Cotswold Water Park report calls for urgent review of monitoring officer role at council

March 13, 2012

The combination – in one person – of the roles of monitoring officer, chief legal adviser and line manager of key service areas involves risk of role conflict and should be reviewed urgently, an independent investigation into the Cotswold Water Park case has recommended to Gloucestershire County Council.

“It [this combination] will be increasingly difficult to sustain as more widespread outsourcing and other changes to council services creates a growing need for demonstrably independent investigation and reporting,” the report by the inquiry team – led by Graham Garbutt – concluded.

A former chief executive and accounting officer for the Countryside Agency, Garbutt also called for a detailed review of the county council’s scheme of delegation among a range of recommendations.

Garbutt was appointed by Gloucestershire to investigate the setting up of Cotswold Water Park Society Limited (CWPSL), its governance and the county council’s relationship with the society. The local authority leased the land to the charity for a peppercorn rent.

The inquiry was launched after the society’s former chief executive, Dennis Grant, was jailed for four and a half years after pleading guilty to six charges of defrauding CWPSL of £660,000.

Responsibility for the park was subsequently switched from CWPSL to another charity, the Cotswold Water Park Trust, in March 2011.

In its report the Garbutt Review said overall the case illustrated the risks involved in transferring service delivery and assets from local authorities to outside bodies, “and the critical importance of ensuring that policies and procedures, and the necessary skills and resources, are in place to manage future pressures”.

Evidence was identified during the review that merited further investigation and this has been referred to the City of London Police Economic Crime Directorate, the report said. However, no additional details about what this related to were provided.

Gloucestershire said it would wait until the report had been considered in full by council before making a formal response.

Cllr Mark Hawthorne, Leader of the county council, said: “There has been a lot of speculation around the business of the Cotswold Water Park Society and the role this council played. I ordered this enquiry to get to the bottom of these issues and to confirm once and for all what is fact and what is fiction.

“It is clear that there are lessons to be learned about the way we work and I want to make sure that we make whatever changes necessary to protect the council and the community whenever we transfer assets in the future.”

Following a meeting of its audit committee this week, Gloucestershire said it would ask its constitution committee to review the monitoring officer role and the way delegated decisions were taken as a matter of urgency.

The county council will also set up a partnership board comprising public sector bodies as well as representatives from the local community to oversee the Water Park’s governance.

In addition it plans to write to the Communities Secretary and call for a review of the steps taken by the District Auditor and the Local Government Ombudsman in the case.

The Garbutt Review’s findings and recommendations were summarised in three areas: specific complaints and concerns; council procedures; and governance.

Specific complaints and concerns

The review concluded that there was no evidence that Gloucestershire was involved in creating the parallel, confidential agreements negotiated in December 2007 between Grant and developer Watermark.

The council did not sign any such document and there was no provision in them for it to do so, it said. The report added that it was likely that the council first became aware of the agreements after Grant’s arrest in 2010 and first saw the documents in August 2011.

The Garbutt Inqury also rejected allegations of a conspiracy linked to the Freemasons, saying there was no evidence to back the claims. There was nothing in what the inquiry team saw to suggest any impropriety on the part of that organisation or its members, it said.

Other findings included:

When Gloucestershire gave consent to the underlease for Keynes Country Park, provided to Watermark by the society, its terms were “significantly more permissive than the headlease granted by the council to the society”. In particular the ‘permitted use’ clause was extended to allow any development for which planning consent could be obtained, except that Watermark could not construct residential accommodation unless reasonably required for employees or security personnel;
In agreeing to these more permissive terms and in other activities, the society “perhaps acted beyond its own rules of operation, derived essentially from the local authorities’ legal powers for providing ‘recreational facilities’. However, under the provisions of the Industrial and Provident Societies Act 1965, this would not have invalidated Watermark’s underlease;
The council’s consent was authorised at official level using delegated powers. “This decision was defective in its failure adequately to take account of internal professional advice and in failing to consult adequately or seek authority from senior councillors or directors.” It also contravened requirements set out in guidance produced by the same department earlier that year. The context for the decision was “pressure for alleged urgency related to the society’s financial position”;
The operation of Gloucestershire’s complaints system failed in this case. There was no evidence that an instruction at one stage from the then director of finance for the matter to be dealt with as a formal complaint was carried through;
Although Gloucestershire’s most senior legal officer had repeatedly cautioned that it would be unlawful for the council to exert influence over the society, the chair of the joint committee did so in drafting a response for the society’s chairman to a very important complaint. Independent legal advice came to a different interpretation – that it was proper for the committee to influence the Society and this was in fact one of its core purposes. The councillor’s action was, on that basis, not unlawful;
Following receipt of complaints, the chair of the joint committee sought advice from the monitoring officer. “This seems to have resulted more in a robust defence of the council’s actions than an independent examination of the facts”;
A complaint to the Local Government Ombudsman was poorly handled and after long delay, not pursued.

Council procedures

The report’s comment in relation to the combination of the monitoring officer, chief legal adviser and line manager role was one of several findings and recommendations contained in the report in relation to council procedures.

There was a pressing need to improve and update these procedures, it said.

“The Water Park project is relatively small but similar failures in other areas of council activity would have greater impact on service users,” it said. “Other service areas should consider these findings and possible implications for their management of risks.”

The report said the monitoring officer in the case had found himself in the position of both defending the council and its staff against threats of litigation and acting as impartial arbiter.

It also called for a detailed review of the scheme of delegation. This would include setting clear thresholds for mandatory consultation and/or approval. Also, where legal or financial advice questioned a proposed decision, this should automatically be referred to a higher level for resolution; “probably a director or cabinet member”.

The report also concluded that:

The county council’s complaints policy seemed comprehensive and sound, but processes for its operation were “inadequate”;
The council’s policy on Freedom of Information was closely related to its complaints policy and it would be helpful to review their relationship. “In this case the council response seems to have been in the spirit of the Act, though with some inconsistency. Clarity is needed on corporate expectations, on who should be consulted on what will be released, and on the recording and monitoring of decisions”;
The policy for disposals of property had some inconsistency with the scheme of delegation. These two documents needed to be aligned and to confirm that they applied to decisions including consents to underlet and other relevant actions “where guidance may be ambiguous”;
While some differences in the codes of conduct for declarations of interest by members and officers were valid, others should be aligned. Compliance in different departments varied and needed active management and strong corporate leadership. Systems for public and media access to this information needed to be transparent and consistent, while requirements in the council constitution for declarations of interest should be reviewed, taking into account government and other advice;
There might be scope for improving clarity in the relationship between the Cabinet and joint arrangements. “This can involve complex relationships with uncertain accountability and ‘ownership’. There is a need to improve role definition, the provision of support and training, and clarity on sources of financial, legal and other advice for the joint bodies”;
Rights of scrutiny and intervention by council nominated board members or observers should be defined and protected;
The role of chief finance officer should be more carefully defined in financial regulations, as should related departmental and delegated roles. “This is essential to minimising the risks of future failure”.

Governance

The Garbutt Review recommended that the Trust review its legal powers “in light of its ambitions and intentions for the future”.

It concluded that “overall”, past arrangements had failed to achieve many of the aims of the Water Park’s creators and local confidence had been further weakened by the existence of criminality.

The review called for the reassessment of earlier assumptions of local authority leadership and resourcing, given the pressure on funding and the capacity of public agencies.

It also said it was not clear that current proposals – such as the abolition of the joint committee and the creation of a new Trust board – would achieve what the joint committee did not. “Much will depend on the Trust, which is likely to fill any vacuum left in governance,” the report said.

The report also called for:

Formal decision processes for issues such as planning policy. “The masterplan would be given added force if these were better co-ordinated across the local authorities”;
A stronger framework of landscape design to guide mineral extraction, subsequent landscaping and the positioning and scale of new housing and other buildings;
The careful examination and application of advice from the Organisation for Economic Co-operation and Development and other bodies on best practice in rural development;
Careful attention to be paid to establishing effective governance including a balance of ‘hierarchies, markets and networks’. “Current proposals create uncertain linkages between the main ‘driver’ (the Trust) and these requirements, with significant risks for the future”;
“At least for an interim period”, a partnership board involving all key agencies as the best means of ensuring effective governance; and
Current funding to continue for the next year while long-term arrangements are developed and put in place.

To read the report in full, click here.