Editorial - 12th July.
Cheshire East Council is not the only council to make costly errors.
Tory-controlled Aylesbury Council recently wasted taxpayers’ money via Aylesbury Vale Broadband (AVB). The council-run enterprise managed to connect a mighty 234 households, at a cost to the taxpayer of £1.5m.
AVB aimed to provide high-speed broadband to remote parts of the authority. According to Private Eye, the council invested £1.44m in a network that connected 234 homes – but bypassed 2,000 households in eight villages without connecting them.
Cheshire East has managed to avoid anything as bad as this, as long as you ignore the appallingly named CoSocius, set up to by Cheshire East and Cheshire West. This managed to offset savings of £1m with a deficit of £2.6m. The council said the company “was not the success we hoped it would be”: a feeling Aylesbury must share.
Aylesbury commissioned a report on the debacle. We downloaded it to see if it had any relevance to Cheshire East.
Readers might be surprised to learn that in one area Cheshire East is above board, although it could be just luck.
One of the chief recommendations in the AVB report was to avoid having Cabinet members on the boards of commercial ventures “unless this can be justified on exceptional grounds”.
The report says a conflict of interest can be perceived when members scrutinise a business plan in their Cabinet role and support that plan in their board role.
No Cheshire East Cabinet members are serving on standalone companies as far as we can tell, although some have done: George Hayes joined The Skills and Growth Company in May 2016, but left Cabinet in October 2017; Coun Paul Bates joined the Cabinet on March 2016 and resigned from the company on 10th May. There may be more.
Another criticism of AVB has more relevance for Cheshire East, as it’s already levelled at councillors on our letters pages: board members of council companies should have “sufficient sector knowledge”.
It’s a fact of politics that ministers rock up at ministries with little knowledge, but soon learn: Biddulph’s Karen Bradley probably only had your layperson’s knowledge of Northern Ireland, but has learned rapidly since being appointed minister there (although Boris Johnson knew little about diplomacy and left the foreign office none the wiser).
At a local level, with less in the way of career civil servants in a big department to help out, there is more of a need for specialised understanding.
Cheshire East is more of a mixed bag here: Congleton’s Coun Geoff Baggot is on the board of Ansa Environmental Services, and while he probably didn’t know about much about waste disposal when he joined, he did have expertise on the financial side. More open to criticism perhaps is George Hayes, on The Skills and Growth Company, or some of the other appointments.
The AVB report says the running of council companies should be “scrupulously above board”, and managing a commercial venture makes it inappropriate for staff to hold particular posts.
One example the report gives is staff working in regulatory roles when companies may be applying for permissions where the council is the decision-maker. We haven’t cross-checked whether this is the case with non-elected board members at Cheshire East companies.
One important role is the section 151 officer, the responsible financial person at the council, who should stay clear of commercial ventures. Cheshire East’s section 151 officer was Bill Norman, who was suspended and has now left.
A section 151 sign-off should be provided for the release of funds from the council to companies owned by the council, says the report. Would Cheshire East have approved the £2m loan/grant to Ansa had there been a full-time section 151 officer in post?
As extensively reported, Coun Bates told the Cabinet that the money was a loan and later apologised as it was not; would the responsible officer have intervened at the Cabinet meeting or later clarified the matter? The AVB report says that empowering the section 151 officer to withhold release of funds or a part could provide further protection to councils.
The report also says councils should undertake thorough market research before entering new markets, including scenario planning and risk assessments.
While the failed CoSocius had no councillors on its board, its annual report for 2015 suggested a lack of planning, with unexpected costs such as software licensing – no-one spotted the company’s ineligibility to benefit from public sector frameworks – overrunning in its Windows 7 migration, and issues with managing projects and pricing. It had the advantage of instant customers: 19 schools converting to academies, Qwest, a Cheshire West venture (that is now apparently non-trading and with accounts overdue, although its parent company Engie Cofely UK is still going) and links with other council operations.
The Aylesbury report is new, and we guess any recommendations as to good practice from it will take time to percolate down.
But it’s also true that as Government cuts force councils to adopt new ways of operating, councils are going to have to be more transparent than perhaps they have been.
• To read the report, Google “Aylesbury BDO AVB Review” and look for the democracy.aylesburyvaledc.gov.uk website; you need BDO AVB Review Final Report.
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