Barham Park accounts: Cllr Lorber provides evidence for claim of £100k combined loss to the Trust

Following the Scrutiny Committee hearing of the call-in over the Barham Park Trust accounts, Paul Lorber has given me permission to reproduce his letter to Kim Wright, Chief Executive of Brent Council:

 

I am writing to summarise my continuing concerns about the losses suffered by the Barham Park Charity as a result failures of the Councillor Trustees and by Officers of Brent Council.

I will deal with the saga of the ‘changes template/style of the 2022/23 under separate cover.

 

One Cabinet member and two other Labour Councillors expressed the view that yesterday’s scrutiny meeting was a "waste of time and money". Since the system of Scrutiny was set up by a Labour Government with the aim of holding decision makers to account these views are surprising and undermine the democratic process and bring it into disrepute.

You told me a while back, in response to my numerous concerns about the Barham Park Trust (BPT) Accounts and loss of income, that an independent audit was to be carried out. I had asked a while back about the scope of that audit and who would undertake it. I was interested because I would wish to make a detailed submission to that person.

As you know I have been expressing my concerns for some time and engaged with officers to get proper answers to my concerns. Sadly these have not been forthcoming. I also made an in advance request to speak at 26 September meeting of the Barham Park Trust which dealt with the accounts deferred from the meeting of 5 September on the grounds that a wrong form was used. I was denied the right to speak and the ability to point out numerous mistakes made by various units of the Council.

The revised accounts - supposedly on the better "received and paid" basis were approved without any questions or review by the Trustees I had no choice but to initiate a call in to Scrutiny.

At Scrutiny one of your officers intervened every time any member wished to ask about figures in the accounts on the grounds that Scrutiny Members could not ask "any operational questions". This seemed bizarre as all numbers in those accounts were the direct result of "operational" decisions many of which could be the wrong decisions.

A mention was made that you had initiated a review of the Accounts but no one present (not even the Operational Director with oversight over Barham Park Trust) was able to provide any details as to the scope of that review and who would to conduct it or the timescale. It sounds a Sir Humphrey Appleby type of review. Scrutiny then expressed a  rather forlorn wish that the findings of that mystical review might possibly be reported to them.

I tried to explain the problems to Scrutiny and made a claim that in my view that through bad practices - "operational" decisions - the Barham Park Trust has lost around £100,000 income and therefore that its cash balances  and reserves are understated by at least £100,000. Action is needed to stop the ongoing losses to arise in future years. This is the list:

1. £22,000 architects charges to the Trust. The BPT agreed to undertake the architects study into redevelopment and income generation on the basis that the estimated cost of up to £25,000 would be met by the Council from its Capital program. That is the only decision BPT as an independent endorsed. At the meeting Councillor Tatler, present as one of the Trustees claimed that the Council was advised that the fees could not be paid out of the Councils Capital Fund and "therefore we agreed to charge it to BPT". I think Councillor Tatler forgot the role she was serving - as a Trustee her sole responsibility is to the Trust and NOT to the Council.

 

Irrespective of Cllr Tatler's confusion there is no record of a decision or authority in place from the BPT Trustees to charge £22,000 to the Trust 2022/23 Accounts.

 

2. The largest tenant occupying space in the Barham buildings signed a lease in 2014 at a rent, inclusive of service charges, of £43,000. The rent was due an upward review linked to CPI in 2019. The Property Unit who do not seem to keep a record of when rent reviews are due overlooked this. As a result the increase in rent from 2019 of around £4,800p.a. was not implemented. The loss to BPT between 2019 to 2023 therefore amounts to around £19,000.

 

3. The Children Centre is leased to Brent Council. A Report to the Executive a few years ago reported that the agreed market rent would be £11,000 plus a service charge. No service charges have ever been calculated or charged and definitely not paid. While without a calculation the exact loss is unknown I estimate it at £10,000.

 

4. Service charges have not been charged to other tenants in the complex either - once again the exact figure is unknown but another loss of £10,000 is a reasonable estimate.

5. The Accounts for many years have been showing an insurance cost relating to the Barham Park buildings of £2,500. A large proportion of this cost should have been recharged to the tenants in line with normal lease agreements. Once again as the Councilor Officers supposedly supporting the trust have never calculated the recharge the exact figure is also unknown - but I estimate the loss to BPT as another £10,000 to date.

 

6. For a number of years the Council has used the BPT cash balances of around £500,000 or more within its funds. The Council only pays BPT interest of 2%. Interest for some time.  rates started rising a while back and charities could get a rate above 2%. I estimate that BPT could have achieved an average interest rate at 3% in 2021/22 and  probably as much as 4% in 2022/23 if making independent decisions the loss of interest income would therefore be around £5,000 in 2021/22 and £10,000 in 2022/23 - a total of £15,000 over those two years.

 

7. The rent paid by the Council to BPT for the use of the Children Centre should be based on market rents determined by an independent valuer. This has not been done for some time and the £11,000p.a agreed some 10 years ago is clearly out of date. Even if the market rent had risen in line with CPI it should be around £13,000p.a. by now which means that over the last 5 years BPT has lost around £10,000 in extra rent income.

 

8. Letting of Unit 7. This was agreed in over 4 years and Heads of terms issued in February 2019. Council Officers suspended the process while the long winded review of the buildings etc is carried out. Had the matter been dealt with efficiently the Unit would have been modernised and been serving people with Dementia from at least 1 April 2021. BPT has therefore lost 2 years worth of rent worth £4,000. 

 

9. Unit 7 sustained extensive damage through water penetration and wet rot. Some of the repairs required where suspended while Unit 7 was modernised - the cost of this could have been paid for out of the NCIL Grant awarded to Friends of Barham Library. The work will now need to be carried out at some point by BPT and will cost a minimum of £5,000. (as this is a future cost this is not included in the £10,000 at this point). 

 

10. The charges for use of Barham Park for annual Funfairs are covered by a Council wide agreement negotiated by the Parks Department. This was renewed from 13 January 2022 and covers 5 parks including Barham Park. The daily licence fee  was set at £978.16 per operating day in year 1 plus RPIX as determined by the average for the preceeding period from September and August. This suggests a day fee of over £1,000 per operating day in Barham Park in 2022/23. Paragraph 2.2g then refers to "annual 41 day operational fees etc" to be paid in April with and fees for additional operational dates to be payable in September. 

 

This implies that BPT should have received a payment of 41 x £1,000 = £41,000 in 2022/23. As only £36,000 is shown as received (accounts on cash received basis) there is a shortfall of £5,000. It is possible and probably likely that BPT has been underpaid in many of the previous years too. The Licence to Occupy agreement for the Funfairs is poorly written but irrespective of this a detailed review of this needs to be carried as the Funfair Operator may have been under charged not just for using Barham Park but all the other parks in Brent.

 

11. As you know one of the tenants, brought to the table and espoused as being ideal by Council Officers in 2013 built up rent arrears of a staggering £79,000. The Lease terms state that interest on rent arrears would be charged. While there was an 'amnesty' for this for a while during the Covid lockdowns this came to end a long time ago. Officers responsible for managing BPT failed to impose any interest charges on this substantial debt which will not be settled until 31 March 2024. To cover this up and to ensure that BPT had enough cash to meet its operating needs the Council was forced to make an 'advance' to BPT which is some what secretly reflected in the 2022/23 accounts as the £39,000 figure was netted off against the balance of £12k of architects which was charged to BPT without BPT approval. The loss of interest lost needs to be calculated but could be up to £5,000. 

In conclusion the combination of the above issues suggest a combined loss of around £100,000 to the Trust. I have attended many of the BPT meetings over the years. I have tried to express my concerns but was frequently denied the right to speak. I have reviewed most of the Reports and Minutes of BPT meetings since at least 2013 and cannot find and decisions which authorise the following:

1. The payment of £22,000 Architects Fees

2. The forgoing of Rent Reviews and the charging a rent in line with the mutually agreed Lease Terms.

3. Failure to charge service charges in respect of the Children Centre (and to other tenants)

4. Not recharging insurance costs for many years

5. Not to to pay the market rate of interest on BPT cash balances after interest rates started rising substantially.

6. Not to revalue revalue and pay a proper market rent for the Children Centre

7. to accept the loss of rental income by failing  to complete the letting of Unit 7.

8. Not to charge interest on rent arears.

9. Not to charge correct operational fees for use of Barham Park for Funfairs. In fact the issue of funfair fees and impact of using the land in Barham Park is hardly mentioned.

BPT is a charity and Councillors and Officers have a very special duty of care to a Charity under its control. As Trustees and as responsible Officers the duty is to the charity only. This duty includes a fiduciary duty to ensure that the Charity receives all income that is due to it, that it does not incur expenditure that it is not responsible for and has not authorised and that its assets are protected.

In my view, and the evidence presented above I am concerned that the Trustees and the officers tasked to serve the Charity have not fully met that duty.