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Oral - Communities First

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Carl Sargeant, Minister for Social Justice and Local Government

In March, I made an oral statement on the Communities First programme, followed by a written statement and the publication of documents relating to the Plas Madoc Communities First partnership. I outlined my dismay at what had occurred in Plas Madoc and my determination to ensure that high standards of governance and accountability were assured in Communities First partnerships across Wales.


The immediate steps that I took to strengthen the governance of Communities First included a programme of detailed audit inspections of those partnerships assessed as posing the greatest financial or governance risk, and the introduction of specific management assurance checks prior to any further substantial financial investments. I committed to make a further statement once the audit inspections had been completed.


The Assembly Government’s auditor service has now reviewed the 12 identified organisations. The work is now concluded in all but one case, and I would like to thank those involved for undertaking that detailed work with pace to enable me to make this statement today. I am pleased that, where the work has been completed, no serious concerns or significant failings have been identified. Organisations were found to have clear policies and procedures in place to administer their finances, and the majority of organisations also had sound governance structures to support the delivery of their organisational objectives.


The importance of training for board members and staff had been recognised, and many organisations could demonstrate that effective training policies and procedures were in place. Most of the organisations held regular board meetings, which included the provision of financial information. Board members were made aware of funding bids that had been submitted, and regular information was also provided in respect of budget monitoring for most partnerships. These are important reassurances, since Members will recall that the audit work deliberately concentrated on those partnerships assessed as presenting the greatest risk.


Draft reports have been prepared and are being circulated to grant recipient bodies and partnerships for their comments. It is my intention to publish the final reports. Where the audit work is not yet complete, in Amlwch in Anglesey, I hope to receive a report in the near future. The Assembly Government’s auditors noted the commitment and dedication of individuals working in these organisations to local delivery. Particularly good standards of governance were noted in areas such as Sandfields, Plas Cybi and Caia park. I have instructed that any good practice that has been identified is made available and shared widely.


While it is pleasing that there were no fundamental failures of control, the auditors found some scope for further improvement action. I will mention here three specific areas identified. There was, in some cases, a high degree of reliance on the honesty, openness and integrity of staff. Auditors therefore identified scope to improve the control framework within several of the organisations that were visited to ensure that, for example, any change in staffing does not expose the organisation to financial risk. In some instances, the distinction between the grant recipient body and the partnership was not sufficiently clear. This is not an unexpected finding, as this was the case in Plas Madoc, and partnerships with similar governance arrangements were included in this programme to allow the adequacy of their individual arrangements to be tested. I have instructed my officials to open immediate discussions with those grant recipient bodies and partnerships where this lack of distinction is apparent, to identify the steps that are necessary in each case to provide greater clarity and accountability within existing relationships or, where necessary, to propose an alternative. In some cases, there was a lack of financial expertise at partnership board level. I attach importance to partnership boards being able to provide effective scrutiny and challenge to financial and management information. Work is already being undertaken to address this issue, through expert support made available to partnerships through national contracts.


These findings must be set in the context of partnerships being run by local people for local people. People involved in their local partnership may not have a background in governance and finance, but the vast majority have a drive to want to improve things for their community. In light of the concerns around Plas Madoc, I would encourage all Communities First partnerships, and not only those subject to the detailed inspections, to note these concerns and act to ensure good standards of financial propriety and governance. We will support them in doing this. In responding to my letter to chairs of Communities First partnership boards in March, many wished to distance themselves from the sort of concern caused by Plas Madoc and to assure me that their work was well managed and governed. So far, the audit findings do not support those who suggested that Plas Madoc’s problems would be replicated widely throughout Wales.


The specific assurance exercises associated, with the further investment of substantial sums, have begun. Informed by the governance questionnaires and evidence provided by the partnerships themselves, these are providing the specific assurances that I seek, and they are also an effective means of reviewing and strengthening governance arrangements that has been welcomed by local partnerships. Initially, priority has been given to those partnerships that have presented applications for outcomes funding, but I have asked that this work be extended to all remaining partnerships.


As a result of the findings of the audits and the assurance exercises, I am able to announce further immediate investment from the Communities First outcomes fund of around £930,000 to support the following projects. There is the integrated children’s centre project, where the grant recipient body is Jobcentre Plus, which has agreed to place dedicated Jobcentre Plus advisers in four Communities First pilot areas. This is a superb example of programme bending. Two projects in Merthyr Tydfil will reinforce the programme’s long-standing support to communities there. These projects will support people in education, training and work. There will be further support for a youth worker in Hightown in Wrexham.


My officials have also moved quickly to further strengthen the overall governance framework. Significant actions include alterations to the scope of the annual audit certification process, closing the loophole where auditors examined only a limited range of evidence of expenditure, and introducing wider distribution of management letters. These changes have been agreed with the Wales Audit Office and are to be implemented now. Work to clarify the arrangements for handling complaints about Communities First will be finalised shortly.


North Wales Police are currently investigating some of the issues that were identified in the Plas Madoc report, and my officials receive regular updates on the matter as it is taken forward. Alongside those investigations, my officials continue to work with staff there to address the management issues identified in the audit report.


In conclusion, the Assembly Government remains committed to ensuring that the most disadvantaged communities in Wales are supported. I am pleased to be able to report the audit assurances I have received and to move forward in awarding further substantial Communities First outcomes funding to organisations. My wish is for this to be achieved as soon as possible.

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