LAI0016
Written evidence submitted by Martin Shortland
Dear Public Accounts Committee
I respectfully request that this letter be submitted as evidence for inclusion into your Local Authority Commercial Investment inquiry.
Summary
A letter I received from HM Treasury stated that,
“The Public Works Loan Board (PWLB) is a non-discretionary lender. It does not ask the purpose of the loans it makes. LAs must only assure the PWLB that the borrowing is within relevant legislation and its borrowing powers.”
It is clear that the PWLB are solely reliant on the due diligence (honesty, experience, commercial expertise, and risk awareness etc.) of the Local Authority (LA) and for the LA to act in an appropriate manner in support of any loan requests.
There is no oversight or accountability to ensure that the LA’s elected representatives have the required expertise and proven experience to make huge commercial property investments using PWLB loans and are always acting in the best interests of the residents they are accountable to.
What happens when the LA acts inappropriately because those making the key financial investment decisions do not have the required commercial experience and expertise?
What happens when the LA does not provide the necessary oversight, accountability, and transparency to its residents, auditors, and lenders regarding its commercial property investments?
Spelthorne Borough Council
Spelthorne Borough Council (Spelthorne BC) is a small borough however it has invested in excess of £1bn in a commercial property portfolio supported by loans provided by the PWLB.
It is of the upmost importance that your Committee stringently challenges those responsible within the Ministry of Housing, Communities & Local Government (MHCLG)/PWLB and Spelthorne BC to explain why this has been allowed to happen with no oversight or accountability.
Spelthorne BC’s past auditors have publicly voiced grave concerns about the uncontrolled investments and no longer act for the Council.
It is understood and accepted that prudent investments are now an important mechanism for LAs to support their finances as a result of reduced central government funding.
However, it is unacceptable and reckless for the MHCLG/PWLB to put local residents and the LA’s critical services at risk by permitting inexperienced elected individuals to act with no oversight or accountability whilst giving them access to a seemingly unlimited source of loan finance.
Spelthorne BC is repeatedly in the National Press because of its uncontrolled spending on commercial property, spending that has become endemic since the appointment of the Council Leader, Cllr. Ian Harvey.
Cllr. Ian Harvey does not have the commercial expertise or experience to manage and oversee such a significant investment portfolio; his cabinet are complicit providing no appropriate challenge.
His property experience originates from running a small student accommodation letting company with his wife, Cllr. Helen Harvey whom he has now appointed as the Portfolio Holder for Investment Portfolio Management, and Regeneration
Through his wife’s appointment Cllr. Ian Harvey clearly sees no conflict of interest in having his spouse in such a prominent position being directly involved with the Council’s property investments.
Spelthorne BC has no appropriate oversight mechanism and is now run by a husband and wife team with questionable commercial property experience and access to unlimited government loans from the PWLB.
Justified complaints and investigations by residents are met with intimidation by the LA’s administration and not with transparency; questions from Councillors are addressed in the same inappropriate manner.
Despite the alarming and increasing rate of its borrowing the MHCLG/PWLB seem uninterested in ensuring that Spelthorne BC are acting appropriately and that those making the commercial decisions have the appropriate expertise and experience; there is no oversight to ensure that they are acting with caution, appropriate risk management and always in the best interests of its residents.
Conclusion
Despite serious concerns raised by the Council’s past auditors the MHCLG/PWLB are allowing Spelthorne BC’s inexperienced administration to act with no oversight or accountability, resulting in commercial property investments exceeding £1bn and they continue to spend in an uncontrolled manner.
Why doesn’t the MHCLG/PWLB provide appropriate oversight to ensure that spending limits are enforced on LA’s?
Why doesn’t the MHCLG/PWLB ensure that the LA’s are accountable for their investments and ensure that the investments are properly audited, and the results published?
I would respectfully ask the Committee to call upon Cllr. Ian Harvey and Cllr. Helen Harvey to address the committee to answer questions about the conduct of the PWLB and the Council’s investment activities.
I hope that your inquiry is able to fully investigate the PWLB loans awarded to support Spelthorne BC’s uncontrolled commercial property investments.
We would welcome assisting your inquiry in any way you deem appropriate.
Thank you for your consideration.