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Audit Called In at Fylde

Audit Called InProbably the item of widest public interest on counterbalance since its inception has been the closure and re-opening of the St Annes Swimming Pool.

Readers have followed its progress with us week by week, often ahead of the story breaking in other news media, and with the detail and accuracy for which we are known.

It now looks as though we may be nearing he endgame of the present phase.

Our last article to mention the pool was 'Various Updates' which itself followed on from our very long and detailed assessment 'Who's in the Swim?'  where we contrasted the details of the two bids that Fylde had received and evaluated to run St Annes pool into the future.

Summing up the two bids we said...

YMCA
"The YM is known as a steady pair of hands and does a lot of good work in the community. They have an ethos similar to that of former Fylde councils. They are motivated by the public good (at least as they see it). They are also ready to cross-subsidise what they see as need with income from those that can afford to pay more. But being a safe pair of hands comes at the price of being less thrusting, innovative, and risk-taking, than a more commercially orientated body."

FYLDE LEISURE ***
"Fylde Leisure (or, more properly what would become Fylde Leisure), operates with an entrepreneurial ethos. They are impatient for results. They want it NOW! They are not afraid to experiment and try things out, and if they don't work, they'll try something else. This sits very badly with even the more progressive of local authorities and, (despite what John Coombes thinks) Fylde isn't one of them. So inevitably, this entrepreneurial ethos rubs against the grain of a council's operation, where the YM is quite a shoe-in."

*** We should point out that the name 'Fylde Leisure' was to be the name of Mr Ellis' company that was to run the pool. Confusingly, it appears that it is also the name of the division of the YMCA which is running the pool.

So Fylde had to choose between the more expensive, tried and tested YMCA, and the much cheaper, thrusting newcomer.

We had also suggested in earlier pieces that we thought the YM was always the former Commissar's favoured contender, and it seemed to us, on our reading of the tender documentation and reports, that some elements within the Council had used the tendering process to 'get rid' of the bid by Richard Ellis who came forward with a proposal when the YMCA had walked away from negotiations, and before they decided, or were persuaded, to re-enter the tendering process.

We understand that Mr Ellis, although initially trusting of the Council's motives toward his bid, now holds the view that the treatment of the two bids was unfair, and perhaps even improper.

He now believes the Council breached its obligations to carry out the tender in a fair, transparent and non-discriminative manner.

After analysing the reasons for refusing his tender (and Fylde's award of the contract to the YMCA), he took advice from barristers and, because of his belief of improper action on Fylde's part, he was preparing a court case against the Council to recover what he described as 'the several hundreds of thousands of pounds' in costs he has incurred in meeting the information requirements of the Council, and his tender preparation costs, and the likely costs of the legal action he was proposing.

He also approached Fylde's external auditors with his concerns about what he saw as irregularities in the contracting process.

We understand he convinced the Auditors there was a case to answer. (And that's no mean feat. They don't often get out of bed unless there's something serious to look at)

We also understand from insiders that Fylde's officers sought to delay an investigation by their Auditors - at least until after the election next May.

In this endeavour, they used the perfectly proper 'legal' argument (though we suspect some people might question the moral stance it implies), that if the Council was required to produce documents etc during an audit investigation, that information would be in the public domain, and might then be used against them, or at least prejudice their defence, in a subsequent court case brought by Mr Ellis.

We're told the auditors accepted this argument, and said they would wait until the outcome of the court case was known.

But Mr Ellis, - against the advice of his legal team - 'pulled the plug' on his court case, and has asked the Auditors to investigate the matter at Fylde now.

We understand they are due to arrive on 2 December to begin their investigation.

Fylde's failings, as highlighted by Mr Ellis include:

  • His usage and membership projections were highly criticised as being 'far too optimistic and a fundamental flaw' in comparison to the YMCA's, but he claims the Cabinet report confirms that YMCA's predicted figures were actually significantly higher, but this was not made clear to Councillors.
  • The community benefits of his bid - which included: retaining the learner pool to benefit local children and disabled users; permanent free swimming; gym and sport facilities for under 16's; quadrupling the current school swimming lesson allocation and his extremely competitive pricing were not mentioned at all, whereas the Council went in to lengthy detail for the YMCA's bid.
  • The YMCA's bid was to include closing the learner pool to 'save on staffing costs' and operate on a 60-hour a week basis. But he says it is now clear that once the YMCA had been awarded the contract, the Council went back to the drawing board and started from scratch as they adopted Mr Ellis' concept by installing a gym and introducing memberships to make the pool sustainable. Both of which were not in YMCA's bid, as evidenced by the Cabinet Report.
  • His bid was £1.6 million cheaper than the YMCA's and he was also providing the Council with an additional annual income. Mr Ellis said he was disgusted that during these times of austerity and government cut backs, the Council can simply disregard this significant factor and waste taxpayers money, especially as the Council has borrowed this amount.
  • He also asserts that the cost of the building work in connection with closing the learner pool and installing the gym have been made available to the YMCA via a secret loan by the Council.
  • The YM's memberships are significantly overpriced at £37.00 per month for a full membership and not competitive in the local market, in comparison to Mr Ellis' proposed £22.50 per month for adults and £12.00 per month for over 60's.
  • Fylde residents under 16 would have received all leisure provisions for free and the Council has deprived residents of this by rejecting Mr Ellis' bid. The YMCA's bid appears to have made no attempt to comprehensively promote memberships or provide offers and seem happy to just survive from the public funded Council subsidy.

At this stage we don't know exactly what the Auditors will be looking for, but Mr Ellis has asked them to look at (in his words):

  • "The significant changes to the YMCA's bid since the tender was awarded and look in to the allocation of re-opening costs.
  • The cost and value to the customer. It is considerably higher than our pricing strategy.
  • YMCA's projections as stated in the Councils Report. They are considerably higher than that of Fylde Leisure's bid, although that was the fundamental reason for the Council rejecting our bid as they thought our projections of 2,000 members was unreasonable and unrealistic. I also found it quiet offensive to read Councillor Fazackerley's quote in the Evening Gazette on 26th August where she expects the pool to attract thousands of users.
  • That the Council has spent almost half a million pounds on re-opening the pool. How this money has been spent. Other than a few new windows, a lick of paint, carpets, rewiring, new lockers, pool cover and re-commissioning the air handling unit, pool and plant room, it's hard to see where so much public money has been wasted. There has been no marketing drive other than reports from local press.
  • Whether the Council tried to get value for money by conducting a comprehensive and competitive tender for the building work. As they did tender and Clement Dickens commenced work as a preferred constructor almost immediately, what date was this invitation to tender and does that come before the decision to award to tender to the YMCA?
  • The Councils misrepresentation of our bid and consult with Councillors to see if they feel they have been purposely misled.
  • The pre-tender position when the pool was closed. There are several instances of the Council being reported as saying they had 'mothballed' the pool. That implies something other than closure. It implies treatment(s) to ensure the public's investment in the property of the pool was protected from undue deterioration. I am concerned that decisions made by the Council were not aimed at getting best value. There is a clear case to be made that the pool was not mothballed at all, it was simply closed and drained. Was a proper mothballing process was implemented and why? If it was, there was so much money that needed to be spent on correcting the damage done by closure. This appears symptomatic of an administration that was not truthful in its dealings (apart from delivering poor value for taxpayers).

We understand that following the Auditor's report, Mr Ellis expects to take up the matter with the Local Government Ombudsman.

So the Commissar's handiwork might yet come back to bite at the May elections.

But there's more. Mr Ellis and others might be surprised to learn the YMCA is seeking even more financial support for its operation of the pool.

They have recently approached the St. Annes on the Sea Town Council and asked them to add £2 to their band D precept for next year.

If the Town Council were to agree, this would raise an extra £21,000 a year for the YMCA. (follow this link for the YMCA's letter)

In considering the matter, the Town Council noted there were no financial details to support the request; there was no way of getting people in Lytham or Ansdell to contribute (as they don't have a Town Council); there was no indication of whether a payment to the YMCA would provide a discount for St Annes residents; and that the YMCA's bid for the contract was awarded without the subsidy that was now being requested.

The Town Councillors were also unhappy at not being invited to join in the bid discussions but now being asked to provide support.

The (perhaps surprising given the comments made) consensus view recorded by the Clerk was that the Council would be prepared to offer some financial support but at the present time were not in a position to do so.

Readers might think that if the YMCA opened the pool and gym for longer hours and during the day when there is no school swimming, and offered more affordable memberships then they wouldn't need a subsidy from the Town Council.

But anyway, the Town Council agreed that they should consider the level of funding for projects at budget time and that any sum to be released to support the swimming pool would be made by the Town Council to be elected in May 2011.

But by then of course, it might not be the YMCA running the pool, or FBC might be a bit poorer, or Mr Ellis might be more cynical and less trusting of Councils and Auditors.

The end game is nearing, but it's not yet clear.

Auditors generally don't make big waves where they can be avoided (look what happened at ENRON), and Fylde isn't going to want trouble with an election looming, so things are still uncertain as the final chapters are written.

We'll bring our readers further news when we hear what's been decided.

Dated:    25 November 2010


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