< CAR PARK REPORT

Report of the Melbourn Car Park Working Group – Phase 2
23 October 2017

Working Group Members:
Roland Potter (Independent Chair)
Duncan Baker (Resident)
Mike Swann (Resident)
Steve Kilmurray (Parish Councillor)
Clive Porter (Parish Councillor)
John Travis (Parish Councillor)
Claire Littlewood (Assistant Clerk to Melbourn Parish Council)

1 Purpose of the Phase 2 Report

This report was commissioned by Melbourn Parish Council because of public concern over the cost* of a project to refurbish the Village Car Park.

* Cost history – Background:
  • The original outline project was framed at a meeting held on 8th January 2014, at which the total project costs were estimated to be about £100k. This sum was to have been funded from a mix of existing reserves, money set aside from a loan already obtained for the Community Hub project, and S106 provision. The nominal budget was further increased to £120k at a meeting on 29th January 2014.
  • The project scope changed again, such that an invitation to tender was sent out at a budget price of £150k; only one tender was eventually received. This was finally recommended for approval by the Finance and General Purposes committee on 30th March 2015, and approved by the Full Council on 13th April 2015 at approximately £255k. Both meetings were held in private session. A Public Works Loan Board (PWLB) loan of £200k was used to finance this decision.
  • Due to problems with the construction, and the nature of the contract, the project cost eventually reached more than £500k; the final account was presented to the Council by Interserve, the main contractors, in February 2016.
  • After a negotiation with Interserve at a meeting on November 25th 2016, this sum was finally reduced and settled at approximately £345k.

    Appendix 3a is a copy of the report that was given to the Melbourn Council detailing the above history as the Phase 1 outcome.
The objectives of the Phase 2 report were to investigate –
  • The decision-making process for this project from conception to completion.
  • The management of the project.
  • Availability and utilisation of appropriate expertise.
  • The relationship and consultation with the general public who would benefit from the project.
  • On-going oversight during the project lifetime.
  • Make recommendations to the Parish Council on future best practice.

2   Executive Summary

  • The Working Group found many problems and weaknesses in following the progress of the Car Park Project. The eventual catastrophic overspend (partially mitigated after the event through negotiation) had triggered the investigation process, but the Working Group believe this should not be the primary reason for concern about the way in which the project was handled.
  • The Working Group concluded the underlying problem was one of mismanagement over a period of time and on many levels. This was not conscious, wilful or fraudulent, but the outcome of poor communication. Diffuse, divided and changing responsibilities for practical project control, inadequate financial control and delegated decision-making also contributed. Some key knowledge and skills were missing, particularly financial control and full understanding of Parish Council accounts and reserves.
  • The project had followed on shortly after another large village project commitment, namely the Community Hub, which had already incurred borrowings of well over £500,000. Repayments on these borrowings had already reduced freely available precept monies by more than 15%. The Car Park Project would increase pre-committed debt-servicing payments to about 25% of the precept. It is the conclusion of the Working Group that these significant changes occurred ‘beneath the radar’ of public awareness and should have been subject to open scrutiny.
  • An important feature in the planning that added to the financial impact was a failure to include future operating costs in the project assessment. Hence neither the need for significant on- going grant-funding support to the Community Hub nor an increased rates assessment on the improved Car Park was predicted.
  • Another issue appeared to be the failure to inform or include the wider public in project design and development.
  • This report will describe the various findings in more detail.
  • The Working Group deliberately do not assign blame or culpability to individual persons involved in delivering the Car Park project; no names are mentioned in the report. In some instances job roles are mentioned in the report, but only to explain and interpret the findings. The conclusion is of a Parish Council project with corporate incompetence at its heart, rather than wilful neglect.
  • 3   Methodology

    • The Working Group reviewed the minutes of all meetings and associated documents over the relevant period and looked for supporting information to justify the Council’s decision-making process.
    • The Working Group undertook a survey of the elected councillors during the period of this project to obtain their views. All affected councillors and staff were invited to comment either in person and/or in writing. Not all did so.
    • It should be noted that these investigations followed a prior phase (Phase 1) of work, that had the objectives to examine and understand the project overspend, to determine the final costs and agree remaining financial obligations carried over from the Car Park Project. The preliminary investigation also informed this report. The top-level conclusions from Phase 1 are included here as Appendix 3a.
    • Due to the high public interest in this investigation, the chair of the Working Group was chosen from well outside the area of Melbourn. Members of the public were invited onto the group, and only councillors who had not been in post at the time of the Car Park project represented the Parish Council.

    4   Issues faced by the Working Group

    The Working Group found that:

    • There was very limited supporting documentation to demonstrate the quality of information the Council had received to inform its decision-making.
    • There were few formal records of decisions made by individual councillors and/or officers in the management of the contract.
    • Considering the value of the project in relation to the Council’s budget, the management of the project was not the subject of a review by the Internal Auditor.
    • There were no clear and open lines of reporting to the Full Council tracking the progress or costs of the project.
    • The Council often chose to consider items regarding the project confidentially, thereby removing the public from the debate and the project from public scrutiny.

    These factors lead to gaps in the evidence and some lack of confidence concerning the exact sequence of events and decisions. However, it is the very lack of a convincing written record trail that indicates the overall failure of competent oversight and decision-making.

    5   Observations

    5.1   How a Parish Council should operate
    • Councillors are not paid employees of the Council.
    • The Clerk to the Council is the person legally accountable for actions made and decisions taken. The Clerk is advised and informed by councillors who have a duty to act in the public interest but no executive responsibility. Council procedures and Standing Orders will indicate when and under what circumstances the Clerk will seek joint approval for decisions from the Chair of the Council.
    • Under the Council’s Code of Conduct councillors have a legal duty to declare any personal or pecuniary interests.
    • Councillors are elected every four years to promote the wellbeing of the community and to manage the Council’s finances with due diligence, and for the benefit of the community.
    • Within any democratic system there will be councillors who do not agree with the decision of the majority. However, all Councils operate on the basis that a simple majority will carry the vote on any decision.
    • Any decision of the Council can only be reviewed after 6 months, or earlier if there is the required number of councillors requesting that a decision be reviewed.
    • Decisions of the Council are a shared corporate responsibility and all councillors have a duty to scrutinise and hold to account the Council’s actions. This is achieved by bringing all significant matters to the Full Council for scrutiny and approval. Working parties or sub committees can do preliminary work. However, such groups must conduct business according to properly approved Terms of Reference and report regularly to the Full Council.
    • All proposals and decisions taken to the Full Council should be open to the public. Only in special circumstances should matters be held in camera, usually either for personnel issues, such as pay and conditions, or where price-sensitive pre-contract information is at risk. It is not appropriate to hold in camera council meetings because the information contained therein might be controversial. (See Section 8).

    The above factors are important background in judging the way the Melbourn Parish Council operated in actual practice when managing the Car Park project.

    5.2   Mode of Operation for the Car Park Project

    Below are comments and views of members of the Working Group concerning the ways in which the Parish Council appeared to operate during the management of the Car Park Project:

    • The culture of the Council during the period of the car park project was less than ideal. Comments from the interviews of those involved confirmed a picture of a very divided councillor group, who were not operating at all well as a team. There were ‘factions’ who tended not to trust one another, with ‘point-scoring’ behaviours. This was not a good platform on which to run a complex and expensive project. It made the task for the Clerk difficult in the extreme, through receiving many conflicting views and instructions.
    • Overall management of the Council during this period was also not effective. The Council frequently demonstrated a lack of confidence in what it was doing through reverting to meetings or part meetings in camera, and a general lack of openness towards the public, especially when public concern began to arise. Council leadership seemed to either ignore or be unable to heal the divisions that existed. The principle that every councillor has equal accountability for what happens did not seem to be in the forefront of the thought process.
    • A greater emphasis on ‘shared corporate responsibility’ and ‘duty’ should have been given, and it became clear that this had not been the case. During the individual feedback a number of councillors then involved commented that they were ‘not kept informed’ of what was happening with the project, using this as a reason for not raising concerns, especially in relation to the cost. While it is clear that communication was hampered due to a breakdown of some important aspects of overall management, this does not absolve individuals from blame or personal responsibility. Councillors nonetheless retained individual accountability for the actions of the group and should have been stronger in demanding partnership in the project process. It appears to have become a failure of the whole Council as a body.
    • It is a tendency of organisations to look for individuals to blame if things do not turn out as expected, or if they are challenged. However, without the contribution, professional knowledge and drive of individual councillors, projects would not be delivered.
    • An assumption was made at an early stage that the refurbishment of the car park was ’something that had to be done’. It appears no one was able to effectively question either the scope or indeed the need for the project. Some councillors’ voices were indeed raised, but were ignored, possibly because of the culture and divided nature of the Council, who were not behaving as an inclusive team.
    • Councillors had taken key roles within the project management of the car park and then relinquished them at a significant moment in the project life. This appeared to the Working Group to be regrettable, and is not in keeping with a duty to promote the wellbeing of the community, which is incumbent upon being a parish councillor. Conversely, some councillors had taken little interest in this very significant project. All members of the Parish Council should have been willing and able to air their views at Council meetings. Even if they completely disagreed with others, all councillors should have taken responsibility for finding out what was being proposed. Open and informed debate at Full Council was not shown by written evidence.

    6   Public Consultation

    To support the decision-making process outlined above, it is good practice for a Council to consult with the public. This is particularly suggested where it involves major projects and assets or where the cost of a project will have a large impact on the Council finances and contributions from local taxpayers.

    Some earlier consultation on the need to upgrade the central car park had been done (See Appendix 1).

    There was thus good reason to address the improvements recommended for the Car Park, based on three different strands of pre-existing evidence:

    • A history of anti-social behaviour
    • To satisfy the policy for ‘Safer Routes to School’
    • To improve the somewhat dilapidated appearance

    The history of anti social behaviour and consequent complaints from residents near the car park site, often with police involvement, was a major driver.

    Previous research had shown that these three very different component factors were involved. This complexity should have been a strong signal that, when the different car park upgrade options were considered, further consultation and broad public involvement should have been sought.

    6.1   Comments on Public Consultation

    Below are comments and views of members of the Working Group concerning the ways in which the Parish Council appeared to operate during the management of the Car Park Project:

    • While the Village Plan and other sources had strongly suggested the need to improve the central car park, this was no different to the background prior to the building of the Community Hub. In the case of the Community Hub further extensive community consultation was carried out. Members of the public were included in the project team.
    • It appears that, while a great deal of money was committed to re-furbishing a car park (that in most important respects already existed) no further public consultation was thought to be necessary before or during the design phase, or at any time after the project had begun.
    • The recently completed Community Hub had already put stress on the Council finances. No weight was apparently given to this, especially when considering the need for public consultation. The duties of councils to conduct public consultation specifically mention that this course is particularly suggested where it involves major projects and assets or where the cost of a project will have a large impact on the council’s finances. The foregoing defines the Car Park Project yet there was no consultation with the public on preferred solutions.

    7   Tendering

    The Council employed a consultant to assist with the tendering process and this complied with the recommended financial regulations. The result of the process was that the Council appointed a project management company and a contractor to complete the work.

    8   Moving items on an Agenda to Confidential (in camera)

    The use of the confidential section on an agenda should be used sparingly.

    The reports on this type of project should be considered in public, to demonstrate that the Council is being diligent in managing its finances and assets.

    Moving items away from public scrutiny can contribute to an air of mistrust between the Council and its residents.

    The confidential part of the agenda should only be used for the following;

    • Engagement, terms of service, conduct and dismissal of employees.
    • Terms of tenders, and proposals and counter proposals in negotiations for contracts.
    • Preparation of cases in legal proceedings and the early stages of any dispute.

    9   The Council’s Internal Management of the Project

    Rather than a Working Party approach, the Finance Committee or Full Council would have more appropriately been responsible for the internal management of the project, due to the likely cost.

    • It would have been appropriate for the Council to adopt a simple project management practice to ensure it both complied with due diligence and observed accountable day-to-day management.
    • The creation of a specific project management-working group to help facilitate a project would be beneficial. However, it should have had clear Terms of Reference and with delegated reporting back to the Parish Clerk. The sub committee set up in the early stages of the project drew up draft Terms of Reference (see Appendix 2). However, no evidence was found that this draft was ever ratified or approved by the Full Council. It is also questionable that this sub committee, subordinate to an existing Planning Committee, should be the right vehicle to handle such a major project.

    Decisions to change the project and/or to spend contingency funds should be recorded, identified, discussed and agreed in public. These decisions should not be delegated to individual councillors or the Clerk. The reason for this is to allow the Council the opportunity to review the progress of the project against budget and to be able to halt or review a project should the cost of the project be increasing outside the agreed budget. There was little evidence of such transparent decision-making.

    As part of the management process there should be regular budget reporting of cost against budget to the Finance Committee and the Full Council. Again, there was little evidence of such communication having occurred.

    9.1   Internal Management – Working Group Comments

    Below are comments and views of members of the Working Group concerning the ways in which the Parish Council appeared to operate during the management of the Car Park Project:

    • The project management structure seemed diffuse and the accountability for scope, costs, communication and decisions very unclear. Councillors either assumed essentially complete control over project development, designs and quotes or they had no involvement at all.
      Those who had brought the final project brief into existence relinquished leadership at a crucial moment, and the subsequent decision to proceed seems to have had a momentum of its own. This appears a significant failure of all concerned to ‘call it’ at a point when everything should have been reassessed.
    • The original project was fairly small in scope, involving much less infrastructure and was much less costly. Due to the failure to ensure proper and accountable project leadership and public scrutiny, the project scope grew to a sum amounting to about half that already spent on the Community Hub. This sum, on top of the loans and commitments already in place from the Community Hub, should have been questioned and openly discussed in Full Council and in the public gaze. That the eventual costs escalated much further during the actual build does appear to be a central or isolated management issue. While communication within the Council and with the public during the construction phase was either patchy or entirely missing, it seems unlikely that the Council could have changed the final outcome and/or the overspend against budget.
    • Committed spend on the earlier Community Hub project had already put the Council finances into a much weaker position than in the recent past, and was worse than those involved knew it to be. The financial governance of the Council has to be called into question therefore, as the Clerk, Finance and General Purposes Sub Committee and the Full Council did not seem to have an accurate or complete picture of the income and expenditure, or the actual state of the reserves.
    • It appears the Council had insufficient knowledge or skills to understand or manage the financial aspects of the Council in general, or this significant project.
    • Much effort was made by this Working Group to understand the financial background and position prior to, during and after both Community Hub and Car Park projects.
    • Although the precept has increased in real terms, it appears the Parish Council now has £65k less available to spend each year, as this is the total amount needed to service PWLB for loans on the Community Hub and Car Park together with consequential costs. This total is the sum of both repayments on borrowings and the grants historically given to support the Community Hub operations (approx. £50k + 15k grant).
    • Having reviewed the past Parish Council accounting statements for 2011/12 the total balances and reserves at the year-end were £610,445 with no borrowings, the annual precept for the year was £190,309, showing the finances to be very healthy.
    • However, the accounting statement for 2016/17 shows that, although the annual precept for the year had risen to £195,917, total borrowings were now £888,380 (requiring a figure of nearly £50,000 per annum for the capital and interest payments) and total balances and reserves of only £115,707.
    • While the purpose of this report is an investigation into the Car Park, decisions on financing should not have been made in isolation from those already made for the Community Hub. Taken together, these two projects now account for in excess of 25% of the annual precept. It is the view of Working Group members that it was not good financial planning to borrow additional money just because it was cheap to borrow due to low interest rates. It is also necessary to take into account how much (a) is already committed in a similar way and (b) has to be repaid, including the capital and interest. The decisions taken have placed heavy repayment obligations on the village for the next 20 years.

      As stated elsewhere in this report, commitments of this magnitude should have been open to public scrutiny and were not.

    10   Accountability

    Various factors should be considered when judging the accountability of the Council during the Car Park Project: –

    • The Council had pushed forward with the project for the benefit of the community in mind.
    • Its desire to complete the project and the constraints of an NJC (National Joint Council) contract were potentially detrimental to the openness of the Council to the public.
    • Ensuring that the Council had a clear mandate from the residents to go ahead with a major project would have been helpful in managing objectors to the project and achieving a good result.
    • Projects of this size need to be managed in such a way that the residents have confidence in the Council. It is therefore necessary to have a clear and open reporting system that the public can see and question.
    • The Council finances are an important reflection of the capability of the Council and this should be reflected in its financial reporting in general and on specific projects.
    10.1   Accountability – Working Group Comments

    Below are comments and views of members of the Working Group concerning the ways in which the Parish Council appeared to operate during the management of the Car Park Project:

    • As it is mentioned above, the Council pushed forward with the project in the belief it was for the benefit of the community. However, this benefit was largely assumed, based on previous research, and ignored the impact and complexity of the actual project. Residents with children would benefit from ‘Safer Routes to School’ if this were included. Also, a small section of the community near to the car park site that was affected by anti-social behaviour would potentially benefit, if anti social behaviour (ASB) could be reduced/eliminated. Given that only very few car-parking places were eventually added, the actual outcome would be hard to justify in cost-benefit terms. Members of the public have stated that just installing the CCTV would have had much the same impact on ASB as a new car park layout. Full public participation might have saved costs.
    • The Clerk was also the Responsible Financial Officer, with accountability for the control and reporting of the Council finances. There were problems with the execution of this, as already indicated in this report. However, there was also a failure of both internal and external auditing during the period before and during both Community Hub and Car Park projects. The Working Group believes that the auditor should have questioned financial commitments of the kind being made, and the proportion of the precept affected.

    11   Summary Recommendations

    • The Council should use public consultation as a tool to inform their decision-making.
    • The results of public consultation should be documented in support of projects.
    • The Council should adopt a project management practice for all future significant projects.
    • The Finance Committee or Full Council should manage projects with a major financial impact overall.
    • The Council should consider the use of Working Groups including councillors, the Parish Clerk and other professionals to help deliver projects.
    • Delegation for these projects should be to the Parish Clerk only; this will protect the integrity of the councillors and the Council.
    • A system of recording decisions and actions should be included in the Project management practice and these should be made available to the Council.
    • The Council should reduce the use of the confidential part of the agenda.
    • By putting the above in place the Council should encourage scrutiny of its actions and decision-making.
    • The Council should review its ability to continue servicing the needs of the village against the background of high-level borrowing.

    < CAR PARK REPORT