Documenting Past Failures: (4) NRF, EduAction, and the Youth At Risk programme

Between 2003 and 2006, LBWF paid EduAction £340,000 for a programme called ‘Youth at Risk’, the objective of which was to reduce exclusions from schools in targeted areas, broadly the poorer parts of the borough.

From 2006 onwards, rumours about this programme began to spread, with the central allegation being that EduAction had not spent the money as intended.

Various investigations ensued, and a complaint was made to the police. The issue rumbled on, receiving extensive coverage in the Waltham Forest Guardian (see links below).

Finally, in 2010, thanks to the persistence of several campaigners and whistleblowers, together with sterling work by Iain Duncan Smith MP, the Information Commissioner ordered LBWF to release an earlier Corporate Audit and Anti-Fraud Team (CAAFT) report into the affair (CAAFT, ‘Investigation Report. NRF Funds – Internal Matters’, July 2008) which for some time it had tried hard to keep secret.

This report is worth dwelling on, since it illuminates so much about each of the parties involved, and their way of working. The key findings (with cross-references to the paragraphs in the original) can be summarised as follows:

(a) The programme was initiated and shaped by the client and beneficiary rather than LBWF.

 The report observes: ‘[Redacted] explained that at the workshop developing proposals, EduAction representatives had stepped in and offered to provide services. The output levels and output criteria had come from EduAction…thus the eventual beneficiary of the funding played a part in framing the expression of need’ (5.1.24).

(b) The programme’s stated objectives were unclear, contradictory, or unstated.

 Representatives from LBWF and EduAction notably diverged, both over time and between each other, about everything from the programme’s overall purpose, to its target client group and required outputs (5.1.1-5.4.16). For example, regarding the latter, it is concluded: ‘No document presented to us as a “bid” gives clear quantities of expected outputs. The only documents quantifying expected numbers of supported pupils are retrospective’ (5.4.1).

(c) The contract between LBWF and EduAction was flawed.

 The contract for this programme was unsigned by anyone from EduAction, which meant that ‘the [LBWF] Regeneration unit’s officers…[had] in effect drawn up a contract between their unit and itself’ (5.10.6). Moreover, the contract included ‘a highly irregular clause’, which stipulated that, provided the LBWF lead officer was satisfied with the programme’s overall level of performance, EduAction could keep ‘any operating surplus’ that might be made, whether ‘through efficient management or otherwise’ (5.10.10) – an arrangement that, according to the report, gave ‘a green light to the provider to divert funds and make economies in services’ (5.10.12). Significantly, though LBWF officers were unable to explain why this clause had been inserted, they could demonstrate that it had been ‘put through Legal’, apparently without comment (5.10.11).

(d) The programme was poorly monitored, though payments were made regardless.

Claim forms varied by quarter, without explanation (5.6.23). EduAction staff provided misleading information at monitoring meetings, with the intention to deceive (4.4.1). The LBWF monitoring team failed to follow up serious issues that arose as the programme unfolded (4.5.1-3). There was confusion about claimed outputs (4.3.1, 4.3.5). However, little of this mattered, because despite ‘persistent non-compliance with funding requirements’, LBWF simply continued to pay EduAction regardless (4.7.2.).

(e) Claimed programme outputs were not achieved.

EduAction claimed that it had involved 100 pupils in the programme, but consistently failed to provide credible evidence to substantiate this figure. Subsequent investigation showed that the true number of pupils involved was nowhere near 100, and possibly less than ten (4.3.5; 5.5.1 and 5).

(f) EduAction may have acted fraudulently.

EduAction charged (and was paid) a management fee of c. £16,500 that it was not entitled to (5.8.1-17); and in another case may have made ‘a duplicate claim for the same activity from two funding streams’ (5.7.10). Moreover, it is considered ‘likely’ that there was also a more encompassing sleight of hand. Before 2003, EduAction had run YAR- type programmes, based upon other funding streams, and therefore when NRF began had the staff and service provision in place and poised to continue. The new money could have been used to build provision, but the paltry output figures already referred to show no such expansion occurred. It is probable, then, that what EduAction did from 2003 onwards was simply divert a sum equivalent to most or indeed all of the NRF funding into ‘other parts of the company’ – a fraudulent activity (4.2.2).

(g) Robust remedial action should be taken.

It is recommended that (a) EduAction be billed for repayment of at least £240,000 and ‘if necessary civil litigation undertaken for the tort of fraudulent misrepresentation in the event that repayment is contested’ (1.1.3); and that (b) the Interim Chief Executive, on the advice of the Director of Finance, consider whether disciplinary action is appropriate in the cases of six LBWF officers (1.3.1-7).

So much for the CAAFT report. What happened next is something of a mystery. EduAction’s line appears to have been that the programme was so badly formulated, it was little wonder that confusion had reigned. Thus, Ms.Rosamund Marshall (EduAction chair) wrote to Mr.Ian O’Donnell (LBWF Director of Finance) as follows: ‘The [CAAFT] report’s findings…highlight that the management process for letting the contract, the development of the “contract” itself by the Council was poorly delivered, and the subsequent monitoring of the “contract” was also poor. As a result, criticisms levelled at EduAction’s project management are unjustified. We would acknowledge, however, that the company’s record keeping was insufficient to provide substantive evidence that outputs were being achieved’.

What we do know, thanks to the Waltham Forest Guardian, is that LBWF eventually took EduAction to court, and in March 2011 won an undisclosed sum, with both sides agreeing to pay their own costs, and neither admitting any liability or wrongdoing.

What we also know is that Cllr. Chris Robbins, who was portfolio holder while all this was going on, subsequently went on to become Leader of the Council.

As for the ‘at risk’ pupils who might have been helped had this money been spent properly, well, your guess is as good as mine…

PS for the Waltham Forest Guardian’s coverage of this saga, see

http://www.guardian-series.co.uk/news/2363446.WALTHAM_FOREST__Fraud_fears_prompt_police_complaint/

http://www.guardian-series.co.uk/archive/2008/07/16/2398460.WALTHAM_FOREST__Council_officers_investigated_over_alleged_fraud/

http://www.guardian-series.co.uk/news/3560655.WALTHAM_FOREST__Anti_fraud_report_publication_put_on_hold/

http://www.guardian-series.co.uk/news/4375296.WALTHAM_FOREST__At_risk_children_fraud_claim_decision_pending/

http://www.guardian-series.co.uk/news/8254637.WALTHAM_FOREST__Council_ordered_to_release_secret_report_into_fraud_claims/

http://www.guardian-series.co.uk/news/3576510.WALTHAM_FOREST__NRF_fraud_probe_handed_to_police/

http://www.guardian-series.co.uk/news/8323446.WALTHAM_FOREST__Secret_fraud_report_released/

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