Investigation into FACT reveals how councillors and council officials repeatedly ignored claims by taxi drivers that rules were being broken
PUBLISHED: 17:11 23 July 2018 | UPDATED: 18:14 23 July 2018
Cambridgeshire County Council paid out hundreds of thousands of pounds to community transport provider FACT without in some instances proper authorisation, funding agreements or with no detailed follow up of how the money was spent.
It has led to questions being asked about whether the cash was legal or even necessary or whether, instead of its intended purpose, the funding was used to finance almost a million pounds of vehicle additions from 2012 and 2016.
That money helped to transform what was once essentially an organisation set up to provide support for elderly and isolated people into a potential multi million pound commercial organisation.
Eighty per cent of FACT’s work now comprises commercial contracts with the county council or with private schools such as Wisbech Grammar School where five of its mini buses are used daily for home to school transport.
Over the past six years county councillors, former county council chief executive Mark Lloyd, county council leaders and Fenland District Council have refused to act on claims that the expansion of FACT was destroying the livelihoods of local taxi and coach firm operators.
“All we ask for is a level playing field, and if they wish to enter the commercial business of coach hire then they should come out of their subsidised, charitable status,” one coach operator wrote to MP Steve Barclay five years ago.
March taxi driver Dave Humphreys has been the lead campaigner to unravel the errors, false statements and misleading information provided by FACT over the years – claims taken up and tested by the Cambs Times over the past six years.
But despite repeated pressure the county council refused to act – until last year when chief executive Gillian Beasley, who replaced Mr Lloyd, authorised an investigation.
Those conclusions, released tonight in a 288 page report with 400 appendices of evidence, provide a damning indictment of a county council handing out large sums of cash to support FACT’s commercial growth.
That was money was often allocated without being properly authorised and the evidence revealed by the inquiry shows that legal agreements covering on going monitoring were not complied with; tens of thousands of pounds of loans were allocated and never recovered.
The result was that FACT was able to take over what were described as ‘failing’ community transports in other parts of the county that led to the Huntingdon based HACT and the Ely and Soham based ESACT to then also possibly lose their original identity and become part of their expanding commercial empire.
The report was prepared by PKF – a leading firm of forensic accountants – and lifts the lid on the scale and propensity of misleading statements and falsifications made in funding bids.
It also details the cavalier attitude of county council officials – and senior county councillors – as they authorised huge sums to allow FACT to expand.
Specific grants – such as £200,000 handed to HACT to begin its Huntingdon operation and £80,000 to expand into Ely through ESACT – were not properly accounted for and no meaningful follow up was carried out to show how the cash was spent.
PKF concede that one problem faced by any scrutiny of FACT’s accounts was that trading activity of both the main company and its Huntingdon and Ely subsidiaries were bound together in one single bank account.
“As the annual grants are deposited into a single mixed-use bank account (in which community transport service and contract income and expenditure is mixed) it is not possible to trace the funds into specific expenditure,” says PKF.
Had they done so it might have made scrutiny easier and could have ensured “the grants have been used for specified purpose”? Not doing so “makes it difficult for the donors to monitor”.
One of the agreements signed with the county council mandated FACT manager Jo Philpott to attend an annual review but she informed investigators “that she has not attended any annual reviews”.
The county council agreements also insisted that quarterly FACT should provided a comprehensive evaluation of miles travelled by their fleet, revenue received from each service, a breakdown of group member, hire bookings, passengers carried, mileage and the total of unmet journeys and journeys not operated. None of these were ever provided to the county council.
From 2013 to 2017 and excluding ESACT the county council handed over annual grants of £210,325 to FACT and £60,475 to HACT to provide dial-a-ride services: start up costs and other income is not included. HACT was awarded a total of £139,000 to buy seven vehicles at launch plus a further £27,000 for VAT. And a small loan to buy radio equipment.
“CCC did not enter into grant agreements with FACT and HACT in respect of radio equipment or the start up funding,” says PKF.
“CCC has not set procedure to ensure grant funding is utilised for the specified purpose.
“HACT did not include milestones in its application for the start up grant and therefore CCC would ne unable to review grant funding against targets. CCC did not follow up with HACT on this omission in the application form”.
A section of the application form for funding to start up HACT included the requirement to list milestones under which progress could be monitored and achievements checked for delivery.
“This was left blank by HACT,” says PKF’s report.
PKF noted that the county council community transport officer attends the annual general meeting of FACT “but was unaware of the monitoring conditions” contained in the original agreement.