AT last week's Corporate Scrutiny Committee a report on the Forest Health and Social Care Community Interest Company was presented by the council's solicitor. No representative of the company was present although this had been requested. The report, with its conclusion that the council should only have loaned this company £3,000, rather than the sum of £26,528 actually lent, makes damning reading.
It is important to remember that the consultant advising the group setting up FHSCCIC received £120,000 for his advice (£110,000 from the Dept of Health and £10,000 from the then fledgling Primary Care Trust). (This was all public, i.e. taxpayers' money, as was the £26,528 provided by the FoDDC of course, most of which also went to him. (This sum has varied every time I have received a letter on the subject from the council's legal department, and even the figures in the published report were apologised for at the meeting as inaccurate. Simple addition appears to be a subject that the council could do with some revision in, along with what value for money means).
There are apparently two types of CIC; the non-profit kind and the for-profit model, of which the Forest Health and Social Care CIC is an example. The first makes no profit and can benefit from grants such as those provided by the Social Enterprise Investment Fund (SEIF). The second makes a profit, although in the case of FHSC, it was intimated that the profit was mostly to be re-invested into the Forest area. This is vague and unquantified. Was 90 percent to be returned to the Forest, or 50 percent, or, perhaps only 10 percent? No-one knows. And where was the other proportion going? Why, in administration of course. The other important aspect of a 'for-profit' company is that it cannot receive SEIF grants.
There are so many questions arising from the report that it would take a much longer letter than anyone would wish to read to address them all, so I am restricting myself to the most crucial. First, why did the consultant, who was employed for his knowledge of the subject, advise a for-profit company, when he presumably knew that this would be an absolute bar to receiving a grant from SEIF? Next, the report indicates that the council was advised in the week commencing 16 November 2008, that the grant would be refused, yet a letter accepting the council's offer of a loan was received from the project group on 21 November 2008. Did the group (and the consultant) already know that the SEIF grant had been refused? This is a crucial question, because David Greaves, who gave the original presentation to the council, had made it clear that if the grant were refused, then the entire initiative would founder as there were no alternative funding plans. If the refusal was known, then why continue to set up the company at all? It also makes nonsense of the £11,288 sector of the loan paid by the council as support for interim governance (whatever that high-flown phrase means) of the CIC.
The final query concerns the part played by the two scrutiny committees. The matter had been referred to community scrutiny for their report on the project group's expenditure to date in October 2008. Although many questions about the finances had been asked in previous meetings, the committee was satisfied with the information presented and did not see fit to refer it back to full council. Corporate scrutiny, meanwhile, only requested the report presented on 31 March 2010 following two questions on the subject being asked by a member of the public. Guess who that was? The council leader admitted, in an answer to my query at full council on 1 April, that it is probable that the report would not have been commissioned at all if it had not been for my questions. It is a sorry state of affairs when an individual has to do the committee's investigation for it. No-one from the council had apparently thought to look at the records of FHSCCIC at companies house or realised that the council held none of the promised shares but, after this was finally brought to their attention, at a 'meeting with the company secretary in february 2010, the council has asked that a council shareholding be issued as a matter of urgency.' (Quotation from the report). If the scrutiny committees are prevented from doing their work for whatever reason this is a matter of concern, for they are, or should be, our watchdogs.
This is a very sorry tale, and supports the view of the Audit Commission that the council does not understand value for money. The final questions must be, how are they proposing to understand it in the future and will the two scrutiny committees provide the forensic investigation that is expected of them on behalf of the public they serve?
Daphne Pearson (Dr), Tinman's Green, Redbrook.