Cambridge LibDems Under Pressure Over Missing Millions

projections17:07 Friday 4th January 2013
Drive BBC Radio Cambridgeshire

[C]HRIS MANN: First this evening, Cambridge City Council has been accused of “losing” over £2 million. The Labour group in the city says that an external audit shows there is a £2.3 million budget shortfall. But the Liberal Democrats say no actual money has disappeared from the Council. Instead, the authority was led to believe it had more money to spend than it first thought. Cllr Tim Bick is the Leader of Cambridge City Council, and earlier today he spoke on this radio station. (TAPE)
TIM BICK: The Council has an annual process of preparing its budget, and it works .. it bases that budget on forecasts of its current spending. In the autumn, when we started out on this process, the Council financial officers provided some forecasts, which were it turns out badly mistaken. And they understated our current spending by this figure of about £2 million. No actual money has disappeared from the Council. What has actually happened is that we’ve had about three months in which the whole Council has been led to believe that the spending level was a bit more optimistic than it really is. (LIVE)
CHRIS MANN: And the Leader of the Liberal Democrats says this came as a shock to the Council, and he feels let down that the error has occurred. (TAPE)
TIM BICK: We are all very disappointed at the way we’ve been .. we feel let down by our financial staff, in making what appears to be a very important error. We called in before Christmas, when this was first highlighted, we called in the services of Ernst and Young, who are our auditors, to carry out an investigation. We gave them two tasks. One was, please get us back to a number we can rely on. And that was our top priority. And that’s the one we’re really looking at now, almost finished, we believe the number is about £2 million. The second part of the question we asked them was, can you tell us what went wrong, in a way that we know what we have to do to make sure this doesn’t happen again. (LIVE)
CHRIS MANN: And Cllr Bick says at this stage no-one has lost their job over the incident, and the Council is still looking into it. (TAPE)
TIM BICK: The situation is less than completely hopeless, because the financial staff themselves highlighted the problem, and are helping to put it back together again. But the exercise Ernst and Young are going to do is going to enable us to be much more precise about action we need to take to make sure it doesn’t happen in the future. If that involves individuals, it will involve individuals. (LIVE)
CHRIS MANN: Well, with austerity measures already in place for the City Council, the Leader says it will not be making more cuts to make up for this shortfall in the budget. (TAPE)
TIM BICK: We and all councils are having to save money year on year, as the Government reduces grant to us, and times of austerity bite in local government. This obviously doesn’t make that task any easier, but fortunately the City Council does benefit from quite a lengthy period of sensible financial decision making, so we have got a prudent level of financial reserves, which are intended specifically to help us in times where something surprising comes up. (LIVE)
CHRIS MANN: Councillor Tim Bick there, Leader of the Council, Cambridge City Council; Leader of the Liberal Democrat party of course. Now Councillor Lewis Herbert is the Leader of the Labour Party on Cambridge City Council, which is the official opposition, and he joins me now. What do you think about this?
LEWIS HERBERT: Well, we’re in a budget shambles at the moment. It’s all very well Councillor Bick putting lots of wonderful gloss on it, but he wouldn’t actually come on the radio this morning and say what is this £2.3 million about. Unless you know where you’re starting from, you can’t start to solve the problem. And so far we and the public haven’t been told why are we £2.3 million worse off than we thought we were.
CHRIS MANN: Didn’t he make it clear in the interview, Ernst and Young are still looking at it. They haven’t got the full answer yet, and when they have, we’ll know.
LEWIS HERBERT: Well maybe. But we have to set a budget. We have to set a legal budget and protect key services for residents, and also sort out the jobs for our staff, and give them security, by 23rd February. And he’s committed in a press release to propose a final budget by 24th January. We don’t even see a budget yet. We’re promised one by next Friday. Given the extent of this massive error, how can we have any certainty that in three weeks, we can produce the right budget Chris?
CHRIS MANN: Well let’s get this right here. Are you saying that he’s to blame for this?
LEWIS HERBERT: Well, there seems to be some implication that £2.3 million has somehow appeared on somebody’s rogue Excel spreadsheet.
CHRIS MANN: You’re not saying it’s in his Swiss bank account, or in the Cayman Islands or anything?
LEWIS HERBERT: No. The money’s not gone missing. But there’s a lot of light being made of such a large sum of money. £2.3 million is 10% of our annual …
CHRIS MANN: Are you saying that he, or the Liberal Democrats, have done something specifically which has led to this error?
LEWIS HERBERT: There is a problem with scrutiny. All of this report went through a committee. But the committee that it went to in September has no Labour members. It has seven Liberal Democrat members. So there is definitely an issue. One angle to this whole problem is that there wasn’t any proper scrutiny of all these figures. So the question to Cllr Bick is what is this £2.3 million about. He should be back on the radio to say. And what is he going to be doing about it? Because it isn’t just about finding out so this never happens again. This increases how much cuts we’ve got to make over the next four years by 50% to £7 million.
CHRIS MANN: There’s already been an accounting error. When the person who’s responsible is found out, should they be fired?
LEWIS HERBERT: Well, we’ll cross that bridge later.
CHRIS MANN: It’s a straightforward question.
LEWIS HERBERT: Well, of course. If people have made huge disciplinary style errors, then that should be part of it. But we’re not going to just flag up a witch hunt here. You don’t find a problem like £2.3 million without a lot of people being involved.
CHRIS MANN: It’s 10% of the budget isn’t it?
LEWIS HERBERT: Yes. This isn’t just a couple of finance officers. This is a process issue as well, and clearly it’s right that the finance team should be back, fully engaged on trying to sort out the budget. Because we’ve only got a metter of weeks Chris, and there’s services and jobs at stake here, and that’s got to have priority.
CHRIS MANN: Are you saying to us that this wouldn’t have happened if the Labour Party had been in power?
LEWIS HERBERT: Well we weren’t in power, so you can’t blame us in that sense.
CHRIS MANN: I’m not saying I’m blaming you. You’re blaming them, so are you saying if you had been running things it would have been different, and this money wouldn’t have gone missing?
LEWIS HERBERT: We believe in better scrutiny than is the case currently over the budget.
CHRIS MANN: So what would you have done differently?
LEWIS HERBERT: The draft budget would have gone through a proper strategy and finance committee, not just to a committee made up of Liberal Democrats. Yes, these things can happen, and the Labour councillors on the Council want to hold the Liberal Democrats to account. But more than that, we want to have the right budget going through, that protects key services. Because the City is a small council. We’re not a poor city. But we’ve got a lot of vulnerable people, and we’ve got a lot of critical services. Tim Bick is not denying that we now have to find £7 million, not £4.7 million in cuts and savings in four years.
CHRIS MANN: Of course there was money lost in the Icelandic banks. There was the Folk Festival write-off. And now this. Perhaps we need to look more carefully at what’s happening in their financial departments.
LEWIS HERBERT: We were promised an independent review after all of the money from a whole year’s Folk Festival tickets was lost. And at that time the then Council Leader said it was down to a couple of rogue officers. What we don’t want to happen is that we go through all of this game again, where it’s put on the shoulders of a couple of officers, when in fact there may be bigger problems. £2.3 million isn’t just a spreadsheet error. There’s a system error, if a budget is put together with 10% of the budget wrong.
CHRIS MANN: OK. Well we hope to be talking to Tim Bick again at the beginning of next week. We shall hopefully get those answers from Ernst and Young. But just briefly Lewis, what do you want to hear from him? What’s the major question?
LEWIS HERBERT: We want to hear, what is this £2.3 million made up of? And rather than coming on to radio being complacent, can he guarantee to residents that working with other councillors .. and remember LibDems are only half of the City councillors at the moment .. we can come up with a budget that does the best for the city?