very few business people, taking no risks for themselves or their businesses, divvying up OUR money for their own pet projects, with almost no oversight from the councils they have robbed of funds and no loss for them if projects fail or over-run in time or cost.

A national scandal.

“Private sector firms are not matching public sector funding for local regeneration, senior civil servants have admitted.

Two senior civil servants at the Ministry of Housing, Communities and Local Government told MPs on Parliament’s Public Accounts Committee (PAC) that cash from the EU, public sector and higher education are still the main sources for funding regional development projects.

The department’s permanent secretary Melanie Dawes and director general Simon Ridley said match funding for the £9.1bn Local Growth Fund is largely dependent on match funding from councils and other public bodies.

Ridley also admitted there were still challenges over transparency and the boundaries of some Local Enterprise Partnerships (LEPs).

The LEPs were set up following the abolition of regional development agencies with the idea that they would be a partnership between business and local government – with an expectation that firms would help funding regional regeneration.

Ridley told the committee that the main private sector input into the LEPs is the time and expertise of board members who work for free.

Committee member Anne Marie Morris said: “Clearly, you are having the private sector involved, so how come you haven’t got a significant financial commitment from them?”

Ridley responded: “The capacity funding we give requires match from the LEP in different ways.

“A large number of business people on the boards do it without renumeration. A lot of the capacity support around the accountable body that the local authority provides is paid for by the LEP.

“Our core expectation was to set up partnerships between the private sector and local government to think about local area development.

“Some of those funding streams are matched by private sector funding schemes.”

Committee chair Meg Hillier asked if developers and construction firms were giving over and above Section 106 contributions to enable projects.

She said: “There is a danger that without having any skin in the game, businesses can walk away and local taxpayers end up picking up the bill.”

Ridley replied: “What the LEP is seeking to do is bring forward projects in the local area that wouldn’t otherwise be coming forward.

“They are often funded by more than one funding stream from the public sector.”

The committee also challenged the pair over a claim that LEPs tended to go to the top-five local employers and as a result, other firms were being left out of key decisions.

Oxford University has become a major decision-maker for its LEP, the committee heard.

Committee member Layla Moran asked: “How do we know that everyone who is a stakeholder in this money is actually involved in the decision?”

Hillier also questioned if the LEPs were accountable, citing Oxfordshire, where meetings were not being held in public.

Dawes said the use of scores in the LEPs annual performance review were conditional for funding being released and this had impacted on responses.

She said: “The real test is how it feels for local communities and I think that’s something that’s very difficult for us to judge in central government. We are on a bit of a journey here. It’s going to take a while.”

Ridley said local authorities had a crucial role in oversight, specifically through Section 151 officers who are ideally placed to deal with complaints.

He said: “All LEPs have got their complaints procedures. We have a clearer role realisation with the accountable body and the 151 officer, so they [the public] might write to them.

“The section 151 officer does have to get all the information that goes to the LEP board. I can’t personally here guarantee that absolutely all of that is in front of every scrutiny committee.”

Dawes confirmed the department has no metrics for assessing complaints being made about the LEPs.

MPs also raised concern about territorial battles between LEPs and combined authorities.

Decisions have still yet to be made about the boundaries in nine LEPs.

Dawes told the committee: “There are legitimate reasons why these geography questions are there. We are working actively with them.

“What ministers will have to work through is whether to impose a decision centrally.

“That would be a matter of last resort.”

Businesses failing on LEP match funding, MPs told

Government lacks transparency over local authority governance

“There is a complete lack of transparency over the government’s handling of local authorities with governance issues, MPs have warned.

A damning report from the Public Accounts Committee has called on the government to strengthen audit and governance of the “complex and fast-moving” environment that local authorities find themselves in.

The cross-party group of MPs warned that local authorities are now pursuing shared services and taking on commercial risk, but are simultaneously dealing with a “significant” reduction in resources.

The report noted that while some authorities have robust arrangements, others are under strain and have “audit committees that do not provide sufficient assurance, ineffective internal audit, weak arrangements for the management of risk in local authorities’ commercial investments, and inadequate oversight and scrutiny”.

The Ministry of Housing, Communities & Local Government’s oversight of local authority governance has until now been “reactive and ill-informed”, the report said. However, it noted that the department has now committed to improving its oversight.

MPs said that MHCLG lacks reliable information on key governance risks and relies on weak sources of information, meaning it has “no way of pinpointing at-risk councils”. They also said that the department is not focused on long-term risks to council finances.

“There is a complete lack of transparency over both the department’s informal interventions in local authorities with financial or governance problems and the results of its formal interventions,” the PAC said.

The report claimed that taxpayers have a right to know if there are problems with their councils’ finances. It cited the demise of Northamptonshire County Council, which it said was an ‘open secret’ but only for those in the sector.

PAC chair Meg Hillier said: “On the rare occasions a local authority fails, the impact on local citizens is severe. Residents facing decimated services get no comfort from being told that their council’s dire finances were “an open secret”.

“The government needs to recognise the extra pressure that squeezed budgets and increased commercial risks are having on local government and make sure it is monitoring the risks effectively so that it can be alert to the impact of changes on local government.”

MHCLG has been contacted for a response.”

Appearing before the PAC in March:

https://www.publicfinance.co.uk/news/2019/03/whiteman-local-government-finance-needs-be-more-transparent

CIPFA chief executive Rob Whiteman called for an improvement in local government audit.”

https://www.publicfinance.co.uk/news/2019/05/mhclg-oversight-local-authority-governance-reactive-and-ill-informed

Local Enterprise Partnerships being better held to account? Not really

No evidence so far … Although LEP control is mostly with DCC, EDDC has an LEP role. Now we have a different councillor mix at EDDC we might get some answers about our LEP’s finances …..

“The National Audit Office has reported a significant improvement in the financial transparency of England’s Local Enterprise Partnerships (LEPs) after section 151 officers were given extra responsibility for ensuring that key data is publicly available.

But the public-spending watchdog has warned that the Ministry of Housing, Communities and Local Government’s unwillingness to evaluate the impact of the £9bn in Growth Deal funding channelled through LEPs since 2015 means it is unable to learn lessons on what has worked well. A total of £12 bn is committed to the fund by 2021.

Set up to drive economic growth as part of coalition government reforms introduced from 2011, there are now 38 LEPs in England, tasked with bringing together business and political leaders in a patchwork of sub-regional areas.

In its first report on their progress for three years, the NAO found a leap in the level of openness displayed by the partnerships, following concerns about financial transparency levels explored by the Ney Review, in 2017.

The NAO said that in 2016 only 13% of LEPs published financial data such as salaries on their websites, while only a third published their annual reports online.

As of February this year, 84% of LEPs were publishing their annual reports online and all gave financial information on the projects they funded.

The NAO said the improvements had followed an MHCLG and CIPFA drive to “set out stronger expectations” of the role of section 151 officers in assuring good financial governance of LEPs.

Section 151s now sign off monitoring information reported to the department.

Sign-off is also required for local assurance frameworks that confirm a LEP’s governance arrangements.

The drive came after the Ney Review’s 17 recommendations and is one of a series of initiatives addressing its findings.

Despite the improvements in transparency, the NAO report said MHCLG’s ability to make the most of opportunities presented by the UK Shared Prosperity Fund – created to replace EU economic development funding post-Brexit – would be hampered by its lack of understanding of LEPs success with the Growth Deals.

“We have previously reported that the department opted not to set quantifiable objectives for Growth Deals, including, for example, the number of jobs created,” it said.

“The absence of robust evaluation means the department and LEPs are less able to learn from what has worked well and ensure that this is reflected in the design or objectives of the new UK Shared Prosperity Fund.”

The report observed that that there was an “inherent tension” in the government’s need to develop a system of governance for a finance model that devolved funding and new responsibilities to ad-hoc business-led partnerships.

“While the assurance framework is stronger, backed up by checks on compliance, it is not proven yet whether these measures will be effective in detecting and responding to governance failures over significant sums of public money,” it said.

“The department’s accounting officer is accountable for the Local Growth Fund delivered through LEPs.

“However, the department has made no effort to evaluate the value for money of nearly £12bn in public funding, nor does it have robust plans to do so.

“The department needs a grip on how effectively these funds are used. It needs to act if it wants to have any hope of learning the lessons of what works locally for future interventions in local growth.”

Public Accounts Committee chair Meg Hillier said MHCLG had to ensure that huge sums of public funding were not wasted as it presses ahead with its devolved approach to delivering economic growth.

“It is too early to tell if the ministry’s remedial actions will get its governance up to scratch,” she said.

“Worryingly, the ministry also does not know if the funding is being used effectively to benefit local communities and businesses as intended.”

Last year the PAC called on MHCLG to implement the Ney Review recommendations and strengthen transparency and governance arrangements at LEPs following failings at the Greater Cambridgeshire Greater Peterborough LEP.

Concerns included the LEP’s relationship with local developers, and how it managed conflicts of interest. GCGP LEP went into voluntary liquidation in December 2017 after the department withheld funding from it.

This week’s NAO report notes that MHCLG “acknowledges that it cannot mitigate entirely the risk of a failure similar to the GCGP LEP”.

Boosted s151 officer role ‘significantly improves’ LEP transparency

“Low reserves aggravate Hertfordshire £90m funding gap”

County councils are at breaking point but most councils are operating on very low reserves these days:

“Hertfordshire County Council is facing a funding gap set to grow to £90m in four years’ time, with plans in place expected to account for half of the shortfall, according to a financial update prepared for senior leaders.

A report to next week’s meeting of the authority’s cabinet says costs of delivering services are expected to rise by £140m by April 2023 while income will only rise by £50m over the same period.

The county’s senior finance team is bringing forward the timetable for producing the integrated plan that informs the annual budget by “many months” so the council can “enhance its approach” to financial planning.

At £57m, price-inflation pressures are the biggest component of the £140m increase, followed by £42m anticipated for disability services related to “population growth”.

Vital service investments estimated to cost £24m and “legislative pressures” described as mainly related to the National Living Wage contribute the final £17m.

The report said that while Hertfordshire had successfully made significant savings of around £315m since 2010, it was “approaching a point where further efficiencies were increasingly difficult to deliver”.

Costs associated with the ageing population – Hertfordshire is on course to see the number of residents aged 85 and above rise by 137.5% over the next decade – were cited as an area where meeting rising demand was particularly challenging.

The report also noted that the county’s reserves were comparatively low when measured against peers. …”

http://www.room151.co.uk/resources/low-reserves-aggravate-hertfordshire-90m-funding-gap/

EDDC external auditors rapped on knuckles – again!

The suggestion when you move home is to change the locks. This lock can’t be changed so maybe an independent locksmith should examine the locks …

“KPMG has been fined £5m and “severely reprimanded” by the financial regulator for a series of failings in its audit of the Co-operative Bank at the height of the financial crisis a decade ago.

Andrew Walker, a partner at the big four accountancy firm who still works there, was fined £125,000 and also severely reprimanded. The Financial Reporting Council (FRC) issued both fines for misconduct that occurred shortly after the Co-op Bank’s disastrous takeover of the Britannia building society in 2009, which ultimately led to the discovery in 2013 of a £1.5bn black hole in the bank’s accounts.

In the second penalty imposed on KPMG in just over a week, it will only pay £4m of the fine as it did not fight the penalty, as well as £500,000 for the FRC’s legal costs. Walker’s fine has been reduced, to £100,000 in the settlement.

The Co-op Bank’s acquisition of Britannia and its risky loan book a decade ago brought the Co-op Bank close to collapse. It ended its 40-year auditing relationship with KPMG in 2014 and appointed EY – another big four firm along with PwC and Deloitte.

KPMG and Walker both admitted that their conduct “fell significantly short” of auditing standards in two areas – valuations of commercial loans acquired from Britannia and the audit of valuations and liabilities under a series of loan notes purchased from Britannia.

The FRC said KPMG and Walker did not obtain enough audit evidence, failed to show “sufficient professional scepticism” and failed to tell Co-op Bank that the disclosure of the expected lives of the loan notes was not adequate.

KPMG said: “We regret that some of our audit work around specific elements of the bank’s fair value adjustments did not meet the appropriate standards. The work in question was conducted almost a decade ago and we have significantly enhanced our procedures and training around the areas in question since then.”

Barry Tootell, the former chief financial officer and chief executive of the Co-op Bank, admitted misconduct in 2016 and was excluded from membership of the Institute of Chartered Accountants in England and Wales for six years. He agreed to pay £20,000 for the FRC’s investigation.

Last week KPMG received a £6m fine and a severe reprimand from the FRC for its audit of an insurance firm, Equity Syndicate Management, more than a decade ago. KPMG’s audits of firms and institutions this year and in 2020 and 2021 will be subject to to an additional review by its internal audit quality team, who will report back to the FRC.”

https://www.theguardian.com/business/2019/may/08/kpmg-severely-reprimanded-for-audit-failings-at-co-op-bank?

What is our Local Enterprise Partnership up to?

Well, if you strip out the projects that are actually “stand alone” and directly-funded by its members from its latest newsletter – not very much at all – and all funded by money that used to go directly to local authorities (and not a murmer about their biggest project – Hinkley C nuclear power station:

https://mailchi.mp/heartofswlep/hotsw-lep-march-newsletter?e=9367babecc