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Lester Hudson: too busy eating cake to notice a £9.8 million overspend

At the cabinet meeting held on Thursday 25th September 2014 the mayor and his advisors received a report on progress with the redevelopment of the East Ham Town Hall campus.

The report stated that additional funding of £9.8 million would be required and that

“there has been a clear breakdown in Governance and reporting procedures for this project, hence these issues have not been properly reported to the Mayor and Cabinet previously.”

Now cabinet has been summoned for an emergency meeting to consider the fall out from the investigation into what went wrong.

That includes the ‘discovery’ that the council opened a new 6th form college without any legal authority and has, therefore, acted unlawfully.

The investigation reveals both systemic incompetence and an extraordinary laxity in project governance:

One problem is that the programme board overseeing the East Ham Campus works appears to have changed into a project board focusing solely on the delivery of the Sixth Form element of the Programme. This shift was not discussed, or approved by any of the Council’s Statutory Officers…

… financial matters across the whole Programme were not discussed at project board meetings. The Board became concerned only with the September 2014 opening of the sixth form centre. Officers assumed its role was to oversee the correct fit out, the appointment of staff, communications etc. and it is clear that cost reports were never submitted to the Board.

… There were no terms of reference or oversight of the whole project.

… Minutes of the project board were taken by a member of the Programme Team, meaning there was a possible conflict of interest and reducing the impartiality of minute taking.

… [Cost and budget management] is the monitoring of actual expenditure, committed expenditure and forecast expenditure to project completion, against the approved budget. On reviewing the documents it is apparent that this has been at best poor or non-existent.

… Not only was there no cost reporting until March 2014, the reports produced do not show all necessary information, in that they do not differentiate between actual and committed expenditure, nor is there a detailed breakdown of works.

… It appears that arrangements for Contract compensation events (these are similar to contract variations) were agreed on an informal basis. An automated system was in place with thresholds for authorisation that did not align with the Council’s authorisation limits and there were inadequate controls or documentation within the Programme for compensation events exceeding authorised limits.

… There were a number of compensation events that were found on the application system which were over £100,000, and above officer delegated authority levels.

… Formal contractual arrangements for the Sixth Form project were never entered into by Officers… the builder was requested to provide a price for the Sixth Form. No report was not submitted to the Mayor, Members or Statutory Officers and, in addition, the Council’s procurement rules were not followed. [see note below – MW]

… There was no sponsorship or Programme Board for the East Ham Campus works since spring 2013. This meant that progress in terms of delivery (time and budget) of the East Ham Campus works as a whole was not challenged or scrutinised by the Programme Board for a period of at least six months.

And on and on (and on) it goes. Page after page of toe-curling detail.

So far three officers have lost their jobs over this, including the executive director for Resources and Commercial Development and the director of Legal Services and Governance. More will follow.

But what about the well remunerated cabinet members who should have been keeping an eye the project: how were these failures not spotted? Why were questions not asked?

Whose portfolios included oversight for the East Ham Town Hall development and the opening of the new 6th form college? Who among our elected representatives is ultimately accountable?

As Sir Robin has thus far declined to publish details of what his army of ‘mayoral advisors’ are supposed to be doing, beyond vague job titles, we can only guess. 

Deputy mayor Lester Hudson double-jobs as the cabinet member for finance and regeneration. He previously also had ‘Property and Assets’ in his portfolio. If his job title actually meant anything you’d expect him to have taken at least a passing interest in what was going on.

That he didn’t either means his job is meaningless or he’s monumentally incompetent. Either way, if he had a shred of decency, he’d be drafting his resignations from both cabinet and council.

Note: As the cabinet report points out, “It should be made explicitly clear that the liability for the failures in establishing adequate or compliant contractual arrangements rests entirely with the Council and there is therefore no evidence of poor practice or impropriety on the part of the Contractors.”

Tags: East Ham, Lester Hudson, newham