Tuesday, 14 February 2012

Just fancy that! Amazing coincidences.

Gone but regrettably not forgotten would appear to be an appropriate motto for Mark James's stint as chief executive of Boston Borough Council. One of his main legacies was the Princess Royal Arena, a massive sports and fitness centre of which one of the main beneficiaries was Boston rugby club. It would appear that the good people of Boston, set amid the tulip fields of Lincolnshire, are still having to pay a hefty whack towards keeping the stadium going all these years later despite Mr James's promise that it wouldn't cost the taxpayer a penny!

As you can imagine, the people of Boston were very pleased to hear that Mr James's services to local government had been rewarded with a CBE. Thanks to the New Boston Eye for reminding us.

Observant councillors and members of the public will recall the chief executive boasting at a meeting of the full council at the end of last year that there had been criticism of a project in "my previous authority", but that he had been proved right.

Carmarthenshire readers will find a report produced by the Audit Commission in 2007 spookily familiar. The report, which looked into the project had a number of things to say, including:
  • In developing plans for PRSA (Princess Royal Sports Arena), the Council, at an early stage, committed to supporting the project with a capital grant of £3 million. The development has cost over £2 million more to construct than originally expected and funds expected from other sources have not materialised to the extent projected. As a result, the Council agreed to grant a significant loan of nearly £2 million from capital resources and guarantee loans of currently £1.4 million to ensure that the facility was completed.
  • In addition initial estimates of net surpluses being made by the facility over its first years of operation have turned out to be grossly inaccurate. Net running costs are proving significantly greater than first anticipated and have resulted in the Council so far contributing £0.8 million in respect of the first two years of PRSA's operation, and including provision for a further £1.1 million revenue support in its medium term financial plan (MTFP) for the next five years [i.e. up to 2010 ed.].
  • The full extent of the financial exposure of the Council should have been more clearly identified in reports to members when decisions on granting additional funding were made, especially with regards to revenue 'operating' support and interest charges.
Helpfully, the Audit Commission also produced a section headed "Reflective Learning". These include suggestions that in future members of the council should be given full details of such contractual arrangements and kept fully informed about them.

Of course, while Boston was left reflecting on this damning report, Mr James had long since departed for the rather larger playground of Carmarthenshire, with its opportunities for bigger, more grandiose schemes.

The 2007 report was by no means the end of the nightmare for Boston. One of the features of the set-up which may also strike a familiar note with Carmarthenshire citizens (think Botanic Garden, Towy bowling alley, etc.) is that a charitable company called BSI (Boston Sports Initiative) was set up to run the arena and take over from the council. The latest accounts for BSI, to October 2011, show that the council is still pumping money into the arena (£380,000 over the last two years).

Of course, any similarities between what happened in Boston and developments in Carmarthenshire are entirely coincidental. Nothing to reflect on here.


caebrwyn said...

When Carmarthenshire Council first approved the funding for the new stadium in 2007 the accountants, Deloitte warned the council that this was a very risky venture, dire warnings in fact. Unsurprisingly the waverers were persuaded by those in charge and it went through. No lessons learnt then.
Here's an extract from the Western Mail last year;
"A report submitted to Carmarthenshire County Council a year before the move in November 2007 by chief executive Mark James and director of resources Roger Jones included a prediction that in the financial year up to 2009, the club would make an operating profit of £983,000. In fact it made an operating loss of more than £3.3m.

The accountants Deloitte, who were asked to assess the new stadium project in 2007, warned there were “significant potential sensitivities” within the business plan which could result in the club making losses rather than profits.

For that reason, Deloitte strongly recommended that the council should seek assurances, possibly in the form of personal guarantees, from the funding directors to ensure that any operating shortfalls would be met within the medium term – five to 10 years.

Last November it emerged that the directors’ personal guarantee to underwrite the interest on the council loan for the first five years had been waived"
(full article; http://www.walesonline.co.uk/news/wales-news/2011/07/29/scarlets-rugby-club-criticised-for-failing-to-file-accounts-91466-29139086/)

Tessa said...

Excellent post thanks. Carmarthenshire Ratepayers' Association tried to persuade councillors to defer their decision to pump money into this massively optimistic venture, as the club had not filed audited accounts with Companies House (so were in breach of company law, and the council was in the dark as to their recent results and the auditors opinion. This prudent advice, as well as much excellent work done by the Stradey Residents Action Group was ignored, and the councillor (Arthur Davies) who tried to get this discussed was shouted down (I know as I was there.