The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
I wish to inform the House of steps that my Department is taking to protect taxpayers’ interests and ensure probity in the spending of public money. As part of the coalition Government’s programme of decentralisation, Thurrock Thames Gateway Development Corporation has been closed and its functions transferred to the local council.
It has come to the Department’s attention that correct procedures were not followed by the corporation, resulting in irregular payments being made during the closure process.
A departmental investigation has identified spending on items including: training for former staff in patchwork, pottery and jewellery-making, the purchase of software and associated training for personal use by a senior executive of the closing body, and payment in lieu of notice when this could have been avoided through timely issuing of notice periods to staff.
The Department considers this to be a serious failing in the chief executive’s responsibilities to safeguard public money, as set out in HM Treasury’s “Managing Public Money”. The Department takes allegations of impropriety very seriously. The Department stripped the chief executive of his designation as accounting officer on 17 October 2012, and commissioned an investigation which has found:
During the winding-up period there had been serious control weaknesses in the corporation leading to irregular payments in lieu of notice because of a failure to issue redundancy notices in good time, and failure to seek and obtain explicit approval for such payments from the Department.
Expenditure on training and the purchase of software incurred in the period from April 2012 to closure was not in accordance with the corporation’s policy and was novel and contentious. Approval should have been sought from the Department to incur this expenditure but this was not done.
The chairman and chief executive set up a company together in May 2012 while still employed by the corporation. The involvement of the chairman and chief executive in the company was not reported in the board’s register of interests and while there were no transactions between the company and the corporation and the company did not trade in the period before the corporation’s closure the failure to disclose the interest was a serious omission.
Ministers regard this as totally unacceptable. The Department is now supporting Thurrock borough council in legal action to recover funds from the former chief executive and director of resources to protect taxpayers’ interests. I hope this sends out a strong signal about our zero tolerance towards wasting public money.
I am placing a copy of the investigation report in the Library of the House.