On the evening of Monday the 30th of March 2009 Cambridge City Council’s Civic Affairs Committee considered a report into how the council came to lose £644,951 which was not paid to the council by the company it appointed to sell Folk Festival tickets online in 2008. I have written a previous article on the contents of the damming report.
- The City Council’s Head of Legal Services said to the committee: “I believe I signed both contracts” [for online ticket sales for the 2007 and 2008 festivals]. He looked sheepish as despite this he tried to deny responsibility for the public money lost by making an astonishing statement on his approach to signing documents: “I expect them to be checked by a solicitor before they’re put in front of me. I do not check financial details. I expect others to have done that work.”
- Cllr Julie Smith, the executive councillor responsible for the folk festival attended the meeting and made a couple of comments during the discussion of the report. However she did not specifically make a statement at the meeting, and none was distributed on paper. The Cambridge News had quoted her a few days earlier as saying she would “issue a statement before the Civic Affairs committee considers the report on Monday”.
- Cllr Smith defended her lack of awareness of what was going on in her area of responsibility saying: “I was at no point involved in the contract or procurement of online ticketing for 2007 or 2008. I think that is entirely normal; I do not think other executive councillors get involved in procurement”.
- Opposition councillors were critical of the fact an independent report had not been carried out as the leader of the council had originally promised. They said that the report, and investigation, had not focused on senior officers or councillors and suggested that this would not have been the case had it have been an independent, external review.
- Councillors and officers noted on a number of occasions that huge amounts of time and effort are spent identifying risk, and compiling a “risk register” yet this large amount of money at risk was not included
- Councillors briefly debated what the role of Executive Councillors ought to be. I am astonished at Cllr Smith’s performance, particularly as she is a professional academic who benefits from public funds – I would have expected someone in that role to be more innately inquisitive. (In another area she is responsible for she lacked awareness of tree fellings)
- There have been serious failings with respect to the procurement of other folk festival contracts – for toilets and marquees too.
- The meeting took about four hours to consider the report, it will be following up on progress against an action plan intended to make the council’s procedures more robust. Other council committees will also have a future role in following up.
- Even Liberal Democrat councillors criticised the council’s procedure. Cllrs Smith and Nimmo-Smith sat together apart from the rest of their group and appeared to be taking a lot of flack.
Opening the Meeting
All members of the civic affairs committee were present, along with a large contingent of other councillors including Cantrill, Bick, Blair, Dryden, Benstead, Newbold, Hipkin and Howell.
Simon Pugh, the City Council’s Head of Legal Services, reminded the committee of an email he had sent them identifying constraints on what could be said in public. He said he thought the debate could be held entirely in the presence of the public (me) and the press (Jack Grove of the Cambridge News), he said there was no confidential element of the report. Mr Pugh said an effort had been made to ensure the process could be carried out in public and reminded the committee of their role. He said the meeting was about: “what went wrong and what we need to do, not to discuss who is personally to blame”, he said that any personal failings: “will be picked up by council’s human resources policy and procedures”
Cllr Boyce who was chairing the meeting asked for any declarations of interest. The only one he received was from Cllr Julie Smith, who declared an interest as the Executive councillor responsible for the folk festival, Cllr Boyce appeared to dismiss that saying it was obvious. Cllr Boyce reiterated that the committee’s interest was: “in the how and what, not the why and who”. He said the committee was interested in process and had to answer the question of : “are the council’s procedures sufficiently robust?”
The council’s head of finance David Horspool introduced the report saying that the “internal audit team has done a significant piece of work”, he noted that the 2008 events were the main focus and references to 2007 were merely present as context. He also said that there had already been a link into activity being undertaken for the 2009 festival and the investigation had already fed its findings into the current festival’s planning. Mr Horspool confirmed that the information had been collected by the council’s internal audit team and there had been an “external assurance role involved in the process provided by a partner from PriceWaterhouseCoopers”. The letter from PWC which was promised at the conclusion of the review which was omitted from the published papers was distributed to councillors and the public at the meeting. Later in the meeting while a completely different point was being discussed Cllr Blair noted that the letter ought, according to PWC’s commitment, to have been addressed to members, however it was addressed to Mr Horspool. Cllr Herbert joked that this indicated PWC knew where the real power lay. The letter stated there were no particular issues with respect to the way the review had been carried out which needed to be drawn to the attention of councillors.
Mr Horspool said that PWC had been involved in determining who needed to be interviewed, what gaps existed in the draft report and had had input to the conclusions. He said that four interviews had been carried out and PWC had determined that no matters need to be highlighted to members. A highly controversial update to the report which had occurred at the request of Cllrs Blair and Hart was noted, this referred to the involvement of councillors, Mr Horspool said that: “the failure of officers to escalate resulted in members not being given the opportunity to express a view”. Other elements of the report he pulled out while introducing it to the committee included the fact it noted: “Lack of planning and robust management”, he went on to talk about what would happen after this meeting, drawing attention to recommendations relating to a detailed action plan, a proposed special meeting of the community services scrutiny committee. Anything not directly operational could he said return to future meetings of the Civic Affairs committee or be taken to the Strategy and Resources Committee. He finished by saying that: appropriate action with respect to individual staff would take place in accordance with the council’s policies and procedures.
Lewis Herbert (Leader of the Opposition)
Labour Cllr Lewis Herbert started by addressing the issue of principle relating to the fact an external independent review had not been carried out. He said it would be logical for Mr Horspool to explain in public what the sequence of events was relating to the decision first to decide on an external review and then later to decide it would not occur. He asked who made the decision that it would not occur, and if the decision was made on the basis of cost. In light of the fact the meeting was discussing procurement he asked if several quotes were obtained to establish the likely costs of an independent external review.
David Horspool replied: “We looked at trying to get an appropriate balance, we wanted sufficient independence to give members confidence. We started at looking at [commissioning a] wholly independent piece of work and on seeing the sort of costs we were getting back in an indicative fashion we made a decision on if we could use public money to that degree”. He said that the view arrived at was to use an independent external assurance rather than have the work done fully independently. He said that the council would have struggled to justify paying external rates to get work such as pulling together evidence undertaken. In terms of a range of quotes, Mr Horspool said: “We didn’t as we were trying to get the review undertaken as quickly as possible”. He said that an indicative quote was obtained, and suggested to councillors that to get an appropriate body with appropriate knowledge would have resulted in costs based on scale rates to the audit commission’s rates, and it would be unusual for a private firm to go in below those rates. In addition he said that “spot rates” for a specific piece of work were usually above not below those rates.
What Mr Horspool did not do was clearly say what the expected costs were, and how this was balanced against the sum at risk, the chances of its recovery, and the council’s need for the investigation and subsequent reforms.
Cllr Herbert asked a supplementary question stating that he felt the public were entitled to an independent review. He said that “one that is steered from within this building is not independent irrespective of the quality of the staff and the work that has gone into it.” He said there was alternatives to using “national accountants”, and also commented on the rate published which quotes PWC as doing six days work plus support for £12K. Cllr Herbert said he thought that could have been done in other ways and there wasn’t a need to employ that kind of route. He said his next question was actually to the leader of the council as the question of having an internal or external review was a political judgement as well as a professional one to be assessed by officers. He said: “If we as politicians are to be the bridge between the public and the council’s staff; why didn’t we consider that, and give the public an independent external enquiry, after such an occurrence affecting a national event?”.
The Leader of the Council, Ian Nimmo-Smith stated: “I think that the decision was mine”. He explained cost was one reason, as well as time. He said time was particularly important in relation to “any consequential disciplinary actions which might flow”. (He later withdrew the word disciplinary and apologised). He also cited complexity and the amount of work already done internally as reasons for doing what he chose to do. He said that neither the cost nor the delay could be justified. Cllr Nimmo-Smith said that it was not uncommon when something like this occurs for there to be a call for more independence, to give more confidence in the processes which then follow. He said: “What I have not heard from the Leader of the Opposition is what’s not covered, what he’s not confident in”. He asked: “In what sense is the work defective?”, saying that in his opinion it was exemplary.
Cllr Herbert responded: “The judgement will be made by those outside. Does it explain it? Does it analyse all the learning? … Our judgement is it was a mistake not to undertake an independent review.”
Cllr Rosenstiel asked about receipts in 2007 and was told that they were ~£400K. He asked that given that sum had been received “unexpectedly” in 2007 was there not a process to check it against the risk register and identify the fact that the contract involved was not on it. Mr Horspool responded that there was no process to check such sums of money against the risk register. He said that the “wash-up meeting” following the project was the appropriate place to catch it. Rosenstiel said that given this was “an unusual receipt” he was slightly surprised that no-one flagged up the risk element. While he noted the originating department clearly hadn’t done this, he was surprised it had not occurred when the sum had become apparent elsewhere, he asked why no-one had thought: “this is a large sum of money; it needs thinking about”. Mr Horspool, the director of finance, said it wasn’t his department’s responsibility and that responsibility lies with the “originating department”. “Even with such large sums?” asked Rosenstiel rhetorically as the debate moved on.
Cllr Herbert expressed the concern that the analysis had not fully considered events surrounding the 2007 event, not because of any inaccuracy in the reconciliation but because a number of themes [from mistakes] which occurred in 2007 were echoed in 2008. He said that the payment of £400K late ought to have been treated as a massive issue. He was concerned the opportunity to learn lessons from 2007 had not been taken and that 2008 was a rerun of 2007.
Mr Horspool mentioned the large number of written questions which had been put forward by members, and said that most, but not all had had responses. Cllr Herbert said that one of his written questions asked for the job titles of those selected for interview. He read out the waffly reply he had recieved, which refused to give him the answer unless he would say what he was going to do with that information. Cllr Herbert noted that he had not been given the job titles. The Labour group circulated their written questions, along with answers they had received, to councillors, the public and the press. At the instigation of Cllr Blair council officer Liz Bisset rushed to snatch them back before we had a chance to look at them.
Cllr Pitt said that he had not had a response to his written questions either, though he accepted the reasoning of high workload. He said that there had been an agreement that all councillors’ written questions and answers would be distributed to all, however due to the timescale this would now have to occur after the meeting. The chair, Cllr Boyce said that he was: “A little bit annoyed by that”. I do not know if by “all” Cllr Pitt means all councillors, or the public.
Chris Howell, Conservative
Cllr Howell said that the report revealed very serious failings particularly relating to the department involved. He drew attention to one element of the report which states:
The procurement of the on-line ticketing service should have complied with Contract Procedure Rules.
He said this was not enough detail, and didn’t make clear if the failure to comply was merely incompetent or something improper.
He said that there were many points in the sequence of events where the problem could have been averted. According to Cllr Howell the report says that people didn’t follow the rules and what that led to was a crunch situation, he said various people did know or should have known that the contractual basis was wholly inadequate and that individuals ought to have come together and said: “no we can’t go live it’s too risky”. He said the decision to go ahead involved errors of judgement and that he could not support the findings of the report. He said that there was a need to look more widely. With respect to financial controls he said we can’t have a procedure if it is not followed. Commenting on the fact that the finance department’s advice had been sought and ignored he questioned why when someone in the finance department had been asked to do a financial viability report and the answer came back “no” why that wasn’t escalated up, and why someone more senior had not then taken a role in events and actually intervened. He suggested that the problem was council officers not understanding why the rules are there, ie. to prevent serious financial loss to the council.
Having tackled the failure to heed the financial advice Cllr Howell turned to the legal aspect. He said the report was unclear on who in the legal department looked at the contract and when. He said whoever did ought to have identified the fact the contract was insufficient and again escalated the matter. He said that the culture in those departments needed to ensure people were aware of why they were doing their job.
Cllr Howell addressed the question of the role of councillors. He asked the Leader of the Council and the Executive Councillor Julie Smith to what extent they felt responsible. He said it was disgraceful that the council leader had tried to pass responsibility onto staff.
Cllr Howell said that there had been lots of opposition activity with respect to the folk festival, with questions at full council and at community services scrutiny committees. He said: “the executive councillor should have been aware of what was going on. It is not good enough to say the executive councillor just sets policy, there’s a need to know enough about what’s going on, she has to take responsibility. The only people the voters can vote out are those who are elected, not the officers. It’s a great shame more responsibility has not been accepted.”
Addressing the leader of the council’s question about what effect the fact the inquiry was not independent and external had Cllr Howell said it was not wide enough, did not investigate senior enough officers. He also said there was a need to look at financial management more generally. To jeers from Liberal Democrat members he tried to draw a parallel with the £9m the council has frozen in collapsed icelandic banks. He said information coming into the council was not being treated with enough skepticism.
Cllr Howell referred to a self-congratulatory oral question at a full council meeting in April 2008 which he said indicated the executive councillor had no idea what had gone on in the department.
Cllr Boyce complained not about the tone of Cllr Howell’s comments, but merely about the length as he called on others not be so prolex.
Cllr Hipkin (Independent)
Cllr Hipkin asked for clarification about delays in the timeline, for example the four week gap between the deadline for payment and the director being advised that the deadline had been missed. He also asked “for clarity among members of the public” the degree to which the contract entered into was at fault as a contract, ie. if a sound contract was breeched or if it was a dud contract which was breeched.
Cllr Hipkin noted that in a private meeting he had suggested that an independent enquiry could be carried out by a senior officer of another authority. Mr Hipkin said that he wold like a courtesy of a reply to that question given that there’s no evidence it had been considered.
The Chief Executive confirmed Cllr Hipkin did raise the suggestion, but that he didn’t think we could get someone of suitable calibre to come in at short notice.
Cllr Hipkin added another question – asking if there were guidelines within the department on what should be escalated. He wanted to know if there had been a failure to follow procedures or no procedures.
Liz Bissett, the officer responsible for the relevant department stated that there were a number of points where there was a failure to escalate properly and there were critical times where known risk was not escalated. She said there were procedures around regular supervision and management and an extensive risk register – she said there had been lots of work on that.
Cllr Herbert questioned the principle of “management by escalation”, saying it was not a management theory he had heard of. He drew attention to the fact the report, by implication, suggests that those at a very junior level were responsible and as they didn’t “escalate” the problems that negates the responsibility of senior management and Executive Councillors. Cllr Herbert at this point stated that it was self-evident that 400K arriving over 4 weeks late (as the report and timeline stated) in 2007 showed there was an issue. Later it became clear that there was no formal date by which the council had to be paid – the 2007 contract was unclear on this key point – so describing the money as “late” was not really accurate. The contract stated the money was to be paid after the festival, and was paid four and a half weeks after it.
Mr Horspool made the odd, academic, point that the 2008 “contract was completed”, but it was merely the schedules and amendments which were not fulfilled in clear breech of that contract. I can’t imagine how this kind of tangled language could have helped councillors, or anyone else better understand what had gone wrong.
Cllr Hart (Labour) said: “the more information that was being given to councillors, the more conflicting it is getting.” She referred to the section of the report which states;
The advice from the Finance Department stated that the contractor should not be appointed, however this advice was not followed.
She contrasted this to the timeline produced by officers in which it was claimed that minutes produced by the project team stated that the advice from the finance department had been that the company’s credit rating was OK.
Mr Horspool said that both items were accurate. The finance department’s advice was not to appoint the company, and the minutes of the folk festival’s team meeting did state the opposite.
Clearly this raises questions about why the advice from the finance department was misunderstood, or at least mis-minuted. Was it given clearly? In writing? To the right people?
Cllr Dryden asked three concise questions (two of which he said he had been asked by festival goers in his ward):
- Will the council be booking less known artists, as they are cheaper, to recuoup money over future-years?
- A question on Staff and Proceedure. Is it the same people who are organising this years festival [as were responsible for 2008’s] ?
- Did the transfer of the arts and entertainments team from central services have any link to events.
He was told that there was no financial impact specifically on the folk festival. The loss was being treated as a general strain on the council’s budgets – as an “overall cost pressure”. Mr Horspool said there was no impact on the housing revenue account, and no direct impact on the folk festival. Cllr Dryden was told the folk festival team has been augmented with a specialist in procurement, and the transfer of the team between departments had been discounted as a contributory factor. Cllr Boyce clarified that the change had happened due to the previous director retiring and Lis Bissett becoming the director responsible. He added that an “ex-consultant” had been appointed to provide procurement advice.
Cllr Benstead decided to jump into the question of “Section 6 and the new Section 6”.
Section six refers to the involvement of councillors. This had been amended since the publication of the report, elements which officers had added are underlined in the below copy of the section: (The amended sheet has not been published online by the council)
6. Reporting to Members of matters relating to the Folk Festival.
6.F1 Officer and Member involvement relating to the arrangements for the Festival should be clear, documented and complied with.
It is not wholly clear what Officer and Member involvement in the arrangements for the provision of the on-line service for the 2007 and 2008 Festivals was, as appropriate documentation could not be evidenced. There are minutes of an initial Officer/Member meeting to discuss ticket allocation and price structure in December 2007, but minutes of subsequent meetings could not be produced.
6.F2 Our findings regarding the reporting to Members are:
- It is clear from evidence provided by Officers that Members were not involved in the procurement or evaluation process for the online-ticket contractor for the 2007 or 2008 festivals.
- The failure of the Officers to escalate issues with the on-line ticketing process, resulted in Members not being given the opportunity to express a view regarding the risk of the actions being taken (such as proceeding for the 2008 Folk Festival arrangement without a fully complete contract being put in place).
6.R1-R3 Member understanding and future involvement in the following Folk Festival related itemsshould be established and processes put in place to ensure compliance with these. It is considered that the following checklist will be a good start to establishing this:
- The risks associated with running the Folk Festival (in terms of operational, reputation, organisational etc)
- Key decisions which need to be taken during the Festival planning and execution of these plans and Members involvement
- Recognition that operational and low risk matters will be dealt with by Officers
- Periodic reporting on progress with the Festival plans, including where escalation to Executive Councillor maybe appriopriate
Councillors should give consideration to the extent to which they wish to be involved in or informed of decisions about the Festival, monitoring of progress and event evaluation. Officers then need to put in place an appropriate mechanism to enable the requirement to be met.
Cllr Benstead said that these changes had made things less clear rather than clearer. He said there was a contradiction between the phrasing “it is not wholly clear … ” and “It is clear…” and asked where the new evidence had arisen.
Regardless of the words, he said that it struck him that if the Executive Councillor had looked at what had happened after 2007 they ought to have spotted the late payment. He suggested that as the contracts for 2008 were not signed until either late in 2007 or even January 2008 there were 4.5-5 months where the executive councillor had an opportunity to pick up on the 2007 problems and act to stop the 2008 contract. He said: “That’s what the executive councillor is there to do”, and asked at what stage she did finally pick up that something was wrong. He noted that this key date – of when Julie Smith became aware of problems in 2007 was omitted from the timeline circulated.
I have already explained that the 2007 money wasn’t technically “late” as the contract was so bad it didn’t deal with the timescale for payment; I question how much of a grasp any of the senior and highly paid council officers present still have in respect of what went on as they allowed councillors to waste a huge amount of time discussing the supposed “late” payment in 2007 without alerting them to the facts. The report to the meeting repeatedly (for example twice in section 4F3 makes statements such as: “The late arrival of payment for the 2007 Festival”); this proved to be a major distraction to councillors. As with the fiasco itself it is hard to determine if this was incompetence or a calculated effort to misdirect councillors’ attention.
Cllr Julie Smith responded to Cllr Benstead saying that it was unfortunate that members had not been made fully aware of the situation. She said that the report’s findings depended on the notes which officers’ had. She indicated that her input had not been sought by referring to her own independent records of her involvement. She explained that there had been consultations with groups of members (and residents) about folk festival ticketing, though this had been limited to allocations, queuing and modes of sale. She said that there had been a report “available to all members” on the council’s intranet. At this point Cllr Julie Smith made the statement I have pulled out as being one of the key contributions of the evening:
“I was at no point involved in the contract or procurement of online ticketing for 2007 or 2008. I think that is entirely normal; I do not think other executive councillors get involved in procurement”.
Cllr Smith, entirely inappropriately, decided to use the occasion of her contribution to the meeting trying to get to the bottom of how a department she was responsible for lost such a huge sum of public money to make a petty political point. She drew attention to the utterly irrelevant fact that the meetings with councillors and residents which she had to discuss ticketing had resulted in a suggestion from Cllr Dryden to make 2000 tickets available for residents to queue for yet only 500 were sold. Cllr Benstead was on top form though and didn’t let her straying from the point to distract him from seeking an answer to his question of when Cllr Smith was made aware of the problems in 2007. She then made the astonishing admission that she only discovered any problem in 2007 when she read the report to this meeting ten days ago.
David Horspool moved to take the heat off Cllr Smith by saying that the evidence available says that it was an officer decision to enter the 2008 folk festival online ticket selling contract. He said that members were merely informed who was selected and there was not an active role for members.
Mr Horspool then tried to justify his wording in the new section 6 (the element of the report on members involvement), he said that “not wholly clear” could be substituted with “not clear” as generally there is a lack of evidence. While not mentioned in the report, or during the meeting, I believe that the council decided not to look at all the relevant emails between officers, and between officers and members as that was considered beyond the scope (capabilities) of the inquiry. Presumably the only emails seen by investigators were those the officers involved volunteered to disclose. This approach was clearly lacking.
Cllr Newbold (Labour) referred to questions which he had asked beforehand, he had submitted copies to the officers running the committee and they were circulated. It was these papers which on seeing they were being distributed to the press and public Cllr Blair prompted council officer Lis Bissett to aggressively snatch back from us without explanation, one of the councillors who had passed them on was also sharply chastised by the officer though no clear grounds were given. It had been made clear at the start of the meeting that all deliberations were to be conducted in public so this was quite a significant deviation from that stance. It was not possible to argue with, or question, the officers decision at the time as this would have disrupted the meeting.
Cllr Newbold made the clear, practical and firmly “on topic” point that: “the striking thing with this debacle was that the amount of money at risk was substantially more than the contract”. He asked what work was underway to investigate other contracts which are similarly designed and need to be looked at as soon as possible”.
Mr Horspool accepted the flaw in the current system which looks at the contract value, not the sum at risk, and said: “clearly we will follow through all of those”.
Cllr Rosenstiel decided to return to the point about the contradiction between the finance department saying their advice was not to go ahead, but the project team’s minutes saying the finance department had reported that their credit check had come back OK. Mr Horspool repeated the essence of his earlier reply saying: “The minutes are inaccurate, the team believed the credit ratings were OK when they were not”. I believe this can be interpreted as the minutes were an accurate record of the team’s meeting, but the facts within them are inaccurate.
Ian Nimmo-Smith – Liberal Democrat Leader of the Council
Cllr Ian Nimmo-Smith said: “Given the tenor of the contributions I want to make clear I personally regret and apologise for the situation the council has found itself in. What we are facing here is wholly unusual. There is a very good convention that the political administration sets policy and will carry the can, take the flack, and be concerned for the reputation of the council as a consequence”. He described the folk festival loss as wholly exceptional in terms of the very high standard in which the council is run.
Cllr Nimmo-Smith said that what had happened “was very unusual”, and drew attention to the “very substantial chapter in the council’s constitution on procurement which acts as a handbook for officers on how those processes work, including on when there is a requirement for an executive decision to authorise the expenditure.
Commenting on the depth of the inquiry the Ian Nimmo-Smith said that several lever arch files of paper had been amassed (the fact the council is so heavily paper based is quite telling). He said that: “it is a piece of work which details what happened not why it happened and doesn’t record what went right along the way.” He also said that the administration is committed to implementing the recommendations which will result from the civic affairs consideration. He rounded up by describing the situation as; “deeply uncomfortable for all of us.”
Cllr Herbert Responds
Cllr Herbert said it was “wholly unfortunate that the leader has put a political slant on a meeting when we are about to go through a sequential analysis of the report”. He said the Leader of the Council had been out of order to talk about the investigation summed up by the report leading to consequent disciplinary action. Cllr Herbert complained that Cllr Nimmo-Smith had seen seven lever arch files whereas the opposition had not even had the answers to questions they had asked almost a week ago. Cllr Herbert then made his comments on the alterations to section six of the report. He noted that he was going to save his inflammatory language for later, but said that his judgement was that it looked as if there had been political interference in that section of the report.
Cllr Nimmo-Smith said: “I regret and withdraw the use of the word disciplinary. I should have said there is a need to look at the actions of individuals in the light of policy and procedures”. The leader of the council added that he had not had any privileged access, and that the seven lever arch files were summarised in the report. He also said that he had not pre-empted or negated the work in the report by his tone, he said it was “clearly ridiculous to put on the Folk Festival this year having identified better ways of doing it, without implementing those without waiting for this committee, however that in no way pre-empts the committee”.
Section One of the Report
Cllr Tim Ward kicked off the line by line analysis of the report asking about “two areas of corporate policy and procedure which were not addressed”, he said:
- What management of contract procedures were in place? Who is authorised to sign what sort of contracts? Is there some sort of audit trail of due diligence, such as checking the risk register? Is there a register of contracts? The Executive Councillor asked for a copy of the contract several weeks before she was finally given one, if that was obstruction or otherwise either way the delay was wrong.
- Escalation. It is not likely everyone involved in the Folk Festival was complicit. There must have been someone thinking this is not quite right, there’s something dodgy here. Were the council’s whistle-blowing procedures fit for purpose? Did staff feel confident in using them? Did staff attempt to use them, and did their attempts fail?
Cllr Ward finished by suggesting, I believe, the council should not shy away from disciplinary action. He said that had the folk festival been organised commercially by a company this loss would have put that company out of business and they would all be out of work.
David Horspool said that the council did have a whistle-blowing procedure in place which was widely advertised and staff were made aware of when joining. He said that people do use the process though it wasn’t used in this instance. On the question of a contract register he said the council does have such a system for retaining documents.
Cllr Pitt responded to this immediately by asking why, given the existence of a register, was there a five week delay between the executive councillor asking for a copy of the contract and being given it.
I believe what Mr Horspool said in response was that while the contract was available the appendecies weren’t. He also went back to earlier points and said that there isn’t an officer who is responsible for checking documents as they are added to the register and flagging up things such as the differences between the 2007 and 2008 contracts, he said that would have been the responsibility of the lead officer for the project who would be expected to have done that as part of reviewing the context in which they were operating.
Having made his off the cuff response he moved on to his planned point saying: “occasional users of procurement really need to get help, they need to get the necessary legal and financial advice”.
Cllr Herbert asked whose contract was it that was signed in 2007 and 2008, was it the council’s text or secureticket’s contract? He also asked how far ahead of the 2008 ticket sales was the 2008 contract signed.
The response from officers indicated that the contract was “primarily the suppliers’ terms and conditions” but these were amended in 2007. In 2008 it was the suppliers terms. Officers said they had “tried to amend them”, suggesting they had not had time. Officers said “the point is there’s nothing wrong with the main part of the 2008 contract [it was just that] the details of the client account wasn’t completed at the time the contract was signed.” The meeting was told that the 2007 contract was signed only a couple of days before implementation.
Cllr Herbert commented on how there were only eight corporate recommendations but thirty-one for the arts and entertainments division. He said he judged another 3-4 were needed. Cllr Herbert said that there were many issues to learn from 2007 as “we did a rerun”.
Cllr Rosenstiel made the point that there is a mismatch between the risk register and substantial sums of money. He was repeating a point that he had already made – that someone ought to have seen the large sum in 2007 and asked where it was on the risk register.
The committee was using an excellent manner of working which I think ought be taken up by other council committees as an example of good practice. The members of the committee were asking their questions first and then after they had had their “turn” other councillors present were invited to pick up on any points which had been missed.
Cllr Blair quoted the section of the report which states:
The procurement and contract management rules are considered to be fit for purpose and provide the rules for ensuring compliance with the legal requirements for procurement in a Local Authority.
She said: “What it doesn’t tell me is if responsibility lies within the service procuring or elsewhere. She said that issues had been raised during the councillors’ [secret] briefing with officers about “finding the gaps”. Cllr Blair asked if the contract was signed within the service in 2007, she noted that the report stated that in 2008 all advice from finance and legal was ignored, and rather disjointedly asked again “where was the contract signed” – (meaning in which department).
It was Cllr Blair’s question which elicited the response which have have highlighted as my top bullet point arising from the whole meeting. The City Council’s Head of Legal Services, Simon Pugh, said to the committee: “I believe I signed both contracts” [for online ticket sales for the 2007 and 2008 festivals], explaining his approach to signing documents he said: “I expect them to be checked by a solicitor before they’re put in front of me. I do not check financial details. I expect others to have done that work.”
I think this raises questions about the way the Head of Legal signs contracts and what he is expected to do for his money. I would have expected a man of his presumed experience to judge the contract and express an opinion, I would have expected him to have had the nous to ask questions about the set up of the client account. The head of legal is a qualified and experienced man who was acting in a professional capacity. I reckon if officers had gone outside their offices into the market square and asked random members of the public to comment on the contract, once understanding what it was for, many would have immediately asked about protection of public money and the arrangements for a protected client account. If not assured appropriate safeguards were in place some might well have even contacted an elected councillor to alert them.
Cllr Pitt drew attention to the fact there “doesn’t appear to be anyway to ensure those signing contracts have seen advice from finance”. He suggested there was a need for a system which would ensure that such advice was available with “almost no effort” for someone signing the contract. He expressed surprise/concern at the lack of a “central check”.
Mr Horspool agreed, saying Cllr Pitt’s proposal “would alleviate a numebr of financial aspects”.
Cllr Pitt was one of a number of councillors who complained about the wording used in the report, suggesting some elements could be interpreted in five different ways. Ironically he requested “greater clarity between contradicting sections”. I know what he meant, he was suggesting the reasons for apparently contradictory statements in the report ought to have been flagged up and explained, rather than simply leaving the unexplained inconsistencies in the document as officers had done.
Cllr Ward spoke briefly, but highly critically on the head of legal’s procedure for signing documents saying: “The signature ought to mean more than checking the terms and conditions are legally OK”.
Cllr Boyce asked “Were the officers doing the right thing for a 30K contract?” he noted that we know they didn’t take appropriate precautions given the amount at risk, but he wanted to know if what they did do was sufficient if only 30K had been at stake.
Project Management / Sausage machines
Cllr Ward, spoke in light of various elements of the report which critise the lack of project planning for the folk festival.
2.F1 There should have been a project plan for the Folk Festival overall, however, there was no such plan.
He said: “If there was not plan there can be no assurance that the project will succeed. It’s all pure luck what comes out the other end of the sausage machine. He accepted that if the same team, who had done it before were involved then “its got a fair chance” but otherwise it was down to random chance. Cllr Ward was the first of a couple of councillors to say:
It looks like this was a train wreck waiing to happen for years – from this report.
Cllr Herbert appeared slightly taken aback by the vigor of Cllr Ward’s criticism of the council on which Cllr Ward is a member of the ruling group. Cllr Herbert said he was going to be more generous, asking: “How much load is put on A&E to produce that kind of event – this is a huge and extraordinary burden”. He noted that councillors often expressed pride that the council put on such a major event with national standing, he asked about the pressure that put on the council in general and the individuals responsible.
Cllr Herbert also said he didn’t accept the lack of escalation argument. He said: “We have management. The Executive Councillor (Julie Smith) was in charge.”
Cllr Herbert asked if there were additional problems with other folk festival contracts, in addition to the toilets and marquee contracts. He received a response from the council’s head of internal audit, Sarita Haggart. She painted a damming picture, saying that contracts had been examined as part of a process of giving the Arts and Entertainments section an “assurance rating” and the outcome had been a rating of “no assurance”, there were no checks and balances in place, and no evaluation of the outcome of contracts. She explained the reason this wasn’t covered in the report before the committee was that she “didn’t want to muddy the waters”. Having said that she said the section do have another well run, “EU level, contract” (Folk Festival Power and Lighting perhaps?).
In house testing
One of the report’s recommendations was that the council ought carry out testing of online ticket selling software in the future. Cllr Pitt asked if the council had the required expertise in-house.
He was told that: “in 2007 and 2008 the service department asked internal audit to try and break it from a customer perspective”. However this was a process conducted without a plan put together by the council, they were following a procedure given to them by the software supplier.
Cllr Pitt said he was: “not sure that addresses point” he pointed out “testing, even from customer point of view, is a skill.” He said he: “did do it for a living for a while, before I learned about screaming” (he’s a teacher).
Cllr Pitt was told that internal audit doesn’t have that expertise but they do have a 3rd party supplier which does the IT work for the council and such an exercise could be “specialised out”. Cllr Pitt suggested the recommendation be changed to reflect the need to go “out of house”.
Cllr Tim Ward took the opportunity to suggest the council ought ensure that it got the intellectual property rights to software which it paid to get developed and asked for this to be considered in future. I think this is a hugely important issue, and councils ought to do this as a matter of course, and going further they ought then share what is produced as widely as possible, making it available for other councils and others to use. This has the potential to save huge amounts of public money and improve services.
The nub of it
Cllr Bick said “this section is the nub of it to me” – “procurement is where the whole thing has been caught out” he said “the measure of success is not if you go to the folk festival and its really good”. He was quite rightly derided by other councillors for making such an obvious and absurd point, he carried on looking a bit confused as he appeared to think he was imparting a valuable gem of insight to proceedings.
He said the council has project management guidelines available on the intranet and asked who decides if these are applied to a given situation. He said there was a link between project management and procurement as project management was referred to in the procurement rules, he said there was a need to look at and update those rules.
Officers responded that “procurement issues tend to driver project management … if you’re going through a procurement procedure that will direct you to project management”.
Cllr Bick pointed out that project management was still appropriate regardless of the amount of money involved in buying things, and asked if the recommendations would address issues where procurement isn’t the driver. He suggested that project management forces the involvement of finance/legal. He asked how visible it was if a project isn’t employing a project management model. He said that there must be people in finance and legal who knew they weren’t involved in a project team. Cllr Bick asked how the absence of a project management process could go unnoticed. The leader of the Council indicated agreement shouting “hear hear”.
The director of finance said his officers wouldn’t always expect to be on a full project team, but accepted this could be a lesson.
Cllr Herbert spoke on the issue of project management. Commenting on the recommendations he noted there was a lack of any focus on corporate learning or responsibility as all the recommendations were targeted at the Arts and Entertainments department. He said this project (the Folk Festival) must be in the top 6 of the council’s projects. Cllr Cantrill interrupted to figuratively stand up rip his shirt off and proudly beat his chest as he noted a project he was responsible for, the “Customer Access Strategy” was the biggest council project.
Cllr Herbert regained his train of thought and asked if it was reasonable to put all the obligation on the small team and not on the organisation as a whole.
Cllr Cantrill said that what was needed was a “corporate project management resource” he asked for officer comments on the scale and nature of such a team.
He was told that the council did have some expertise in house, and gave an example of someone being redeployed to work on “the depot project”. The Chief Executive said that the council did the best it could, and agreed with Cllr Cantrill saying he had “no doubt those skills add a different dimension”.
Cllr Blair made another speech, not adding anything new, but agreeing with those who’d said this was a disaster waiting to happen, and apparently supporting the proposals for better project management suggesting that the Folk Festival team had been “flying by the seat of its pants” and that wasn’t good enough.
Cllr Herbert also commented on the project management of the folk festival, referring to recommendation 1 – the need for a project plan and timeline. He drew a parallel between the folk festival and the elections as both involve many staff from across the council playing some role on the day.
Cllr Ward commented on the “cost of quality”, there had been suggestions that the council couldn’t afford dedicated project management expertise, so he said £600K would have bought a lot of project management.
Cllr Herbert asked why there was so little detail about 2007, to be told that it wasn’t 2007 that was being investigated, the references to 2007 were just context. He asked why there was no proper review of the 2007 folk festival and asked questions about the reconciliation process with respect to the ticket money.
Cllr Pitt asked how the company was selected and if more than one company had been considered for selling the tickets. He was told that 2008 was a follow on from 2007 and that the council’s requirements had driven the selection of the company. (The council considered only this company could cope with its wide range of different ticket types and desire for high tech aspects such as mobile phone ticketing).
Cllr Pitt asked why there was no follow through following the advice not to go ahead given by the finance department, he asked why this advice was not copied to the legal department (who might then have refused to sign the contract).
Cllr Herbert asked about the council’s ability to deal with a company which was not behaving ethically, suggesting that there was a need for a change in culture and a greater interest in protecting the council’s interests particularly when dealing with “mean and nasty” people.
Cllr Blair noted the recommendation that if a decision was to be made to go against the finance department’s advice that decision ought to be made at director level. She suggested this ought to also apply to any decisions to go against the advice of the council’s legal team. Cllr Benstead said that any such decisions to go against professional advice ought be reported to the Executive Councillor.
Mr Horspool replied: “OK”.
There was a discussion about the need for financial and legal input in all “substantial” procurement, Cllr Rosenstiel pointed out the problem was that the council’s definition of “substantial” didn’t catch the matter under discussion.
The timeline was discussed, with questions asked about various delays.
Cllr Ward asked why there wasn’t a system in place to ensure that the finance department knew it was expecting money to come in on the 11th of August so that it could be chased on the 12th if it wasn’t there.
Surprisingly he was told by Mr Horspool that there was a system in place which just wasn’t used. Cllr Ward clarified that the council’s systems could cope with an unknown amount, and one that wasn’t related to an invoice and Mr Horspool said they could, the system was there, it just wasn’t used.
Cllr Herbert asked who was responsible for reconciliation and working out how much the council was owed by the ticket seller. Mr Horspool said, as he had done to many questions, that wasn’t the responsibility of his finance department, but of the team running the folk festival.
While Cllr Blair had earlier made some good contributions to the meeting she asked a series of four questions most of which had all already been covered during the meeting or were answered in the report, however she did manage to illicit another key point from Mr Horspool. While she hadn’t asked specifically for it is was in response Cllr Blair’s speech that the head of finance revealed that there was no date for payment of the 2007 folk festival money. He described the contract as “woolly” saying it said only that payment would be after the festival had taken place.
Moving to 2008 Cllr Herbert asked who had decided three months was a suitable period to wait for payment. He suggested that as the council can pay invoices within a week or ten days something of that order could be expected, or at the longest thirty days.
While he was speaking Cllr Herbert decided to jump into the question of recovering the money. He said that if there had been an independent review “it would have had a much harder look at efforts to chase the money”. He asked if, and when the council decided to “go forensic” and get aggressive.
Simon Pugh, the head of legal, said that as soon as the legal department was notified it took external advice, and following that advice decided to pursue the company for winding up. He explained how at first they were rebuffed by the company’s suggestions they were seeking refinancing which with hindsight we know is nonsense but then he gave them the benefit of the doubt and held off for a bit, thinking that improved the council’s chance of recovering the funds.
Mr Pugh explained the ticket seller held the funds until after the festival to deal with refunds etc. but had no explanation for the 3 month delay.
Cllr Pitt sought clarification on the fact the council had taken external legal advice and was told that as the case was unusual it was outside the expertise of council staff so an expert recovering funds was contacted.
Cllr Herbert, still on the subject of chasing the money said: “this was an extraordinary company to be dealing with”, he pointed out that there had been other creditors listed in the company’s accounts, such as the Duxford Flying Proms, but that they were not listed on the latest list of creditors from the winding up meeting. This raises questions about if they’ve been paid ahead of the council, and if so why. He wondered if they had been more aggressive at pursuing their funds than the council. (He also wondered out loud if their debt might have been assigned to “another fictional part of the web of companies”). He asked if the council ought to have been “more Victorian” and prepared to “strong arm” and fight to get its money back.
Winding up towards the end of the debate he returned to say something he had refrained from saying earlier for fear of winding everyone up too much before they’d dealt with the detail. He said that the ammendment to the section on member involvement had “the whiff of Alistair Campbell about them”. Liberal Democrats rapidly heckled him pointing out Cllr Hart (Labour) had been one of those calling for clarity in that section. He questioned how the changes had been made. The Chief Executive and Director of Finance said that their had been no undue political influence on the report and Cllr Herbert withdrew his allegation.
Cllr Herbert complained about the failure of the Leader of the Council and the Executive councillor to take responsibility. He said “the leader makes decisions”, he said that if the leader and executive were going to stick by their argument that they weren’t involved then that: “backs up the idea that no one is running the council. It says that no one is taking responsibility”. He asked “what is the learning for members” and suggested that the Strategy and Resources Scrutiny committee ought be tasked to do a range of investigations every year. (Fishing expeditions presumably?). He said that there was a need to look at the role of members.
Councillors rehashed their discussion about the appropriateness of the “escalation” requirements; I thought Cllr Pitt managed to convey well what was required when he suggested there ought be more “exception reporting” to councillors.
Cllr Benstead spoke about what he thought the role of executive councillors was – which was to keep a watching brief. He said he was not suggesting councillors got involved in management, but he did think they ought to ensure they were kept in a well briefed position.
Opposition councillors and the Liberal Democrats played out their well rehearsed arguments on the pros and cons of the council’s scrutiny procedures, before chancing upon something which caught even more of their attentions – the question of if Cllr Herbert ought be allowed to call something or other a “Dog’s Breakfast”, he was told that “Dog’s Breakfast” wasn’t an acceptable phrase, it had to be “Pig’s Breakfast” or “Dog’s Dinner”. This little debate appeared to wake the councillors up, Cllr Herbert settled on “Dog’s Dinner” and the committee got slightly closer to finally getting round to considering the recommendations.
The Labour Group proposed an amendment replacing the headline recommendations with:
That the committee:
a/ regrets that the commitment to undertake an external independent inquiry into Folk Festival online ticketing has not been implemented.
b/ considers the report incomplete and requires the review to be extended, with extra terms of reference to be agreed by the chair and spokes [opposition spokespeople] of the civic affairs committee.
c/ agrees, as an interim measure, that the recommendations in the report to date be implemented.
d/ recommends to the council the need to increase scrutiny of Executive Councillors by Councillors including a specific review of the powers of the Strategy and Resources Scrutiny Committee to enable it to undertake a programme of financial scrutiny investigations each year.
Cllr Pitt suggest a special meeting of the Community Services Scrutiny Committee
Questions were asked about possible future PWC involvement, During this discussion Cllr Herbert asked if they had been paid for attending the creditors meeting, to which Mr Horspool replied – “they’ll probably ask now you’ve mentioned it”.
Cllr Boyce summed up the agreed future actions that he anticipated:
- A report to council. The minutes of this meeting, will be reported to the full council, but with no debate. Liberal Democrats suggested they expected a Labour motion would be forthcoming which would ensure a full council debate.
- The Community Services Scrutiny Committee will look at implementation of the recommendations affecting the folk festival operationally.
- The Strategy and Resources Scrutiny Committee will look at implementing the broader corporate recommendations.
- The Civic Affairs Committee will monitor progress in relation to the action plan
While the Labour amendment was defeated the committee did agree to broaden a number of recommendations. The details of the wording agreed is the one area on which the official minutes will be better than my notes. (I would like to see the City Council produce “decision notices” immediately following meetings so that the what was decided can be rapidly be made public well in advance of the full minutes.)