To note the completion of the audit of the 2013/14 accounts following the rejection of an objection received in relation to the energy from waste plant.

Representatives from Grant Thornton referred to a letter to a member of the public which accompanies their report. The letter, which responds to an objection to the 2013-14 accounts with regard to the Worcestershire and Herefordshire waste management service private finance initiative (PFI) contract, is given to the committee as an interested party. However, the committee’s remit is to consider Grant Thornton’s response to the member of the public in relation to the closure of the 2014 accounts rather than looking at the details of the project. 

The external auditor is required to give opinion on the accounts by September each year. The public can object and make representations to the auditor in relation to legality, reasonableness or on the basis of value for money, and the auditor is obliged to consider an objection and respond.

The auditor will issue a report on issues of gravity and national importance in the public interest. The objection was not considered to meet that criteria for a report to be issued and so a statement of reasons for that decision was provided for the objector. The points considered in the response were:

•           Whether the project represented value for money;

•           Whether the council handled the project appropriately; and

•           That the accounts are in order.

A key aspect of this was whether the council made reasonable decisions. Councils are expected to seek expert advice on new projects and it is the task of audit to ensure that advice was sought from an appropriate source and acted upon and considered objectively. There is a long history to the waste incinerator project, with constraints of longevity and contractual terms.  The auditor concluded that the council had sought appropriate advice and established information on value for money. The approach taken was not considered to be unreasonable and therefore there was no requirement to report in the public interest, although there were lessons learned from the project which have previously been reported to committee. The project stimulated a lot of local debate but it is audit’s role to look at governance issues and not to challenge the views of the experts consulted by the council. The auditor concluded that the council’s financial analysis was sound.

A member thanked the auditors for the report and sought clarification on the distinction between relevant advice and sufficient advice and whether the project represented value for money for Herefordshire independent of other partners.  In response to her question, the auditor felt there was no evidence to suggest that the council did not gain sufficient evidence or that experts in the field were not consulted. There was sufficient relevant evidence gathered to enable decisions to be made. The objector had asked if the variation to the contract represented good value for money and it was found that it did. This project was a very early PFI contract, not without its challenges and decisions were made in light of that and based on appropriate advice.

The member further commented that the report contains a caveat about the technologies chosen for the project not being the best and that they were not considered in terms of the specific site, implying that there was therefore no assessment of whether the best technology for the site was chosen and whether it represented value for money in that respect. It was believed that early reports suggested a different preferred solution.

The auditor replied that consideration needed to be given to tried and tested technologies and results from other sites.  It was noted that most councils choose incinerator technology and that alternative technologies carry a degree of risk.

The chairman reminded the committee that its role is to consider the report and asked if members had any questions about the letter.

A member commented that councillors have a role in explaining to the public why decisions are made on spending. This was an early PFI project and there are lessons to be learned. However, as there were no national plans for such projects, councils were forced to have local solutions.

The vice chairman commented that regardless of individuals’ views on the future of waste management and preferred technologies, the auditor’s report provided assurance with regard to the process and whether it was clearly followed. Constraints were a major factor partly due to the partnership arrangement and the duration of the project. The constraints need to be noted so that consideration can be given to how future partnerships are established.

In response to a member’s request for more detail about the report’s recommendation for ongoing monitoring, the auditor confirmed that Worcestershire had set up a separate committee to consider risks relating to the councils’ role as lender to the scheme the Audit and Governance Committee was tasked to carry out a similar role in Herefordshire. It was noted that matters relating to this lending had been reported to this committee in the past and this will continue.

A member observed that it appeared Grant Thornton had approached the matter thoroughly and professionally and that their report provides a clear account of that. 

RESOLVED

That the closure of the 2013/14 accounts and the rejection of the objection received be noted.