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The decisions as the council's minutes record them. A plain-language summary follows once it has been written.
RESOLVED That the Grant Schemes - Lessons Learnt report be noted and the internal controls required for all future grant schemes where funding is received by the Council (including for onward allocation to third parties), be endorsed.
There were no apologies for absence received.
There were no requests received.
There were no declarations of interest received.
Decision as recorded
RESOLVED That the Grant Schemes - Lessons Learnt report be noted and the internal controls required for all future grant schemes where funding is received by the Council (including for onward allocation to third parties), be endorsed.
Before the Committee considered the paper, the Chair made the following statement: Today we will be considering a serious matter about which there has been much debate in the Council and elsewhere. Our primary task is to consider and comment on the paper provided by Officers on the lessons learnt in respect of the commercial property grant funding of the Pembroke and Pembroke Dock regeneration scheme. This is to be done in the context of our terms of reference. It would therefore be helpful to remind ourselves of the role of the Governance and Audit Committee in relation to this matter. The Committee’s terms of reference state that we need to provide independent assurance on the effectiveness of the internal control system and that it effectively addresses the risks faced by the Council. To do this, it is incumbent on us to make appropriate enquiries of both management and the Head of Internal Audit to determine if there are any inappropriate scope or resource limitations that would lead to a similar situation arising at some time in the future. In effect, as a Committee, we need to be confident that efficient and effective assurance arrangements are in place to avoid a repeat of the incident we are about to discuss here today. I also feel the need to remind you of the Public Services Ombudsman’s guidance on the Code of Conduct for Councillors. This makes it explicit that Councillors should not act in a way that would bring the Authority in disrepute, and whilst freedom of speech is respected, the rights and interests, including the well-being of others need to be protected. It is not our role to question the motivation and competence of Officers, the guidance makes it clear that such actions are unacceptable as are personal attacks. I am raising these issues because I have been criticised personally on social media for upholding the Code of Conduct for Councillors and acting in the public interest to protect public confidence in unelected Officers. As the guidance states it is totally inappropriate for Councillors to raise Officers’ performance issues in a public meeting. It is also unacceptable to make any such references in the media or to personally attack someone through social media. As Chair of this Committee, I can assure you that there will be no cover up of anything, but issues will be considered on the basis of facts and within our terms of reference. Furthermore, I will not tolerate emotive and accusative language or any breach of the Code of Conduct for Councillors. The Committee then proceeded to consider the report by the Director of Resources detailing the Lessons Learnt in relation to Grant Schemes. The Director of Resources introduced the report and stated that the report had been requested during the Extraordinary Governance and Audit Committee meeting on 10 September 2024. It was stated that during 2014, a management review of the Commercial Property Grant Scheme (CPGS) was undertaken by the Audit and Business Risk Manager and Head of Revenues and Assurance who have both since left the Council. It focussed on lessons learnt which primarily involved a walk-through review of the project case file for 29 Dimond Street, Pembroke Dock. The review was presented to the Audit Committee on 22 September 2014 and made 12 recommendations which would then be applied to all grant funded schemes/projects as appropriate. Eight of the recommendations had substantially been implemented at the time of the Audit Committee meeting, with implementation of the remainder reported to the Audit Committee following subsequent Internal Audit reviews. It was added that an Internal Audit review of the Townscape Heritage Initiative (THI) reported to the Audit Committee on 29 January 2019 stated that ‘Lessons have not been learnt from previous schemes undertaken, which include lack of available resources, a lack of detailed photographic evidence and site visits, and the frequency of site visits and exact checks undertaken not being published. The most significant area of concern is the deadline for works to be completed before March 2019’. Since that piece of work, there have been a number of Internal Audit reviews of grant schemes that have taken place between 2014-15 and the current financial year 2024-25. In order to provide a level of assurance, Members were informed that Internal Audit reviews of grant schemes had been a regular feature in the risk based Annual Internal Audit Plan. It was stated that since 2014-15, Internal Audit have undertaken 99 reviews of grant schemes, albeit that total includes grant schemes where funding was received by the Council and allocated to third parties and also grant schemes where the funding was received and utilised by the Council. A summary of the number of Internal Audit reviews showing the financial year undertaken and assurance opinion for each internal audit was included within the report. It was highlighted that whilst there were seven Internal Audit reviews given a limited assurance opinion in the period 2014-15 to 2018-19, there have been no limited assurance opinions since, which provided a level of assurance that internal controls were in place and operating effectively. It was noted that all of those Internal Audit reviews with a limited assurance opinion would have been reported to the former Audit Committee at the time of issue. A summary of the number of Internal Audit recommendations for each financial year was also outlined within the report. It was noted that whilst there were 186 recommendations made in the period 2014-15 to 2024-25, 70 of those recommendations related to the seven Internal Audits given a limited assurance opinion, the last one being in 2018-19. Reference was made to thefour Internal Audit reviews undertaken during 2024-25 and in order to give a current picture of internal control within grant schemes, further information was provided as follows: The first three Internal Audits undertaken were: · Homelessness Grant Programme (2023-24 Grant Funding) (Reasonable assurance) · Housing Support Grant 2023-24 (Reasonable assurance) · Regional Consortia School Improvement Grant (RCSIG) End of Year (Substantial assurance). It was stated that only three recommendations were made in respect of those Internal Audit reviews as detailed within the report. Two of the recommendations relating to compliance with grant terms and conditions were rated medium, with one relating to monitoring and reconciliation rating high. It was noted that all three recommendations would be implemented during 2024-25. The fourth and most recent Internal Audit review was stated to be the Shared Prosperity Fund (Economic Development and Regeneration) which was summarised within the report. It received an overall Internal Audit assurance opinion of moderate with one recommendation rated very high, two recommendations rated high, and three recommendations rated medium which shows that weaknesses in internal control still exist and need to be mitigated. The recommendations outlined on pages 8 and 9 of the report related to: · Payments of Funding (rated Medium) · Subsidy Control (rated Medium) · Record Keeping and Data Retention (rated Medium) · Governance Arrangements (rated High) · The Application, Assessment and Award Process (rated High) · The Grant Claim Process (rated Very High) The Grant Claim Process recommendation rated very high was ‘Payments of grants to third parties must not be made unless there is evidence supplied to support both the payment and defrayment, and documentation received from claimants must be robustly scrutinised to ensure that only eligible expenditure is included. Where grants have been paid without defrayment evidence, grant recipients must be contacted to request relevant supporting documentation. A decision must also be sought on whether the identified overpayment should be recovered’. The Head of Internal Audit had provided confirmation that the recommendation had been implemented. Reference was then made to the responsibility for Grant Schemes and it was stated that overall responsibility for grant schemes, where funding was received by the Council and allocated to third parties, has not always been clear, with the roles of those ultimately responsible for the grant schemes being blurred with those responsible for the management and administration of the grant schemes. It was stated that there was now a different structure in place for the responsibility for grant schemes from that in 2012-13 as illustrated within the report. Members were informed that those responsible for the overall Commercial Property Grant Scheme and its management and administration in 2013 were all in one Directorate and were direct reports of each other. It was stated that the Shared Prosperity Fund (SPF) in 2024-25 had evolved due to the lessons learnt from previous grant schemes, with those with overall responsibility, management and administration being split. It was recognised that whilst there had been an improvement to the previous structure there were still some blurred lines and it was evident that certain roles must be totally independent of each other. Members were informed that regular Officer liaison with the Deputy Leader and Cabinet Member for Finance and Efficiencies had provided political oversight of the SPF which was supplemented by periodic update reports to Cabinet. It was stated that the process had worked well and should remain for future grant schemes as appropriate based on the value of the funding but should be enhanced to include periodic update reports for relevant Overview and Scrutiny Committees following the reports to Cabinet. Looking forward, in order to have sufficient seniority, it was stated that the designated Senior Responsible Officer (SRO) for grant schemes must be a Director, Head of Service or a Corporate Manager. In order to maintain independence and to avoid any blurring of roles, the roles of Senior Responsible Officer (SRO) and Lead Officer cannot be held by the S151 Officer, Monitoring Officer or Head of Internal Audit or their deputies. Also to avoid a blurring of roles, it was stated that those officers involved in the management and administration of the overall grant scheme cannot be involved in the management and administration of any funding allocated to Council Directorates (including for onward allocation to third parties). Reference was made to Grant Panels and it was stated that they had been in place for many years but with varying roles and responsibilities. During Covid-19, where £millions of grant funding was flowing through the Council and on to third parties, a panel of Senior Officers (Director of Resources, Head of Financial Services, Head of Internal Audit and the Revenues & Benefits Manager) was created to determine compliance with grant terms and conditions, to consider appeals against decisions not to award funding and to consider potential fraudulent applications for funding. It was stated that the panel worked well during Covid-19 and continued currently with its remit amended to cover wider revenues and benefits complaints and challenges, often linked to the application of Council Tax premiums. Looking forward, it was recognised that a grant panel for each future grant scheme where funding was received by the Council would improve the internal controls by considering the governance arrangements to be adopted for the grant scheme, to ensure compliance with the grant terms and conditions, to review any complaints or challenges to grant awards made during the operation of the grant scheme, to review progress and to undertake a lessons learnt review at the cessation of the grant scheme. Whilst not specified in the report, the grant panel would also consider whether staff involved in the grant scheme required any specific training and the most appropriate form of delivery. It was stated that in order to have sufficient representation, the grant panels should contain, as a minimum, the Senior Responsible Officer (SRO) for the grant scheme, the Lead Officer for the grant scheme, the S151 Officer or a deputy/representative, the Monitoring Officer or a deputy/representative and the Head of Internal Audit or a deputy/representative. The importance of the agreed Action Points from each meeting of the grant panel being maintained for future reference was highlighted. Reference was then made to the allocation of Grant Funding to Council Directorates and it was stated that in the instance that a Council Directorate was a recipient of funding from a grant scheme (including for onward allocation to third parties), then the arrangements outlined should be replicated, as appropriate based on the value of the funding. It was added that to avoid a blurring of roles, those Officers involved in the management and administration of the overall grant scheme cannot be involved in the management and administration of any funding allocated to Council Directorates (including for onward allocation to third parties). An update was then provided in relation to performance management, with it being stated that the performance management of staff involved in the management and administration of the overall grant scheme would be the responsibility of the Senior Responsible Officer (SRO), with the performance management of staff within Directorates involved in the management and administration of funding received from a grant scheme, including for onward allocation to third parties, would be the responsibility of a Senior Responsible Officer (SRO) (if one is in place based on the value of the funding) or the relevant Director. It was added that in the event of any performance management issues, the Senior Responsible Officer (SRO) or relevant Director would adhere to the Council’s HR policies and procedures in place at the time. With regards to continual learning, it was noted that the grant panels would undertake a lessons learnt review at the cessation of each grant scheme and any lessons learnt would be cascaded via the Extended Leadership Team (ELT) and, where appropriate, built into any existing and future grant schemes. It was stated that any necessary training identified would be provided promptly and before the commencement of any future grant schemes. Members were advised that Internal Audit would continue with its reviews of the grant schemes which would be undertaken following a risk based assessment by the Head of Internal Audit, with any limited Internal Audit assurance opinions reported to the Statutory Officers Group and the Governance and Audit Committee. Reference was then made to risk management, and it was stated that whilst risks (threats and opportunities) in respect of the management and administration of grant schemes were being identified and mitigated, those risks may not be consistently recorded on a risk register or escalated to give greater visibility to others. Looking forward, it was recognised that a risk register should be in place for each grant scheme with risks (threats and opportunities) recorded on the Councils’ risk management system, with any significant risks escalated to the relevant Directorate risk register and/or Corporate risk register as appropriate. In summing up, the Director of Resources stated that all future grant schemes where funding was received by the Council (including for onward allocation to third parties, for example the Shared Prosperity Fund (SPF)) should have the internal controls outlined on pages 12 and 13 of the report in place (unless due to the level of funding or risk profile the S151 Officer and Head of Internal Audit deem it not necessary). An example of this was stated to be the Welsh Church Act Fund with a maximum grant of £5,000 and only a few applications each financial year which would not need all the internal controls to be in place, for example a grant panel and would only require a Senior Responsible Officer or Lead Officer. The Committee debated the contents of the report and the verbal updates and the key points were highlighted as follows: · In response to clarification sought by Mr John Evans as to how many incidents of performance management issues had arisen in the past five years, the Director of Resources agreed to obtain the information from the Head of HR and report back. · Councillor Alan Dennison made reference to the Shared Prosperity Fund and requested further details as to what threshold grants had to meet to be considered by Cabinet or Overview and Scrutiny Committees. The Director of Resources advised that high value or high risk grants which meet the threshold outlined within the Constitution would require Cabinet consideration and agreed that larger schemes which require Cabinet approval could benefit from Overview and Scrutiny consideration also. It was agreed that a list of grants would be compiled by the Director of Resources with the level of authorisation outlined for each grant. · Councillor Alan Dennison suggested that it be included that in the instance that a Cabinet Member was involved in a grant application, that they withdraw from liaising with Officers on the matter. The Monitoring Officer advised that the Members’ Code of Conduct was very clear in that any Member with a personal and prejudicial interest in a matter should declare it and then withdraw from taking part in the decision making on the matter. · In response to clarification sought by Mr John Evans, in relation to post grant checks following disbursement, the Audit, Risk and Counter Fraud Manager confirmed that mid-term reviews were conducted along with a final audit at the end of the scheme to identify any lessons which could be learnt. · Mr John Evans raised concerns with Grant Panel meeting Minutes being stored as word documents and queried if improvements had been made to retain those Minutes more securely, to eliminate the possibility of the content being tampered with post meeting, and whether the minutes were open to public access. A suggestion was made for such Minutes to be retained as PDF documents. The Director of Resources advised that to his knowledge such Minutes were not open for public viewing and agreed to liaise with I.T. to ascertain if they could be retained through a secure document management system, which would clearly identify any changes made, post meeting. · Continuing on the point of Minute accuracy and transparency, the Chair expressed the importance of staff training to ensure all staff undertaking the drafting of Minutes know the importance and seriousness of accurate reporting and retention of Minutes. · Councillor Mike Stoddart sought clarification as to whether tenders of CPGS schemes were evaluated on only eligible elements of work. The Director of Resources advised that during the investigation conducted post scheme, it was apparent that tenders had not always been evaluated solely on eligible elements of work, and it was identified as part of the audit work that there were issues with the way that was undertaken on those grant schemes. · Councillor Mike Stoddart sought clarification as to whether the recommendations adopted by the Audit Committee in 2014 had been implemented, to which the Director of Resources advised that the matter would have been reviewed in audit reviews on grant schemes since that time. The Audit, Risk and Counter Fraud Manager provided assurance that whilst the specific matter being discussed was before he was in post, all lessons learnt from previous grant schemes were taken into consideration when undertaking internal audit reviews on grant schemes to ensure improvements had been made and the recommendations made were still in place. · Following on from the above, the Director of Resources pin-pointed the 2014 report, highlighted the recommendation and assured Members that it had already been implemented by the time the Audit Committee considered the report. · Councillor Alan Dennison made reference to the three internal audit reviews conducted within 2024-25 and queried who selected the areas of audit. The Audit, Risk and Counter Fraud Manager advised that some audits were required by Welsh Government, with others being conducted due to risk profiles. · Councillor Mike Stoddart made reference to the view of the Council appointed Barrister that there had been fraud conducted in relation to the CPGS which had been facilitated ‘by incompetence at best and complicity at worst by Council Officers’ and then made reference to a statement made by Mr Gwyn Evans suggesting that the view was a libel against Council Officers. Councillor Stoddart commented that he was surprised that the Committee had not been more proactive in wanting to resolve the discrepancy between the two views, although suggested that the lack of probing had been due to the Chair restricting debate, in an undemocratic manner. He added that in his opinion the report being considered by the Committee was a white-wash and that the culture of the Authority had a part to play. · In response to Councillor Stoddart’s views on her, the Chair expressed that she was a very democratic person who did not hold back from addressing issues, however stated that unless evidence of a ‘white-wash’ or ‘cover-up’ could be provided then the Committee could not consider it. In response to it being suggested that she restricted debate, the Chair stated that she had considered the guidance from the Public Services Ombudsman on the Code of Conduct for Councillors, and it was clear that it was not the Committee’s role to question a Council Officer on their performance, those concerns should be dealt with via other processes. In response to evidence being requested by the Chair to prove a white-wash or cover-up, Councillor Stoddart stated that he could not go into detail at this point and that he had never received a satisfactory response, despite going over and over the matter. He added that information had been outlined within his latest blog post on the subject, of which he shared the link with Members. · The Chair reiterated that the Committee was tasked with deciding if it was satisfied that lessons had been learnt, sufficient improvement had been made and all checks and processes were now in place to ensure the situation from 2014 did not arise again and stated that if any specific evidence contrary to that could be provided then the Committee could look into it. · The Chair sought confirmation that anyone involved in the matter, who had committed misconduct, was no longer employed by the Authority. In response the Director of Resources advised that one individual was subject to disciplinary action in 2013-14 of which the result was that they were disciplined and stated that he was not aware of anyone else currently employed that would have committed gross misconduct. Councillor Mike Stoddart stated that he did not feel the Director of Resources was the correct person to be seeking that assurance from. · Councillor Jacob Williams provided some summing up remarks stating that he was in agreement that the Council’s culture had a large part to play and spoke to support the evidence and work Councillor Stoddart had committed to progressing the matter, with the passage of time being no consequence. He added that he was not sure what the expectation of the report before the Committee was, but he had assumed it would include background as to how the matter had evolved and how it had reached the point it was currently at, which it did not. He stated that the Barrister’s report was the best conclusion of the matter. · Mr John Evans commented that whilst he was also disappointed in the lack of content within the report, he had seen a clear improvement in the culture of the Council since 2014 and was content that whistleblowing procedures had been strengthened. He added that he was now pleased to be a part of the Committee within the improved transparent environment and was assured that the organisation was now doing its best to do things correctly. Moved by Councillor Alan Dennison; Seconded by Councillor Aled Thomas The vote, undertaken by way of a roll call, was carried. The votes were recorded as follows: For the Motion: Councillors Maureen Bowen, Alan Dennison, Mike James, Aled Thomas and Dr Norma Barry and Mr Martin Veale [6] Against the Motion: Councillors Michael Stoddart, Jacob Williams and Mr John Evans [3] There were no abstentions. RESOLVED That the Grant Schemes - Lessons Learnt report be noted and the internal controls required for all future grant schemes where funding is received by the Council (including for onward allocation to third parties), be endorsed.
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