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What More Does the Solace Report Tell Us About the Housing Revenue Account Investigation?

Published on: 19 May, 2024
Updated on: 22 May, 2024

Following the complex story of the Housing Revenue Account investigation is difficult especially as GBC has been so reticent. Recent publication of the Solace Housing Governance Review has provided more information.

In this edited extract from the Executive summary the paragraph sequence has been altered to give a chronological order in addition to minor editing for clarity or style compliance. Those parts in italics have been added during the edit to add further information. Martin Giles.

What was the background?

A three-year contract with a value of £2.4 million for electrical testing and inspection was awarded to Seville Developments Ltd under direct award with a commencement date of October 5, 2021. This was achieved via the council’s procurement process and was found to be compliant.

In February 2022, the council agreed to invest £24.5 million in bringing the council’s housing stock up to standard. The Corporate Governance and Standards Committee raised some reservations at the time.

Several agency staff were appointed and were given authority to appoint housing repair and maintenance contractors.

See also: ‘Damning’ Report Debated at Council Meeting – CEO Calls for Councillors to Come Together

A “whistleblowing” report was made in September 2022. An investigation of the whistleblowing was reported in January 2023 and highlighted risks. (It is not reported what action was taken, if any.)

When was the overspend problem discovered?

On June 27, 2023, the newly appointed monitoring officer, Susan Sale, was made aware by the deputy s151 (finance) officer, that the council had spent significantly more than the contract value, with a contractor providing housing maintenance work on the council’s housing stock.

What else had been discovered?

  1. That work may have been ordered when it wasn’t necessary;
  2. That work may have been ordered, invoiced and paid for when it was not completed at all or not to a satisfactory standard;
  3. That duplicate invoices may have been submitted and paid for the same work;
  4. That works may have been ordered and undertaken that were not the responsibility of the council.

Second Seville Developments Ltd Contract

A second contract with Seville was awarded in June 2023 (it was reported this week by Susan Sale, monitoring officer, that the contract was entered into “on the 13th of June with the commencement date of the 1st of June [sic]” but “there are some outstanding questions around the timeline”).

Second Whistleblowing

A second whistleblowing concern was raised in July 2023 (this is understood to have been by a different whistleblower).

When did a criminal investigation commence?

An investigation into criminal offences has been ongoing since early August 2023.

What happened as a result of the investigation?

The subsequent investigation resulted in two employees being suspended and five agency workers having their contracts terminated, on the advice of the external independent investigators, on  September 12, 2023. The initial investigation was conducted by Reigate & Banstead Council’s anti-fraud unit. It was also referred to Surrey Police, who referred it to the South East Regional Organised Crime Unit (who eventually confirmed that they were leading the investigation. This is understood to remain the position.)

What else did the council do?

In October 2023, the council established a Strategic Project Group (Housing) including the monitoring officer, strategic director Community and Wellbeing, the s151 officer, the deputy s151 (finance) officer, the lead legal specialist, lead HR specialist, lead ICT specialist, executive head of housing, executive head of community, executive head of regulatory service and others, to manage various workstreams including stakeholder engagement, communications, unpaid invoices, contractual matters, external audit, service delivery and employment matters.

A Strategic Project Board (Housing) was also established, comprising the chief executive, monitoring officer, chief financial (s151) officer, strategic director Community and Wellbeing, council leader, chair of the Corporate Governance & Standards Committee and chair of the Overview & Scrutiny Committee.

The Corporate Governance & Standards Committee approved this governance framework of the Board and Group and the commission of an independent external consultant to undertake the governance review on November 29, 2023.

Police action March 2024

On March 21, search warrants covering three homes and six vehicles were executed by police officers from the Regional Fraud Team within the South East Regional Organised Crime Unit (SEROCU). One man in his 50s, understood to have been one of the five who had his contract terminated, was arrested and taken to Crawley police station. He was released within hours once his solicitor was in attendance.

Guildford Borough Council has been asked to confirm the current status of the two officers who were suspended in September 2023.

The Housing Governance Review dated April 2024 has reported that:

  • there were high risks for the council including systems processes, leadership and financial monitoring;
  • the housing software system had not had the recommended updates for eight years and does not link to Business World, the Corporate Finance software system. This meant that there were limited financial checks and balances, and budget monitoring was difficult;
  • officers said the “Future Guildford” review and implementation (2019), had removed capacity, roles and continuity of knowledge, compounding the lack of systems and processes and appearing to encourage silo working;
  • housing officers explained that they had not had one-to-one [meetings with managers] or performance appraisals for some time. There appeared to be a lack of leadership in this area;
  • when the report (completed in April 2024) was written, the council’s Housing Surveyor Team was vacant and had no permanent surveyors. This lack of in-house expertise and capacity meant that the council often didn’t inspect and check work and was reliant upon agency staff. There was also incompleteness of data which compounded matters;
  • the deputy s151 (financial) officer’s email alert in June 2023 referred to expenditure, procurement and governance concerns, risks and expenditure that exceeded the contract value with Seville – £18.9 million in less than a three-year period. This exceeded the contract value, although there had been no contract variation;
  • the Corporate Procurement Team was staffed solely by temporary officers and there is evidence that an officer identified the unauthorised expenditure and raised this with the Housing client but did not escalate the matter.

Extract from debate on the Solace report at the Corporate Governance and Standards Committee meeting on Wednesday evening (May 15)

Cllr George Potter

Cllr George Potter raised the case where some landscaping of a garden in his ward was carried out. The garden had been well maintained but had been returned, unnecessarily according to a neighbour, to a flat lawn.

The neighbour had complained: “Why take out these particular, apparently healthy, trees?”

Cllr Potter thought it might explain part of the housing maintenance accounting problem when he realised that, potentially, the same people were commissioning work, getting paid to do the work and then signing it off as being necessary.

He continued: “Obviously, we’re going to have to wait for the police investigation, but a lot of these very odd things that we’ve seen start to make sense and I think what also [has become] abundantly clear is that no matter what the strategic direction for the service was, when the governance in procurement was so poor and so dysfunctional, and so potentially open to abuse, no amount of strategic decision-making or investment could fix the problem.”

And he identified three questions:

1. How much money has the council lost as a result of all of this; given the complexity of the situation can this ever be determined?

2. How was this issue detected in the first place? Was it the new financial controls introduced or the whistleblowing? (The monitoring office responded that the whistleblowing had been coincidental.)

3. Why wasn’t it reported to The Corporate Governance Committee in line with council procedures and to the Executive?

Pedro Wrobel

Pedro Wrobel responded: “Unfortunately, none of us are in a position to know [all the answers] … we also shouldn’t speculate. So all we’ve got in front of us is the position that we’re at now.

“We have the the external legal firm who’ve been commissioned to investigate who knew what, when, and that will allow us to address some of the more sort of egregious issues here.

“But the important point now is to make sure that we have the right processes, the right structures, the right people, the right culture, all of those things moving forward and that’s what our improvement plans are intended to address.”

Read the full Solace review here.

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Responses to What More Does the Solace Report Tell Us About the Housing Revenue Account Investigation?

  1. Wayne Smith Reply

    May 21, 2024 at 8:58 pm

    Thank you, Martin Giles for this summary of the latest GBC debacle.

    I’ve commented before on this issue. It was clear that GBC didn’t have the most basic checks and balances in place for budgetary control.

    This finding in particularly is just lame: “…the housing software system had not had the recommended updates for eight years and does not link to Business World, the Corporate Finance software system. This meant that there were limited financial checks and balances, and budget monitoring was difficult…”

    Even if the two computer systems couldn’t interface directly with each other, somebody had budgetary control of the Housing Revenue Account and it was their job to keep on top of it. It may have been difficult but that’s no excuse to sit on their hands and let a £multi-million overspend occur. That didn’t just happen overnight. It beggars belief.

    And let’s not kid ourselves that this is just one isolated incidence of GBC malpractice. Does anyone remember how in 2020 then Head of Planning Tracey Coleman resigned after just three years service and was awarded a reported £100,000 pay-off. For resigning! Nodded through by GBC executive and the council’s Scrutiny Committee. Why? All conveniently covered by a non disclosure agreement.

    When viewed in conjunction with some of the comments made when this report was debated at the Council meeting

    It’s clear that [new CEO] Pedro Wrobel really does have his work cut out to sort out the culture and lack of processes within GBC departments.

    As for our councillors – they are there to represent the electorate. They should do their best for the people of this borough. Make sure we get value for money, not just nod things through on party lines. Guildford has been in decline for years now. Make it a better place!

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