Bath & North East Somerset Council

DECISION MAKER:

Council

DECISION DATE:

27th March 2008

PAPER NUMBER

  

TITLE:

Review and Refinement of Decision Making and Governance Framework - Bath Spa Claims

EXECUTIVE FORWARD PLAN REFERENCE:

       

WARD:

All

AN OPEN PUBLIC ITEM

List of attachments to this report:

None

1 THE ISSUE

1.1 The Council is asked to review and refine the decision making and governance arrangements concerning the conduct of the Spa claims.

2 RECOMMENDATION

The Council is asked to agree that the Council:-

2.1 Notes the action taken to date and the current position.

2.2 Authorises the Chief Executive, with the approval of the Leader of the Council and the Leader of the Liberal Democrat Group, and following consultation with the Cabinet Member for Resources ,other Group Leaders, the Chief Financial Officer, the Monitoring Officer, the Director of Development and Major Projects and the Chair of the Major Projects Overview and Scrutiny Panel to:-

a) Decide on behalf of the Council any matters relating to the Bath Spa claims.

b) Make recommendations to Cabinet or Council as appropriate concerning the conduct of Spa claims.

c) Approve by whatever mechanism is appropriate, the funding of expenditure considered necessary in connection with Spa claims where existing budgetary provision is inadequate and/or existing arrangements for approval do not otherwise apply and

d) Report back in September of this year and February 2008 on progress in connection with the claims, including recommendations as to any future strategy.

3 FINANCIAL IMPLICATIONS

The estimated cost (to 31 March 2008) of the Bath Spa Project (including the claims project, but excluding interest) is £45.2m of which £31.2 has been funded by the Council.

The Council has considered funding for the Spa Claims projects as part of successive budget reports each year since 2005. In addition there have been specific reports to Council (e.g. 17 November 2005, 30 March 2006 and 13 July 2006. Funding has been authorised by Council and within the sums allowed total expenditure to the end of March 2008 is expected to be c£4.578m, (£1.485m in 2007/08, £1.361m in 2006/07 and £1.732m in 2005/06. These costs are chargeable to the Council's revenue account and exclude costs charged to the capital project itself.

In February 2007 the Council established an Exceptional Risk Reserve which was reviewed and maintained in February 2008, specifically to enable funding to be available for Spa Claims and Single Status. In February 2008 Council agreed to "Authorise the Council's s151 Officer in consultation with the Cabinet Member (Resources), to drawn down on the exceptional risk reserve, if required, consistent with the purposes originally set out in Section Annex 2 of Appendix 1 of the February 2007 Budget Report as amended in Section 3 of Appendix 2 to this report."

Council should note that the s151 officer and/or the monitoring officer have the statutory duty to report to Council in the event of concerns about the Council's financial standing and/or lawfulness of decisions. Similarly any of the individuals listed in paragraph 2.2 may request a specific report to Council as they may consider appropriate as and when consulted.

4.1 Council will be aware that, following completion and opening of the Spa, work has continued with a view to ensuring the Council is in the best possible position it can be in respect of the cost of the project. This has included dealing with claims made by the former contractor and consideration of the extent to which the amount the Council paid for the project was greater than it should have been and any liability to be attached to other parties for such additional cost.

4.2 As is apparent from the nature of the project and its history, there are two important but fundamentally opposed aspects that need to be considered. The first is the general presumption that, given the public interest in the history of the Spa, as much of what happened as possible should be available as factual information to the public. However, this is only in the Council's and the wider public's interest when putting such information in the public domain will not prejudice the Council's chances either of recovering money it should not have spent on the Spa from third parties or from defending itself against any claims that the Council should pay any more money than it already has to those involved.

4.3 The Council has already, of course, had reported to it on a number of occasions a full and detailed breakdown of the expenditure the Council has incurred in connection with the Spa. It is apparent from these figures that there is a significant and substantial difference between what the Council paid and what the Council should have paid had the contract proceeded as originally envisaged. The Council's fiduciary duty to its council tax payers require the Council to carefully consider how it is prudent and financially responsible to act. It is this concern to establish the Council's position to both defend claims and make them that has characterised the Council's activity in connection with Spa claims to date and a crucial stage has now been reached which may require the Council to take well informed and swift decisions in the foreseeable future.

4.4 In accordance with the Council's well established project management arrangements, a Board has been operating for a number of years concerning the Spa Claims. Chaired by the Cabinet Member for Resources, the Board includes the Chief Financial Officer, the Interim Strategic Director of Resources and Support Services, the Monitoring Officer and the Strategic Director of Development and Major Projects. The Chief Executive and Leader of the Council will also attend as necessary depending upon the issues to be considered.

4.5 It is the Board, operating within the Council's budget management rules and approval was already given by Council, that has guided the Council's approach and strategy to date. The strategy, to a certain extent, has been reactive rather than proactive given events that have occurred but it is anticipated that a more proactive and fundamental look will be needed in the immediate and for the foreseeable future which necessitates the informing of Council of what has happened to date, the review and reaffirmation of governance arrangements and decision making procedures and the Council satisfying itself that appropriate checks and balances are in place.

4.6 Council is referred to the "other options considered" section of this report and the rationale section for more detail of why the proposed decision making and governance structure is recommended.

4.7 Proposed Approach

As the Council is aware, it is its role (rather than the Cabinet's) to decide upon the overall budget (both capital and revenue) and the broad areas of prioritisation and spend within those budgets. It also has established a budget management scheme which sets out when Council must be involved in decisions to allocate or reallocate funding.

4.8 It is proposed that it is full Council that controls major or significant decisions on Spa claims related issues. The mechanism for it doing so is to delegate as set out in recommendation 2.2 in the knowledge that, in addition to regular progress reports, any significant matter may be referred to Council if need be.

4.9 This approach will leave in place existing arrangements whereby decisions within Council approved budgets and policy are and will remain the responsibility of the relevant Cabinet member, in this case the Cabinet member for Resources, or officers authorised on their/Council's behalf.

5 RISK MANAGEMENT

5.1 The Project Board have fully reviewed the approach set out in this issue and support the recommendations.

6 RATIONALE

6.1 It is clear that Council needs to be confident when delegating any functions that there will be the maximum possible democratic involvement consistent with the need to ensure efficient and effective decision making, confidentiality and good governance. It is considered that the proposed recommendation, coupled with the existing arrangements for project management through the Project Board optimise the involvement of the Council and its elected members without compromising the ability for the Council to pursue its objectives in the most effective way.

7 OTHER OPTIONS CONSIDERED

Three principal options were considered as set out in the following paragraphs.

7.1 For all financial matters relating to Spa claims to be dealt with by full Council. This option was rejected as the full Council assembly is not a suitable body for the management of a significant and potentially fast evolving project with litigation related issues.

7.2 For the Council to provide sufficient financial provision to enable the matter to be managed by the Cabinet. This option was rejected as the Council would naturally wish to ensure that budgetary provision and parameters were clearly established and this could not be done other than as part of the decision making process to be deployed.

7.3 Establish a committee of Council. This option was not pursued as there would be little advantage in terms of democratic accountability (given that the public would undoubtedly need to be excluded from the vast majority of any discussions as they would focus around the Council's legal position) and there would be no benefit from the associated significant procedural requirements that go with any formal meeting of a Council body. The same level of accountability, it was considered, but with far greater flexibility and speed of operation, would be achieved by the recommended course of action.

8 CONSULTATION

The matter has been the subject of consultation with the Project Board ADVICE SOUGHT

a. The Council's Monitoring Officer is the report's author. The Section 151 Officer (Divisional Director - Finance) and the Chief Executive, have had the opportunity to input to this report and have cleared it for publication.

 

Contact person

Vernon Hitchman, Solicitor to the Council (01225 395171)

Malcolm Hanney, Cabinet Member for Resources (01225 477033)

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