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

EXTERNAL AUDITOR'S FINDINGS  

PART TWO  

On 7 June 1998 the then Acting Chief Executive was regrading the Principle Officer responsible for the Office of the Leader and the Chairman of the Council, in effect their joint PA. He regraded her to a Principle Officer Grade H ("POH") plus a 5% allowance for irregular working hours. A file later dated 18 June stated: "Spoke to the Leader yesterday who said he expected the grade to be higher than POH. I agreed to grade post at POJ rather than create problems defending POH. It is easier to claim POH was an error rather than amend the job description and fudge a POJ evaluation".  

The Acting Chief Executive stated: "What I was instructed to do by the Leader was to ensure that the Principle Officer was paid £30,000 as a consequence, within my authority, I made it a POJ, which brought it close to the Leader's suggested figure. All in all, I thought, having seen the Chief Executive go fairly quickly, that was a reasonable thing to do in the circumstances. I judged that it was a small price to pay to get out of an irritation which was becoming a cancerous sore affecting relationships with senior members".  

During 1999 the Principle Officer took on further responsibilies making her entitled to another regrading. Cllr Speechley and former Cllr Mawby met with the Personnel Officer who recorded in file notes: "Cllr Speechley said that if he redefined the post she would receive more money. I said that he would tell me the outcome and how much she was to be paid. He said he had had enough of all this messing about and was fed up with things that go on in Personnel". Cllr Speechley denies the meeting took place. Due to the above, I consider that the decision to grade the Principle Officer's post at POJ was unlawful. On a number of occasions Cllr Speechleyand former Cllr Mawby interfered with the established process to evaluate the proper grading for the Principle Officer. This is in breach of the National Code of Local Government Conduct.  

The Chief Executive had given Cllr Speechley and former Cllr Mawby relevant advice with regard to the appointment of officers. I therefore cannot accept that they were unaware of their boundaries in staffing matters; they are also included in the National Code of Conduct and in the Members' Handbook.   On 24 July 2001 the Temporary Monitoring Officer met with Cllr Speechley, Cllr Croft and the Chief Executive. Her file note states: "The Leader reported that the majority group wished to appoint the Director of Education as the Acting Deputy Chief Executive during the suspension of the current office holder. He wanted this before Council as a matter of urgency to cover the Chief Executive's holidays in August". The next day Cllr Speechley told those who had been at the meeting that he had already spoken to the Director of Education who indicated her willingness to accept the post. He had also spoken to the Director of Social Services explaining why he was not to be offered the post. The Monitoring Officer wrote to Cllr Speechley advising him that the post should be filled on merit, and that a selection process should take place. She further advised that the claim of urgency could not be substantiated.  

A meeting of the Appointments Sub-Committee was scheduled which was chaired by Cllr Speechley. At that meeting the Monitoring Officer advised that anyone who had spoken to any candidate should withdraw. Neither Cllr Speechley nor any other Councillor declared an interest and withdrew. On 6 August 2001 the Director of Social Services wrote to the Chief Executive: "On 24 July the Leader phoned me to say that he and the Chairmen wished to appoint a Deputy Chief Executive. They had decided not to offer me this appointment, but had decided on the Director of Education. I and all the other Coroprate Directors subsequently received an e-mail asking if we would like to apply for the post. Given the events described above, I did not regard this as a genuine or open process and so felt that I had been denied the opportunity to be considered for the above position".  

The above illustrates how certain majority Councillors, in particular Cllr Speechley and former Cllr Mawby, stepped considerably beyond the proper bounds of conduct in staffing matters. In some instances, their conduct has been in breach of the National Code of Conduct. Their instructions to officers, if carried out, would have led and in one instance did lead to unlawful decisions. Other majority group members have also been involved in lobbying or exerting pressure with regard to personnel matters.  

In early 2000 the Council decided to help QJ Foods to re-route lorries to and from its factory away from the village of Holbeach Hearn. My concern is the way in which the Council set about achieving its aims. On 27 April 1999 the Policy Committee chaired by Cllr Speechley resolved under its economic development powers, to make a grant of £150,000 to the company. The Dept of Trade and Industry informed the Council that the grant would be in breach of European competition law, the State Aid rules, as the grant could distort trade between member states.  

To manufacture a way around this the Council explored using the Highways Act 1980 to stop up access to private roads and thus be able to pay compensation to the owner. If the Council inflicted £150,000 worth of damage on the company it could then compensate to that amount. Use of this Act is only lawful where the highways grounds justifying the exercise of the power relate to the particular accesses which it is proposed to stop up. Two of the accesses did not take any HGV traffic from the factories. There was no highways justification for the stopping up of any of the three accesses. The sham nature of this action is illustrated by the fact that the two private accesses are not, and were never meant to be, stopped up. The agreement permits continuation of existing use, agricultural and emergency purposes. Also the two private accesses do not abut any public highway. The whole exercise was no more than a device to circumvent the State Aid rules. In the event the company's value was enhanced by the grant, the State Aid rules were breached. As such, the payments were unlawful both in terms of domestic and European law.  

A key part of the culture has been the misuse of delegated authority. Certain majority group members have let officers know that they wished certain matters not to be aired in Council, Committee or Sub-Committee. Formal delegation may be given to an officer but not by an individual member. It is not lawful for an officer with delegated authority to act under the instructions of a member. The Chief Executive advised Cllr Speechley and former Cllr Mawby in a briefing note dated 11 Oct 1999: "Members need to appreciate that it is unlawful for officers to implement group decisions which have not been ratified by a politically balanced Committee on Council". On at least one occasion the delegated powers of the then Deputy Chief Executive were used to keep from Council/Committee matters which were of dubious legality. Further evidence of this behavious is found in a note from the then Deputy Chief Executive to the then Treasurer concerning the departure of the former Chief Executive. The note states: "There is a binding contract with cessation of employment and this is what we wished to achieve without recourse back to the Committee". In fact the matter had never been to Committee.  

In my view, on a number of occasions, reports to the Council with regard to breaches of the National Code of Conduct and breaches of the law should have been made.  

Since the conclusion of my investigation I have been paying close attention to developments in officer/member relationships. Of major concern has been the apparent tension between the Chief Executive and certain majority group members, in particular Cllr Speechley. The Council needs to take the necessary steps to improve this situation.  

The Chief Executive wrote to the majority group Councillors in Marchand April 2001 encouraging them to take this investigation seriously, to make themselves available for a briefing on the likely content of any Public Interest Report and to consider how the Council might best prepare itself for such a report. A memo from senior majority group Councillors in response was to the effect that the Council ought to do no more than to rebut the matters under investigation and to await the issuing of any report before responding.  

It appears that the only matters which those majority group councillors were seeking to discuss were the processes by which the Chief Executive had obtained independent legal advice and his actions with regard to the former Deputy Chief Executive. I was, at that stage, disappointed with the lack of response from senior majority group Councillors with regard to the substantive corporate governance issues under investigation. The Audid Review Committee approved the Council's formal response to my provisional views document on 10 July 2001. That response confined itself to pure matters of law. There was an opportunity for them to address the underlying corporate governance issues, which led to the unlawful actions by the Council. I was disappointed that the Council failed to do so.  

Had the Council responded in a more positive way, I may have been able to report in this document the specific progress towards addressing the cultural and governance issues identified. I consider that an opportunity has been lost and at the time of writing I have no evidence that the Council has actively begun to address my concerns. From my discussions with Councillors and officers, I remain convinced that relationships between officers and certain majority group members do not seem to have improved.   I noted with some concern that the Council's Standards Committee was originally intended to be made up of only majority group councillors and the independent members, who the Council had decided should be in the minority. It was the only County Council in the country to have decided to set up its Standards Committee without any Opposition group representation. Given the matters reported on here I considered it appropriate for there to be representation from the Opposition or for the Independent members to hold the balance of power. Without this, public confidence in the Standards Committee was likely to be reduced.  

This report was researched and compiled by Councillor