In my previous post, I gave an account of Pembrokeshire County Council’s governance and audit committee meeting on 10 September 2024 during which its new chairman, Dr Norma Barry, prevented Cllr Jacob Williams and myself from questioning the officers and members the committee had called before it to give evidence.
That meant that a series of statements of dubious veracity concerning the authority’s handling of misappropriated grant funds were allowed to go unchallenged.
One such concerned an issue that I raised way back in 2013/2014: the fact that when bids for grant-funded building restoration work were being evaluated, the tender sum included a combination of eligible and ineligible works.
As the grants were calculated as a percentage of the actual cost of the eligible items this incentivised developers, builders and architects to bump up the cost of eligible work while minimising that allocated to ineligible work.
To give a simple example, a contract with a 50% grant rate, where the true cost is £50,000 for the eligible work and £50,000 for the ineligible work, would have a tender price of £100,000 and a grant of £25,000.
However, if the developer, builder and architect are in cahoots, they can arrange for the same £100,000 to be split 70:30 with a grant of £35,000.
Of course, that means underpricing the ineligible work, but, as I will explain in a further post, that little difficulty can be overcome by later omitting this loss-making element from the restoration project altogether.
It was clear to me that this is what had happened on several grant projects in Pembroke Dock and as I wrote in my submission to Cabinet on 2 December 2013:
Potential for Fraud
“This [intermingling of the cost eligible and ineligible work] is an open invitation to fraud, because it could give rise to a situation where the applicant’s preferred builder can load up the rates for the eligible work while reducing those for the private (ineligible) work.
This is especially so if there is a collusive agreement between the applicant and the builder that the ineligible works will not be required to be done. That being the case the builder can submit whatever rates he likes for the private work without ever having to deliver, while the desired outcome for the applicant is the lowest tender with the highest grant”.
The council responded:
“As the eligibility of each item of expenditure is assessed by the Council, the applicant and his contractor does not know which items are eligible and which are not. They are not provided with a detailed breakdown of the grant calculation.
Consequently they have no ability to carry out the fraud suggested, whether they collude or not.”
Of course, if this were true, it would mean the developer has bought a property, engaged an architect, applied for planning permission and gone out for tender without having any idea how much grant aid, if any, the property would attract.
The response to my next argument seems to concede this point, because, after I claimed:
Taxpayer Value for Money
“It is perfectly possible for the lowest gross tender to represent poorer value for money for the taxpayer than a higher one.”
The council responded:
“If the lowest possible grant is one that is too low to encourage the developer to undertake the project then offering grant at that level is pointless. There is therefore a risk of significant wasted effort, and wasted taxpayers’ money, if we do not offer a grant that is likely to be accepted.”
However, as I pointed out above, the risk of “wasted effort” already exists if the developer has no idea at the outset how much grant the project might attract.
At the meeting on 10 September 2024, when this subject was brought up, European Officer Gwyn Evans, whose department had overseen the Pembroke Dock grant scheme, was allowed to treat us to a dissertation on the present grant regime “which is no longer subject to EU rules” which we were told “were very legalistic”.
And the UK shared Prosperity Fund under which they were now operating had “virtually no rules” so questions regarding eligibility “just don’t arise”.
While this was all very interesting it was completely off the point because what was under consideration were the rules that existed back in 2013/2014 when this all blew up.
Addressing this point Mr Evans told me:
“With regard to the issue, or your suggestion, if I can put it like that, that we should have based the grant on the tender with the lowest eligible cost and not just the lowest cost tender, I think that is really problematic.
To do that, it would require the council insisting that the applicant engage a contractor whose costs are not the lowest.”
Now, putting myself in the shoes of such an applicant, I’d refuse a grant and withdraw my application, because telling an applicant that you’ll only fund a grant if he incurs additional costs would leave the applicant wondering what the point of the grant was.
In addition, which tender has the lowest eligible costs can’t be known until each tender is analysed, and that would be an immense amount of work.
On 29 Dimond Street there were actually 18 contractors that returned tenders.
So to find which had the lowest eligible costs, officers would have had to have analysed all 18.
And that would have been more work than we have the available capacity to do.
So the suggestion is, in my opinion, I’m afraid, impractical.
I can see the logic of what you’re saying, but it’s simply impractical.”
However, impractical as it might be, the council’s revised grants procedure manual (which was adopted in September 2014) requires that, in order to avoid the possibility of fraud, this was the method that should be used to evaluate tenders.
Below is an extract from the report to the Audit Committee on 22 September 2014 which laid down the exact procedure that I had been advocating all along. And it is interesting to note that it had been in force since January 2014 which was well before I unearthed the evidence that led to the fraud complaint to the police.
Unfortunately, because the chairman, Dr Norma Barry, refused to allow cross examination of Mr Evans’ testimony at last month’s meeting, I was unable to cast any further light on this apparent inconsistency.
