Agenda item

Following the Committee’s debate on 28 November 2024, and 27 January 2025, the purpose of this report is to provide an overview of BCP FuturePlaces Limited from its inception to the most recent decision making relating to shareholder governance in so far as it relates to BCP Council.

The Chair invited the Chief Financial Officer to clarify a point made in a public statement that ‘FuturePlaces lost more than £5million in just 2 years’. He referred to the Cabinet report of February 2024 on Budget Monitoring 2023-24 at Quarter Three. This advised that FuturePlaces was projected to repay £2.38m of the £4.75m outstanding debt principle, with £2.37m of debt remaining to be written off against the £4m provision detailed in the report.

The Monitoring Officer (MO) presented a report, a copy of which had been circulated to each Member and a copy of which appears as Appendix 'A' to these Minutes in the Minute Book. To assist in scoping its investigation into BCP FuturePlaces Limited, the Committee had requested an independent and objective overview of the company. The report provided information relating to the chronology of the Council’s decision making and approach to shareholder governance in relation to FuturePlaces, the governance documents which had been published and the agenda and minutes of FuturePlaces Board meetings. The report set out options available to the Committee and highlighted factors to be considered when agreeing a way forward.

It was noted in the report that a business case and Cabinet approval would be needed to fund certain options as there was no allocated budget. The Chair invited the Portfolio Holder for Finance to comment on the likelihood of funding being approved. The Portfolio Holder referred to the history of FuturePlaces and acknowledged the concerns raised. He highlighted one or two areas where further work could be done to ensure mistakes were not repeated and certain allegations dealt with. However, he could not support the funding of a costly external investigation into an issue which was now so political and where most information was already publicly known. Instead, he suggested that an internal working party of independent persons/non-aligned members be established within existing resources supported by Internal Audit.

The Chair invited the Independent Persons (IPs) to comment on this suggestion. They raised a concern about personal indemnity and pointed out that fraud was the responsibility of the Council as a whole to investigate. They reminded members that the Committee should be acting apolitically. Their active involvement in an investigation may conflict with their role in providing oversight. The Monitoring Officer advised that there was no open investigation of fraud in relation to FuturePlaces according to Dorset Police. It was noted that the IPs were covered by the Council’s indemnity insurance when undertaking approved council business. The Portfolio Holder confirmed that he had contacted the IPs with his suggestion in advance of the meeting but had then left them to discuss it in private.

Some members did not feel it would be appropriate for an investigation into FuturePlaces to be conducted internally. They referred to the role of the Committee in ensuring effective governance and financial accountability.

It was moved and seconded: “That the Audit and Governance Committee proposes an independent investigation. This would involve identifying and appointing an independent person to lead the work and report to the Committee at a date to be identified.” It was noted that this proposal would form a recommendation to Cabinet as there was no allocated budget for an external investigation.

Members speaking in support of the proposal felt that an independent investigation would offer more reassurance to the public than if it was done internally. It would guard against any political motivations and would be able to evidence what was factually correct and what was misinformation. It should scrutinise the whole lifespan of FuturePlaces, including any alleged governance failings and the decision made to close the company.  As previously suggested, the scope of the investigation should be as wide as possible and should include provisions to call external witnesses, access to all council/company correspondence and full disclosure of papers. It should be independently chaired and should involve members at every stage.

Members in support of the proposal felt that the requirement for a business case and a budget for an external investigation and the reporting of this in the media was pre-empting their decision and pressurising them into changing their mind. It was in the public interest to establish what had happened to taxpayers’ money and why certain governance issues were not picked up at the time. It was pointed out that not only was a large amount of money involved, there were also consequential costs associated with FuturePlaces which should be considered. Answers were needed to ensure mistakes were not repeated and to demonstrate to local residents that these issues were being taken seriously. It was suggested that an external investigation could be financed by reallocating unused ward improvement funds.

Members speaking against the proposal felt that the request to fund an external investigation was unlikely to be approved due to the substantial costs involved. The Committee had to be clear about what it wanted to achieve and for some members it was already clear what had happened and why, where the money went and who was responsible. Issues were highlighted around the staffing structure and salaries associated with FuturePlaces, the apparent absence of targets and performance monitoring and the composition and relationship of board members, much of which had already been picked up and there was now a need to move on. There was no cost benefit in paying for an external investigation if lessons had already been learned and changes made, especially in the current financial climate.

It was noted that many concerns around FuturePlaces had already been addressed as part of the recent shareholder governance review of council-owned companies. To build on this, it was suggested that an investigation could focus on internal governance and procedures to check whether the steps already taken were sufficient. This did not require an external appointment, it could be something which the IPs could investigate and perhaps for a new Chief Executive to look at afresh. If there were allegations of fraud and criminal behaviour these could be pursued through the police and other channels. It was pointed out that not supporting an external investigation (which it was noted was not something the Committee had originally specified) did not mean that Members were backtracking or no longer supporting an investigation.

One of the Independent Persons questioned why the Committee did not view Internal Audit as an independent resource which could undertake an investigation if provided with a scope. She also commented on the procedures for investigating fraud and suggested that if desired the Committee could limit costs by splitting the scope into areas for external and internal investigation.

Officers commented on points arising from the debate. Members were advised that the reporting of this agenda item in the media was founded entirely on the written report, there had been no dialogue with officers. Officers were unable to comment on the perception of Internal Audit, as independent of senior officers, in not being able to undertake an investigation. Members were reminded of the purpose of the report, which was to assist the Committee in scoping an investigation at this meeting, using the information provided and the list of issues to consider set out in paragraph 12. Any business case would need to include the proposed scope to enable Cabinet to make an informed decision, particularly if funds were being taken from another budget. The MO had a statutory duty to provide Cabinet with relevant advice to ensure it was fulfilling its fiduciary duty to the taxpayer.

The motion was not carried: Voting: For – 4, Against 5, Abstain – 0

Cllr J Beesley and Cllr M Phipps asked that their votes in support of the motion be recorded in the minutes.

The Committee proceeded to consider alternative options. One suggestion to set up a working party with the two IPs and an unaligned councillor was not taken forward. Members considered another proposal, to ask Internal Audit to consider whether the Council owned company shareholder governance review had gone far enough in addressing lessons learned. Points raised in discussion included that only an external investigation would be credible to the public, that it was not clear to Internal Audit what the Committee wanted and that it may be better to defer the item than rush a decision. It was suggested that the scope could be refined in discussion with the Constitution Review Working Group. Unfortunately this would not enable the scoping to be done in public and was not strictly within the group’s remit. Following discussion, the proposal was withdrawn.

It was then moved and seconded “That an investigation be carried out by Internal Audit, the scope of which to include the received minutes of FuturePlaces decisions made at Cabinet and other committees and with a request that it retrieve any available emails and communications so that Internal Audit can conduct an oversight of the communications. These to be limited to information in the electronic domain and all recoverable from BCP FuturePlaces servers, and only to apply to current officers in BCP with a report back in six months”.

Some members felt this proposal would restrict the scope of an investigation. It would not provide the public with confidence if undertaken internally, no matter how well conducted, and would take too long to report back. Others supported the involvement of Internal Audit and felt that if the scope was too wide the investigation would become over complicated and could end up achieving nothing.

The MO advised that in the interests of natural justice and fairness the wording in the proposal should include reference to current and past officers and councillors. She also explained the reasons why it was impossible to undertake a global search of emails. If Members were minded to support the proposal, they would need to set clear, specific parameters. It was suggested that this be delegated to the MO. As the scope remained unclear the MO advised that she would only be able to do this in consultation with Internal Audit and other Statutory Officers as to what was appropriate. The proposal was amended to incorporate these points.

RESOLVED that an investigation be carried out by Internal Audit, the scope of which to include:

• the received minutes of BCP FuturePlaces Limited,
• decisions made at Cabinet and other committees,
• a request that IT retrieve any available emails and communications to allow Internal Audit to conduct an oversight of those communications, this to be limited to information in the electronic domain/that recoverable from BCP Council and BCP FuturePlaces Limited servers and only to apply to current and past officers and councillors and to delegate authority to the Monitoring Officer in consultation with the Head of Audit and Management Assurance and other Statutory Officers to set the parameters of any email searches

 with a report back to the Committee in six months

Voting: For – 4, Against – 3, Abstain – 2

Cllr J Beesley and Cllr M Phipps asked that their votes against the motion be recorded in the minutes.