Auditors, ombudsmen and councillors

Over the last few years quite a few residents of Carmarthenshire have decided to take their concerns about Carmarthenshire County Council to the Wales Audit Office, and all have found that their hopes of persuading the authority to take action have ended in disappointment.

Several years ago the Carmarthen Journal told readers that an investigation of the council's planning department by the Audit Office was about to be undertaken, and the office received quite a few letters from citizens outlining their grievances as a result.

The auditor replied to Cneifiwr's complaints about the handling of a major planning application with a brief letter written on what looked like recycled lavatory paper (top marks for economy). The letter said in a tone which mixed surprise with exasperation that the Audit Office had received a significant number of unsolicited letters complaining about aspects of the council's planning function, apparently in the belief that an investigation was about to be undertaken.

This was not the case, it added. The auditor was merely contemplating whether an investigation was warranted, and needless to say the conclusion was that despite the unsolicited letters from various victims and aggrieved citizens,  no action needed to be taken.

Interestingly, as Caebrwyn has discovered, the Public Services Ombudsman for Wales has taken a rather different view.

More recently, a couple of people felt moved to write to the WAO to question the council's decision to pump almost £1.5 million into the Towy Community Church's 10 pin bowling alley at a time when it was making cuts to all sorts of other services, including libraries, school music schemes, support for the Welsh language, museums, road maintenance, etc.

The responses came, it turned out, from the appointed auditor for Carmarthenshire rather than the WAO itself, and carried with them the unmistakable whiff of County Hall where a ghost writer appeared to have been at work.

The auditor told the residents that the Council has "the power to do anything which it considers is likely to achieve the promotion or the economic well-being, the social well-being and the environmental well-being of its area", wording taken from the Local Government Act 2000.

Further, all decisions had been correctly made at the appropriate level, and the grants awarded by the council "will have met" the prescribed requirements for each scheme, they were told.

The "will have met" bit is interesting because it suggests that the auditor was either assuming that this was the case or had been told by the council's officers that that was so.

In other words, the auditor took the council's word that everything was OK and above board.

What about the council's duty to ensure that public funds were not being wasted? Well, the disposal of an asset which had been "independently valued" at £750,000 (although the book value was £835,000) fell within the threshold of the General Disposal Consent of £2 million which meant that the Council was able to avoid the legal requirement that it disposes of any land at best consideration. So it was OK to use £835,000 of public money to give to a small church (strictly speaking it is a 99-year lease at a peppercorn rent, but the council treated it as a disposal) because in the council's view it is likely to achieve the promotion or the economic, etc. well-being of its area.

Ironically at about the time the councillors voted to approve the latest funding package for the church, the council was also finalising its budget proposals and a huge swathe of cuts to all sorts of services.

Whenever the council is challenged about hikes in charges in leisure centres, the closure of libraries, public lavatories, cuts in funding for Mentrau Iaith, etc., it always responds by telling us that it has no statutory duty to provide any of these services.

Of course it has no statutory duty to ensure that Carmarthen has a 10 pin bowling alley either.

Next up was Caebrwyn who had previously been assured that the auditor would be monitoring the costs of the libel case between her and the Chief Executive.

You can read about the response she received here, but it was made clear to her that the appointed auditor was not subject to the Freedom of Information Act, and that any information he divulged would be at his discretion.

The whole point of having external auditors of local government is surely (a) that they are independent, and (b) that they perform their duties in a transparent and open way in order to assure local people that their councils are both acting within the law and using public money efficiently and effectively.

The locally appointed auditor system certainly fails the second of those two tests, and there is reason to wonder in the case of some locally appointed auditors just how independent they really are from the local authorities they are supposed to be monitoring.

Just as the Towy Church project rests on that catch-all clause from the Local Government Act 2000 (promoting the economic well-being, etc.), so the Caebrwyn libel case appears to rest on an equivalent clause from the Local Government Act 1972 which says that,

a local authority shall have power to do any thing (whether or not involving the expenditure, borrowing or lending of money or the acquisition or disposal of any property or rights) which is calculated to facilitate, or is conducive or incidental to, the discharge of any of their functions.

The implication here is that Caebrwyn's blog is somehow preventing the council from discharging its functions, although as the decision by the Executive Board was subject to a public interest exemption, we can only speculate as to how her blogposts are jamming up the wheels of local government.

The libel case itself has been grinding slowly along for over 6 months now, and it will be almost another 6 months before the case goes to court. Obviously, the lawyers' meters are ticking away, and costs at this early stage are already known to be in excess of £60,000 before anything much has happened. By the time the case has been heard and any damages awarded, the sums involved could well be astronomical.

A timely illustration of what this could mean comes from a recent libel trial involving a student who sued two national newspapers for making false claims about his participation in demonstrations against education spending cuts. The trial ran for just 5 days, and the judge issued an order for the two newspapers to make an interim payment of £450,000 to meet the claimant's baseline legal costs. The final figure is likely to be higher and excludes damages awarded to the claimant, Luke Cooper. A summary can be found here.

The council will be insured in the case of its defence of Caebrwyn's claim, but it is almost certainly not covered for the costs incurred in its counter-claim. If the council loses, those costs will come directly from public funds, and an interesting question in this regard will be how the council's costs are apportioned, especially since the same counsel is conducting both the defence and the counter-claim. We can be sure that the council's insurers will be keeping an eagle eye on their exposure.

The question is whether the external auditor is paying as much attention to the taxpayers' exposure as the insurers are to their likely share, and what if anything he might do to protect us.

Nothing that the auditor has done in recent years can give us much comfort on either score, and as Caebrwyn has discovered, the auditor does not have to tell us anything because he is beyond the reach of the Freedom of Information Act.

The case law on which the County Council is basing its counter-claim relates to a libel case involving Bedford Borough Council and a Conservative Party election agent. There the district auditor decided to intervene after the libel case had been settled to object to the use of public funds in pursuit of a libel claim, and that extremely belated response by the auditor played a significant part in the judge's decision to dismiss the auditor's claims.

Will Carmarthenshire's appointed auditor learn from the Bedford case and intervene while time is on his side? Will he warn the Council against pursuing its counterclaim and the risk of a huge financial hit? Will he seek to impose any limits on the Council?

Well, we can but live in hope.

There is a draft Audit Office (Wales) Bill waiting to go before the Welsh Assembly which might just tackle this mess by making the WAO directly responsible for local government, but by the time that hits the statute books, the dust will have settled on the libel case.

Perhaps the biggest lesson is that all of these desperate appeals to ombudsmen and auditors would not be necessary if our elected councillors found the courage to say no a little more often and remembered that every pound given to the Llanelli Scarlets, Towy Community Church, the chief executive's libel fund and all of the other worthy causes means a pound less for our existing museums, leisure centres, school music programmes, support for the Welsh language in the community, etc.