Hart loses £1m down the back of the sofa

Hart Loses £1m down the back of the sofa

Hart Loses £1m down the back of the sofa

Sorry for another post highlighting Hart’s dire financial position. But the bad news keeps on coming. Not content with the budget car crash, playing the Shapley Heath shell game and disappearing into medium term black hole, they have now lost over £1m on the waste contract.

Yes, £1,088K has gone missing from the Waste Contract and nobody knows where it is. Perhaps it’s down the back of the sofa or maybe it’s been sucked into the black hole. Apparently this loss is being investigated by external consultants.  It seems highly irregular that nearly 10% of Hart’s entire budget should have gone missing. Indeed, if they still had the money, last year would have been in surplus, not in deficit to the tune of £784K.

We had previously thought that with the Covid disruptions, a deficit last year would have been entirely forgivable. But now it has transpired that the deficit last year was a spectacular own goal, revealing massive weaknesses in financial controls. The waste contract is supposed to be “passthrough” where expenditure is matched by income.

The missing money was reported to Overview and Scrutiny in June.

Hart Loses £1m down the back of the sofa

HAWBDC Basingstoke Waste Contract £1.121m un-invoiced at year end reported June 2021

It was also reported to Cabinet earlier this month. It isn’t clear how the variance managed to change from £1.121m to £1.088m between mid-June and early July. Nor how un-invoiced costs can morph into an overspend. But “fluid” reporting is becoming a hallmark of the Council. Indeed, if it were only “un-invoiced costs”, why not simply issue the invoices, rather than start an investigation?

Hart Loses £1m down the back of the sofa

HAWBDC Basingstoke Waste Contract £1.088m overspend reported Jul 2021

Hart Loses £1m: Audit Trail

However, the loss shouldn’t come as a total surprise. There is an audit trail of how Hart managed to lose £1m down the back of the sofa.

Let’s start with the passthrough budget.

HAWBDC Basingstoke Waste Contract Pass through budget from Budget book

HAWBDC Basingstoke Waste Contract Pass through budget from Budget book

This clearly shows a net overall cost of zero, where income exactly balances costs.

The first sign of something going awry came in the budget review to the end of July 2020, reported in October.

HAWBDC Basingstoke Waste Contract £896K variance as of July 2020

HAWBDC Basingstoke Waste Contract £896K variance as of July 2020

Costs of nearly £896K had remained un-invoiced due to officers shielding from Covid. Understandable perhaps, but a massive sum nonetheless.

By September 2020, reported in December, the situation had got worse.

HAWBDC Basingstoke Waste Contract £1.48m variance as of Sept 2020

£1,48m of invoices had still not been sent, but Cabinet and public were reassured that they would catch up in the coming months.

By December, reported in March 2021, over £1.5m of invoices remained unsent.

HAWBDC Basingstoke Waste Contract £1.52m variance as of Dec 2020

HAWBDC Basingstoke Waste Contract £1.52m variance as of Dec 2020

It took until June of this year to report to O&S that there was a significant problem and come clean that an investigation was required (see above).

The subject came up at Audit Committee this week. There is to be an internal audit of Waste and Street Cleaning.

Hart Loses £1m down the back of the sofa.

Waste Internal Audit not starting until September

However, we understand from the video of the meeting that this work isn’t due to start until September. So, the internal audit team won’t start to look at this until over a year has elapsed from problems first being apparent. That doesn’t seem urgent enough to find out what happened to nearly 10% of the entire budget.

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