Wirral Council plays the Regeneration Game (badly)

Just before Christmas started Wirral Leaks asked for a guide to the BIG Fund/ISUS/Working Neighbourhood investigation. Well where to start?

BIG stands for business investment grants. ISUS stands for intensive start-up support.

BIG is not to be confused with Think Big (marketed under the rather terrible catchphrase Think Big! Think Wirral). Think BIG was for grants of over £20,000 and as far as I know isn’t included in the whistleblowing allegations. Think BIG had a budget of £300k a year in Wirral Council’s budget from 2009/10 and is now called the Think Big Investment Fund.

Business Investment Grants (for under £20,000) were awarded to companies that were successful in applying for a business investment grant. Grant Thornton (who are also Wirral Council’s auditors) were asked in October 2012 for a quotation for work to look into the whistleblowers’ concerns. As a result of this work, two reports were produced and sent to Wirral Council. One report was on BIG and the other on ISUS.

In response to a question from Nigel Hobro to Cllr Phil Davies at the full Council meeting in July, Wirral Council published the summary of Grant Thornton’s report into the BIG program.

I made a Freedom of Information request for Grant Thornton’s ISUS report in August 2013. On the 23rd September 2013 Wirral Council stated that “the report, which has been reported previously, has been handed over to the Police for their consideration, in accordance with the recommendations contained within the report” and refused providing the report using a s.30 exemption (Investigations and Proceedings conducted by Public Authorities).

I asked for an internal review as the investigation had been carried out by Grant Thornton UK LLP (who isn’t a public authority). Another factor I pointed out was that Wirral Council weren’t bringing criminal proceedings, but instead passing it to the police. I also pointed out that s.30 was a qualified exemption and subject to a public interest test (which Wirral Council hadn’t included in its original reply).

Wirral Council’s response to the internal review was that they still refused to release the report. However they did provide further detail as to why. Firstly they stated that the investigation into the BIG and ISUS program was done independently of Grant Thornton’s role as Wirral Council’s auditors. This was to “review the earlier investigation conducted by the authority’s Internal Audit section and to conduct their own investigation into these allegations” and referred to an assurance by Grant Thornton that their work on BIG & ISUS was independent to that of their work auditing Wirral Council’s accounts.

Wirral Council regarded the work that Grant Thornton had done on BIG and ISUS as on Wirral Council’s behalf, therefore in Wirral Council’s view a s.30 exemption still applied. Stating this in English only a person with a legal background would write “as such Section 30 of the Freedom of Information Act 2000 is still appropriate as the investigation was conducted by an organisation acting on behalf of the organisation.” Despite referring it to the police, Wirral Council gave the impression they hadn’t made their minds up as to whether they would start a criminal prosecution themselves. However if they hadn’t made their mind up already not to institute criminal proceedings on this why refer it to the police?

In a concession though, they did agree with me that the original refusal should have included Wirral Council considering the public interest test. The person doing the internal review did carry out a public interest test (of sorts).

They gave many reasons against disclosure (and none for). The reasons they gave were that they regarding it being in the public interest not to disclose the report were that “the investigatory process is safeguarded“, that it would “undermine an investigation/prosecution of criminal matters“, “dissuade members of the public from reporting potential or actual wrongdoings“, “undermine the prosecution process and the role of the criminal courts” and “could prejudice the right to a fair trial“.

However, there is more than this in this story. As referred to in this previous blog post headlined “Million pound contract between Wirral Council and Enterprise Solutions (NW) Ltd for ISUS scheme was never signed” and referred to at 1.16 to 1.22 of Grant Thornton’s report the contract between Wirral Council and Enterprise Solutions Limited (also known as Wirral Biz) was never signed (a copy of the unsigned contract is linked to from that blog post).

Therefore Enterprise Solutions (NW) Ltd don’t regard it as a binding contract. Enterprise Solutions (NW) Ltd are quoted in Grant Thornton’s report as stating in a letter to Wirral Council from December 2012 “this company has nothing to hide in relation to its involvement in any of the above programmes [one of which was the BIG programme] on which it provided services. We are therefore prepared to grant access on the basis requested, on the understanding that your costs of the exercise are borne by the Council.”

Despite this commitment by Enterprise Solutions (NW) Ltd to Wirral Council by letter in December 2012, that they had “nothing to hide” Grant Thornton state in 1.21 of their report that “we have not been given access to the documentation retained by the company concerning the services it provided under the BIG programme and have, therefore, been unable to discuss these with Enterprise Solutions.”

Complicating the matter further, Wirral Council was also in receipt of money from the (since abolished) North West Development Agency in the form of grants. This was for the ISUS (intensive startup side of things). The first ninety pages of the contract with the North West Development Agency is here and a further thirty-six pages here.

The North West Development Agency money given to Wirral Council under the terms in the contract (one hundred and twenty-six pages isn’t the whole contract as there were pages on publicity requirements I haven’t scanned in yet) came from Europe. Just to complicate things even further, Wirral Council also used Working Neighbourhood Funds money to fund these programs.

The whistleblowers’ concerns were that companies that didn’t qualify for grants were given them. On the BIG side, applications were first reviewed by the BIG Panel then the award of the grants were agreed by Wirral Council’s Cabinet (not part of public meetings of Cabinet but in private after the press and public were excluded) due to “commercial confidentiality“.

Grant Thornton looked into the applications of six companies that had applied for business investment grants. In five of these they found “financial anomalies” which were not explained to the BIG Panels. Four of these five were “significant anomalies” which had not been brought to the BIG Panel’s attention. The types of anomalies are outlined in 2.33 but ranged from accounts that indicated that the applicant had paid unlawful dividends (contrary to the Companies Acts) to balance sheets were one year’s opening balance didn’t match the previous year’s closing balance.

One applicant had included a £500 grant from Wirral Council in its accounts, which had been received four months before the accounting period that the accounts covered. Grant Thornton recommended that out of the six applications it looked at that Wirral Council should claw back the grant to the company referred to as BIG6 and refer that application to the police (which happened at some point earlier this year).

I asked Merseyside Police some questions in September about their investigation in September. The reply I got from a Detective Chief Inspector Gareth Thompson was “This matter is currently in the hands of Wirral Borough Council and any requests for information you have should be directed to them, perhaps by way of a Fredom of Information enquiry” (yes freedom is spelt incorrectly in the reply, but to be fair to Detective Chief Inspector Gareth Thompson I would guess that freedom is a word used very rarely by police officers).

This blog post contains a transcript of the answer given to Nigel Hobro by Cllr Phil Davies back in July 2013.

So who knows what’ll happen next in this overly complicated saga? Who knows? Certainly my attempts to make inquiries have been stonewalled (apart from the contracts which I’ve published). However there is an unconfirmed rumour that DCLG (the Department for Communities and Local Government) are going to clawback grant money from Wirral Council in 2014 which could come to a six-figure amount.

So there you have it, nearly everything I know about the BIG/ISUS saga and Wirral Council.

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