Agenda item

This draft investigation report - BCP FuturePlaces Ltd (FPL) covers scope areas 1 to 8 (all scope areas).

 

This A&G Committee meeting will be the third meeting on this matter. The Committee has previously reviewed:

 

·       an initial part A which covered scope areas 1 to 4 at a meeting on 24 September 2025. The meeting only managed to review scope areas 1-3.

·       Part 4 to 5.5 inclusive on 6 November.

 

This A&G meeting will attempt to cover parts 5.6 to 8 inclusive

 

There may be a need for a least one further meeting to consider further matters.

 

At the conclusion of this investigation there may still be gaps in understanding, and the Committee may or may not decide that further investigation through other means is required.

 

NOTE:

 

In relation to the confidential Appendix (Section F of the report), should the Committee wish to discuss the content, it is asked to consider the following resolution: -

 

‘That under Section 100(A)(4) of the Local Government Act 1972, the public be excluded from the meeting for the following item of business on the grounds that it involves the likely disclosure of exempt information as defined in Paragraphs 1 and 2 in Part I of Schedule 12A of the Act and that the public interest in withholding the information outweighs such interest in disclosing the information.’

 

The Committee considered the report of the Head of Audit and Management Assurance (HAMA), 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.

 

This was the third meeting to consider the draft Internal Audit investigation report on BCP FuturePlaces Ltd (FPL). The Committee had previously reviewed an initial part A report which covered scope areas 1 to 4 at a meeting on 24 September 2025. At its second meeting on 6 November 2025 the Committee had considered a report covering all areas (scope areas 1 to 8). The Chair explained that this meeting would pick up where it left off in November at the end of Scope Area 5.5, continuing to make comments and identify areas where clarification was needed and/or where further consideration may be required.

 

Scope 5. Items requiring specific assurance (continued)

 

5.7 Did the Board provide adequate oversight of the company and its activities, at all stages.

 

·       A Member questioned why the FPL Board agenda shown at 5.7.3 contained mostly verbal reports including the risk register. The HAMA explained that a typical agenda included more written reports than the example given with the risk register usually presented on screen.

 

5.8 Establish whether any steering groups or advisory groups, to BCP FuturePlaces Ltd, existed.

 

·       Members commented that the FPL’s involvement with such groups was to be expected. It was noted that the list provided in the report was not meant to be exhaustive.

·       A Member questioned whether FPL had undertaken wider community engagement. The HAMA referred to FPL’s engagement with the local community on the Holes Bay scheme at 5.8.5 and advised that this was not an isolated example. The use of ‘charettes’ was also noted.

 

5.9 Establish the relationships that BCP FuturePlaces Ltd had with other bodies/initiatives, companies and council companies/delivery vehicles.

 

·       The HAMA clarified that Bournemouth Development Company (BDC) did not pay FPL for its work on the Site 2 - BIC/Winter Gardens/ARC scheme. This work had been included in the FPL business plans approved by Cabinet. The Council had paid FPL for the work in progress as part of the closure settlement.

 

5.10 Any other specific items that may be revealed as a result of the investigation

 

Additional Restriction Grant (ARG) 4 (Covid)

·       While Members were able to disagree (and did) with FPL’s application for the ARG and how the grant was used, the focus for the purpose of this investigation was around the process followed in awarding the grant.

·       Members questioned the status of the BCP City Panel but were reminded that the decision maker in this case had been the Council.

·       The HAMA advised that the Council had followed Government guidance and its own local scheme when awarding these grants.

·       Members commented on similar examples in other councils where the use of ARGs had been questionable.

·       It was noted that ARGs had been part of the then Government’s attempt to kickstart the economy in what had been unique circumstances. ARGs were no longer in existence.

 

Area for consideration: Whether councillor membership on award panels should be reviewed (although it is noted that Cllr Broadhead withdrew from the process in this case)

 

Loan Interest calculation

·       It was noted that the calculated loan interest in the 2022/23 financial year did not follow the wording in the loan agreement.

·       Members were advised that there was a level of interpretation and ambiguity in the wording and that it was accepted in this case that the right interpretation hadn’t been made at the time.

·       Members noted that there had been no financial implications for Council in this case, however the Committee agreed that this needed to be addressed to ensure it didn’t happen again.

 

Area for consideration: Suggested recommendation to ensure the wording of loan agreements is more straightforward and easily understood by all parties and includes a definition of the term ‘execution date’.

 

Scope 6. Council oversight of BCP FuturePlaces Ltd

 

6.1 Were a shareholder’s agreement, support service agreement, commissioning contract, working capital loan agreement, and lease/licence to occupy any council premises put in place and agreed.

 

·       Members expressed concern that the resource agreement and commissioning contract only ever existed in draft form.

·       It was noted that as time went on more and more support services would have been provided by FPL not the Council but nothing concrete was in place. FPL and the Council had also disagreed on aspects of the commissioning contract.

·       The HAMA commented that the Council as shareholder should have stepped in when it became clear agreement could not be reached and been more forceful in stipulating what went in the agreement / contract.

·       Members’ comments included:

o   That initially, draft agreements may have been thought sufficient. This may have been due to setting up FPL at pace.

o   That the delay in finalising agreements seems to have led to increasing tensions between FPL and the Council.

o   That it was difficult to understand how it could have happened especially considering the amount of public money involved.

·       Members also questioned the number of outline business cases (OBCs) which had been in draft form, although it was noted that this was not unusual for major work where review and input was required.

·       Members were advised that just because a document was in draft form it did not necessarily mean that it was exempt from Freedom of Information (FOI) requests.

·       Members were advised that service levels and standards between council services were agreed as part of their annual business plans.

 

Area for consideration – Whether the Committee should ask questions/seek views of the relevant stakeholders on the impact of the resource agreement and commissioning contract remaining in draft

 

ACTION: Officers to seek clarification on the circumstances when draft documents are / are not exempt from FOI requests

 

6.4 Consider the adequacy of the role of the Council’s internal audit team

 

It was noted that this section provided factual analysis and insight only due to the HAMA being inherently conflicted. It was a matter for Committee to take a view or obtain an alternative view on the adequacy of the IA role.

 

6.4.5 – 6.4.10: Internal Audit work undertaken:

·       Members asked about the degree of IA’s involvement in FPL. The HAMA clarified that this had been stipulated by the Council in the resource agreement. As detailed in the report, this had equated to 21 days work over the lifespan of FPL, mainly as a service to the Council but also with some benefits for FPL.

·       Members asked at what point IA became involved in FPL. The HAMA advised that FPL had always been factored into IA’s risk assessment. The IA work undertaken was set out in this section of the report and had included a review of the adequacy and existence of relevant policies.

·       Members commented on whether there should be a mechanism for more scrutiny during the initial set up of high risk projects.

·       Members also commented that the natural role of audit was to be more backward looking.

 

6.4.11 – 6.4.13: Factors considered when making the judgement on whether specific audit coverage was required – risk based:

·       Members noted that one of these factors was the short lifespan of FPL, meaning there was less audit area to carry out detailed assurance work,

·       A Member questioned the level of oversight provided. The HAMA referred the committee to the lines of assurance in the Council’s Assurance Framework - the first line being directors/managers, the second line which included the work of boards such as the FPL Board and other forms of assurance and the third line which was IA.

·       Details of assurance from other sources were set out in the report. As an example Members were referred to section 5.7 which had provided further information about the FPL Board including the seniority of membership/attendance at meetings and the Board’s oversight of the company and its activities during its lifespan.

·       Members considered whether there should be more regular monitoring of progress by the Council for projects involving this level of investment. The Committee was advised that this point had already been addressed. Members were referred to Scope Area 8 (Lessons Leant update) which set out details of the new shareholder governance arrangements.

·       A Member commented that ‘arms length’ should not mean less oversight when public money was involved

 

ACTION: Add to Forward Plan an update on the progress of shareholder governance arrangements and lessons learnt, following on from 2 October 2024 Cabinet update report on Council Owned Companies Shareholder Governance Review.

 

Scope 7. Decision to close BCP Future Places Ltd – Cabinet 27 September 2023.

 

7.1 Consider if the report to Cabinet adequately sets out the options, financial implications and risks associated with the decision to close BCP FuturePlaces Ltd.

 

·       The Chair referred to the different viewpoints and narratives of relevant stakeholders and the tensions involved.

 

7.2Review the robustness of the process for determining what work was to be paid for and what work was not paid for.as part of the final settlement.

 

·       Members noted that they had already discussed this in scope area 4. 

 

7.3 Set out the detail of the work paid for and not paid for.

 

·       Members noted that they had already discussed this in scope area 4.

·       Members’ comments included that the closure of FPL had been a political decision, factors including the financial position of the Council at the time and with an awareness that some costs incurred by FPL on projects the Council then decided it would no longer prioritise or take forward would need to be written off.

 

Scope 8. Lesson Learnt Update

 

8.1 Review of the previous lessons learnt, actions implemented and those outstanding and including any additions as a result of this investigation.

 

·       A Member queried why some councillors were still company directors and noted that the Shareholder Advisory/Operations Boards were not listed as meeting this year.

·       The Chief Executive gave an update on the work of the Shareholder Operations Board. The Board had met recently and was currently undertaking a review of all council owned companies. As soon as practicable the focus would then move onto the more member led Shareholder Advisory Board. Members were assured that the recommendation to no longer appoint councillors to company boards would be implemented.

·       The Monitoring Officer advised that there was a formal process for updating arrangements and agreeing the appointment of directors to council owned companies. It was important to ensure this was done correctly in a considered manner rather than being rushed.

·       A Member spoke of the need to be mindful of how and why some of the more historic entities such as BDC and Seascape had been set up, the need to recognise the different structures involved and the role of the committee in ensuring proper accountability and scrutiny of the process.

·       A Member asked about the action plans to bring each company’s arrangements in line with best practice.  The Committee was assured that the lessons learnt for the Council would be taken forward, to ensure that in future the arrangements for governance and oversight were right and proportionate and properly considered. It was noted that specific arrangements may depend on the individual company and the element of risk. There was also a need to recognise the context, in terms of the current financial climate and the current Administration’s approach.

 

ACTION (already noted at 6.4): Add to Forward Plan an update on the progress of shareholder governance arrangements and lessons learnt, following 2 October 2024 Cabinet update report on Council Owned Companies Shareholder Governance Review.

 

Next steps

 

The Chair thanked the Head of Audit and Management Assurance for producing such a thorough and informative investigation report and for enabling the vast majority of content to be available in the public domain. She acknowledged the amount of work which the report had required of him. The Committee agreed that the report was an excellent piece of work for which he should be commended.

 

The Committee proceeded to discuss the next steps having completed its consideration of scope areas 1 to 8. The Committee did not yet feel in a position to finalise the report and adopt any recommendations until Members had the opportunity to ask written questions of relevant stakeholders involved in FuturePlaces. Members discussed the procedure for submitting questions through the Chair and the timescales for responding. It was noted that there was no obligation to reply. The Monitoring Officer commented on right to reply principles and the need to be aware of certain caveats, including a need to phrase questions with care. A Member asked about any requirements to publish responses. The Chair agreed to seek further advice on this so that the position could be confirmed with the relevant stakeholders. To ensure a consistent approach was followed, stakeholders who had already supplied previously submissions (some of which had been out of scope) would be included in the questioning process.

 

The HAMA advised that the majority of the scope sub questions listed in Appendix D had been answered in the report including all sub questions from the committee.

 

The HAMA clarified that his final recommendations were as set out in the report at Appendix C. Any further recommendations or comments were a matter for the Committee to progress. The Committee indicated that it was minded to accept in principle the recommendations at Appendix C but agreed to formally consider these and any further recommendations from Members at a future meeting as part of the final report together with any information provided by relevant stakeholders in response to the committee’s questions.

 

A Member commented on the need for residents to see that action would be taken if required.

 

The Chair acknowledged that there were differing views among Committee Members on the question of whether and when any external work would be required but she felt it was important to keep this option open.

 

ACTIONS associated with next steps:

 

·       Committee Members to send questions for relevant stakeholders involved in FuturePlaces to the Chair asap

·       Chair to seek advice of the Monitoring Officer on the phrasing of questions and then arrange for final list to be circulated to Committee

·       Issue written questions to the relevant stakeholders week ending 12 December 2025 and seek written responses by mid January 2026

·       A final report to be presented to the Committee in early 2026, comprising a Forward from the Chair (a draft of which to be shared with the committee), the draft Internal Audit investigation report and a compilation of responses from relevant stakeholders

·       Recommendations to be finalised and agreed by the Committee and referred to Cabinet and Council