To consider the SWAP report into the Council's process in relation to a one-off capital payment made to Theatr Brycheiniog in 2018
Minutes:
Documents:
· Report of the Corporate Director, Resources and Transformation
· SWAP Final report – One Off Capital Payment Diligence Report and Appendices
· Portfolio Holder decision report
Discussion:
· SWAP had undertaken a review to ensure effective governance had been applied during the decision to make a one-off capital payment to Theatr Brycheiniog in August 2018
· There were 14 recommendations made – three priority 1, nine priority 2 and two priority 3
· There were nine key areas noted in the conclusions:
o Outcome – concerns were raised regarding the Council’s diligence in the process. Theatr Brycheiniog had not been under scrutiny. Whilst the payment aided recovery, it was unlikely to affect whether or not the Theatr was an on-going concern
o Transparency – there was a lack of documentary evidence and audit trail with inadequate records to support the decision
o Property – the building belongs to the Council but the lack of clarity regarding responsibility for maintenance had led to conflict. Two services had been independently involved with the Theatr leading to an uncoordinated response. Lines of responsibility were now in place and a more joined up approach is being taken.
o Constitutional Framework – very few urgent decisions are taken but a framework is in place to accommodate such requirements. There is no evidence of wrongdoing, but improvements should be made. There should be a segregation of duties to enhance decision making.
o Due Diligence – the decision had been complex, and circumstances had rapidly changed. The urgent nature of the decision affected diligence. Due diligence had been carried out when it had been expected that a loan would be made to the Theatre, however this was not followed when the decision was made to make a one-off payment. The process was not well formalised. The risk to the Council of a loan was much less and records should have been kept to ensure the Authority was not investing in an unsustainable organisation.
o Urgency – a loan had been requested and a decision had been deferred until such time as it became urgent. The Authority had contributed to this urgency and the decision taken bypassed the scrutiny function. Earlier action would have allowed for increased scrutiny.
o Cabinet Decision – the decision was made on 26 August 2018 with minimal information to support the decision. The decision should have been subject to further review.
o Decision – the decision bypassed scrutiny and was called in to Audit Committee. The Committee was not given a genuine opportunity to scrutinize the issue – there was a lack of transparency and information. The decision complied with constitutional procedures but scrutiny by the Audit Committee could not be meaningful
o Payment - £189K was not dictated by Theatr Brycheiniog but determined by the Council. The Authority should have considered payments from other bodies. It cannot categorially be stated that it was legitimate capital expenditure to improve the asset.
· The Committee recognised the need to learn from the circumstances surrounding the award of this payment and the need to be more open throughout the process.
· The public need to know that their money is being well spent
· There was no evidence that the Theatr was in a better position for having had the grant
· Members are frequently told that local authorities are not commercial entities but checks and balances must be in place – there were no minutes of meetings throughout the process and only lip service was paid to scrutiny.
· It was not clear whether Arts Council Wales additional grant funding had been considered as part of the decision
· It was unacceptable that the positions Acting Chief Executive and S151 Officer were vested in one person at the time the decision was made leading to a loss of rigour in the process
· The Corporate Director, Resources and Transformation assured the Committee that there had been significant progress since 2018 in strengthening governance. Additional training had been provided for officers and scrutiny arrangements were being improved. Impact Assessments have also been improved. The structure of reports has been changed to improve the level of detail and information provided. Senior Management Team and the Executive Management Team meet more frequently to identify issues.
· Although there had been insufficient time to involve scrutiny in the process, there had been time to consult with local members
· It was clear that there were concerns in January 2019 and that any urgency could have been identified at that time. It had not been necessary for an urgent decision.
· Members noted that other Theatres in the area were frustrated or angry that one venue should have received additional support
· The Monitoring Officer confirmed that there had been a separation of function of the Chief Executive and S151 Officer. New processes will be put in place to enhance transparency. Information will be provided in one location on sharepoint to ensure this is easily accessible.
· The Head of Service, Property and Planning confirmed that the Corporate Landlord function was being implemented. Assets will be dealt with by Strategic Property – work will continue to deal with services more closely. Inspections of properties will be undertaken.
· The Head of Finance stressed that all decisions should be subject to due diligence, not just urgent ones
· The Committee were concerned regarding responsibility for delegated decisions and whether sufficient information is available to enable such decisions to be made
Outcomes:
· A follow up audit to ensure all actions for improvement have been implemented will be carried out
Supporting documents: