BREAKING: Shapley Heath survey results postponed

Posted on September 7, 2021September 7, 2021

Shapley Heath survey results postponed

Hart Council have just sent out an email to members of the Shapley Heath Thematic groups. It says (emphasis ours):

All activities on the Shapley Heath Garden Community Project will pause until the business case for the review of the Local Plan is brought back to November’s Cabinet meeting. You can read the full statement on the Hart District Council website.

The meetings for the Opportunities Board, Landowners Forum, and Stakeholder Forum (the thematic groups and steering group), and therefore the publication of the baseline studies and the summary report for the Communities’ Survey, will now be postponed until a decision is made regarding the business case for the Local Plan review…

We will remove the meetings scheduled in September and October, and we will endeavour to provide you with further information as soon as we can.

We were previously told that the survey results would be published in the Autumn. Might it just be possible that we didn’t give them the “right” answer in the Community Survey?

The baseline studies were supposed to have been published before the Opportunity Board meeting in July. That meeting was postponed until September and has nor been cancelled. Might it just be that the developer funded baseline studies aren’t worth the paper they’re written on?

At the time of writing, there is no news item on the Garden Community website about these developments. However, this announcement does follow on from last week’s Cabinet.

Shapley Heath Paused – Hart Wake Up and Smell the Coffee

Posted on September 4, 2021September 4, 2021

Hart Wakes Up and Smells the Coffee – Shapley Heath Paused

We have good news. At Cabinet on Thursday the Cabinet agreed to create a business case to review the Local Plan. An immediate consequence of this is that all work on the Shapley Heath Project will be paused. We should view this as minor victory as it is almost certain they will retain Shapley Heath as an option in the Local Plan review.

The announcement was confirmed on Facebook by the Council’s official account:

Garden Community Project Paused

James Radley Announcement

It is clear that the announcement caused them some distress because Councillor Radley’s statement was virtually unintelligible. It included the words:

We should look to generate a business case for the cost benefit analysis of starting to commence the preparation for the next local plan review. A new settlement can continue to be investigated along with other options such as urban intensification as part of the LP.

If the Government sticks to its prior guidance on Planning Reform, a review of the Local Plan will be a mandatory requirement. So it’s almost a foregone conclusion that the Local Plan review will go ahead.

It was left to Councillor Cockarill at the meeting to make clear that the consequence of this decision will be to pause the existing Shapley Heath project. The full discussion at Cabinet can be seen on the video below:

Shapley Heath Paused: Campaign Impact

It is always difficult to know exactly what impact our campaign has on the Council. However, we will claim some credit for this outbreak of common sense.

We called for a review of the Local Plan back in January. It’s taken 8 months, but finally they have taken some notice.

We have of course highlighted the level of spending on Shapley Heath on many occasions recently.

First at the same Council meeting linked to above, then in our letter to all councillors in February.
Then we highlighted how the grant money they received has been squandered on PR and not on proper planning studies.
We have highlighted the shambolic budgeting and financial controls here and here.
The campaign also highlighted the word salad contract specifications being issued to contractors.
And not to forget the refusal of the Audit Committee to request an Internal Audit of the spending.
Finally, we highlighted the absurdity of continuing Shapley Heath as they presided over widening deficits.

Hart Financial Black Hole Gets Bigger

Posted on September 1, 2021September 1, 2021

Hart Financial Black Hole Gets Bigger – but Shapley Heath carries on

There’s good news, bad news and some downright ugly news in the latest Medium Term Financial Strategy reported to Overview and Scrutiny. Let’s get the bad news out of the way first.

Hart Financial Black Hole Gets Bigger – Updated Medium Term Financial Strategy

The projected deficits have risen since last reported in July in the Statement of Accounts. The deficit for FY22/23 has risen from £1,175K to £1,214K. In FY23/24 the deficit is now projected at £1,569K, up from £1,413K.

Black Hole at the Heart of Hart's Finances

Hart Council MTFS Statement of Accounts July 2021

Analysis of the differences shows some worrying trends.

Hart Financial Black Hole Gets Bigger MTFS Comparison

Hart MTFS Comparison

Commercial income for each of those years has grown by over £700K. In addition, they are also forecasting higher New Homes Bonus receipts and more grants. Income from Council Tax and Business Rates is virtually unchanged. However, the extra income is more than offset by ballooning costs.

Hart Financial Black Hole: Good News

The good news is that the Council are starting to get to grips with the problem and have started to identify savings. So far, they have identified two levels of saving. Level 1 is apparently relatively easy, and if they manage to implement all of their ideas they will save £335K per year. However, we don’t think spending saved grant money or capitalising expenditure are real savings.

Level One Savings

If they manage to implement the Level 2 savings, they would achieve a further £467K of savings each year.

Level Two Savings

This is a welcome first step. However, even if they implement all of the identified savings, they total up to only £802K. This is much less than the deficits in each year. So, there’s still a very long way to go to balance the budget.

Hart Financial Black Hole: Ugly News

The ugly news is that cutting the disastrous Shapley Heath project doesn’t even feature as a potential saving. That’s right, the Council finances are sinking into the abyss, but they still plan to carry on squandering more and more of our money on a totally unnecessary project.

The other ugly news is that they are now projecting a surplus for this financial year of £117K. If that sounds odd, read on. On the face of it, this is a big improvement on the £381K deficit assumed in the original budget. The surplus comes because they are now going to receive extra commercial income from the office block they recently purchased in Basingstoke. This is weird because the projection conveniently ignores the £776K adverse variance they (almost) reported in the Full Year forecast paper presented to the same meeting. They are dressing up a deteriorating deficit as a surplus. It seems they can show only good news in the MTFS and totally ignore the bad news. Another ugly, shambolic financial report.

Hart Budget Gaslighting Continues

Posted on August 28, 2021August 28, 2021

Hart Budget Gaslighting

The confusing reporting of Hart’s FY21/22 budget continues. The continued obfuscation, coupled with an insistence that nothing has changed can only be described as gaslighting. Papers covering the outturn for the first quarter of FY21/22 have recently been considered by Overview and Scrutiny.

The first thing that jumps out of the page is the inaccurate statement 4.2 which says, “The forecast position for expenditure as of 30th June 2021 was a variance to Budget of £2.7m”. The actuals for Q1 do show a favourable variance of £2.7m. However, the forecast full year outturn is an unfavourable variance of £776K, a fact not mentioned in the entire report.

You have to work hard to find that variance. In the table showing the comparison between budget and actual, they have omitted the total line. So, you have to add it up yourself. Below is the table as presented in the paper, together with our analysis that includes a total line. Most of the adverse variance is due to loss of income in the Leisure contract. The £470K positive variance in Community Services is unexplained. The smaller adverse variances in the other service areas are also unexplained.

Overview and Scrutiny Aug 21 Table 1.1

Hart Budget Gaslighting: Q1 Full Year Forecast

The next thing that jumps out they have chosen to present the “Original” budget in a new way. This makes it impossible to compare it to prior versions like-for like. A new line called “Accounting Treatment”, amounting to over £1.5m has miraculously appeared. This is extra income, presumably from reserves, to offset the additional spending that was not included in the original version of the budget. Here are the changes in graphical form.

Hart Budget Gaslighting: FY21-22 Budget Changes Since February 2021

We’re Not Changing the Budget

However, Councillor James “Rhetoric” Radley insisted that nothing had changed in the budget:

However, he admitted at July questions that changes have been made to account for depreciation, SANG spending and additional Government grants. He failed to mention that the Waste Client Team net income budget has fallen £52K and the budgets for Corporate Communications (+£19.5K) and Register of Electors (+£17K) have higher spending even though they are not affected his explanation.

Hart Budget Gaslighting: Accounting Treatment

When you delve into the depths of “Accounting Treatment”, things get even murkier. The first item of note is that £667K of income from interest on investments and property rental income has been moved “above the line”. Councillor Radley declared this in the actuals for FY18/19 and 19/20, but somehow forgot to disclose it for the current year.

Changes to HAZFEN: Commercial Income

CCH Rhetoric Awards Q1 Written Answer

Then, there’s an extra £1m transferred from reserves, presumably to cover SANG expenditure. Plus nearly £0.5m more to cover depreciation charges. In addition, there’s a previously undisclosed £1m for pension contributions.

Changes to Accounting Treatment Items Pensions and Reserves

Of course, the total employment costs have changed in both directions across the different version so the budget too.

Hart Budget Gaslighting Employment Cost Changes

If they look like changes to the budget and smell like changes to the budget, they probably are changes to the budget. To forcefully deny that anything has changed is simply gaslighting the public.

Audit Committee Refuses Shapley Heath Audit

Posted on August 14, 2021August 27, 2021

Hart 3 Wise Monkeys Refuse Shapley Heath Audit

Hart Audit Committee Refuses Shapley Heath Audit

Hart’s Audit Committee has refused to add Shapley Heath to its Internal Audit Schedule. There was a terse exchange between Councillor Tim Southern and Chair of the Audit Committee, Chris Axam. Councillor Southern requested that the project be added to the audit schedule because the project was taking up a lot of time and effort and costing a lot of money. In addition, the project was controlled by very few people within Hart District Council.

In a rambling response, Councillor Axam refused, saying:

I can understand that people might want to look at it in terms of in depth, I don’t think anyone should be worried about that but I am not quite sure you can build it into an audit plan in the way you would normally audit most other things. I just don’t think it, at this stage I don’t think at this stage it lends itself so easily to that…

Unless I am being naive here, everybody who is working on Shapley Heath knows that they have a budget and what it is and they are engaging in going through a process.

A video of the full exchange is shown below:

Yes, Mr Axam, we think you are being very naive. You must have overlooked the fact that four different budgets were set last financial year and the variance reporting was laughable. You must have also missed that they transferred £283K to fund spending against an overall zero budget last year. In FY18/19 they spent £90K against a (revised from zero) budget of £50K. They have also set two different budgets so far this year. If this doesn’t tell you there’s something to be looked at, we don’t know what will.

This is not the response we would have hoped for from an independent minded, intellectually curious chair of the Audit Committee.

Weak Financial Controls

Later in the meeting, the S151 officer said:

We really need to make sure that our financial controls are fully, fully embedded within the organisation at all levels, so that everyone knows exactly where to look to find the financial regulations written in a way they understand.

In other words, there’s currently a significant weakness in financial controls that needs to be addressed.

Shapley Heath Audit Three Wise Monkeys

Perhaps it’s no surprise that the Audit Committee didn’t accept the need to audit Shapley Heath. The councillors who are part of the ruling coalition behaved like the three wise monkeys.

Councillor Axam (CCH) appears to see nothing, because he admitted in the meeting that he might have “been asleep” at other meetings.
Lib Dem Councillor Blewett hears nothing, because he left the meeting during the Shapley Heath exchange.
Councillor Davies (CCH) says nothing during the entire exchange about Shapley Heath.

Transcript of Shapley Heath Audit Item

The video of the full meeting can be found on Hart’s Live Streaming YouTube site. Although, be quick because the recordings have a habit of disappearing. The full transcript of the Shapley Heath item can be found below:

Tim Southern

We’re spending a lot of time, effort on the Shapley Heath plan, what audit controls are being put on the team to ensure t is being properly controlled?

Emma Foy

In terms of…We’ve got internal controls across the organisation around budget management, budget monitoring, virement, budget approvals and council standing orders and financial regulation. We don’t have Shapley heath as a specific element within our audit plan this year. That maybe revisited at another time or in the future. But Shapley Heath like any other department or project in the Council is subject to the same element of budget monitoring and approval than than any other.

Tim Southern

We are actually in the Council putting in an enormous amount of time and effort into it. Do you not think that we should really be controlling this and auditing it properly and making sure that the funds are actually being managed properly? Because there are big question marks about Shapley Heath and I really do think it should be one of the things you should be auditing in the Planning Performance Plan.

Emma Foy

So we can take…At the moment Shapley Heath is managed not by that Place Team but separately by the Joint Chief Executives. So it doesn’t form part of the Planning Department. I completely acknowledge that it’s all part…

Tim Southern

That sounds like good reason to audit it.

Chris Axam

If I can just come in for one second. I can understand your concerns Tim, I think they are valid in the sense that obviously money which we are spending as taxpayers we need to make sure that it’s being spent wisely. However, I am not quite sure I am not quite sure how you would audit something like Shapley Heath. Other than to say, as I understand it that the funds which have been allocated, the £500K which the Council has committed over a period of three years is not, you know exceeded in the sense that we look to spend one third of it and as the project goes along.

But I am not sure exactly how you could audit much more. Because much of it is I think is exploratory in terms of looking. It’s engaging with obviously outside people and running the project itself. I can understand that people might want to look at it in terms of in depth, I don’t think anyone should be worried about that but I am not quite sure you can build it into an audit plan in the way you would normally audit most other things. I just don’t think it, at this stage I don’t think at this stage it lends itself so easily to that. I think the more information you get about it the better. But I think there’s nothing to, you know, be kept away from people but the money needs to be properly spent I agree with you there.

Tim Southern

I think perhaps we should consider it into the future because it is a major investment of this organisation at the moment and I think that we should make sure that the money is being set under control. Under control. I wasn’t worried about the spending of the money provided it is controlled and that’s the audit function.

Chris Axam

Yeah, but I can’t you know. Unless I am being naive here, everybody who is working on Shapley Heath knows that they have a budget and what it is and they are engaging in going through a process. And they would have to go and come back obviously to Full Council I think, we certainly to Cabinet to say “Look, we’re progressing with this, it’s gone quicker and faster and better than we thought and we can get other things moving but we need more funds”. I think they would do that. I think that would be a normal, from what I understand how this council works, I would expect that to be done.

So, in terms of audit processes, I’m not sure it’s entirely valid. I understand your concerns as a Councillor in Shapley Heath and obviously how Shapley Heath is presented to the public .I can understand all of that.

Tim Southern

I think we’ve got to be very careful about a very small number of people in the organisation are actually in control of this. And it worries me that there is no external control of it.

Chris Axam

I wouldn’t necessarily agree with that, in the sense of external control. I mean we have the joint Chief Executive and I think the two people who I think are allocated to the Shapley Heath project. Three people alright. Ok it is a small number. It is obviously a resource hungry facility because at the moment all Shapley Heath is is an exploratory exercise to see whether it has a possibility of going forward. At this stage it’s no more than that.

Tim Southern

All I can say is, that I am glad I have alerted it then.

CCH Rhetoric Awards 2021

Posted on August 10, 2021August 27, 2021

CCH Rhetoric Awards

We asked a series of questions about Hart’s finances in general and Shapley Heath in particular at the Council meeting held on 29 July. Normally, we would report on the answers to these questions within a few days of the meeting. We are still waiting for some of the written answers to be provided, so we thought we should provide an update.

Regular readers may recall that CCH’s leader famously described his untrue statements about Shapley Heath in a letter to our MP Ranil Jayawardena as “rhetoric”. Unfortunately, the answers to our questions are riddled with inaccuracies and inconsistencies. It seems the CCH Rhetoric Machine has been fired up again. So, we have instituted the satirical CCH Rhetoric Awards. Read on to find out which answers we awarded the prestigious Golden Cowpat.

CCH Rhetoric Awards – Summary

Q1 Changes to Actuals for prior years: Wooden spoon for falling at the last hurdle after first giving a convincing answer.
Q2 Big Sings in the Budget: Partially correct answer, but a Silver Cowpat for the answer clearly not being the whole truth.
Q3 Budget does not add up: Partially correct answer, but a Silver Cowpat for the answer clearly not being the whole truth.
Q3 Supp – Waste Contract: Temporary Silver Cowpat award, but we reserve the right to upgrade to a Golden Cowpat if the external consultants don’t find the missing £1.1m.
Q4 Shapley Heath Budgets: Coveted Golden Cowpat for the level of rhetoric.
Q4 Supp Shapley Heath Spending: The “Not Me Guv” Sloping Shoulder Award and the Artful Dodger Prize for avoiding the question.
Q5 Shapley Heath Baseline Studies: Special Sword of Truth award for this answer that revealed developers are funding the independent studies.
Q6 £283K Transfer from Reserves: Another Golden Cowpat and the Greensill Award for Financial Transparency
Q6 Supp How much of £500K Shapley Heath Reserves remain: Awarded the special Paul Daniels “Not a Lot” Award for not providing an answer at all. [Update] Award now rescinded because answer now provided [/Update]
Q7 Shapley Heath Spending FY20/21: Another Golden Cowpat and the Enron Lifetime Achievement Award for Accounting Excellence.
Q7 Supp Shapley Heath Overspend: Lord Lucan Award for the missing answer. [Update] Award now rescinded because answer now provided. Golden Cowpat awarded instead [/Update]

Let’s go through the detailed questions and answers one by one. The original question (and supplementaries) are shown in bold black. The answers are shown in blue and our commentary on the answers are shown in red.

Question 1: Changes in Actuals for Prior Years

Q1. Why have the actuals for FY18/19 and FY19/20 changed between the publication of the draft budget in February 2021 and the final budget published this month [Note the actuals in the draft didn’t match the Final V2 budget either]? Is there any impact on the published statutory accounts for those years?

Hart Finances Out of Control – Changes to Actuals

A1. Before I answer any of the detail I would just like to let everyone know that we will be publishing these questions and answers, because the questions relate to tables and data whilst I will provide verbal responses I think the response will be most understandable in written format.

In the first table you refer to i.e. the draft budget published February 2021, interest on investments for 2018/19 and 2019/20 was excluded from the summary by service and instead included as part of below the line adjustments. For transparency and accountability this was placed above the line for reporting in the latest version of the budget book to ensure that it forms part of the detailed monthly budget monitoring process.

This has no affect on the statutory accounts which reports income and expenditure in a different format according to the CIPFA SORP.

The tables below shows the detail of these line adjustments.

CCH Rhetoric Awards Q1 Written Answer

Our Response: On the face of it, the verbal answer given at the meeting was a reasonable explanation. However, it has been spoiled somewhat by the tables provided in the written answer which don’t match the figures for FY19/20 in the original draft budget and of course, the end balance is not zero after accounting adjustments. This opens up even more questions about control over the budgets. We shall award this answer the Wooden Spoon for falling at the last hurdle.

Question 2: Big Swings in Budget between Service Areas

Q2. There are big differences between the budgets agreed for the Service Areas in March and final budget published this month. What governance processes were used and who authorised such massive swings in the budget and are they in accordance with the constitutional budget procedures 3 and 5 as well as financial regulations FR10 and FR12 which limit changes unless approved by full council?

Hart Finances Out of Control – Big changes between draft and final budget

A2. There is a net difference between the draft budget and final budget of £37K

This is due to changes in the assumptions in the value of recycling credits, grants and depreciation.

The draft budget, due to its timing made assumptions based on information known at that time. As final numbers became available, they were incorporated into the Final Budget.

In summary the following updates were made.

- Grants – estimated numbers were used at the time of the Draft Budget. As final details were received these were incorporated into the final budget and categorised into the correct Service Area.
- SANG allocation in Tech & Environmental – S106 reserves were released which fund the SANG cost centres. This allocation was not included in the Draft Budget.
- Depreciation: Final asset valuation reports were not available at the time of the draft budget these numbers were updated for the final budget.

Q2 Written Answer

Our Response. First, the swing of £37K overall is larger than the £10K that needs to be signed off by Cabinet. Moreover, the rest of the explanation given does not hold water. Swings of >£10K are apparent in some services. For example, the Waste Client Team net income budget has fallen £52K, more than the limit that needs to be signed off by Full Council. The budgets for Corporate Communications (+£19.5K) and Register of Electors (+£17K) have higher spending even though they are not affected by the explanation given. In effect, a different budget is now in operation to that which was signed off by Council.

This is another example of poor budgeting and inadequate oversight and governance. We give this a Silver Cowpat award. The answer had some merit, but is clearly not the whole truth.

Waste Client Team Budget Changes

Other Budget Changes

Question 3: Budget Does Not Add Up

Q3. In the recently published final budget for FY21/22, the sum of the spending in the service areas for GL Codes 10000 – Basic Salary, 44069 – Homelessness and 90012 – Other Government Grants is not equal to the total for those GL Codes in the “Subjective” summary. In short, the budget apparently does not add up. It appears as though HANEED is missing from the service areas. What steps are being taken to make the budget internally consistent and what impact will correcting the errors have on the projected deficit?

Hart Finances Out of Control – Budget Does Not Add Up

A2: The HANEED cost centre detail page was missing from the scanned copy of the paper copy of the Draft budget book. The budgetary numbers were not missing from the overall numbers. This is a matter of presentation.

Additional checks will be incorporated into the process for future publications.

Our Response. Again, this is not a complete answer. First, it refers to the draft budget published in February. However, despite being pointed out by email at the time to all Councillors, the JCX’s and the S151 Officer, the draft budget was passed with the error. However, the same error persisted into the Final budget published in early July. The question related to the Final budget. This was corrected when it was drawn to the attention of officers. However, the error cannot simply be a “slip of the scanner”.

First, it seems unlikely that the scanner would miss exactly the same page five months apart. Secondly, other changes were made between the Final and Final V2 budgets. The total employee costs decreased £50K between Draft and Final, yet increased £211K between Final and Final V2. This is another example of the Council now working to a different budget to the one signed off in February. We give this answer another Silver Cowpat award. The answer had some merit, but is clearly not the whole truth.

CCH Rhetoric Awards Employment Cost Changes

Q3 Supplementary – Waste Contract

Q3 Supp: Have the ever-changing budgets and persistent errors impacted on the Waste Contract, where over one million pounds appears to have been lost down the back of the sofa?

A3 Supp: I can reassure you that that is not the case. Following the reconciliation of costs of the waste contract as part of the handover of the client management to Basingstoke costs of £1.1 million remained under a rechargeable cost code. It was agreed with Basingstoke that we would bring in independent specialists to review these costs, how they should be accounted for, and whether they should be rebilled. This work has started, and early indications are that this dates back to 2018 and investigations are continuing. This is an accountancy artifact which relates to the council cross charging. There is every expectation that these charges balance out with other charging which has flowed in the other direction. The net affect being zero. This is simply an accounting artifact.

Our Response. If this missing money is just an “accounting artifact” with a “net effect of zero”, why is it recorded as an unfavourable variance in papers to Overview and Scrutiny and to Cabinet? Both papers presented by none other than Councillor James Radley. The same overall variance has made its way into the statutory accounts due to be audited shortly. If the problem dates back to 2018, doesn’t this call into question the accuracy of the accounts from earlier years?

We give this a Silver Cowpat award, because there is an outside chance the external consultants find the money. But we reserve the right to upgrade to the coveted gold award.

Hart Loses £1m down the back of the sofa

HAWBDC Basingstoke Waste Contract £1.121m uninvoiced at year end reported June 2021

HAWBDC Basingstoke Waste Contract £1.088m overspend reported Jul 2021

CCH Rhetoric Awards Question 4: Shapley Heath Budgets

Q4. The recently released final budget for FY21/22 shows that the budget for HASETT – New Settlement in FY20/21 was zero. It consisted of ~£68K for employee costs and car allowances, offset by a somewhat implausible identical receipt from GL Code 44047 – Consultants Projects. In common with the other service areas, no overheads were allocated. Yet, the transparency report shows spending of £63.7K on consultants (not money received from) in “New Settlement” for FY20/21. What governance processes were used to authorise such a large spend against an overall zero budget, apparently in contravention of FR10 in the constitution?

Shapley Heath Financial Shell Game: New Settlement Transparency Report FY20-21

Shapley Heath New Settlement Transparency Report FY20-21

A4: The New Settlement published budget for 20/21 did not reflect the release of reserves agreed by Cabinet in February 2020.

These reserves were drawn down at the end of the year on assumption of agreement made by full council on the 6 February 2020 and approved by Cabinet.

Our Response. We have scoured the document referred to. The only references we can find to Shapley Heath are:

- It being described as a “pressure” requiring £500K of spending over 3 years
- £167K of discretionary spending allocated in the FY20/21 budget

We do not believe that setting a budget is the same thing as releasing reserves. In any event, the budget should reflect the spending required, and a release of reserves is not “income”. As Councillor Radley has said himself, moving money from reserves is the equivalent of moving money from your savings account to your current account to cover an overdraft.

Oh, and the Council meeting to approve the budget took place on 27 February 2020, not 6 February. We give this answer the coveted Golden Cowpat for the level of “rhetoric”.

Q4 Supplementary FY21/22 Shapley Heath Spending

Q4 Supp: Hart recently advertised Garden Community contracts with an indicative value of £56K, against a FY21/22 budget of £25K, isn’t it time for some proper forensic accountants to get to the bottom of what’s going wrong with budgeting and financial controls?

Answer A4 Supp [On the Night]. I am not in a position to comment on how Place department operate, but we do maintain that our departments, at the end of the year have balanced their budgets and I am quite convinced they are working within those limits.

Answer A4 Supp [Written Answer]. The Council operates internal controls across the organisation. These include budget monitoring, budget virements and spend approval. The Shapley Heath project is subject to these same budgetary controls as all other projects/activities.

Details of these controls can be found within the published Hart Constitution – Financial Regulations and Contract Standing Orders. Hart Consitution [sic]

Our Response: First, Shapley Heath is a Corporate Services project, one of the areas that Councillor Radley is responsible for. The rest of the answer does not address the question posed. The “Not Me Guv” Sloping Shoulder Award and the Artful Dodger Prize for avoiding the question on this one.

CCH Rhetoric Awards Question 5: Shapley Heath Baseline Studies

Q5: In addition, the Shapley Heath Opportunity Board papers show that four Baseline Studies had reached the status of “Finalised” by 8 March, before the end of the Financial Year. These must have cost money, but do not show on the Transparency Report nor on the Contracts Register. How much was spent on Baseline Studies and Strategy Reports in FY20/21?

Shapley Heath Baseline Studies as of 8 March 2021

A5: The Shapley Heath Opportunity Board Papers clearly state that the Baseline Studies were funded by promoters. No money was spent by the Council on Baseline Studies or Strategic Reports in 2020/21.

Our Response: It does seem more than odd that Councillor Radley should proudly proclaim that none of the £283K transferred from reserves was spent on anything useful for the project. It’s looking like the HDC project team is little more than the PR department for the developers. And we are paying for it. If the Baseline Studies were funded entirely by developers, how can they be relied upon to be impartial? Are HDC really going to base their Shapley Heath strategy on documents funded and sourced from the developers? What ever happened to a council led project? We give this answer a special Sword of Truth award.

Question 6: Governance Arrangements for £283K Transfer from Reserves

Q6: The agenda pack for July Cabinet shows that £283K was transferred from reserves to fund Shapley Heath. How is it possible to spend £283K against a zero budget whilst running a deficit and what governance processes authorised this spend?

Shapley Heath Financial Shell Game £283K Transfer from Reserves

Shapley Heath £283K Transfer from Reserves

A6: Expenditure for Shapley Heath spend was presented to Cabinet on the following dates:

- Feb 2020: Cabinet 20 02 06 Budget 202021
- Q2 2020/21: Cabinet – 20 12 03 Budget Monitoring
- Q3 2020/21 Cabinet – 21 03 04 Budget Monitoring

Shapley Heath is funded by Government Grants. Grants have been received over several years. With Cabinet’s consent, grant funding can be transferred to and from an ear-marked reserve between financial years. Members provided the approval for a £283K transfer from reserves at Cabinet on the 3^rd July to fund 20/21 expenditure. This paper was subject to scrutiny by the Overview and Scrutiny Committee.

Our Response. We covered the ever changing budget and spending for Shapley Heath here. During the year, the full year budget has fluctuated from £167K originally to £500K in July. It went back down to £68.6K (2 x half-YTD £34.3K budget) in October and then to zero. Spending miraculously fell from £65.5K in July to £47.7K in October. It seems they can set a budget, change it willy-nilly and then seek approval for unbudgeted expenditure after the money has been spent. In addition, Shapley Heath is not solely funded by Government grants – see below.

Oh, and by the way, the Cabinet meeting to approve the £283K transfer from reserves took place on 1 July 2021, not 3 July. Another Golden Cowpat award for this one and the special Greensill Prize for Financial Transparency.

Q6 Supplementary: £500K Shapley Heath Reserves

Q6 Supp: How much of the £500K set aside in reserves for Shapley Heath remains unspent?

A6: Promised written answer has not yet arrived.

Our Response: Of course, if Shapley Heath really was funded by Government grants, then the answer to this question should be really simple. The whole £500K should be remaining to be spent. But so far he has claimed £167K was transferred from reserves in February 2020 and we know a further £283K has just been approved.

Let’s help Councillor Radley out here. By our calculations, based on Hart’s published figures, there will be ~£98K of the £500K reserves remaining at the end of this financial year. That’s assuming they don’t go over budget this year. We suspect that they will have virtually nothing to show for this spending other than a botched survey and some biased studies from developers. How much more of our money is going to be wasted on this ridiculous white elephant? We award this the Paul Daniels “Not a Lot” Prize for not even bothering to answer the question.

Shapley Heath Reserves Remaining Update

[Update] Unfortunately, we will have to rescind the Paul Daniels “Not a Lot” Prize because an answer has now been provided. The answer given was:

The answer at the 31^st March 2021 is that we held £367,051, no further reserve transfers have occurred since then.

This is consistent with HDC now accounting for the £130K grant received in June 2021 in FY20/21 (within £10K). So, our estimate of ~£98K remaining at the end of FY21/22 is if anything a bit high. Table above updated accordingly. In any event, this answer shows that the answer to the main Q6 is incorrect. It is clear that some of the £500K reserve has been used. Therefore, Shapley Heath is not funded just by Government grants. [/Update]

CCH Rhetoric Awards Question 7: Shapley Heath Spending FY20/21

Q7: How much was spent in total on Shapley Heath Garden Community in FY20/21 and can you provide a detailed breakdown of that spend (and receipts) please?

Answer [On the Night]: As this question necessitates the provision of tables of data it will be answered as a Freedom of Information request to provide the detail. I can however tell you the totals in summary this evening by way of reading them out.

Staff costs £114,261
Supplies and Services of £72,102
Total controllable costs before recharges is £186,363
Income received for 2021 year from MHCLG was £130,000

Answer [FOI]. The FOI answer was substantially the same, with the addition of £7,500 cost recovery.

CCH Rhetoric Awards Q7 FOI Response

Our Response: We think there is some mistake here. Both responses show the £130K grant obtained from MHCLG as being accounted for in FY20/21. This is rather odd because:

The same £130K also shows as a line item in the Final V2 FY21/22 budget (see image below). Clearly the same money should not be accounted for in two different financial years.
The grant was announced on 7 June 2021, and presumably received shortly afterwards. June 2021 is unambiguously part of FY21/22. No other announcement about Government funding has been made since the original grant award of £150K in 2019.
The FY20/21 full year outturn report contained an entry showing £283K transferred from reserves to covering “FY2020/21 work on the New Settlement at Shapley Heath” (see image above). It is highly unlikely that such a large transfer would be required if £130K had been received from Government in FY20/21

HASETT – Shapley Heath Final Budget FY21-22

We give this answer the coveted Golden Cowpat along with the Enron Lifetime Achievement Award for Accounting Excellence.

Q7 Supplementary: How is it possible to overspend on employment cost budget?

Q7 Supp: From memory, the budget for employment costs was £68K and I think Cllr Radley said it was almost double that. How can we spend more than double [NB: should have said nearly double] the budget?

A7: No written answer has been forthcoming.

Our Response. My memory was right. £66.7K direct employment costs plus £1.4K for car allowances. This one gets the Lord Lucan Award for the missing answer.

[Update] We will now have to rescind the Lord Lucan award because an answer has been provided.

The budget was set in advance of the year and only included gross salary costs for 20/21 excluding on costs. When on costs were added this increased the requirement for spend.

However, we can now award a new Golden Cowpat for the answer. The £68K budget above clearly includes normal on costs of employers NI, pension contributions and even car allowances. So, the overspend is not explained at all. [/Update]

Shapley Heath Finance Masquerade

Posted on August 6, 2021August 27, 2021

Shapley Heath Finance Masquerade

Closer examination of the evolution of the Shapley Heath budget and spending has revealed disturbing weaknesses in budgeting and financial control. This comes in addition to the errors in reporting the FY21/22 overall budget and the smoke and mirrors surrounding the reporting of the FY20/21 budget and variances.

In summary, for Shapley Heath in FY20/21, they set a budget of £167K and then increased it to £500K. Then they cut it between July and September. Spending year-to-date somehow declined between July and September. Then finally, the budget was cut to zero. They eventually spent £186K for the full year, but had to transfer £283K to reserves to fund the spending. Why the £97K discrepancy, perhaps it is overhead allocations yet to be recharged?

In case you are wondering if this is just a one-off issue because of the special circumstances of Covid, think again. In FY18/19, they set a zero budget, then in November 2018 approved a £50K budget. They had overspent this by December and ended up spending £90K for the full year.

This can only be described as lax financial control. It’s just a masquerade where they pretend to set a budget, spend whatever they like and then gain approval after they have spent the money.

Here are the details:

Shapley Heath Finance Masquerade: FY20/21 Original Budget

They set an original budget of £167K. This comes after returning £787K to reserves from FY19/20 after the Inspector threw out their plans for a new town.

Shapley Heath Finance Masquerade FY20-21 Original Budget

First Variance Report to July 2020

By July 2020, the full year budget had miraculously increased to £500K. Spending had already reached £65.5K. Because the budget had increased, this was recorded as a favourable variance against budget.

Shapley Heath Finance Masquerade First Variance Report to July 2020

Variance Report to September 2020

By the end of September, the budget to date had reduced from £167K in July to £34.2K. This perhaps reflects the revised budget agreed in July. However, a revised service-by-service budget wasn’t provided at that time. Miraculously, spending to end September had fallen to £47.7K from the £65.5K spending to end July. This was now recorded as an unfavourable variance. The unfavourable variance reflected unplanned spending of £13K on a Covid survey. Quite what this has to do with a potential new development several years down the line is anyone’s guess.

Shapley Heath Finance Masquerade Variance Report to September 2020

Variance Report to December 2020

The budget was not reported for the year to December 2020. At this time they only reported variances to budget. By this time, the variance to budget (which one?) had increased to £37K. they had hired two extra people and Chelgate PR. Strangely, the spend on the Covid survey had fallen to £8K. There was also a “variance to forecast” report, but Shapley Heath didn’t appear in it.

Shapley Heath Finance Masquerade Variance Report to Dec 20

Outturn Reporting

The outturn reporting gets even more odd. The official report presented to Cabinet shows £283K transferred from reserves to fund FY20/21 spending on Shapley Heath. Yet, in an answer to a question to council in late July, spending of £186K was claimed (it maybe the extra costs come from overhead allocation recharges yet to be reported).

Shapley Heath Finance Masquerade Outturn Reports

Full-year budget set at zero

All this spending has been incurred despite the full year budget being reset to zero. It is difficult to describe this as anything other than a complete mess.

Shapley Heath Finance Masquerade Full Year FY20-21 Budget Change Feb 21

FY18/19 No Better

And just in case you thought this was a one-off aberration caused by Covid, FY18/19 was no better. They originally set a zero budget. A £50K budget was approved in November 2018. This was overspent by December, with spending at £51.5K. At the time the December figures were reported in March 2019, it was expected total spending for the year would be £67.4K. The full-year outturn is now recorded as £90K. Nearly double the requested budget. What a shambles.

Shapley Heath Finance Masquerade FY18-19 Overspend on Budget Change

Hart Budget Smoke and Mirrors

Posted on August 1, 2021August 27, 2021

Hart Budget Smoke and Mirrors

This post is about the changes Hart keeps making to its reported budget and the way it changes the terminology to describe the budget.

Hart Values

Let’s start with their values. these include the two emboldened values shown below.

Behaving with integrity, demonstrating strong commitment to ethical values, and respecting the rule of law.
Ensuring openness and comprehensive stakeholder engagement.
Defining outcomes in terms of sustainable economic, social and environmental benefits.
Determining the interventions necessary to optimise the achievement of the intended outcomes.
Developing the entity’s capacity, including the capability of its leadership and the individuals within it.
Managing risks and performance through robust internal control and strong public financial management.
Implementing good practices in transparency, reporting, and audit, to deliver effective accountability.

Hart Original and Revised Budget for FY20/21

For completeness, let’s compare the original budget with the revised version agreed in October 2020. All looks fairly normal.

Hart FY20-21 Budget Changes Original to Revised So Far So Good

Hart Budget FY20/21 Variance Report to October 2020

Again it looks fairly innocuous. But note the subtle change in terminology from Cost of Services to Net Cost of Services and the addition of an additional “Total” line.

Hart FY20-21 Budget Changes Revised to Oct 20

Hart Budget FY20/21 Variance Report to December 2020

At first, this looks OK. But note another change in terminology.

Hart FY20-21 Budget Changes Oct to Dec 20

Closer inspection shows the terminology between the October revision and the December variance report has been reversed. What was “Cost of Service” is now “Net Cost of Service”. Net Expenditure has switched from the main total to a sub-total.

FY20-21 Hart Budget Smoke and Mirrors Revised to Dec 20

Hart Budget Smoke and Mirrors – Outturn Report

Things really start to go awry now. Part of the terminology of the December 2020 variance report is retained. But the numbers completely change. If you compare the “Net Cost of Service”, the budget for FY20/21 has apparently increased from £9.5m to £11.1m. However, if you compare the visually equivalent lines, the budget has been cut by £335K from £11.4m to £11.1m. What on earth is going on?

FY20-21 Budget Smoke and Mirrors Changes Dec 20 to Full Year Outturn

Hart Budget Fy20/21 Outturn to Accounts

Then when you look at the accounts, the numbers stay the same, but the terminology changes yet again.

Hart FY20-21 Budget Changes Outturn to Accounts

It’s difficult to believe that even those producing the numbers know what is going on. It’s almost certian the employees working to these numbers are completely confused. I am sure that Councillors and certainly this attentive member of the public doesn’t have the first idea what they are doing. If anyone thinks this meets the standards of robust internal control, strong public financial management and transparency, then I have bridge to sell you.

Hart loses £1m down the back of the sofa

Posted on July 29, 2021August 27, 2021

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.

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?

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

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

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

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.

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.

Growing Black Hole at the Heart of Hart’s Finances

Posted on July 27, 2021August 27, 2021

The Black Hole at the Heart of Hart’s Finances

More evidence has emerged of Hart’s Finance car crash. The black hole at the heart of Hart Council’s medium term finances is growing. They recently published their draft accounts for last financial year which updated the medium term financial plan (MTFP).

This shows that the expected deficit for FY22/23 has expanded to £1,175K and the deficit for FY23/24 will be £1,413K.

Hart Council Medium Term Financial Plan

This represents a massive deterioration compared the the forecast provided in last year’s accounts and to Cabinet as recently as December 2020. At that time they forecast zero deficit in both years.

Hart MTFS presented to Cabinet December 2020

They got closer to reality at the time of the budget in February 2021. However, the FY22/23 deficit has grown from the £1,018K estimated at that time.

Hart Council budget deficits 2021/22 and 2022/23

Even these horrifying numbers are optimistic. They assume £499K of as yet unidentified savings will be made in FY22/23 and £796K in FY23/24.

If they manage to make the savings, then the deficit will still be 10.7% of their budget in FY22/23 and 12.5% in FY23/24. If those savings don’t materialise then the deficits will be 15.1% and 19.6% respectively. These are huge numbers. Even more troubling is that there doesn’t appear to be any formal committee set up to deal with the issue. However, they have recently bought an office block in Basingstoke. The income they receive may help to close the gap.

Crumb of Good News in Hart’s Finances

The only crumb of comfort is that the estimated deficit for this financial year has fallen from £381K when the draft budget was signed off to £179K in the MTFP. This seems to reflect that they have received £270K of extra income for Shapley Heath (£130K) and Recycling Credits (£140K) not included in the draft budget. However, this extra income should have seen the deficit falling by £270K, not £202K.

Shapley Heath still burning money

It is galling to see that money is still being squandered on the entirely unnecessary Shapley Heath project when the overall financial position is so dire. The Council are fiddling while our money burns.

We have asked questions about these and other issues to be answered at Council on Thursday 29 July. They can be found here.