“Officials in charge of billions of pounds of Whitehall business grants have overseen hundreds of payments to their colleagues’ firms, the Daily Mail reveals today.

They were put in charge of £7.3billion of taxpayers’ money to boost growth and help small businesses, under the Government’s flagship Growth Deal scheme.

But on at least 276 occasions, the cash has been used to make payments to the officials themselves, their own companies, or projects they stand to benefit from.

The officials sit on boards called Local Enterprise Partnerships or LEPs consisting of local business bosses and council chiefs. These bodies have not accounted for £3.7billion of the cash they have been given by the Government.

Astonishingly there are no rules to prevent the officials from using the cash to award grants to themselves, or from making their decisions in secret.

In the first comprehensive audit of the billions spent under the Growth Deal, the Mail’s investigation found conflicts of interest over hundreds of payments. In some of the most extraordinary cases:

■ A board boss saw his own call centre handed a £1million taxpayer-funded grant – a quarter of the funding available for his area;
■ A multi-millionaire banker oversaw payments of nearly £13,000 to his family’s Norman castle for board events;
■ A board member’s multi-millionaire business partner received a £40,000 payment – to renovate a luxury barn on his estate that they both used as their offices;
■ A £60,000 grant intended for local companies was given to a Saudi chemical giant after its UK boss joined an LEP board.

Last night a Government spokesman admitted the Mail’s findings were ‘extremely serious’. And the evidence was branded ‘completely unacceptable’ by the Commons public accounts committee chairman Meg Hillier, who accused the boards of acting like ‘a cosy little club of private businesses’.
She vowed that the committee would carry out a full investigation of the Mail’s evidence.

Under the Growth Deal, £7.3billion has been allocated to LEP boards to spend on projects that will supposedly boost growth all over England.

The revelations will embarrass Chancellor Philip Hammond, who just last week pledged to hand a further £1.8billion to LEPs in his Autumn Statement.
But no rules were ever laid down by the Government about whether the private sector bosses who sit on LEP boards and administer the funding can award the money to themselves.

Many of them seem unaware that taxpayers’ money must be accounted for.
In many cases, the bodies have simply refused to explain payments, or been unable to provide any records of how decisions involving tens of millions of pounds of public money were made.

Because most of the bodies do not publish accounts, it took months of Freedom of Information requests to establish where the £7.3billion had gone. And the Mail has found that barely half has been properly accounted for – with at least £3.7billion unaccounted for publicly. Hundreds of grants have also been handed out in secret – so it is impossible to tell whether officials have benefited financially. Nearly £500,000 worth of grants have been labelled ‘miscellaneous’ or ‘redacted’ in accounts provided to the Mail.

One LEP refused to provide an account of its spending, and told the Mail to look at board minutes online – where all details of all its funding decisions were redacted. Another said it had promised all the companies it gave money to that their names would be kept secret.

It was last night refusing to name the 182 businesses that had benefited – meaning it is impossible to know whether any of its board members were among them.

From the figures that have been provided nationally, the Mail found 276 payments – worth more than £100million – which involved obvious conflicts of interest.

In many cases there are no public records of how the decisions were made. Where they are available, we found some board members had declared their interests – but had been allowed to sit in and even vote on decisions anyway.

Others do not bother to declare their private interests in registers which are supposed to be published online.

Until our investigation, four in ten of the bodies failed to publish a register of interests – even when asked for one by the National Audit Office. In addition, some board members were found to have taken fees for ‘consultancy’ work or other services – while publicly claiming they were not remunerated. Some of the fees have been paid through private firms or personal service companies – a practice which allows the beneficiary to potentially avoid paying income tax.

The supposedly low-cost LEPs have also spent a fortune on their lavish expenses – for hotel stays, foreign jollies, chauffeured travel, meals out, curries and burgers.

Although they are supposed to spend only £500,000 a year on their running costs, one has spent £24million in just six years.

In a report published earlier this year, the National Audit Office raised serious concerns about the accountability of LEPs. It said it had been unable to find details of the remuneration of senior staff at 87 per cent of LEPs, and said registers of interest were missing at four in ten of the bodies. The report said the Government’s ‘light touch approach to assessing value for money’ was at risk of becoming ‘no touch’ and criticised it for having an incomplete picture of how the bodies were operating.

Last night MPs said the abuses were shocking – and accused the Government of allowing a ‘staggering’ lack of accountability over the billions of taxpayers’ money.

And they have demanded to know why billions were handed to boards chaired by representatives of private sector companies – without any safeguards to stop public funds being abused.

‘It’s not at all clear that the right safeguards have been put in place,’ Meg Hillier said. ‘To have more than £3.7billion that is not accounted for publicly is just completely unacceptable. These board members need to understand that if they go on an LEP board, it’s not just a cosy little club of private businesses. We have already raised concerns about the accountability of LEPs and the lack of basic systems in place to make sure interests are declared and where money is being spent. This whole issue is of deep concern to us.’

Charlotte Leslie, Tory MP for Bristol North West, said the Mail’s findings were ‘diabolical’ and suggested LEPs were at risk of becoming ‘cosy clubs for local vested interests.’ She added: ‘This must be investigated fully.’
A Government spokesman said: ‘We take the Daily Mail’s findings extremely seriously.’

Last week, after being contacted by the Mail about the story, the Government published new rules. The spokesman added: ‘We want to see greater transparency on how taxpayers’ money is spent. We won’t hesitate to act if any Local Enterprise Partnership fails to comply with these new tougher standards.

The Mail has found that more than £100million has been paid to LEP board members and officials’ own businesses or projects they have a stake in.

These are some of the most shocking examples…

1. ESTATE AGENT HAD OFFICES RENOVATED FOR £40K

A board member’s business partner was handed £40,000 to refurbish a luxury barn on his private family estate.

The barn belongs to Richard Burton, the business partner of LEP board member Bill Jackson. It also happens to be where Mr Burton and Mr Jackson run their estate agency – called Jackson Equestrian.

Mr Jackson’s girlfriend also runs an interior design business, Horton Interiors, from the building – and reports online suggest her firm may also have been a beneficiary of the grant because it was used to carry out some of the refurbishment work.

Her company boasts of having undertaken ‘all work in the planning and feasibility stages, as well as securing grant funding’.
A news release on her company’s website added that it had ‘created a fun yet practical scheme for the offices, including whimsical wallpaper in the communal kitchen’.

After being fitted out at taxpayers’ expense, the barn now appears to boast luxury interiors, a design studio and oak signs, while a sculpture of a rearing horse stands amid manicured gardens in its front drive. As well as being the multi-millionaire heir of the estate, Mr Burton has a share in Mr Jackson’s business.

Mr Jackson did not disclose the fact that Mr Burton is his business partner – and married to his girlfriend’s niece – in his register of interests. He only declared the fact that the grant was ‘on buildings used on offices for Jackson Equestrian and Horton Interiors’. He insisted he had no financial interest, because the firms only rented the building.

The LEP has refused to provide evidence of how the funding decisions were made but said Mr Jackson, 71, who is the current High Sheriff of Herefordshire, has no involvement in funding decisions related to the redundant buildings scheme, and that they were made by a steering group. A spokesman added: ‘Neither Mr Jackson, nor any of his companies, has applied for or been a recipient of funding. Mr Jackson has no involvement in the allocation of any funds.’

Mr Jackson, said: ‘The grant was made to Longner Farms to which I have no financial connection. Jackson Equestrian, a company I am director of, rents part of the converted barns at £10 per square foot, which is a commercial rent and there is a lease in place. At all times I have declared my interest to the board in writing and have made no financial gain.’ Neither Mr Burton or Horton Interiors responded to requests for comment.

2. BANKER’S OWN CASTLE GOT £13K

A multi-millionaire banker received nearly £13,000 for his family’s Norman castle from the LEP board of which he is a member.

Eton-educated James Saunders Watson runs his family’s 20-acre Rockingham Castle Estate, alongside a lucrative career at investment bank JP Morgan.
Before Mr Saunders Watson joined the Northamptonshire LEP board in 2011, it made no payments to the estate. But within months of him joining, the LEP started giving money to public events there. This included more than £12,000 to sponsor dressage, cross-country, and show jumping competitions.
More than £400 was also used to cover the cost of canapes, elderflower presse, orange juice, mulled wine and mince pies for an LEP event at the castle.

This event was to ‘promote Northamptonshire’ – although technically, the castle is in Leicestershire.

The payments for the events were made directly to Mr Saunders Watson, who operates as a sole trader rather than through an official company. Mr Saunders Watson, 55, lives in the castle with wife Elizabeth, 51, and their three children.

The castle, started in 1071 on the orders of William the Conqueror, has been the family seat of the Saunders Watson family for 450 years.
In an interview with the Financial Times in 2004, he said: ‘It’s wonderful to have so much space. The part we live in has 11 bedrooms, with a further five available if needed, and there are 20 acres of garden outside – the kids love it.

‘Of course there are drawbacks. It takes ages to unload the car after we’ve been to the supermarket because we have to walk through two courtyards carrying everything; and it’s also an awful long way to the loo.’
Mr Saunders Watson is estimated to be worth £22million. He is head of investment trust marketing at JP Morgan.

There are no public records showing how the decisions were made, but Northamptonshire Enterprise Partnership said Mr Saunders Watson had no role in the decision to pay money to his castle, which was made by officials and not at board level.

It said sponsoring the Rockingham International Horse Trials allowed it to promote Northamptonshire ‘as an investment and housing location to a national and international audience’.

A spokesman added: ‘The refreshments were best value as no charges were made for use of the venue. NEP has a key strategic objective to promote Northamptonshire as a great place to live, work and invest.’

Mr Saunders Watson said the horse trials sponsorship was ‘exceptionally good value’ and that refreshments ‘were charged at cost with the venue costs met by me, as part of my commitment to NEP and Northamptonshire’s economic growth’.

He said he had no role in choosing to pay the castle, adding: ‘Rockingham Castle is the oldest historic building and the only international equestrian event in the county so it is not surprising or inappropriate that an organisation responsible for promoting Northamptonshire would include Rockingham in its activities.’

3. SAUDI ROYALS’ FIRM GOT £60K

A £60,000 growth grant intended for ‘local companies’ wanting to ‘take on more business’ was given to a Saudi chemical giant represented on the board handing the cash out.

The multinational firm – which is one of the world’s largest makers of petrochemicals and makes profits of £5billion a year – was chosen for the growth grant after its UK director joined the LEP board handing out the money.LEP advertising stated that the grants would ‘support local companies looking to recruit more staff, enabling them to grow and take on new business.’

But astonishingly SABIC – which is based in Saudi Arabia and is 70 per cent owned by the Saudi royal family – was given £60,000 as a ‘wage subsidy’ for its British base in Teesside.

The global chairman of SABIC UK Petrochemicals Limited is Prince Saud bin Abdullah bin Thenayan Al Saud, a member of the Saudi royal family +7
The global chairman of SABIC UK Petrochemicals Limited is Prince Saud bin Abdullah bin Thenayan Al Saud, a member of the Saudi royal family
Paul Booth, chairman of SABIC UK Petrochemicals Limited, continued to sit on the Tees Valley LEP board when the payments were made. SABIC – which stands for Saudi Basic Industries Corporation – employs more than 40,000 people across more than 50 countries.

The global chairman is Prince Saud bin Abdullah bin Thenayan Al Saud, a member of the Saudi royal family. SABIC UK and Tees Valley LEP said Mr Booth had no involvement in the funding decisions, which were taken by an LEP panel he did not sit on. SABIC UK said the application was made without Mr Booth’s knowledge.

A spokesman added: ‘Mr Booth was not involved in the decision-making process for making these payments. He and SABIC UK Petrochemicals Limited did not operate under any conflict of interest or otherwise exert any inappropriate influence.’

The LEP said the grant had led to new jobs, adding: ‘There is no impropriety. Robust procedures are in place to ensure any potential conflicts of interest are identified and dealt with.’ ”

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