LBWF hands out £8m. of government support grants for pandemic hit businesses, but won’t say which got the cash

During the pandemic, LBWF has been awarded large amounts of central government money both for its own use, and to support the borough’s economy.

One of the biggest of the latter disbursements occurred between November 2020 and July 2021, when LBWF received £8m. from the England-wide Additional Restrictions Grant (ARG) scheme, and paid it out to 1,051 local businesses.

The objective was to focus on the ‘strategically significant’, defined as those ‘able to demonstrate their contribution to the local economy through, including but not limited to…Contribution to borough priority sectors…Local & regional economic impact of potential loss…Impact of loss / retention on local regeneration…Tax contribution and record…[and] Record on social value’.

Relatedly, LBWF also created a Business Recovery Board, chaired by ‘a senior Cabinet Member’ and bringing together ‘business leaders and representative organisations from the borough’s key employment areas and sectors’, in order to ‘oversee and drive’ its ‘Business Recovery Plan’. 

These were important interventions, unprecedented in recent history, yet, astonishingly, much of how they panned out on the ground remains secret.

Thus, asked under the Freedom of Information Act which businesses have benefited from the ARG funding, LBWF responds:

‘The Council has assessed the impact of releasing the information withheld under the exemption section 43(2) – commercial interests, in order to decide whether disclosure would, or would be likely to, prejudice the Council’s commercial interests or those of any third party(ies).

There is, of course, a public interest in promoting transparency of the Council’s decisions and accountability.  However, the disclosure of the information currently withheld under this exemption would be likely to prejudice commercial interests of businesses (third parties) in receipt of grants as it will reveal financial details which could place them at competitive disadvantage and may prejudice them in future commercial matters. 

It is therefore the view of the Council that, at this time, the public interest in withholding the names of businesses who have received grants outweighs the public interest in disclosing it’.

And as to the Business Recovery Board, a request to see its minutes produces the retort: ‘No formal minutes are produced for the meetings as agenda items are covered through presentation slides by speakers’.

Why has LBWF adopted this stance? Why, in short, are taxpayers being prevented from knowing about how £8m. of their money has been spent? 

It needs to be said, first of all, that LBWF’s own explanation for its opacity is implausible, because it overlooks the fact that every company, every year, anyway has to report its ‘financial details’ to Companies House, and thus make them public.

What’s going on?

It is relevant to start with the wider context.

For some time, there has been growing national concern about the way business support schemes are being run, such that the Local Government Ombudsman is reportedly fielding a rising number of complaints.

A key issue is fraud, illustrated by the fact that, in the last few weeks alone, Herefordshire Council has clawed back £1.2m., including from a pair of companies that made claims but in reality never traded, and Leeds City Council has admitted paying over £1m. to 74 companies which it now wishes to reclaim.

Finally, at a more parochial level, there’s the established fact that LBWF’s long-term record in terms of husbanding public monies is at best patchy, with due diligence in particular a perennial weakness.

So, putting these various observations together, LBWF’s refusal to reveal much about ARG may reflect less a desire to protect companies, and more a desire to protect itself – that is, limit the potential for reputational damage.

This supposition is given further credence by close scrutiny of how ARG has been working locally.

Initially, LBWF appointed Cllr. Simon Miller, then Portfolio Lead for Economic Growth and Housing Development, to oversee ARG, and published details about the application and evaluation processes, including the criterion to be used in deciding whether or not bids were to be supported.

Nothing wrong there.

But, of course, decision-making never takes place in a vacuum, and it appears that senior councillors early on made officers very aware of their expectations and hobby horses.

Hence, when the Cabinet initially discussed ARG, Cllr. Clyde Loakes underlined his pleasure that ‘the grant award framework would have a positive weighting towards businesses who have changed the way their services are delivered to reflect the importance of the climate emergency and reducing their carbon footprints’, and Cllr. Coghill ‘explained that she was involved in conversations (at regional and national level) around the cultural and creative sector… [and] said that…the borough’s culture and creative sector…would never be left behind by Councillor Miller’s team’. 

Whether or not such rather unsubtle promptings made any impact is difficult to tell, but what can be said is that in the few cases where information about ARG recipients has leaked out, the outcomes appear perplexing.

For example, in one case, two assessors evaluated the same bid and then gave it widely divergent scores, suggesting that the process being used was a good deal less objective than the published procedures promised, while in another case a company that was handsomely funded with a six-figure grant had, prior to the pandemic, apparently always made losses.

What’s more, payment to lame ducks may have been more common than might be thought likely, because when assessing companies’ suitability for funding, though LBWF asked for evidence that, due directly to the pandemic, turnover was at least 30 per cent down, it did not scrutinise longer term financial performance, meaning that those which had been poorly, even recklessly, managed over a number of years were just as eligible as the rest. 

Quite why LBWF decided on this approach is unknown, but the possibility exists that it was partly in order to protect business rates revenue.

In conclusion, there is much more to this story than has so far appeared in the public domain. LBWF seems to hope that secrecy is its best option, but public anxiety about fraudulent claims for government business support during the pandemic, to repeat, is increasing, and there may yet be a day of reckoning.

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