RESUME OF SALIENT POINTS FROM THE PUBLIC INTEREST REPORT INTO LINCOLNSHIRE COUNTY COUNCIL  

EXTERNAL AUDITOR'S FINDINGS  

PART ONE  

I Am concerned that left unchecked the dynamics set out here will destablise the Council and damage its reputation. For this reason I will make enquiries and, if necessary, carry out further investigations regarding the Council's response to my recommendations.  

It is important to note that in my view the matters reported on here are not isolated incidents. I am aware of other matters, which I decided not to investigate but which are currently under investigation by the Council.   This report concerns a breakdown in corporate governance and in particular a failure in the safeguards of legality and ethics within the Council. On a number of occasions this has led to decisions and acts by the Council which are unlawful.  

A dysfunctional relationship has developed between certain senior officers and certain majority group councillors, in particular the leader, Cllr Speechley and former Cllr Mawby. Senior officers have been subject to a climate of fear with regard to their jobs if they did not follow the wishes of certain majority group councillors, in particular Cllr Speechley and former Cllr Mawby. The way to preserve one's position was to carry out their wishes regardless of whether or not a particular matter had been before Council, Committe or Sub-Committee and, in some cases, regardless of its legality.   Officers fears have been fuelled by the circumstances in which the former Chief Executive, and the former Director of Education left the Council. In both cases, the officers fell out of favour with the majority group, in particular Cllr Speechley and former Cllr Mawby. I am of the view that their departures were forced upon them, primarily on account of the wishes of certain majority group councillors and, in particular, the two Councillors mentioned above.   It is clear that the breakdown in relationships has come to a head over the last few years. A briefing note sent by the Chief Executive to senior Tory members at the time of the Director of Education's proposed departure states that: "There will be wider ramifications of members deciding to pursue their current line and sever the Director's contract. Following:- Large-scale redundancies following the change of control, the departure of the previous Chief Executive and the departure of the Central Support Manager. Staff have expressed concerns about a members' 'hit list' of officers, it is the perception of the scale of it in Lincolnshire which causes concern. If this climate were to develop the organisation will fossilise, high calibre staff will leave and the council will suffer as a result".   A second factor has been the close relationship between Peter Burns, the former Chief Solicitor, Deputy Chief Executive and Monitoring Officer, and certain majority group members, in particular Cllr Speechley and former Cllr Mawby.  

One former Chief Officer said: "It was an increasing occurrence that these members wanted not to work with officers who did not wish to do what members wanted to do and who would resort only to working very directly with the Chief Solicitor, who would find solutions in order to implement things". It is fair to say that there became an increasing tension between the leadership of the Council and a number of  Directors who refused to bend on areas where they did not think that they should bend (all three such Directors have since left the Council).  

I consider that the Chief Executive is being blamed for having brought certain matters to my attention and for having co-operated with my investigation. In my view the Chief Executive has acted properly, in the best interests of the Council and sought to raise the standard of ethics and probity within the Council.   Certain majority group Councillors have let officers know that they prefer a particular decision not to go before Council/Committee. The practice of keeping matters away from Council, Committee or Sub-Committee in order to avoid the scrutiny of the Opposition, and in consequence the public is unlawful.   The purported use of delegated authority when in reality the officer is acting on individual members' instructions (or those of the majority group), fundamentally undermines the democratic safeguards embodied in local government legislation and is unlawful.   Cllr Speechley and former Cllr Mawby have been, and in Cllr Speechley's case continues to be, overly powerful within the Council. With regard to Cllr Speechley I have come across examples of behaviour, which can only be categorised as both improper pressure, and misuse of power. This is most evident in his involvement in staffing matters. Cllr Speechley threatened to dismiss a chief officer if he did not appoint Cllr Speechley's preferred candidate. Cllr Speechley sought to dismiss the former Chief Executive telling her to "leave the building" there and then. Cllr Speechley told a junior personnel officer that he was to disregard the established job evaluation criteria with regard to an officer who worked in the Leader's Office, and that he, Cllr Speechley, would tell the Personnel Officer, what the officer was to be paid.   I became aware of other members also lobbying or seeking to exert pressure with regard to personnel matters. This is contrary to provisions of both the National Code of Conduct and the Members' Handbook. I am of the view that such experienced members were or ought to have been aware of the terms of the National Code of Conduct, which is reproduced in the Members' Handbook.  

The Chief Executive on at least one occasion reminded Cllr Speechley and former Cllr Mawby of the proper rules of conduct. For these reasons therefore I am of the view that certain majority group Councillors, in particular Cllr Speechley and former Cllr Mawby, must take personal responsibility for many of the problems that have arisen. They did not see the necessity to be constrained by the normal safeguards of the decision-making process in local government and the democratic process suffered accordingly.  

As a consequence of the culture within which certain members were able to bring about the departure of Chief Officers, unlawful severance payments have been made. The purpose of these payments was to secure the officers' voluntary agreement to leave in circumstances in which it is very unlikely that the Council would have been able to dismiss them through the normal disciplinary route. The rules on payments which may be made to a departing officer are subject to strict limits. It appears to me that the matters under investigation have led to items of account which are "contrary to law".  

I consider that the matters reported on here are of sufficient gravity to warrant a public interest report. They have led to a breakdown in the normal decision-making process and therefore the proper governance of the council. I am also concerned that since my investigation began there appears to have been little recognition by senior members of any of the problems reported on here. I have not detected any significant progress in the Council addressing such problems.  

The Council did not appear to have grounds lawfully to dismiss the former Chief Executive or Director of Education, it nevertheless set out to pay a sufficient sum to secure their voluntary departure without regard to the legality of the severance payment made. The Audit Commission has paid particular attention over recent years to the inappropriate use of early retirement, specifically the financial consequences of severance payments generally and has encouraged external auditors to conduct routine investigations into local authorities' use of such powers. It is in this context that I am disappointed to find that the Council has failed to learn from the mistakes made by others. The two officers between them received in excess of £400,000 thus my concern over these payments is twofold, first the legality and second, the absence of justification for payments of such magnitude.  

Regarding the former Chief Executive, in the absence of any documentary evidence setting out any concerns as to her role, her performance or in what way the Council's functions would be made more efficient by virtue of her departure I conclude that the necessary tests have not been satisfied and that the payment to her of £120,246.72 was unlawful.  

On 7 September 1999 Cllr Speechley told the Chief Executive that he wanted the Director of Education to leave the employment of the Council. Cllr Speechley only cited two alleged problems, one concerned communication with Councillors over a PFI bid and the other over the way he dealt with an external company. The Chief Executive took issue with Cllr Speechley and confirmed his support for the Director. The Chief Executive met with the Director and informed him that "he had been instructed that the Director should depart". The Director was told that the Council would agree to his early retirement on the basis that it was "in the interests of efficiency".  

On 7 October 1999 the Council explaining that the Director was to leave issued a press release. It stated, "During his tenure at the top, the Council's Education Service has consistently outperformed other Shire Counties in terms of results. Lincolnshire's Education Service is held in high regard nationally and for that much of the credit must be given to him". Cllr Speechley admitted that members were not consulted on the terms of the press release.   On 11 October 1999 the Chief Executive copied a memorandum to Cllr Speechley. It stated that: "following a group meeting, senior members decided to terminate the contract of employment for the Director of Education. The stated reason was a failure to implement group policies and decisions". No consideration was given by the Council as to whether or not the circumstances existed which would justify the exercise of the discretion to grant added years to the Director's pension fund. The evidence indicates that the number of added years was calculated by reference to what was needed to persuade him to leave voluntarily. On these grounds, in my view, the award of added years was unlawful. The Council also paid an honorarium to the Director, the purpose being to enhance his final salary and hence his pension. That was not a course lawfully open to the Council.  

The above two cases illustrate how the Council has misused its severance powers. Negotiations were conducted as if the Council was entitled, when making severance payments, to take into account what needed to be paid to secure officers' voluntary agreement to leave. This has been driven by the wishes of certain majority group Councillors, in particular Cllr Speechley and former Cllr Mawby that the officers in question leave the Council's employment.  

At a meeting on 15 April 1999 Cllr Speechley told the former Director of Highways and Planning that if he did not do as he was instructed with regard to the appointment of an officer then the Council would be "looking for a new Director of Highways and Planning, so you cannot say there was any ambiguity or doubt about how clear we are being with you".  

Shortly after that meeting the Chief Executive met with Cllr Speechley and former Cllr Mawby to discuss the matter. Former Cllr Mawby remembers that meeting and being advised against members being involved in personnel matters or seeking to influence them unless formally involved by the Council. Cllr Speechley denies any recollection of that meeting.  

Given the fact that notes of the meeting with the Director of Highways and Planning were taken I find that Cllr Speechley did indeed threaten to dismiss the Director. Such action is both improper and in breach of the National Code of Conduct and the Members' Handbook. It was also unlawful. Cllr Speechley had no authority or justification for acting as he did. Had the Director made the appointment as instructed, that appointment itself would have been unlawful. The Director would not have been acting within his delegated powers, but on the instructions of a single member.  

LINK TO PART TWO