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Government withholds more than a million in funding from Cambridgeshire and Peterborough Combined Authority

More than £1.3m in funding for Cambridgeshire and Peterborough is being withheld by the government after external auditors found “significant weaknesses” in governance arrangements.

Mayor of Cambridgeshire and Peterborough Combined Authority Dr Nik Johnson in Ely where the mayor's office is based. Picture: Keith Heppell
Mayor of Cambridgeshire and Peterborough Combined Authority Dr Nik Johnson in Ely where the mayor's office is based. Picture: Keith Heppell

A letter from the Department for Levelling Up, Housing and Communities confirmed it would be taking a “precautionary approach” to the transfer of funding to the Combined Authority until it has assurance that there are “appropriate plans” in place to “reach a resolution”.

The letter was posted on Twitter by Peterborough MP Paul Bristow who hit out at the Combined Authority’s Labour mayor Dr Nik Johnson for “costing the city millions”.

The letter, which is dated June 30 and addressed to interim chief executive Paul Raynes, states: “As you know, we are aware of the issues regarding the governance and leadership capacity within the Combined Authority (CPCA) which have prompted your external auditors to write to the chair of the CPCA’s audit and governance committee setting out a series of concerns.

“While CPCA has now formally approached the department for assistance in driving improvements in these areas, we will be taking a precautionary approach to the transfer of funding to the CPCA until we have assurance that there are appropriate plans in place to reach a resolution.

“In the first instance, the department will therefore be pausing payment of 2022/23 Mayoral Capacity Funding and 2022/23 Local Enterprise Partnership Core Funding to CPCA.

“If you consider that the pause poses any financial risk to the authority, or its local investments, then you should advise the area team at the earliest instance, who will work with you to understand the issues and to identify potential mitigations.”

A Combined Authority spokesperson said: “The Combined Authority can confirm that it has received a letter from DLUHC suspending their payments to the Authority as a precautionary measure until such time as there are plans in place to resolve the issues outlined in the letter of 1 June from our external auditor.

“The paused £1.375m DLUHC funding represents of total expected ‘in-year’ funding. It does not impact on the Combined Authority’s financial stability in this financial year, and committed funding for projects and existing agreed delivery programmes are unaffected.

“The Combined Authority is already in positive dialogue with DLUCH and we will be continue to work with all our partners and new interim CEO, focusing our efforts on delivery for all the communities of Cambridgeshire and Peterborough.”

Last month, a letter was published from associate partner at Ernst and Young (EY) Mark Hodgson to the independent chair of Combined Authority’s audit and governance committee, John Pye.

Mr Hodgson: “We have commenced our audit work for the financial year ended 31 March 2022 and have identified a significant weakness in CPCA’s governance arrangements.

“We believe this weakness is pervasive as it could lead to a significant impact on the quality or effectiveness of services or on its reputation and could expose the authority to financial risk or loss.”

He said there were concerns CPCA “has insufficient capacity, capability and an inappropriate culture to support the effective governance and operation of the organisation and how it discharges its statutory services”.

In response the mayor, who is subject to an ongoing probe into his conduct, said “serious resuscitation” has been needed to keep the heart of the Combined Authority.

Dr Johnson, who was elected last May, ousting Conservative James Palmer in a shock result, pledged: “I won’t walk away”.

Speaking at Thursday’s audit and governance committee meeting, Mr Hodgson said the issues highlighted at the authority were some of the “most significant” he had dealt with in his professional career.

Although Mr Hodgson said there were some “encouraging signs” from the authority, but that there was not a “full and comprehensive response” to all of the issues that had been raised.

The committee chair, John Pye, said he had observed challenges with the authority’s board since the start. He said that creating an organisation needed leadership and common purpose.

Mr Pye said he had taken advice on whether the challenges he had observed at the board were common at other combined authorities in the country.

He said he had been told there were some difficulties with various different political agendas, but that there was a “collective recognition around the table of overriding issues”, something he said the Combined Authority had not seen.

He added there had been “no constructive discussion” at the board meeting earlier in the week when they had been presented with the report on the external auditor’s letter.

At that meeting Dr Johnson clashed with fellow board member Cllr Anna Bailey as the Combined Authority AGM resumed for a third time on Monday.

Cllr Bailey, the Conservative leader of East Cambridgeshire District Council, wanted to raise questions about the Ernst & Young letter.

Labour’s Dr Johnson said the AGM was the “wrong forum” for such a discussion on the matter.

But Cllr Bailey persisted, saying: “I want to examine matters raised in the EY letter, are you going to let me speak or not?”

Dr Johnson said “No”, to Cllr Bailey several times, adding: “We’ve given initial consideration to this matter.”

Cllr Bailey said: “I’ve not given consideration to the matter, and I would like to ask several questions about it before this board.”

Dr Johnson said: “No, we’ve given it initial consideration.”

A frustrated Cllr Bailey called upon the legal officer to intervene.

The result of the Cambridgeshire mayoral elections won by Dr Nik Johnson seen here with his mum Kath. Picture: Keith Heppell
The result of the Cambridgeshire mayoral elections won by Dr Nik Johnson seen here with his mum Kath. Picture: Keith Heppell

Jodie Townsend, interim deputy monitoring officer, said: “It is the responsibility of the chair for the management of the meeting, and the chair has the discretion for the time management of speeches and whether they may be made by the member or the officer.”

Dr Johnson said: “There it is – however, you had a specific question so I will give you the opportunity to speak.”

Cllr Bailey responded: “So, I have two questions…”, to which Dr Johnson said: “No, one question only.”

Finally getting the opportunity to ask her questions, Cllr Bailey said: “I would like to know the cost of the employment-related plan so that we can make informed decisions about the rest of the agenda today.

“And I would like to ask about the current level of vacancies and our staff recruitment plan as I see that we’re carrying 36 vacancies in the organisation. Three are among the top five posts – one of which is obviously a statutory post, which we are dealing with. I understand that we are advertising for 33 new recruits, and I would like to examine and understand from the board what we are doing about those vacancies, how we are going about filling those vacancies and the likelihood of success.”

“The questions, however, were left unanswered.”

The Cambridgeshire and Peterborough Combined Authority and the DLUHC have been approached for comment on the government’s letter.

Additional reporting by Local Democracy Reporters Hannah Brown and Robert Alexander.

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