A 'lack of safeguards' around a Liverpool Council fund for community projects 'could have contributed to a loss of public money'.
Until three years ago, a near £1m pot of funding issued to fund projects across each ward in the city was not “regularly or consistently” accompanied by checks or paperwork according to a report to be discussed by the local authority’s audit committee. The report outlines that prior to 2019, “it is probable that the lack of these safeguards would have resulted in the loss of public monies.”
The Mayoral Neigbourhood Fund (MNF) is a budget split between each ward in the city, managed by Liverpool Council’s streetscene service. Its current purpose is to enable councillors to grant-fund projects in their wards that are “in line with the aims and objectives of the City Plan.”
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Following an internal audit report in 2019, the grants and performance team was brought on board to assist with MNF to voluntary and charity organisations following a series of allegations about its misuse.
The report detailed that prior to this move, “such awards were not regularly or consistently accompanied by application forms or similar paperwork, nor were checks undertaken on the recipient organisations to ensure that they were legitimately constituted.”
“Recipient organisations were also not given terms and conditions to adhere to when receiving MNF, and monitoring of spend and delivery was not requested or collected.”
Subsequently, all recipients are now required to submit monitoring information, including receipts for expenditure funded by the grant, within a month of the end date of the project or activity. The report added that any group may be visited by an MNF officer during the project as part of monitoring checks, and while in practise visits have not taken place since March 2020, due to the COVID-19 pandemic and associated restrictions, a lack of resources means, there are currently no plans to restart these visits.
The reported added: “Without a baseline to measure against, it is not possible to ascertain whether level of risk has been reduced by the process now implemented, but it has brought a level of scrutiny, governance, and accountability that was previously lacking. Whilst it is a low bar against which to measure progress, there have been no further allegations of misuse of MNF, resulting in Internal Audit investigations, since February 2019.”
There has been one known incident which may have amounted to an attempt to defraud the council according to the report. It said: “Grants and Performance Team, in the undertaking of its health checks, queried discrepancies between the signatories’ stated positions within the applicant organisation and Charity Commission records, as well as discrepancies with the bank account details provided.
“These discrepancies would have prevented payment being approved had the application not been subsequently withdrawn. Management was notified after the fact."
It added that while rare “there have been occasions when some elected members and applicant organisations have sent correspondence which have resulted in officers feeling pressured to ignore the established processes.”
Committee chairman, Cllr Kris Brown, also questioned how money was being spent, citing funds being allocated to cabaret parties. He said: “The fund is well used 90% of the time and does make a positive contribution to communities and are of best value.
“The issue is, prior to 2019, there was a lack of checks and balances, and a number of concerns were received about how the grants were administered and this was mentioned within the Caller Report. Even with the new processes, we need to see if we are mitigating the risks and consider if this is truly best value.
“That’s something we need to consider going forward, it’s why we called for this report, it’s not a witch hunt as we know this is vital to a number of organisations.”
