Lytham Hall Mess

This is a long and sad story about the troubles that have encircled Lytham Hall since the Lottery Project that had been expected to deliver wonderful improvements had to be changed and, as a consequence, part of the grant that was expected from the Heritage Lottery Fund (HLF) was withdrawn when the HLF itself lost confidence that the project had sufficient funding to complete it within arrangements that were acceptable to them.

We struggle to see how any winners will emerge from this mess which has - at least at present - produced a serious breakdown in trust between the Hall's ultimate owners - Lytham Town Trust - (LTT) and the Heritage Trust for the North West (HTNW), to whom Lytham Town Trust leased the Hall.

Members of the Lytham Town Trust have made acrimonious attacks upon the Heritage Trust for the North West, and without some relationship guidance, it is difficult to see how that situation can be repaired to normality, let alone the harmony and unity it should enjoy.

It also seems that FBC are joining the feeding frenzy that has developed (or perhaps been created) around the Heritage Trust for the North West's Chief Executive John Miller - against whom much of the (in our view, unjustified) vitriol seems to be being directed at present.

From what we have been able to establish so far (and we're not yet at the bottom of it all), we think the real problem lies at the door of the County Council - or perhaps more fundamentally - in the hands and votes of the electors of Lancashire who changed the political colour of the County Council - which in turn changed the County's spending priorities.

More than £1m of funding (which had been promised to the Lytham Hall project under the former LCC's Conservative administration) did not materialise after the Labour party, supported by the Liberal democrats and others, assumed majority control of LCC in May 2013.

In our view, that change of political control is the root cause of the loss of the Lottery Grant for Lytham Hall.

There have been other failings as well, including some on the part of HTNW, but they mostly all seem to track back to the delays and the revisions or re-interpretations of undertakings previously given, as LCC shifted its position and its priorities regarding Lytham Hall after the change of political control.

We tend to agree with the statements made by the Heritage Trust for the North West to the Heritage Lottery Fund that....

"A major grant from Lancashire County Council negotiated in 2011-12, and confirmed in 2013 has failed to materialize due to a change in political power and major cutback to their budgets."

We also we tend to agree with their statement ....

"The delays and uncertainties caused by the withdrawal of support from the Lancashire County Council has led to the Trust operating a deficit for the past three years."

As yet, we do not have the original source documentation for those original 2011-12 negotiations and all the other early documentation we need to confirm this position. We do have some, and we are working on obtaining the others.

SYNOPSIS
We begin with a Preamble about our earlier Newsflash, then move to a quick outline of the Background to this matter before explaining a bit About Lytham Town Trust and then About the Heritage Trust for the North West.

From there we start our main report which is set out as a Chronology of what has happened - from about 2011 to date.

In 2011 we look at the Early moves at LCC and then Early moves at Fylde and how Fylde's Cabinet Sets the ball rolling, before hearing how Full Council prepared to take the grant decision, and looking at the complication that we think has been caused by the 'Prudential Agreement' before considering the actual Grant resolution wording at Council, and moving on to the Cabinet meeting which accepted and approved the further information, and then the final Cabinet resolution authorising release of the grant money.

In 2012, we report the First monitoring report and the Cabinet Minutes that approved it.

In 2013, we note a political move at LCC before considering the LCC letter that promised the grant of £1m, before noting the Change of political control at LCC and the lack of a Monitoring report at the end of 2013.

In 2014, we consider  the Second Monitoring report at Fylde before moving to LCC to see what was happening about the £1m grant there.

In 2015, we look at more changes at LCC before considering the position at Fylde with the Third Monitoring Report which heaped praised on the work HTNW were doing.

In 2016, we begin with What was happening at Fylde, including new moves for a Coastal Revival Fund Grant. We then look at What was happening at LCC as HTNW tried to construct a revised and reduced Stage II bid. We then look at LCC's revised and reduced £300k offer that necessitated it, and the revised conditions LCC wanted to impose, before moving to the County Council's final offer which caused the bid to fail. We then note that our MP tried to help, but the bid failed and The cracks began to show.

We then consider the Dreadful Tourism and Leisure Committee meeting last November that attacked  Mr Miller, before looking in more detail Why it was so dreadful as we re-consider the First Monitoring report, the Second Monitoring Report and the Third Monitoring report. Then we note that the Minutes of this meeting are awful and some may be ultra vires.

Next we move to the Audit Investigation Fylde commissioned, and Overview the Auditors Report,  and its Terms of reference before looking at each of the issues they considered. Issue 1 - Why funders pulled out, and Issue 2 - the work undertaken by others and Issue 3 Whether the project will complete, and Issue 4 - what Fylde's £300k has been spent on and Issue 5 whether Fylde can/should claim any back. Finally we look at what we regard as the Weakest part of the report, something that, sadly, damages our confidence in all that has gone before.

Finally, we look at Our own conclusions from the story, and the Most shocking revelation in all of this dreadful story, and the Truly awful recommendations that are being made to Fylde's next Tourism And Leisure Committee this Thursday, before asking What's to be done and making some suggestions.

 PREAMBLE

Readers who have asked to be notified when a new article is published also get early warnings of important issues if we hear of problems on the bush telegraph - usually before we have enough information to publish a story.

On 31 August we sent a Newsflash that said 'The sad news that Lytham Hall will not now receive an anticipated Heritage Lottery Fund grant of £1.7million has come as a blow to many.

We're told the money (which should have been part of a £5.9 million restoration scheme) was "turned down" by the Lottery after reviewing a "revised application" that had been submitted to them "following a series of delays and a reduction in funding from other sources."

What's not properly clear yet is exactly why the "revised scheme" had to be submitted in the first place. We're beginning to hear very worrying stories about this matter from some of our readers. We know the HLF to be a positive, helpful, and highly professional outfit. Withdrawing a grant already offered is simply not the sort of thing they would do unless matters were very serious.

We understand the decision was actually taken by the HLF's head office in London, which adds further credence to the concerns we're hearing.

We would not be surprised if there are revelations to come.'

That newsflash was sent as news of the Hall was breaking in public, and before more details had emerged.

 BACKGROUND

Clifton family debts meant that the hall passed to its chief creditor around 1963. That creditor was Guardian Royal Exchange Assurance. They took ownership and, for a while, they used it as offices.

In 1996 they put it up for sale. Various methods to secure the hall and grounds against commercial use or development were looked into by a range of local people and organisations, but the £1m asking price was difficult to raise. Eventually, British Aerospace offered Lytham Town Trust a donation to buy the Hall, and it became owned by the Lytham Town Trust in 1997

The Hall is Grade I listed (that's the most important of the three listing grades) but it is currently on the 'At Risk' register as well, because of its condition.

 ABOUT LYTHAM TOWN TRUST

Lytham Town Trust Limited is a private company limited by guarantee. It has two main aims. In summary they are:

• Firstly to preserve historical, architectural and constructional heritage buildings in and around Lytham.
• Secondly to provide recreational facilities, community centres and other amenities of a similar character for the benefit of the Lytham residents.

We are pretty sure that at the time of the Hall's ownership change, GRE also included various farms and other lands in the package with the Hall. It was thought that these could produce income or capital for Lytham Town Trust to help sustain the Hall going forward.

For example, everyone thinks Fylde Council own Blackpool Road Playing Fields [and Lytham Green.*see update at end]   But FBC do not own them outright. The freehold of these (and several other areas) passed into the ownership of Lytham Town Trust from GRE, and so far as Blackpool Road North [and (at least parts of) Lytham Green*see update at end] is concerned, FBC are simply lessees of the Lytham Town Trust.

It has since been suggested to us that these 'endowment' properties of which we speak were not provided at the same time as the Hall, and we have heard an employee of HTNW tell the Tourism and Leisure Committee

".... unlike a lot of National Trust properties, there's no endowment fund. Quite often there's a big pot of money - 20 times the value of the site - from which you are earning interest to help with the running costs of the Hall. We don't have that unfortunately...."

Well, memories do fail of course, and if the one we're relying in has failed them we are wrong.

But we were quite closely involved with these matters from FBC's perspective at the time, and whilst it would be nowhere near an income of 20 times the site value, and we no longer have access to the documentation to check, we have a clear recollection of several properties operated by the Council that moved into the Trust's ultimate freehold ownership. These include the above, plus 'bog island' as it was then colloquially known before it became the more pretentious 'Lytham Piazza' - and we seem to recall several other areas being on the list - as well as one or more farm(s) that GRE's farm manager used to look after. All told we would not be surprised if the total ran to somewhere between 10 and 20 properties.

Subsequently, (around the year 2000), Lytham Town Trust came to an arrangement with an organisation called The Heritage Trust for the North West (HTNW) to manage the Hall on their behalf. We imagine this was because the task of managing the hall was beyond the capability of the Lytham Town Trust.

Strangely (in our view), the chosen mechanism by which this management was to be delivered was via lease of the Hall to HTNW (rather than something like a service or management agreement).

It may have been done this way because LTT wanted to divest themselves of the responsibility for operating and restoring the Hall (in which they had little expertise). And it may be that HTNW (who had a good track record in doing this sort of thing elsewhere) might have persuaded LTT to structure the agreement as a lease, but either way, it's water under the bridge, and not easily changeable now unless it is by mutual agreement.

As far as we know, the agreement that governs the relationship between these two bodies is not a public document, so the terms of the relationship and obligations and responsibilities of the two organisations are not public knowledge.

We believe HTNW leased the Hall from the Town Trust for a period of 99 years.

We note here that in some situations, a lease of more than 7 years counts as a form of ownership for certain purposes. Whether that's the case here or not we don't know, but a 99 year lease does give the lessee a strong position.

We know from other documents we have seen that this Lease is not a typical one. It has no value, for example, to HTNW as security for a bank loan.

We have also heard it said that it is a full repairing lease, but we're not clear about the extent of that repairing obligation.

We understand that HTNW may develop things like a bookshop, restaurant, souvenir shop and spaces for meetings, training, private hire, and exhibitions and so on that will generate income to help offset running costs. We also believe HTNW have to admit members of the public as often as possible and they may charge for admission and keep the income to help offset costs.

For their part, we understand that Lytham Town Trust granted the right for HTNW to hold the property for the term of the lease without interruption or disturbance, and they agreed to support HTNW in seeking grant funding.

We were also told that HTNW can exit the lease after 10 years.

Whilst we imagine the lease itself will set out the sort of maintenance that will be required, we're told it does not prescribe formal arrangements for progress reporting and monitoring of such (or, from what we can tell, any) work undertaken by HTNW.

If that is true, it is a serious omission.

We did hear that the lease created something called an 'executive committee' comprising two representatives agreed jointly between HTNW and LTT.

We are uncertain whether that means two from each organisation or one from each giving two in total, but it's probably not that relevant anyway.

What is more relevant is that, despite its name, this does not seem to be a committee with executive powers to operate or maintain the Hall, but rather it is about encouraging and coordinating the support of local organisations concerned with the Hall, and generating user and public support for it. It's executive scope is limited to promotion and community relations.

It seems to be a device to engender public and community support for the Hall.

It does not seem to be a device for keeping track of what is, or has been, happening.

We're making a bit of a fuss about this lease, because we think the terms of this agreement are both central and crucial to what will happen in the future.

For example, at one extreme, it could be that, having leased the property to HTNW, LTT now have no effective say over what happens to it, and HTNW may take whatever decisions it wants for the next 90 years or so, whilst at the other extreme the agreement might require restoration targets to be met by HTNW and it could require progress and financial reporting, and permit the owners to intervene in what happens operationally.

Without knowing the terms of the lease for certain, it is not possible to position the formal relationship between HTNW and LTT between those two extremes.

However from what we have been told, we come to the view it is closer to the first alternative than the second, and that does not bode well for efforts to find a way out of the present debacle.

The arrangements between the two bodies has the feel that LTT were happy to say: here it is; look after it properly, and off you go.

 ABOUT THE HERITAGE TRUST FOR THE NORTH WEST

The Heritage Trust For The North West is a private company limited by guarantee, and without share capital. It is exempted from using the term 'Limited'

It began life in 1978 as a small operation in Barrowford, East Lancashire (when it was known as Lancashire Heritage Trust). It rose to prominence when it restored what is now the Pendle Heritage Centre. That's also where it was initially based.

In 1996, it merged with the North West Buildings Preservation Trust (which had similar aims) and enlarged its remit to cover the North West of England.

But in 2006 HTNW moved its headquarters to the (Grade II listed) 'Higherford Mill' in Nelson, which they acquired and restored for use as a centre for what are called the 'creative industries'.

During its life to date, HTNW has grown and grown in importance and scale.

It now manages or owns a dozen or so buildings and six or more Heritage or Visitor Centres.

It has a successful track record in delivering significant heritage projects, including some very big and important ones.

Its published accounts for 2015 show it had £1.3m in 'Own use assets', £3.4m in 'Long term investments', £355k in 'Other assets' and liabilities of £2.7m.

The Chief Executive and principal driving force for HTNW is a chap called John Miller.

Although HTNW has a board of Trustees, in practical terms Mr Miller IS HTNW.

We have had intermittent professional contact with him and his organisation since the early days of HTNW at Pendle, and it takes only a short time in his company to realise that HTNW is not his job, it is his life. He is wholly committed to it, and we imagine he sees what he is doing as his destiny rather than a function.

But in our experience most people who display these characteristics have a tendency to take too much on personally, and they also feel the need to deal with the minutiae personally as well. They find it difficult to separate their lives and their personalities from their work and, as someone once said to us, they have little or no capacity for the professional 'ironic detachment' needed of, say, a doctor or lawyer.

The positive side of such people is a tremendous sense of urgency and a huge capacity for making things happen and getting things done.

But the downside is that the work always grows until it ultimately exceeds anyone's capacity to deal with it personally.

It may also involve a predilection for above average risk-taking, and for the bending of rules - if doing so produces the necessary outcome.

For such people, the end usually justifies the means.

Most often, people like this are hugely successful. But it can easily end in disaster - as one of the most obvious and colourful recent exponents of this genre - Camilla Batmanghelidjh of 'Kids Company - recently found to her cost.

 UNWINDING THE CHRONOLOGY

In this section we look at what happened when, and how it all came about.

 2011

 EARLY MOVES AT LCC

From 2000 to 2011, HTNW had worked with Lancashire County Council toward having the grounds of the Hall operated by the (then) LCC Countryside Ranger service as a Country Park.

On 14 January 2011 Lancashire County Council's 'Cabinet member for Environment and Planning' considered a report that would have created a Management Agreement Between LCC and the Heritage Trust for the North West to manage and develop Public Access to the Grounds of Lytham Hall.

We don't know if this scheme actually came to pass, (we suspect not), but we do know it's not the case today.

But moves were being made in the right direction, and there was talk of a bid to the Lottery people for a big funding project to restore the hall

 EARLY MOVES AT FYLDE

Also - but quite separately - in January 2011, counterbalance had been told in confidence that that at least some of the Fylde Conservative group were hatching a plan (that had originated in November 2010 or perhaps even earlier) to sell off the Melton Grove housing enclave in Lytham and use the proceeds in ways they thought would help their election prospects.

We were told two specific projects had been identified, one was to contribute a large capital sum toward Lytham Hall (which came to pass), and another was to be spent in Ansdell - possibly doing up the town centre with some sort of environmental improvement scheme (which also happened).

Although we were regularly being told the developing Melton Grove situation needed investigating, we couldn't get any corroboration for it, not even for part of the story, until Mid February 2011 when we published 'Melton Grove Mess'

It was also at this time (Feb 2011) that FBC received an 'informal request' for £300,000 toward the Hall.

That request was kept under wraps until the formal request was made a month or so later.

We published our contentious and controversial article 'Capital Funding Request - Lytham Hall' which broke the story.

 CABINET STARTS THE BALL ROLLING

In March 2011, FBC's (then) Cabinet considered a report from Fylde's then Chief Executive, Philip Woodward.

As well as being Fylde's Chief Executive, he was also an officer of the Clifton (Lytham) Housing Association which was responsible for administering Melton Grove.

His recommendations to the Cabinet at that time were:

1. That, the Cabinet agrees, in principle, to a capital grant of £300,000 being made to the Heritage Trust for the North West for the Lytham Hall restoration appeal conditional upon the successful sale of Clifton (Lytham) Housing Association Ltd and the council receiving the capital receipt.

2. That the Council be recommended to agree an addition to the capital programme in accordance with recommendation 1, to be fully funded from the Clifton (Lytham) Housing Association sale receipt.

Mr Woodward's proposal inextricably conditioned the income from Melton Grove's disposal to a grant to Lytham Hall.

We said at the time "If Lytham Hall is so important - and we can see the argument that it is important - Fylde can find the money needed to help the lottery grant in other ways, not least by borrowing the £300,000. It is currently £8.3m in debt and has authority to borrow up to £12m, so another £0.3m isn't going to make that much difference for something that important."

 FULL COUNCIL DECIDES TO GIVE THE MONEY

At the Council meeting that had to take the actual decision on this matter, Cllr Tim Ashton left the meeting and took no part in the decision.

He had (quite properly) declared both a personal and prejudicial interest and left.

It was explained by the Council solicitor that he had a personal interest because he was a director of, and represented the Council on, the Clifton (Lytham) Housing Association Ltd that was proposing to sell Melton Grove, and he had a prejudicial interest because he was also a Director of Lytham Town Trust Ltd who were likely to get the £300,000 from the sale proceeds of Melton Grove.

Interestingly, he was also a Lancashire County Councillor, and early in 2011 Lancashire County Council had been approached by the Lytham Town Trust (or by their lessee of the hall, the Heritage Trust for the North West) about the possibility of LCC giving a grant for this project.

Cllr Ashton may also have been a person who was a member of, or in a position of general control or management of, the Heritage Trust for the North West, to which he had been appointed or nominated by the County Council.

We say he *may* have been a person in 2011 because we could not find his register of members interests for 2011. But he undoubtedly was in such a position and did declare that interest in April 2012.

We think of all the people involved in this matter Cllr Ashton is probably the most knowledgeable. He occupied a unique position (Director of Melton Grove, Director of Lytham Town Trust, Official of the Heritage Trust for the North West, County Councillor and Fylde Borough Councillor) to understand how things were being arranged and slotted into place, so we imagine he might have the best knowledge of what has gone on, but to date, we have not heard him speak on this matter.

 THE 'PRUDENT AGREEMENT'

The report to Fylde's Cabinet in March 2011 about the £300,000 grant had included these words:

"Should the Cabinet / Council agree to the request it would be prudent to draw up an agreement with Heritage Trust for the North West to ensure that the grant was used in direct support of the Lytham Hall restoration work for which planning permission has been granted."

This sentence is now causing incredible confusion - so we will provide our take on it (which differs fundamentally from the Borough Council's view)

Firstly, we agree that the idea of creating such an agreement was referred to in the text of the report.

Normally, if councillors wish to condition a grant or spending, a draft 'Heads of Agreement' document would form part of their agenda papers. They could then see, and approve (or require change) to any or all conditions that were being proposed.

This did not happen here.

There was no draft Heads of Agreement with the agenda papers

Adopting a Heads of Agreement was not part of any of the recommendations presented to the Council.

Nor was it part of the Council's resolution.

It was simply mentioned in the preceding report as being a prudent measure.

It is our view that the 'Heads of Agreement' document is not one of the conditions upon which the grant was made.

It did not exist when the grant was approved.

So we believe there are grounds to believe that it MAY NOT be used to condition the grant.

The only conditions on the use of the grant, are those set out in the wording of the resolutions of Council and Cabinet.

We agree such a Heads of Agreement may be devised and used to define the frequency of reporting and so on and similar ancillary administrative matters regarding the grant, but not the actual grant of funds.

This is a crucially important matter, because Fylde now assert that this Heads of Agreement governs the grant they made.

We do not believe that is correct.

 THE GRANT RESOLUTION AT COUNCIL

The agreement to provide the money was (and remains) governed by the actual resolution of that Full Council meeting which was:

"to agree the recommendation of Cabinet in principle, to a grant of £300,000 being made to the Heritage Trust for the North West for the Lytham Hall restoration fund, subject to:

1) further detailed information being available to the Council on a) financial arrangements; b) Public Access; c) Project timetable; d) other funding contributions

2) recommendation 1 to be subject to the receipt of equivalent additional capital receipt being identified in the Council's capital programme."

The vote on this was carried, with 23 votes for - and 17 against. (The detail of who voted which way is recorded in our linked article 'Still a Shambles')

That *subject to* wording here is very important, because it is this precise wording that conditioned FBC's £300,000 grant to HTNW.

The key points of the resolution were:

• The money was to be paid to HTNW
• It was to be used for the 'Lytham Hall restoration fund' (As far as we know, there was no such fund or bank account of this name, this was simply a generic term to cover all the work that HTNW was doing at the hall)
• The HTNW simply had to *make detailed information available* to the Council on the matters set out in (1a-d)

(Note: technically, this 'making available' wording is an example of exceptionally cleverly worded Council-speak. It carries no right or requirement for FBC to *approve* any of HTNW's proposals. They may only receive them.

We have no doubt at all this was an intentional and carefully considered choice of words by the former Chief Executive who had (exceptionally) proposed them personally at the Council meeting.

The money had to had to come from FBC's Capital Programme. (It is now - wrongly in our view - being claimed that the money had to be *spent* on capital works by HTNW, when this is not the case)

We reported that Council meeting - and who said what about this matter - in great detail in our article 'Still a Shambles' and readers are advised to read that article to get the full flavour of what was happening at the time.

 CABINET OF 28 JUNE 2011

At the subsequent Cabinet meeting of 28 June 2011 HTNW did indeed provided the further detailed information the Council had required of them.

Readers can follow this link to download a copy of the FBC agenda and the 49 page report from HTNW setting out everything Fylde had asked for.

Fylde's Chief Executive had personally reported this matter to this June 2011 Cabinet.

His report re-iterated the Council resolution, then said:

"The Trust has now provided the additional information requested, which is attached at Appendix A of the report and the Cabinet is asked to confirm whether this information is sufficient to satisfy the request made by Council.

The additional information has been made available to all members of the Council via the publication of this Cabinet agenda."

What we see from this wording is another example of the (then) CE's cunning phrasing which is deliberately intended to limit the scope of the Cabinet's decision.

They were simply being asked to agree that the information had 'been made available to the Council' by HTNW and that this provision satisfied the Council's resolution - which, in the CE's words, had now become downgraded to a 'request' - (a description that is considerably less significant than a Resolution of the Council)

The whole of the this process of providing the £300,000 could now be seen for what it was in this phrasing.

There was an absolute intention in the CE's mind (and possibly in the minds of some Cabinet Members) that Melton Grove would be sold to generate the necessary cash, and £300,000 of that was going - come hell or high water - into Lytham Hall's lottery bid. Opportunities for it not to happen were closed off at every turn (e.g. the CE's absolute linking of the Melton Grove money to Lytham Hall in the earlier Cabinet agenda item; his particular phrasing of the Council Resolution - which should have been the wording of an elected Council member, not the CE - and which cleverly avoided any debate on the substance of the grant, only whether the information had "been made available" by HTNW)

The underlying intent that is displayed in this process is the equivalent of the modern day acronym 'JFDI' (which, for the sake of civility we will expand without its original Anglo-Saxon language as) - 'Just Flippin Do It'

In the mind(s) of the main proponent(s) of this funding plan, it is clear there was never the slightest intention of looking what would be done with the money.

It was simply the turn-key funding that would precede the receipt of a much bigger grant from HLF.

Without it, the Hall would not be granted Lottery funding.

Ergo, its purpose was to open the door that would allow the Lottery grant to be paid.

Readers might detect anger and criticism in our writing at this point, and they would be correct to do so. We will forever be angry about the disgraceful way that that Melton Grove was handled by senior people within FBC, and we remain angry about the exclusion of proper democratic process in the decision to fund the Hall. But we would like to make it clear to readers that this is not a criticism of the Hall itself, (or of HTNW in its efforts to generate funding). We recognise the importance of the Hall and the need for FBC to provide the support it did. Our objection is not to £300,000 being used to unlock a lottery grant, it is simply an objection to the shameful and undemocratic manipulation of the process that was used to bring it about

 CABINET'S RESOLUTION

The minutes of that June 2011 Cabinet Meeting record:

"8. Lytham Hall

Councillor Susan Fazackerley (Portfolio Holder for Leisure and Culture) provided members of Cabinet with an update on the above. In doing so, she stated that the Council had previously resolved to provide financial support (in the sum of £300,000 capital grant) for the restoration plans for Lytham Hall subject to the receipt of specific additional information. The Heritage Trust for the North West had subsequently provided the requisite information and this was included within the report which had been circulated to all Members.

In reaching its decision, Cabinet considered the details set out in the report before it and at the meeting and RESOLVED to confirm the acceptability of the additional information received from Heritage Trust for the North West on the restoration project for Lytham Hall, and that the financial support committed by the Council be released subject to the receipt of the capital receipt referred to in the report."

That resolution says the required details had been provided and were satisfactory, and the money committed by the Council resolution was to be paid over to "The Heritage Trust for the North West for the Lytham Hall restoration fund"

Readers will see that, if you put the right head on when you read the words, the overall intent becomes crystal clear.

FBC confirmed the additional information that had been provided was both acceptable and sufficient to release the money.

The real objective had been achieved.

The money was going to Lytham Hall to unlock the lottery bid a day or so before the deadline by which the grant application had to be submitted.

Subsequent to this decision, Fylde's officers constructed an agreement with HTNW which Fylde now claims to condition the grant that they made.

We do not believe that this so called 'Heads of Terms' agreement conditions the making of grant at all.

It may properly condition other things - like the mechanics of how progress reports may be made by HTNW, and so on, but such an agreement (and any constraints it contains) was never approved as a condition of the grant being given.

The grant of £300,000 was made on the decision of the Council and Cabinet which, (in our view intentionally and specifically), did not include any further conditions other than those set out in the Council's minutes.

The money was not being given to do specific things at the Hall.

It was being given to unlock the lottery grant.

And as long as it was spent within the ambit of the 'Lytham Hall restoration fund', that was its real purpose.

Unlike the later Coastal Revival Grant, none of Fylde's decision-taking meetings to consider the £300,000 grant  to HTNW saw or approved any 'Heads of Terms' agreement or any detail on what the money would be used for.

The decision to approve and make the grant to HTNW was made completely without reference to including any 'Heads of Terms' as a condition and, we suspect for the most part, this document is probably an irrelevance to the making of the grant .

The ONLY conditions imposed by the Council on its decision to grant the money were as we have reported in Fylde's (1a-d) resolutions above, and the present Leader of the Council herself presided over the Cabinet meeting which confirmed that those conditions had been met and the money would be released to HTNW once Fylde received it from the sale of Melton Grove.

 2012

 THE FIRST MONITORING REPORT

A year later on 27 June 2012, the first Progress Monitoring Report was provided by Mr Miller from HTNW.

Fylde's Chief Executive again (unusually - because it would normally have been a subordinate officer dealing with such a lowly matter) presented the report personally. Readers can follow this link to download the full report.

Fylde's Chief Executive's report included the following statements:

"1. In August 2011 the Council agreed to pay a one off capital grant of £300,000 to Lytham Hall to support the Heritage Lottery funded Restoration Project (including restoration of the historic buildings and landscapes; sustaining investment in the long term through delivery of a management and maintenance plan; and increasing usage of the facility through the delivery of an activity development plan) to ensure the continued accessibility of Lytham Hall and associated country park"

and

"4. The financial accounts and the risk register for the restoration project were made available to the Chief Executive and are available for officers to inspect, this was a requirement of the lottery bid. Along with all the other information that has been presented to the Council we are satisfied that the project is on target at this stage and will deliver the intended outcomes."

and

"The £300,000 capital grant awarded by the Council has been used to leverage additional funding as part of the lottery bid with the whole project costing £5.9 million. The vast majority of the project spend is capital work on the restoration of the gardens and the Hall with 100% of the grant awarded by the Council being spent on the capital works."

Mr Miller's appended report had volunteered the expectation that "The capital grant awarded by Fylde Council will not be used for revenue purposes"

This is presumably what prompted the CE's monitoring report to say that 100% of the grant awarded by the Council was being spent on the capital works.

However, as we have said, spending this money on capital expenditure at Lytham Hall was not something that was conditioned by the Council and Cabinet resolutions authorising the grant to be made.

The references to "capital grant" and "capital monitoring" in various reports are to internal FBC arrangements. This is because the sale of Melton Grove produced a 'Capital Receipt' - and the spending of Capital Receipts carries with it a requirement for officer reports to outline Fylde's progress on its capital spending.

In this case, the word 'capital' appears in the Council resolution only to confirm that the grant is to be paid from a 'capital receipt' received by FBC.

And the Cabinet resolution only refers to the word 'capital' in the same way i.e. "...subject to the receipt of the capital receipt referred to in the report"

Neither minute authorising payment of the grant limits it to spending on capital items by HTNW. (Although HTNW appear to be setting out to do so on a voluntary basis in the agreement they signed after the grant had been made).

Mr Miller's report (appended to the Chief Executive's report) also included the following:

"......The Grant of £300,000 is a contribution to the whole capital project costing £5.9 million and has helped leverage additional funds through the Heritage Lottery bid. The full benefits will become apparent when the whole project is complete and the community will get the full enjoyment of the Hall. Likewise it will be possible to show how all the capital grant has been allocated to the restoration project at the end of the project.

3. Financial Records
The Trust maintains accurate financial records in accordance with financial regulations applicable to any Trust. The records are subject to an external audit each year and are available for the Council to inspect on request.

4. The Heritage Lottery Fund, which is contributing 41% of the finance for the project require that a Risk Management Strategy is in place as part of the bid, which includes the grant from Fylde Borough Council. The risk management strategy is available to the Council for inspection on request."

It is important to note that FBC's CE and his officers said they had inspected both the financial accounts and the HTNW's Risk Management Strategy (i.e. about the risks of something going wrong with the project) and were satisfied with them.

The importance of this will become clear later.

 CABINET MINUTES: MONITORING 1

The minutes of that Cabinet meeting record:

"In reaching its decision, Cabinet considered the details set out in the report before it and at the meeting and RESOLVED:

1. To note that the capital grant awarded to Lytham Hall is being spent in accordance with the Heads of Terms as at April 1st 2012 on the restoration project and that the required monitoring information has been made available.

2. To request that a further capital monitoring report at the end of the current financial year 2012/13 to ensure the grant continues to be spent in accordance with the Heads of Terms and to confirm that the restoration project remains on target.

3. To take up the offer of a tour and presentation of the Hall as part of the monitoring process and extend the invitation to any other elected members that wish to attend."

Readers can follow this link to download a copy of FBC's official minutes of that meeting

 2013

 POLITICAL MOVES

In October 2013, the County Councillor Geoff Driver had narrowly survived a challenge to remove him as the leader of the Conservatives on Lancashire County Council. The vote was 18-14 in favour of Mr Driver continuing as leader. We were told by a council insider that the other main contender for the Leadership was none other than Fylde's Cllr Tim Ashton.

We mention this here simply because - if the information we were given is true - it shows the importance and influence that Cllr Ashton would have had within the Conservative group on the County Council at around this time.

 THE LCC PROMISSORY LETTER

On 6th March 2013, (Note: This was before the LCC elections in May and whilst the Conservative group on LCC had an overall majority) the County Council wrote to HTNW about their request that had been made for funding.

This letter was two years after HTNW's original business plan for the Grant had been published in March 2011. It was also what we consider to be a very long time after the 2011/12 first discussion on LCC funding a £1m grant for Lytham Hall.

The letter began....

"I write further to recent correspondence from Martin Kelly, ·Director of Economic Development, Lancashire County Council, regarding the decision taken by the County to, in principle, provide additional financial support to the Heritage Trust North West."

The first - and most blindingly obvious - point to stand out here is that LCC were not setting out to fund Lytham Hall at all. They were setting out to support the work of HTNW in Lancashire.

This matters - because the funding they were offering was a mixed bag of support - only some of this was specifically conditioned to the refurbishment of Lytham Hall (£1m). The other funding on offer had a broader application.

Sadly, in what appears to be an attempt to leverage HTNW to change its business practices, LCC had created a link between the Lytham Hall and the Non-Lytham Hall support.

Under an administration at LCC that wanted to support the Hall, this construction could easily have been interpreted as a series of separate conditions.

But if there had been an administration that wanted to use the 'in-principle promised funds' for something else, it could deliver an equally justifiable reason not to fulfil the promise that had been made - by claiming that it was a "take it or leave it" all encompassing, single package of an offer.

We think this might have been what happened, and we're on the case to see if we can find more evidence about this matter.

The LCC letter went on to set out the in-principle agreement offer:

• "An in principle agreement to increase the Heritage Trust North West's Loan Guarantee from £500,000 to £1,000,000.
• "An in principle agreement to investment £1,000,000 in the refurbishment of Lytham Hall
• "An in principle agreement to provide revenue funding for the operational costs of the Heritage Trust North West"

However, these offers were subject to conditions, including:

• "...the drafting of a Development Plan, agreed by the Trust Board. The Development Plan will include
• "An Asset Disposal Strategy setting out a schedule for the disposal of identified Trust property assets in order to reduce the Trust's reliance on loans to undertake activity
• "An agreement to the County Council taking a charge over Trust property assets, as identified in the Asset Disposal Strategy, to a value sufficient to cover potential liabilities from the £1,000,000 Loan Guarantee
• "An agreement to the proceeds of sale of any Trust properties, to be either:

Applied directly in reduction of AHF loans, and the guarantee from LCC reduced by the same amount, or

Set aside for loan repayment at a later date

Once the above actions have been undertaken the County Council will then be able to proceed with the increase in the Loan Guarantee level which will facilitate the Trust undertaking the refurbishment of Lytham Hall.

The County Council will then also be in a position to make a grant to support the refurbishment work.

In order to continue to support the ongoing work of the Trust the County Council wishes to enter into further discussion regarding revenue support. It is envisaged that all County Council financial support will be managed through a Service Level Agreement."

This offer, and what subsequently happened to it, is the crucial piece of the jigsaw that almost certainly caused the failure of the Lottery grant in the middle of the project.

That lottery grant application had been predicated on receiving the promised £1m from LCC.

Furthermore, the funding of HTNW's operating costs by LCC was also an essential aspect.

But the increased loan guarantee does NOT appear to be money that features in the costing of the lottery application form that we can see - and at this time we are not clear whether any of it was money destined for Lytham Hall or whether it was for the other projects HTNW were running elsewhere in Lancashire.

We understand that LCC *appeared to believe* HTNW were getting a loan for some of the money for the Lytham Hall Project, but we have yet to see evidence for, or against, this being the case.

Whilst we're not at the bottom of this particular aspect yet, we have found out that the loan guarantee appears to relate to a County Council loan guarantee of £500,000 that was given in respect of loans going back to the 1990's - and HTNW was alleged to have defaulted on one of those loans it had taken out.

As yet, we've seen no evidence of whether, or why, and in what circumstances, a default may have arisen, but if it was as a result of inability, or a wilful intent not to repay (rather than, say, a disputed sum), then we can understand LCC being cautious.

So, perhaps, understandably, when LCC were asked to increase their guarantee from £500,000 to £1m, they wanted better some security for their guarantee, and they wanted HTNW to agree to LCC placing a 'charge' (which would put them at, or toward, the top of the list for repayment in the event of the guarantee being called upon and HTNW not being able to repay the loan) on other property owned by HTNW.

So we have to be open-minded at this time about whether the loan guarantee was necessary for the HLF lottery grant.

But what we do know from the letter is that LCC were not altogether happy that HTNW was relying so much on borrowing to fund its activity, and they wanted HTNW to look at its portfolio of property and see what it might be able to sell to reduce its reliance on borrowed money.

Again, this appears to us to be a general point about the broader operation of the HTNW, and it may not have been specific to the Lytham Hall Lottery project.

It feels almost as though the County Council officers were using the £1m Lytham Hall funding request as an opportunity to twist the arm of HTNW to conduct their business dealings differently in future.

If that's right, (and we have no proof either way at the present time) then we could see this as a conflict between the wholly staid, solid and reliable, boring culture of the County Council, and the more business-like, risk-taking entrepreneurial approach to its operations that might have been adopted by HTNW in order to make things happen.

This part of the story is important because if - as was later to be claimed - the loan guarantee was not needed for the Lytham Hall Lottery scheme, it becomes arguable that the County Council's subsequent refusal to grant the £1m (that it had promised in principle to the Hall Project) - may not have been properly justified.

 A CHANGE OF POLITICAL CONTROL AT LCC

In May 2013 control of the County Council passed from being an overall Conservative majority to a Labour (supported by the Liberal Democrats and others) majority.

 MONITORING REPORT

There was no report from HTNW at the end of the 2012/13 financial year (as had been requested in the minute), but a report was made in January 2014

 2014

 MONITORING REPORT 2

In January 2014 Fylde's Chief Executive provided an update report headed 'Lytham Hall Capital Grant Monitoring Report.' This time, there was no attached report from Mr Miller.

Fylde's officers appear not to have believed it necessary to append his report to the Cabinet Agenda, and they had interposed themselves between the two.

So this was a report presented by Fylde's officers - who has seen the necessary documentation (and presumably Mr Miller's report?) from which they had selected and presented the information they gave to the Cabinet.

CE's report included....

"2. In accordance with the Heads of Terms agreed as a requirement of the capital grant monitoring reports are submitted to the Council and financial records made available for inspection. This is the second monitoring report that has been produced.

3. Council officers have viewed the financial accounts of the Heritage Trust for the North West, the company which is managing the Lytham Hall restoration project (along with a number of restoration projects in the North West of England). The accounts confirm the award of a grant from the Heritage Lottery Fund of £2.59m, along with a further capital grant from Fylde Borough Council of £300,000, towards the total project cost of almost £6m. With nearly all the funding now in place, the Heritage Lottery Fund gave the Trust permission to commence the scheme in March 2013.

4. Since the last monitoring report to Cabinet in July 2012 the project has progressed as planned with a strong focus on opening up the gardens and grounds to increase access and footfall in the surrounds of the Hall. The restoration of the Parkland has been continuing throughout 2013 with significant progress having been made clearing and revealing the Mount and the felling of non- protected trees to expose vistas."

Readers can follow this link to see the full report

The formal minutes of that Cabinet meeting record:

"In reaching its decision, Cabinet considered the details set out in the report before it and at the meeting and RESOLVED:

1. To note that the capital grant awarded to Lytham Hall is being spent in accordance with the Heads of Terms (as at April 1st 2012) on the restoration project and that the required monitoring information has been made available.

2. To note the offer of the tour of Lytham Hall with any interested members contacting Darren Bell who will organise a visit to the venue through the Project Manager to see the latest development work and future plans."

So again in 2014, Fylde's officers and the Cabinet members were satisfied regarding the progress being made, and readers can follow this link to see Fylde's minute of that fact

 OVER AT LCC

We understand that during 2014, the County Council became aware that the Architectural Heritage Foundation (AHF) (from whom HTNW were to have secured further loans that would be guaranteed by LCC) would be no longer be making a loan.

So the loan guarantee package that LCC had proposed in March 2013 ceased to be needed.

This position has been (sort of) confirmed to us in a Freedom of Information request response from LCC which first explains the conditions under which the LCC funding had been offered, then concluded by saying

"...LCC was informed in July 2014 that the AHF would not be able to provide further loan funding to the HTNW. As this was the basis of the original HTNW request to increase the loan guarantee, the LCC decision, and consequently the in-principle agreements, were no longer applicable."

We see this as LCC's further attempt to wheedle out of their promise to pay the £1m - using the justification that because some parts of the agreement had changed, none of the other parts of the undertaking they had given now applied.

Fylde's Audit investigation sees it slightly differently, they say (at 3.1.8)

"When the funding model was offered to HTNW by LCC it was on the basis that the AHF would be providing a loan for the Lytham Hall project. However, LCC became aware that the AHF would be no longer be making a loan in 2014 and therefore the loan package that LCC had proposed in March 2013 no longer existed, leaving a significant funding gap for the HLF project."

We're not sure what they mean about the 'significant funding gap' because HTNW had simply refinanced their loans with another financial provider, without the need for guarantees. The Auditors know this too, so we don't understand why they think there was a funding gap - unless they are simply accepting that the £1m isn't now going to be provided by LCC.

Whether it was from HTNW's own choice, or whether from necessity arising from an AHF unwillingness to provide further loans as LCC's FoI response to us suggests, it was true that the AHF loans were paid off.

We have a press statement dated 2 September 2015 from the Unity Trust Bank which quotes as follows:

"John Miller, Chief Executive of Heritage Trust for the North West, said of the financial decision to refinance its mortgages: “The refinance enables our short-term lending from the Architectural Heritage Fund to be paid off and converted into long-term loans with Unity Trust Bank. This gives the Trust greater flexibility in terms of rental incomes and mortgage payments on our buildings.

“We came to Unity following a recommendation from the Co-operative Bank, and I’ve been truly impressed by the support we’ve received from the bank, and particularly from our relationship manager, Margaret. We’re the only Trust in the area dedicated to preserving and conserving wonderful cultural heritage sites that can become real assets for local communities and hope we can implement the sustainable re-use of many more historical buildings in the future.”

Having been able to release the County Council from its guarantee in respect of the former loans from the Architectural Heritage Fund, we do not think it was unreasonable for HTNW to expect LCC to stump up the £1m it had promised for Lytham Hall.

Certainly that's what we would have expected.

But it's not what happened.

In the (retrospective) words of HTNW's revised application:

"By the time these conditions were met there had been an election resulting in a change of administration at County Hall followed by the need for major cutbacks. LCC advised that they no longer had the money to fund this grant."

We suspect this is the reason that the Lottery scheme failed partway through.

The change of heart by LCC - resulting from the change in political power, coupled with their change in spending priorities, and major cutback to their budgets, was the (pretty big) torpedo that sank the project halfway through.

And we regard their weak justification for it (in effect: 'they didn't meet all the criteria we set') as being very a dubious and dishonourable approach to have taken.

 2015

 THE POSITION AT LCC

Early in 2015, the County Council was again approached regarding the grant for Lytham Hall.

There is some uncertainty about exactly what happened, and in what order, at this time, and we do need to see more data than we have at present to be sure about what happened at this period.

The Auditor's report for FBC (3.1.9) says

"LCC and the Chief Executive of HTNW continued to discuss potential funding models and in January 2015 HTNW were requested to provide a revised business case for funding. HTNW missed the deadline for submitting the business case, however when it was received it was still seeking funding of £1,000,000 for the project."

Paraphrasing the words of Mandy Rice Davies, we might think - 'Well, they would say that wouldn't they?'

HTNW had released LCC from the liability to guarantee their loans, so we would agree there should have been no need to meet the conditions LCC had previously imposed in relation to loans and borrowing, and the £1m ought to have been made available. It was a necessary part of the match funding for the Lottery grant and it had been approved in principle.

However, LCC have told us that, at that time, they felt that the £1m - which had been originally requested was not appropriate - because they now thought HTNW had assets that could generate the required funds.

This explanation adds further weight to our belief that, in effect LCC had changed their mind on making the £1m grant and (having arguably lost their previous justification concerning the loans and borrowing) they were now trying to justify that change of mind by saying - 'well, if HTNW didn't now need the loan guarantees, then HTNW should raise more of the money themselves.'

Poor show.

 THE POSITION AT FYLDE: MONITORING 3

In March 2015, Fylde held its last Cabinet meeting before its return to a Committee style of governance.

The Cabinet might reasonably have been expecting the annual monitoring report of the Lytham Hall Capital Grant at its final meeting (end of the 2014/15 Council year), but none was provided.

We're not clear whether Mr Miller from HTNW had provided the details to officers by the relevant date (we suppose he had), but they at least, had not made a report to Councillors.

Under the new Committee System, responsibility for monitoring the Lytham Hall grant fell to the newly constituted Tourism and Leisure Committee, headed by Chairman Cllr Cheryl Little and Vice Chairman Cllr Tim Ashton.

Readers will remember our earlier reference to Cllr Ashton's unique position of knowledge in this matter, so we imagined all would bode well for the future with someone so knowledgeable as Vice Chair of the T&L Committee.

There was no monitoring report at the first T&L meeting of 4th June.

And at their 10 September Meeting, there was a 'Capital Programme Monitoring Report' as at 31 July 2015. This agenda had progress reports on 15 capital schemes within the Tourism and Leisure Committee's terms of reference, but there was no mention at all of the Lytham Hall scheme.

However, by 12th November 2015, someone had woken up, and there was a monitoring report on the agenda.

Again, officers had interspersed themselves between the Committee and HTNW - because the written report was prepared and delivered by Fylde's officers.

That said, it looked to us as though someone wasn't completely awake when they prepared it because para 2 of this *third* report said:

"2. In accordance with the Heads of Terms agreed as a requirement of the capital grant monitoring reports are submitted to the Council and financial records made available for inspection. This is the second monitoring report that has been produced." (When it was actually the third report)

Paragraph 3 from the previous year's officer report was also reproduced (with the exact same wording).

It then went on to say that since the last monitoring report in January 2014 significant progress has been made with the project objectives.

It described the completions and progress that was being made on the gardens and grounds then spoke to progress on the wider objectives including:

"• Agreed an extension of time to the project with HLF following the initial match funding delays at the start, with completion now due in August 2017.

• Adoption of a two phase approach to the restoration of the Hall, with external repairs to Georgian and Jacobean Hall (Phase 1 £850,000) followed by internal work and alterations to both buildings (Phase 2 £2.6million).

• Progress to RIBA Stage H of the Phase 1 external repairs, with the scheme currently out to tender. The procurement process involved 9 leading conservation contractors submitting a Preliminary Qualification Questionnaire and attending interviews, and a final 5 invited to tender. An award of contract is anticipated in November 2015 with start on site in February 2016 and completion November 2016. This phase involves reroofing, leadwork, rainwater goods, stonemasonry, repair and decoration of windows, and repainting the stonework in the original 1760s John Carr colour scheme. This has been carefully researched and paint testing carried out on the North Entrance."

It then went on to explain various events, the volunteer activity that had taken place at the Hall, and so on.

The report then went on to outline and describe another grant for which Lytham Hall might be eligible.

It was something called the 'Coastal Revival Fund' and its purpose was to support or restore local heritage and facilities on the English Coast that benefit the wider community and the surrounding economy.

Up to £50k was available and according the report 'Lytham Hall' had submitted a bid for funds of £47k for external painting of the hall and works to outbuildings.

The difference here was that if (we presume HTNW) were successful with the grant, then because it was Government money, Fylde BC would become the 'Accountable Body' who would receive and disburse the money to manage the expenditure and ensuring specific milestones were met etc.

A future report to the Council's Finance and Democracy Committee was promised if this additional grant was secured.

The report from Fylde's Finance officer commented:

"This reports confirms the continuing compliance with the Heads of Terms of the agreement to provide a capital grant to Lytham Hall (dated April 1st 2012) in respect of the Lytham Hall restoration project."

We think that's a pretty clear statement of satisfaction - (even if, in our view, the use of the Heads of Terms reference is wrongly applied in it).

However, an employee of HTNW did attend the T&L Committee meeting in person, and they provided a PowerPoint overview of the Hall together with a very detailed twenty minute 'position statement' on the work undertaken to date under the auspices of HTNW, and some of the outstanding matters to be addressed in the future.

At least four councillors made comment or asked questions.

One was concerned about conflict when work was going on and public access needed.

Another - who seemed to have some involvement with the Tea Rooms - was very complimentary about what was happening at the Hall.

Another said:

"If I may say, I think yourself and your staff need to be congratulated on the work that you've done so far. Quite a few councillors have visited on an individual basis or with you and Darren, and were very impressed by the work you're doing...."

Cllr Ashton (Vic Chairman) also spoke to say

"Thanks very much for that report, excellent update. There are two Grade 1 Listed buildings on the Fylde Coast, one is Blackpool Tower the other is Lytham Hall... so we need to support Lytham Hall. It could have been a hotel at one time, if BAe Systems hadn't stepped in and granted £1m to Lytham Town Trust to buy the Hall, so I think we're fortunate that it is there for the people of Lytham and for the Council. Ultimately in the long term this Council should be supporting Heritage Trust for the North West in its task of keeping it open and making sure it's sustainable for the future. To me that's the most important thing, to be sustainable. Hopefully I think Lytham Hall's going to stand on its own two feet once this project's finished, and be sustainable for the long term, so I hope everything goes well. Thank you.

With such high levels of satisfaction as were expressed by councillors - especially those like Cllr Ashton who had intimate knowledge of the roles of all the bodies involved - and was (or had) actually been a part of most of them personally - it's no surprise that the minutes of that meeting note.....

".....Full details of the progress that had been made in line with the project objectives was also set out in the [HTNW] report. In addition, the report made reference to the application submitted by Lytham Hall for a coastal revival fund of £47,000."

It continued:

"Various members commented on key aspects of the project and in particular, the commendable work that had been undertaken so far."

"Following consideration of this matter, the Committee RESOLVED:

1. To note the capital grant awarded to Lytham Hall is being spent in accordance with the Heads of Terms as at April 1st 2012 on the restoration project and the required monitoring information has been made available.

2. To agree in principle that the Council will act as accountable body for the Coastal Revival Fund project should it be approved by the Department for Communities and Local Government."

So, once again everything in the garden was lovely as far as Fylde was concerned and our readers can see that for themselves by following this link to download the agenda report, and this link to download Fylde's official minutes.

 2016

 HAPPENINGS AT FYLDE

At its meeting on 7th January 2016 Fylde's Tourism and Leisure Committee was invited to recommend to the Finance & Democracy Committee the approval of a fully funded addition of £47,000 to the Councils 2015/16 Capital Programme towards the restoration of Lytham Hall

This was to be met to be met from a grant that had been made from the Coastal Revival Fund of the same amount and it was proposed that Fylde become the accountable body on behalf of HTNW who would let the contracts for some improvement works at the hall.

And on 25th January 2016, Fylde's Finance and Democracy Committee heard that the Coastal Revival Fund grant application had been successful, and the money would come to the Hall.

From what we can see from the reports, the work that was to have been done had changed somewhat.

At the T and L meeting the report had said

"Lytham Hall (Heritage Trust North West) submitted an application to the Coastal Revival Fund for £47,000 to undertake the external painting of the hall, the creation of a joinery workshop and to fund the production of a park conservation management plan."

But the costing in the Finance and Democracy Agenda said the money was for

• "Advance technical work prior to the start of the main exterior refurbishment of the hall contract; creation of a joinery workshop; and preparation of a conservation management plan"
• The total was still £47,000, but it now comprised
• Restoration of Georgian Hall: (Architect Fees, Quantity Surveyor Fees, CDM Coordinator Fees) £30,000
Create Joinery Workshop Equipment: (Building Repairs) £10,000
• Conservation Management Plan (Engagement of Specialist Consultant) £7,000

So the painting had been dropped in favour of hiring technical expertise connected with restoration.

That may be because the report noted:

"One of the main criteria for the funding was that it had to be spent by 31st March 2016."

So perhaps a contract to paint the outside of the Hall could not be organised quickly enough whilst there was still suitable weather, and the work changed.

Either way, the committee RESOLVED:

1. To approve a fully funded addition of £47,000 to the Council’s 2015/16 Capital Programme towards the restoration of Lytham Hall to be met from a grant from the Coastal Revival Fund of the same amount;

2. To approve a single payment of the grant upon the receipt of supporting invoices from Lytham Hall (Heritage Trust North West); and

3. To note that the delivery of the project is to be achieved through the engagement of consultants/contractors and suppliers to deliver the various elements of the project in line with the Council’s financial regulations and contract rules and procedures.

It is noteworthy that the arrangements for expenditure on this (separate) project are properly set out in detail in the report, with estimated costs for each element, and that the minute conditions the grant to be spent on those elements.

This is the proper way to do it, and is in STARK contrast to the arrangements Fylde set in place to pay the £300,000 to HTNW as a grant.

So at this time, Fylde was still happy with HTNW's work and progress at Lytham Hall, and was now gaily working in partnership with them - on a separate project - to progress improvements at the Hall

But all that was about to change.

 HAPPENINGS AT LCC

By May 2016 HTNW appear to have accepted that LCC were not going to give them the £1m they had promised, and HTNW set about producing a valiant attempt to create a silk purse from the sow's ear of the mess that LCC had left them in.

They produced a proposal to revise the Stage II Lottery grant they had already received the first part of.

We've seen a copy of this document and it explains some of what we have set out in this article.

In broad terms, it suggested to the Lottery Fund that, even with the missing funding, HTNW could do a worthwhile job on the Hall itself, if the Lottery people would put in the same money in as they were going to spend already, but accept that HTNW would not be able to do all the things they had hoped to do, and their 'match funding' for Phase II would reduce.

The net effect of this would have been to have the HLF increase its share of the project spending from 41% to 71% of the (reduced) total spending, set against what would become 29% of match funding which HTNW said was confirmed for Phase II.

The original project would have seen HLF fund 41% of the total cost, and others (including the value of the time donated by a small army of willing volunteers) would have made up the remaining 59%.

The lottery people appear to have set out not to give more than 50% of the total cost. They required the applicants to have their own "skin in the game" to around 60% of the total project cost.

The revised scheme that was now being proposed by HTNW included work on the exterior envelope of the Georgian and Jacobean Hall, and creating visitor interpretation and revenue generating facilities on the ground floors.

The aim here was to make the building watertight and weatherproof and thus reduce the 'heritage at risk' status of the building. It was also to create the infrastructure to provide a sustainable, viable heritage attraction that could generate money.

The first and second floor's internal restoration had been dropped from the revised scheme, as had the proposed new glazed roof for the courtyard.

You can see why HLF would not have been very impressed with this idea compared with what they had been expecting to get.

The 'Revisions' document went on to explain what had happened in quite some detail, and provided revised costings and so on.

9/10 for effort, but in reality, probably only 4/10 chance of success.

During the preparation of this document in late April / Early May 2016, correspondence was taking place between LCC and HTNW to try to sort out at least some money from LCC.

We understand that eventually LCC conceded they would match Fylde's contribution and give £300,000 but this was still going to be subject to conditions.

 LCC'S REVISED AND REDUCED OFFER

On 24th May, LCC's Chief Executive sent an email to County Councillor Ashton, who forwarded it to people at both HTNW and LTT. The email confirmed an earlier phone conversation and said

"LCC is willing to provide gap funding for the Lytham Hall project to match Fylde Borough Council's contribution of £300,000 if the existing conditions that we have set are met

The conditions are:

• There is a clear commitment and plan for disposal of HTNW properties [as originally proposed] to reduce the funding gap and fund the development
• Where properties are mortgaged there is a clear approach to how such receipts will be realised
• There are letters of support from key partners, HLF and Fylde BC.

If the above conditions are met then LCC will provide the gap funding indicated above."

So, LCC was still at this time trying to insist that HTNW produced a plan and give a commitment to dispose of some of its assets elsewhere.

But the reason for this condition seems now to have changed.

It was now trying to get HTNW itself to fund some or all of the money they need from their own resources.

Whether this was intended to reduce the £300,000 LCC had offered, or whether it was to address the shortfall between the £300,000 and the £1m original offer, is unclear.

In what seems to have become something of a 'mountain and Mohammed' situation, HTNW told their landlord LTT that the offer from LCC was still subject to various existing conditions contained in the original grant letter of 6 March 2013, (some of which no longer applied) and they said they would write to the County to confirm that these conditions had been satisfied vis:

1. The AHF loans have all been repaid in full and LCC released from its guarantee in respect of the loans.

2. The Trust had already disposed of a number of properties and secured sufficient funds to match the HLF grant.

But these undertakings were not exactly what LCC had asked for of course.

HTNW said they would also....

".... explain that, as a result of the reduction in the LCC pledged from £1million to £300,000, we have had to rework the project in order to eliminate the funding gap whilst, at the same time, continuing to meet the objectives of the original HLF Award."

We suppose this sort of correspondence bounced back and forth for a while until eventually agreement was reached on the terms under which the £300,000 would be paid to HTNW and could be included in their revised Stage II proposal.

 THE COUNTY COUNCIL'S FINAL OFFER

By 16th July, agreement had been reached that the Leader of the County Council should approve in principle:

"(i) a capital grant of £300,000 from the County Council's Economic Development Capital Budget in support of the renovation of Lytham Hall, subject to Heritage Trust for the North West entering into a Grant Funding Agreement with the County Council;

(ii) that any capital grant be made on the basis that Lytham Hall will become self-sustaining and that no further grants from the County Council will be sought for future restoration or revenue activity; and

(iii) that the detailed implementation of the above decision(s) be delegated to the Director of Economic Development, in conjunction with the Director of Financial Resources."

The issues about the loans seem to have been removed from this, but in their place was (what we thought was a most unpleasant) Clause 2 which seemed to us to be the equivalent of a householder sending a cheque for less than a bill they had received, but marking it "in full and final settlement" (so if it was banked by the trader that was all they were getting).

Like we said, unpleasant, and unworthy.

Readers can follow this link to download the full report and the recommendation to LCC's Leader 160716lc.pdf

This was agreed by the Leader of Lancashire County Council, (in July 2016) with conditions attached. One of these was that it would be used to support the £1.7m restructured bid to the Heritage Lottery Fund.

But the Heritage Lottery Fund refused to agree the restructured bid for a £1.7m grant for Phase II.

 OUR MP TRIES TO HELP

On 11th August 2016, the Express quoted our MP Mark Menzies as saying

"After being told that Lytham Hall's lottery funding was in jeopardy I met with the trustees to see what I could do to help.

Following that meeting, I made an urgent phone call to the Heritage Lottery Fund (HLF) to arrange more time for the Lytham Town Trust to try to work through some of the issues which had been raised.

However, I received notification last week that the HLF Board of Trustees had rejected an alternative plan for a reduced scheme, whilst accepting that positive steps had been made to resolve some of the problems.

Obviously I supported the original successful bid for grant funding so I am extremely disappointed this has happened"

The Heritage Lottery Fund conveyed this decision to HTNW on 9th August

When it became public, all hell to broke loose, and the LCC's second promise of the reduced £300,000 for the Hall, evaporated.

We broke this bad news to our registered readers in a counterbalance newsflash on 31 August. The Lytham Hall internal newsletter reported it about the same time and asked for people to put on a brave - business as usual - face. And on 9th September HTNW issued a formal press release giving the bad news.

 THE CRACKS BEGIN TO SHOW

By 22 September 2016, cracks and recriminations were starting to show.

The Lytham St Annes Express reported that

"Lytham Town Trust is still seeking answers following the withdrawal of a £1.7million Heritage Lottery Fund grant...... Town Trust chairman David Gill said: It is essential that we understand what the significant risks identified by the HLF are so that we can plan a way forward. We are aware that HTNW has received a report about the governance and management risks and, despite making a request to their chief executive John Miller, we have still not been provided with a copy of this report. Without an understanding of these risks, we cannot even begin to consider supporting a further grant application to the HLF or any other funding body."

Because the (Moore Stephens) report had not been released, there was speculation that its contents are damaging to the HTNW.

This may be the case, and we have seen comments from HTNW which say they do not agree with the content.

But unless or until it is published no-one knows one way of the other what the report to the HLF - the one that caused them to withdraw from Phase II - says, and speculation about it's content simply isn't going to help the situation.

The extent of the unfolding tragedy for the hall itself becomes clear when you reflect that Mr Gill was speaking about HTNW - the organisation they themselves had selected to lease and operate the Hall on their behalf.

This was bad.

But it was about to get even worse.

 A DREADFUL T & L MEETING.

Sadly, we were out of the country when a meeting of Fylde's Tourism and Leisure Committee considered this matter on 3 November 2016, so we don't have our usual recording and report of what happened.

We can only therefore rely on what we were told by several of our readers who were present in the public gallery.

Amongst other things, the agenda report noted that:

"The Chief Executive of the Heritage Trust for the North West has been invited to the meeting to present further details and address questions from the committee."

But according to our readers, the meeting had the hallmarks of something that was more akin to an ambush than an invitation, as two members of Lytham Town Trust sought to publicly attack the Chief Executive of the Heritage Trust for the North West in the 'Public Platform' before the meeting started.

We did receive copies of their presentations to the Committee and authority to quote from them. We had intended to reproduce quotes from their presentations, but in the interests of fairness, and so that we are not thought to be using their quotes selectively, readers can follow this link to download read both the statements read out at the meeting by Mr Kitt  and by Mr Gill  

We were shocked to read them, as we suspect our readers will also be.

We were subsequently told by LTT that they regarded this as being Mr Miller's second opportunity to explain where the £300k FBC donation had been spent, and for the second time he was unable to do so.

They also told us that Susan Fazackerley, Council Leader, challenged Mr Miller very strongly about the reason for LCC's withdrawal, and asked if it could have been because an important deadline for the requested Development Plan had been missed.

We suppose here she was referring to what we understand was a delay of three days in HTNW submitting a revised business case in respect of a request from LCC made in early 2015.

We understand from those present at Fylde's T&L Committee meeting that Cllr Fazackerley was especially pressing with this point about the delay, and she gave our readers the impression that HTNW missing the 'deadline' (by three days) was a key cause of LCC not providing the funding.

We think that's absolute tosh.

And even if that was the case, we think it's a bit rich when, from our investigations, it is clear that LCC were twisting and turning in all sorts of ways to get out of having to pay what had been promised. And if Cllr Fazackerley thinks thee days is a long delay, we have to ask - what on earth does she make of the three YEARS that LCC took to come up with the grant offer in the first place after they had been asked for it!

Our readers (who were present at the meeting) told us that Fylde's normally well behaved councillors behaved like sharks at a feeding-frenzy and joined in what became a savage attack on Mr Miller.

We will have more to say about this in our conclusions, but suffice for the present to say from what we have been told, a lot of mouths seem to have been opened without brains having been engaged first, and most certainly without even adequate, let alone sufficient, knowledge and understanding of what had gone before.

This is why we now produce the longer story of what happened.

 WHY WAS THIS MEETING SO DREADFUL?

Some of the blame for this situation lies at the door of one or more officers who, undoubtedly in our view, should shoulder the majority of the blame for how the councillors - who had read their reports - reacted.

In our view the officer(s) produced an appalling, rabble-rousing report that exacerbated and inflamed a bad situation instead of setting out to seek a resolution of it.

The officer report seemed to want to encourage Mr Miller to be attacked. We regard an approach like that as shameful.

One reader even suggested to us that they thought the whole thing had been set up to provide Lytham Town Trust with the opportunity to launch such an attack on Mr Miller, and they even suggested that some of Fylde's councillors seemed to have been selectively primed to join in.

We really wouldn't want to think that was the case, but one of our readers did leave the meeting with that perception.

The report's first recommendation to councillors on the T&L committee was that they should....

"... determine whether they can be confident that the capital grant awarded to Lytham Hall has being spent in accordance with the Heads of Terms as at April 1st 2012 on the restoration project based on the information and evidence put before them."

The delicious irony of that date should not be overlooked by our readers.

Dear God in Heaven: the officers only had to look at the monitoring reports that they themselves had submitted to members after examining the documentation provided over the last three years by the HTNW.

The most recent of these saw praise for what HTNW had done heaped all over the HTNW representative by several councillors, and even heard the Vice Chairman of the Tourism and Leisure Committee, Cllr Tim Ashton say:

"Thanks very much for that report, excellent update. There are two Grade 1 Listed buildings on the Fylde Coast, one is Blackpool Tower the other is Lytham Hall... so we need to support Lytham Hall. It could have been a hotel at one time, if BAe Systems hadn't stepped in and granted £1m to Lytham Town Trust to buy the Hall, so I think we're fortunate that it is there for the people of Lytham and for the Council. Ultimately in the long term this Council should be supporting Heritage Trust for the North West in its task of keeping it open and making sure it's sustainable for the future. To me that's the most important thing, to be sustainable. Hopefully I think Lytham Hall's going to stand on its own two feet once this project's finished, and be sustainable for the long term, so I hope everything goes well. Thank you."

And his Committee was now being asked by an officer to say whether they could be confident that the capital grant awarded to Lytham Hall has being spent in accordance with the Heads of Terms.

We simply have to ask, what on earth was this officer thinking about to pose such a question?

Firstly, Fylde's Councillors had said, time after time - and indeed they had been advised by professional officers time after time, that they *WERE* satisfied.

Just look at the evidence

 FIRST MONITORING REPORT

This was presented on time in June 2012. The Cabinet resolved

 "...the capital grant awarded to Lytham Hall is being spent in accordance with the Heads of Terms as at April 1st 2012 on the restoration project and that the required monitoring information has been made available."

They also resolved

"To request that a further capital monitoring report at the end of the current financial year 2012/13 to ensure the grant continues to be spent in accordance with the Heads of Terms and to confirm that the restoration project remains on target."

 SECOND MONITORING REPORT

The next report was presented to Cabinet in January 2014. The report noted

"Council officers have viewed the financial accounts of the Heritage Trust for the North West, the company which is managing the Lytham Hall restoration project (along with a number of restoration projects in the North West of England).

The Cabinet's minutes show they resolved

"...To note that the capital grant awarded to Lytham Hall is being spent in accordance with the Heads of Terms (as at April 1st 2012) on the restoration project and that the required monitoring information has been made available...."

 THIRD MONITORING REPORT

Presented to the Tourism and Leisure Committee in November 2015. Fylde's officer's covering report noted that

"Council officers had viewed the financial accounts of the Heritage Trust for the North West.....",

It also made mention of a possible new grant for the Hall from the Government's 'Coastal Revival Fund'. A HTNW employee also made a PowerPoint presentation at the meeting at the end of which the preamble to the Cabinet's decision notes with some satisfaction that:

"Various members commented on key aspects of the project and in particular, the commendable work that had been undertaken so far."

Those 'various members' actually included Cllr Tim Ashton who, as we have reported previously, probably knew as much or more about what was going on in each of the organisations involved in the project than anyone else did.

The Committee resolved:

"1. To note the capital grant awarded to Lytham Hall is being spent in accordance with the Heads of Terms as at April 1st 2012 on the restoration project and the required monitoring information has been made available.

2. To agree in principle that the Council will act as accountable body for the Coastal Revival Fund project should it be approved by the Department for Communities and Local Government.

So not only were they satisfied, they passed an explicit resolution *TO SAY* they were satisfied.

And - we say again - they were now being asked whether they could be confident that the capital grant awarded to Lytham Hall has being spent in accordance with the Heads of Terms.

Words fail.

The second, and in our view the even bigger failing, is for Fylde's officers to have assumed that they were judging the GRANT that was made by reference to the 'Heads of Terms' document (which in our view has very little standing in this matter).

The *GRANT AWARD* of the £300,000 from the sale of Melton Grove was conditioned ONLY by the resolutions of the Full Council and the Cabinet, neither of which had any reference to any Heads of Terms, and both of which were skilfully phrased by a cunning former Chief Executive to make sure the £300,000 money was paid to HTNW come hell or high water, just as those same elements would not have stopped the disgraceful sale of Melton Grove that he engineered to fund it.

We are moved to wonder at the competence of the officer reporting this matter to the T & L Committee.

Were it not for our innate respect for the usual professional officer class, we might be tempted to think the report had set out to intentionally deflect what should rightfully have been criticism of those officers who had repeatedly told elected members that all was well at Lytham Hall and the money was being spent properly - if, indeed they now thought, or events had shown, that this had not been the case.

And just before we move on, we will also note recommendation 4 of the same officer report which exhorted the Committee to require:

"That the Heritage Trust for the North West put in place a clear plan of action to restore Lytham Hall’s historic buildings, landscapes and structures to enable Lytham Hall to become a major tourism destination on the Fylde Coast."

What on earth is that all about? What locus does FBC think it has to interfere in, and to require, the lessee of a private property, owned by a different private company to do anything?

When they refused to take ownership of the Hall at the time GRE wanted to dispose of it, and when they would not provide the £1m that was needed to keep the Hall out of commercial exploitation, what moral authority does Fylde Council now think it has to complain about the heroic efforts being made by others to do what they failed to do in the past.

HTNW is now the effective owner of the Hall. They are responsible only to Lytham Town Trust for meeting the terms of their lease for the next 90-odd years.

End of story.

It is none of Fylde BC's business what transpires in that relationship.

We think the sooner people realise and accept that fact, the sooner some progress stands a chance of being made.

Masochistic readers who want to see the full report to this Tourism and Leisure Committee can follow this link to download it

 THE MINUTES ARE AWFUL

Having said all that, the minutes of this item were arguably worse than the report.

Fylde's officers had checked, and repeatedly told members over three years that they were satisfied (and some councillors said they were "very impressed by the work you're doing" and "yourself and your staff need to be congratulated on the work that you've done so far",) the minutes of this last meeting of the Tourism and Leisure Committee have the temerity say:

1. That the committee is not confident based on the information and evidence presented:

(a) That the capital grant awarded to Lytham Hall has being spent in accordance with the Heads of Terms on the restoration project and

(b) That the current trustees and management of the Heritage Trust for the North West are capable of successfully completing the restoration of Lytham Hall as originally envisaged

2. That the Tourism and Leisure Committee ask for an independent audit to be commissioned to examine in detail and to ascertain:

(a) The reasons for some of the major funding bodies pulling out of the project.

(b) The findings of other work undertaken into the project such as the Moore Stephens report prepared by the Heritage Lottery Fund.

(c) Whether in light of this information the borough council can have any confidence that the existing trustees and management of HTNW will ever be able to complete the restoration of Lytham Hall within a reasonable time period.

(d) What has the £300,000 that Fylde Council gave to Lytham Hall been spent (to be suitably itemised)

(e) Whether in light of the outcome of 2 (d) above, the council has any grounds to demand repayment of the £300,000 grant awarded by Fylde Council in 2011.

We are simply appalled at the incompetence, the lack of judgement, and the plain ignorance displayed here.

Whilst, if doubts about compliance with the terms under which the grant had been awarded did exist (i.e. the Council and Cabinet resolutions of 2011), it would be perfectly right and proper for an audit of that situation be undertaken by FBC, but they have no locus to act beyond that matter.

Fylde's formal role is to monitor and be satisfied about the £300,000 it gave to 'Lytham Hall.'

It is not there to police the restoration scheme for the Hall

It may have views about that wider restoration, and it might be proper to express those views should it wish to do so, (although we would urge public silence to encourage the real parties concerned to get together to work out a joint approach for the future).

That should be the extent of Fylde's involvement.

It does not own the Hall, it does not manage the Hall. It does not operate the Hall. It is not responsible for the Hall.

But what FBC are trying to do with Minute 2 is to 'mission creep' beyond their proper responsibility and almost to act as the 'enforcer' for the Lytham Town Trust.

This is an especially dangerous direction upon which to embark (especially when the Vice Chairman of the Tourism and Leisure Committee is also a Director of Lytham Town Trust).

Questions about the competence of the existing trustees and management of HTNW are simply not a matter for Fylde Council after the event. They are a matter between the owners of the Hall and their lessee - within the terms of the lease that they granted.

If Fylde wanted to know about the competence of the trustees and management of HTNW the time they should have investigated those matters was as part of the 'due diligence' they ought to have undertaken before they decided to make the grant of £300,000 grant from the sale of Melton Grove.

And frankly, the idea of even considering whether there are grounds to demand repayment when you have repeatedly said you are satisfied with what has been done by HTNW is preposterous.

All a barrister would have to do is plonk Fylde's own public agenda and minutes containing that information on a table in front of the Judge, and ask if they are Fylde's official documents, then ask for his costs.

Frankly, this council is out of control on this matter.

 THE INVESTIGATION AND FYLDE'S 'AUDITORS REPORT'

Almost inevitably, as a result of the decisions of the last T&L committee, 'Mission Creep' began, and an investigation was commissioned.

We can find nothing the T&L Terms of Reference that would authorise expenditure on such a wide investigation into assets, services and functions that are not owned by, and are not the responsibility of, Fylde Borough Council.

Nevertheless, such matters were set out to be reported upon by the appointed auditors.

We think Fylde are skating on quite thin ice here.

We heard that two auditors or accountants from Blackpool's Corporate Fraud Department had appeared at the Hall on 5th January 2017 and began the investigation that Fylde had commissioned.

(It fact, we now know it was Blackpool's Chief Internal Auditor and a member of the Internal Audit and Corporate Fraud Team at Blackpool Council)

Their report has just been published, and it is mostly a good piece of work.

We think it skates over some aspects that should have been given more attention (or at least more emphasis). And we think the way it reports the information is closer to what Fylde would have wanted to hear than it is at being even handed. But they have done some good investigating - as one might have expected.

Their investigation terms of their reference have mostly been set by FBC's minutes of 3 November last year (reproduced above), and as we have said already, these go much too far outside Fylde's formal responsibility and the T&L Committee's terms of Reference for our liking - but that's not the fault of the investigators.

 THE AUDITORS REPORT

Their report begins with a very sensible...

"Blackpool Council was commissioned by Fylde Borough Council to undertake an independent review of the Lytham Hall Restoration Project. This was as a result of a meeting of the Tourism and Leisure Committee in November 2016 where it was determined that the Council could not be confident that grant monies provided by Fylde Borough Council had been spent appropriately."

That's fine by us. It is entirely appropriate for Fylde to want to know that their £300,000 was spend within the 'Lytham Hall restoration fund' (which is the exact wording that the Council resolved to spend it on).

But Fylde didn't need to appoint Auditors the see that this money had been spent properly. They could simply look up the reports of their own officers - who had been monitoring the activity on the ground and checking the financial information provided by HTNW annually over the last three years!

But of course, the Auditors report runs far wider than Fylde's own money.

That's because FBC asked them to look more widely

The Auditor's report accepts the assumption that the 'Heads of Agreement' govern the grant.

We do not accept that assumption. It is our view that the conditions governing the grant are the specific conditions that were resolved at the Council and Cabinet meetings of 2011. And (unlike the grant for the subsequent 'Coastal Revival Fund' which gave a breakdown of the work and costs which were approved specifically), those resolutions of 2011 do not include a requirement to comply with any other constraint such as a 'Heads of Agreement document.

 THE REPORTS TERMS OF REFERENCE

The Auditors took, as their terms of reference, the minutes of Fylde's Tourism and Leisure Committee which their report reproduces as being:

• The reasons for some of the major funding bodies pulling out of the project.
• The findings of other work undertaken into the project such as the Moore Stephens report prepared by the Heritage Lottery Fund.
• Whether in light of this information the borough council can have any confidence that the existing trustees and management of the Heritage Trust North West (HTNW) will be able to complete the restoration of Lytham Hall within a reasonable time period.
• What has the £300,000 that Fylde Council gave to Lytham Hall been spent on (to be suitably itemised).
• Whether the Council has any grounds to demand repayment of the £300,000 grant awarded by Fylde Council in 2011

In our opinion, only the last two of these are properly the responsibility of Fylde Council

Whilst we understand Fylde might want to better understand what happened, and we can see it is right that they might wish to do so, we worry that the underlying intention in seeking the other (wider) information is to take some form of action on these wider issues, to intervene in the affairs of what are actually two private companies.

We cannot see that such action would be within the Terms of Reference of the Tourism and Leisure Committee.

We are especially concerned about some of the actions recommended in what is said to be the Chief Executive's report to the Tourism and Leisure Committee on Thursday next.

These actions include a request for the immediate removal of HTNW’s Chief Executive from the Lytham Hall restoration project.

That is an action we do not believe FBC has proper authority to take.

The tenure of the Chief Executive of HTNW is a matter only for the Trustees of HTNW

Nor can we understand the authority by which the Tourism and Leisure Committee can require evidence to be produced by the HTNW to demonstrate that they have the capability and appropriate personnel to continue to deliver the Lytham Hall restoration project.

Here again we do not believe this is a matter within the Terms of Reference of the T&L Committee either.

It may be a matter for the Directors of Lytham Town Trust who have contracted with HTNW to do certain things with the Hall, but neither of these are properly the province of Fylde Council to take action upon.

So, following that overview, we'll now take each of the Auditors headings in turn and look at what the Auditors reported

 LOOKING AT EACH ISSUE IN TURN: ISSUE 1

1). The reasons for some of the major funding bodies pulling out of the project.

This part of the report is not about Fylde's £300,000 grant. It is about the wider HTNW application.

As far as we can tell, only the Heritage Lottery Fund actually took a decision to 'pull out of the project'

However, some of the other monies that had been either estimated or promised as match funding in the original application did not all fully materialise, and that is what caused the HLF to 'pull out'.

Fylde's £300,000 did fully materialise of course, but - for example, the County Council's £1m was reduced to £300,000.

Although technically not 'pulling out' these reductions contributed to HLF pulling out and the report goes on to consider them.

It is not systematic in taking each of these reductions and explaining why they changed.

It explains what happened to some of them, but it has not been able to properly identify the reasons (which is what FBC asked).

For example, It attempts to explain the tortuous saga of the LCC promise. But it does not address the impact of the change of political control at the County Council. The closest it gets to this is saying:

"3.1.10 - In 2015 LCC were facing significant financial pressures due to funding reductions inflicted by Central Government as part of austerity measures. Therefore, it would be difficult to justify providing funding for a project at such a significant amount."

And whilst it recognises that HTNW's refinancing of its loans had released LCC from the increased loan guarantee HTNW had sought (and indeed from all the loan obligations LCC had given to HTNW since the 1990's as far as we can see), the report says

"However, this did not change LCC’s view that they could not justify funding Lytham Hall at the levels requested by HTNW"

This is a statement of fact. It is not the *reason* that LCC took this view to reduce the amount they had promised.

Our view of why LCC changed their mind and were no longer willing to give the £1m they had promised is that after the change of political control, their priorities changed, and they sought to justify not meeting their promise first by using the unmet loan guarantee condition as the argument not to donate. And when that condition was removed by HTNW (thus releasing LCC from the guarantee), they said that hadn't changed anything, and when that position was shown to be untenable they said HTNW should use more of their own money and eventually they had to concede £300,000 if HTNW would agree to that being in 'full and final settlement"

That is the view we hold, and it paints responsibility for the reduction from £1m to £300k in a very different light to the report of the Auditors.

We think the combined impact of the scope, content, and tone of this section of the Auditors report tends be too accepting of the LCC position in our view and it this shows HTNW in a worse light than we believe is justified.

We think it is the same with the other funding changes they have chosen to highlight in the report, and whilst they *have* shone more light into some of the darker corners of the project, they have not yet properly illuminated the whole scene, and have not fully explained the *reasons* for each of the funding changes that took place.

 LOOKING AT EACH ISSUE IN TURN: ISSUE 2

2).The findings of other work undertaken into the project such as the Moore Stephens report prepared by the Heritage Lottery Fund.

This section focuses on two aspects. The (Moore Stephens) report commissioned by the Lottery people into the Lytham Hall project, and some retrospective estimates that Lytham Town Trust constructed into what they estimated to have been the income and spending by HTNW.

The unwillingness to make the HLF's report public is creating division and distrust which we regret, but we do understand why both HLF and HTNW would not wish to do so at the present time.

However, the absence of cogent and clear information has set off a wave of unhelpful actions that attempt to protect the reputational integrity of the parties concerned.

So LTT have tried to reconstruct the HTNW's information on income and spending - seemingly in order to show, or at least imply that it was their tenant's fault not theirs, and FBC are trying to distance themselves from the responsibility that is theirs, by commissioning this investigation.

Both of these actions are directed at HTNW and in particular at Mr Miller.

HTNW themselves have mostly been silent in public, and have instead focused on trying to project an image of 'business as usual'.

We can see that this is partly in order to keep their income generating events and activities going at the hall (in order to keep the income flowing), and partly to retain and motivate the incredible army of volunteers who are giving freely their time - and in some cases their own cash to buy equipment ranging from screws to much larger sums on equipment.

The public squabbling of the other parties involved is hugely damaging to the Hall itself, and to the morale of those who volunteer their time and resources.

Our own analysis of this part of the Auditors report is that there is no neat, clear-cut answer. What one person sees as a failing the other may see as a necessary adaption to changing circumstances.

For example, the Auditors say (at 3.2.17)

"Lytham Town Trust conclude that there is a fundamental difference between them and the HTNW in relation to how the grants received for the HLF project at Lytham Hall should have been applied and also in the way in which a charity should be managed to ensure that protection of public money."

If that's the case, we have to ask - what provisions did Lytham Town Trust build into the lease agreement they granted to HTNW to monitor how the funding received was spent?

If the answer to that is that is that they did build them in, they should have been exercising the monitoring they set out.

However, if, as we suspect from their having to ask the question, they did not build such provisions into the lease agreement, we would have thought they would be wiser not to make public statements that only reflect their own lack of foresight and competence.

We would also ask what provisions LTT built in to the agreement keep an eye on the way the charity was being managed?

We partly know the answer to that because we are aware that one of the LTT members was invited to become a trustee of HTNW and attended their meetings and did so until just before this problem arose when they resigned, saying they were dissatisfied with the way the trust was being run.

The auditors have, thankfully, not got involved in validation of the arguments taking place in public between the owner and their lessee - other than to say HTNW had accepted a need to improve its governance.

We were aware of that ourselves before the Auditor's report.

We knew of an internal HTNW briefing from late in 2016 which noted the HLF had been concerned that the project was no longer sustainable.

This concern had followed on the back of several other large projects in the North West which had received large grants had recently gone into liquidation. It was also against a background that three Museums owned by Lancashire County Council (which HLF had supported) were closing.

So HTNW had already accepted the need for it to make a more robust case in the future.

The note went on to explain that HTNW was reviewing its Governance arrangements and also wanted to take account of recent changes in both charity and company legislation.

We understood HTNW's Governance Review was expected to cover:

• a review of the Memorandum and Articles of Association;
• the membership of the Board of Trustees;
• a skills audit;
• arrangements for advertising, interviewing and appointment of new Trustees;
• the appointment of Advisory Groups (Building Conservation/ Gardens/Collections);
• the human resources required to meet the objectives, the staff structures, the appointment of new staff and reporting arrangements;
• arrangements for finance controls and reporting.

We understand this process is already in train at HTNW.

So although it does not seem to have filtered through to the Auditors (or at least they have not commented on it in their report other than to say HTNW had accepted the need to improve its governance), these matters are already being looked into by HTNW with a view to submitting a further bid to HLF - probably in 2018 we understand.

 LOOKING AT EACH ISSUE IN TURN: ISSUE 3

3). Whether in light of this information the borough council can have any confidence that the existing trustees and management of the Heritage Trust North West (HTNW) will be able to complete the restoration of Lytham Hall within a reasonable time period.

The Audit report concludes on this matter (at 3.3.3)

"It should be recognised that HTNW have been in place for a number of years and have managed a number of building preservation projects. However, the Lytham Hall project is complex in terms of the number of funding streams and the scale of the programme, and it appears that it has suffered from a lack of effective management and dedicated financial support from someone who is qualified in financial management, specifically in relation to large scale projects. Based on this it would be difficult to provide assurance that the HTNW, as this moment and with their current processes, would be able to deliver the Lytham Hall project on a timely basis, nor is there currently the funding available to deliver the scheme."

Their justification for their saying this appears to be the breakdown in trust, and the fact that HLF is unwilling to make the 'Moor Stephens' report public.

What the Auditors do not appear to know is that the HTNW is at present addressing these issues with the governance review it is currently undertaking.

 LOOKING AT EACH ISSUE IN TURN: ISSUE 4

4). What has the £300,000 that Fylde Council gave to Lytham Hall been spent on (to be suitably itemised).

The Auditors report assumes this matter is governed by the 'Heads of Terms' agreement. For reasons we have already outlined, we do not believe this to be the case. Fylde's Conservatives used their majority vote in Council - and, supported by the then Chief Executive who sought (in our view intentionally and deliberately) not to fetter the grant Fylde's majority party wanted to provide as a turnkey for the much bigger lottery fund grant.

We still believe what we had been told months before all this became public. That the plan was to generate a capital receipt to benefit Lytham Hall and Ansdell that would enhance the electoral prospects of the Conservative candidates in those areas. Unfortunately, this aim was soured when what they were doing to the residents of Melton Grove became known as the scandal it was.

But the Auditors report knows none of this.

They pick out some of the heads of terms for comment

"the grant was to be made as a single payment of £300,000 to HTNW."

Given there was no breakdown of the grant when it was awarded or paid, we wonder what basis FBC expects to use to judge whether a 'suitably itemised' schedule of expenditure had been complied with or not - even if one were to be provided by HTNW.

"HTNW had to submit details of how the Grant has been spent within the restoration project and ensure that the capital grant is allocated to the restoration project only."

Frankly this is a stupid matter to raise. Fylde has repeatedly accepted and resolved that they were satisfied on both these matters.

"HTNW would notify the Council immediately if the restoration project or the funding requirement changed."

We are not in a position to know what information was passed to FBC, except we do know that Fylde was aware of the Phase II revised bid - and thus by implication the changes to the funding - in May 2016 just before the revised bid went in. So as far as we can see HTNW met this condition.

"HTNW would repay the Grant to the Council in the event that the Heritage Lottery Fund contract terms for the Restoration Project are not delivered in terms of restoring the historic buildings and landscapes, sustaining investment in the long term through delivery of a management and maintenance plan and increasing usage of the facility through delivery on an activity development plan."

This is difficult to evaluate. From what we can see the £300,000 has been spent mostly on costs associated with the restoration of the historic landscape. There has also been a lot of work to develop a management and maintenance plan and to vastly increase the number of people at attractions and events.

It would be our view that far more than £300,000 has been spent on such work.

The Auditors have made a valiant attempt to quantify this matter but say it has not been possible to do so because the grants from various sources have not all been accounted for separately.

Fylde's grant of £300,000 (and we suspect other grants) carried no requirement for ringfencing to particular items. Fylde's grant was "made to the Heritage Trust for the North West for the Lytham Hall restoration fund" with no further analysis of what it should be used for. So it is not surprising that HTNW regarded the money given as match funding as one combined sum from which they could spend.

So whilst we don't believe that the Heads of Terms govern the use of the grant, even if we suspend our disbelief in this matter we see nothing of significance that is untoward so far as HTNW is concerned.

The Auditors conclude (at 3.5.3)

"... it is not possible to specifically detail how Fylde Borough Council’s funding has been spent. However, this needs to be balanced with the fact that considerable work has been done on the grounds at the Hall."

"HTNW had to supply sufficient information about its provision of the Services to enable the Council to assess compliance with the Performance Measures".

There is no doubt that this was done - as the annual monitoring reports to Fylde Council show.

 LOOKING AT EACH ISSUE IN TURN: ISSUE 5

5). Whether the Council has any grounds to demand repayment of the £300,000 grant awarded by Fylde Council in 2011

The Audit Report notes (at 3.5.1) that

"The Head of Terms provided by Fylde Borough Council for the funding for Lytham Hall clearly state that the £300k was a capital grant. However, the financial information provided shows that not all the money could have been spent on capital works but has been apportioned to contribute to all the costs identified in the HLF project."

Once again we make the point that this matter is being misunderstood. The term "capital grant" as we have already shown was simply an indication that it came from a capital receipt at Fylde and as such, it was subject to Fylde's Financial regulations when it was made to HTNW.

The minute awarding the grant carries NO requirement for it to be used only for capital spending at Lytham Hall. It says only that Fylde's grant was "made to the Heritage Trust for the North West for the Lytham Hall restoration fund" with no further analysis of what it should be used for.

In our view that resolution of the Council as set out in that minute overrides anything else.

The Audit report also says (at 3.5.2)

" Under the Heads of Terms Fylde Borough Council requires HTNW to:

... keep accurate financial records in accordance with good management practice and will make them available to the Council on request. The records
will in particular provide a clear audit trail of how any Grant has been used.

... provide the Council with a schedule of dates when any external audit of accreditation inspection of the services will be undertaken and provide the Council with a copy of any resulting report."

So far as we can tell, Fylde has seen the HTNW's accounts for the year ended 31 March 2015. These include the following statements

"Company law requires the trustee directors to prepare financial statements for each financial year which give a true and fair view of the financial position of the company during the year and of its financial position at the end of the year. In preparing those financial statements, the trustee directors should follow best practice and:

• Select suitable accounting policies and then apply them consistently;
• Make judgements and estimates that are reasonable and prudent;
• State whether applicable accounting standards and statements of recommended practice have been followed, subject to any material departures disclosed and explained in the financial statements;
• Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The trustee directors are responsible for keeping proper accounting records which disclose with reasonable accuracy the financial position of the company and which enable them to ascertain their financial position and to ensure that the financial statements comply with the Companies Act 2006 and the Charities Act 2011 and regulations thereunder.

They are also responsible for safeguarding the assets of the company and for taking reasonable steps for the prevention and detection of fraud and other irregularities."

So assuming their auditor does hold the opinion that they are a true and fair view, we imagine the first part of 3.5.2 has been met. We also understand Mr Miller has offered to provide further information on how the grant was used once the accounts for the Lottery Project are finalised.

And we imagine he will also be able to meet the requirement about external audit at the same time.

 THE WEAKEST PART OF THE AUDIT REPORT

In what we regard as the Achilles Heel of this Audit report, and the part that best illustrates its desire to slant the presentation of information toward what FBC was hoping to receive, the (extremely weak) final paragraphs of the Audit Report say

"3.5.4 We also note that how the grant was being spent had previously been reported to the Council on:

• Cabinet – 27th June 2012

• Cabinet – 15th January 2014

• Tourism and Leisure Committee – 12th November 2015

3.5.5 At each of the above meetings it was resolved that the capital grant awarded to Lytham Hall was spent in accordance with the Heads of Terms.

That mealy-mouthed platitude at 3.5.5. is the whole extent of what this audit report has to say about the three detailed reports that were presented and which we have expounded in detail above.

For us, this weakness devalues what we otherwise regard as some good - if incomplete - investigatory work.

Readers can follow this link to download the full T&L Report for this Thursday's meeting, with the full Auditor's Report appended

 CONCLUSIONS AND ANALYSIS

It's clear to us that the former Chief Executive became persuaded for one reason or another that Lytham Hall should get £300,000 from the Council. He then either decided to sell Melton Grove to fund it, or, rather, he fortuitively picked up a stalled sale plan from a year or two earlier and re-energised the sale, with the intention of diverting £300,000 of the sale proceeds to Lytham Hall.

He came close to 'moving heaven and earth' to make sure it happened. No administrative sleight of hand was too much of an effort to employ in order to generate the funding. On his watch, the sale of Melton Grove brought the greatest shame in the whole of Fylde's history upon the Council.

And when the Council was browbeaten into reluctantly handing over the cash, he made sure that the wording authorising its handing over required only the presentation of further information by HTNW in order to release the money. He was the person that prepared that form of words in the Council Meeting.

No councillor proposed those words. After much confusion over a range of amendments, he created the resolution and the Council was invited to vote on it without it having been properly proposed and seconded.

The Conservative majority did vote (23 to 17) for the grant and the wording that the Chief Executive had proposed.

Subsequently in June 2011 the further information requested by FBC appeared at a Cabinet meeting with David Eaves Chairing the meeting and Cllr Susan Fazackerley as Portfolio Holder for Leisure and Culture. It was she who "provided members of Cabinet with an update" on the matter. As a result they

"RESOLVED to confirm the acceptability of the additional information received from Heritage Trust for the North West on the restoration project for Lytham Hall, and that the financial support committed by the Council be released subject to the receipt of the capital receipt referred to in the report."

HTNW subsequently voluntarily agreed to accept a 'Heads of Terms' agreement which included a requirement for him to deliver an annual monitoring report and financial statement to FBC.

Those monitoring reports are explained above and with them we have provided the source documents as links.

There is no doubt that on each of those occasions occasion, the Council expressed satisfaction with how the grant and its spending was progressing.

 THE MOST SHOCKING REVELATION

But there is even more.

As recently as 23 May 2016, Fylde's Chief Executive wrote to HTNW's Mr Miller as follows

"Dear John,

RE: THE RESTORATION OF LYTHAM HALL

Further to our conversation about your application to the Heritage Lottery Fund for additional funding, I am writing to confirm that the Council is very supportive of the Lytham Hall project. We are delighted with the progress and particularly impressed with the transformation of the Park, and look forward to the completion of the next phase.

I confirm that the Trust has complied with all the reporting procedures regarding the grant of £300,000 paid to the Trust. Members have appreciated the opportunity you have given them to formally inspect the restoration on a number of occasions.

If you require anything further from me in support of the application for additional funds do not hesitate to contact me.

Yours sincerely,

ALLAN OLDFIELD
CHIEF EXECUTIVE"

Readers can follow this link to download a copy of that letter from FBC's Chief Executive Allan Oldfield.

 THE TRULY AWFUL RECOMMENDATIONS

We now invite our readers to join us and to share our complete incredulity that, after sending such a letter, a report in the name of that same Chief Executive makes the following recommendations to the Tourism and Leisure Committee this Thursday coming.

1. That Heritage Trust North West (“HTNW”) have failed to comply with clauses, 5, 8, 9, 14 and 22 of the Heads of Terms of the Lytham Hall Capital Grant agreement dated August 4th 2011.

2. That the committee has no confidence in the ability of the present leadership or management of HTNW to lead the Lytham Hall restoration project and request the immediate removal of HTNW’s Chief Executive from the Lytham Hall restoration project.

3. That the committee seeks reassurance, with supporting evidence, from the Heritage Trust North West Board that they have the capability and appropriate personnel to continue to deliver the Lytham Hall restoration project, in particular an appropriately qualified financial officer, without which the committee cannot have confidence in HTNW delivering the Lytham Hall Restoration Project.

4. That the management of the Lytham Hall restoration project includes separate and dedicated accounting and financial management from other projects being delivered by HTNW.

5. That the financial management arrangements include a separate capital account and that all accounts are submitted on an annual basis for inspection to all parties that have made a grant contribution.

6. That the Heritage Trust North West be required to provide an itemised list with costing of the capital initiatives that Fylde Council’s £300,000 has been allocated to and the amount of the grant that remains unspent, in accordance with Clause 5 of the grant agreement.

7. That should HTNW decline or be unable to take any of the actions set out above to ensure compliance with the terms of the council’s grant, the council will take such action as may be open to it (including legal action) to recover the grant.

8. That HTNW be requested to invite Fylde Council to nominate an elected member of as a member of its Board of Trustees.

9. That six monthly progress reports are provided to the committee by the elected member representative and the appropriately qualified financial officer responsible for the Lytham Hall restoration project.

10. The committee notes the continued challenge of the refusal to release the Moore Stephens report under the Freedom of Information Act and if it is made available that it is brought before the committee for consideration.

11. That the council reviews the protocols for capital grant funding of longer term projects to include milestone payment terms determined by set criteria as opposed to one off up-front payment.

12. That the Council, preferably with other funding partners, seeks the intervention of the Charity Commission to review the overall financial management and governance arrangements of Heritage Trust North West and its respective trading companies.

We believe that many of these recommendations are well outside the scope of the Terms of Reference of the Tourism and Leisure Committee that is being asked to approve them, and we argue they should not do so.

We are sad that, in order to deflect criticism from their own organisations, those involved have - in our view unreasonably and excessively - taken aim at Mr Miller and HTNW.

It may seem we are defending HTNW and Mr Miller here, and to some extent we are, because we do not believe all he is criticised for is justified.

But we are not blind to the fact that Mr Miller has shortcomings as well. His propensity to procrastinate, and his desire to micro-manage are troublesome traits.

That said, he does have is a terrific drive to see this project succeed, and a willingness to devote his time to its success.

We are entirely convinced that if and when he does leave HTNW, it will need at least three people to replace the work he does there, especially when you bear in mind that HTNW is managing not just Lytham Hall, but another 15 or so buildings as well, including large heritage centres and the restoration of Bank Hall on the Southport road.

But the saddest thing in all of this acrimonious mess - and it is a mess - is that the thing everyone should be focusing on - Lytham Hall itself - is being lost sight of in the recriminations and backstabbing that is taking place.

The people that should be working together to secure the best that can be achieved for Lytham Hall have forgotten what they should be doing.

 SO WHAT'S TO BE DONE?

Having done the research we have, there are a few measures we feel able to suggest.

In the end event, unless the hall is lost to a commercial use, or unless Fylde takes ownership of and responsibility for Lytham Hall and its funding, (and understandably, they have repeatedly refused to shoulder that financial responsibility), this remains a matter that the owner and the lessee must resolve between themselves.

The Town Trust is not able to manage the building alone. They seem to think a different CE at HTNW would sort it all out.

We don't think that's likely.

We think both LTT and HTNW need to press their 're-set' buttons.

They need to step back from the brink of an unfolding disaster, and start again.

So firstly, Fylde Council should gracefully back out, and withdraw all the recommendations from its Tourism and Leisure Agenda this Thursday.

It should replace them with a recommendation that speaks about the Council's willingness to support and encourage both Lytham Town Trust and the Heritage Trust for the North West to come together to work through any differences they may have out of the glare of publicity, and with the common aim of resolving the problems at Lytham Hall.

We suspect this process will involve accommodations by both LTT and HTNW, and we imagine it could well involve a re-negotiation of the lease (which is clearly not working as LTT want at present), and that re-negotiation should give LTT more influence over what happens to the hall and grounds, and it should relieves HTNW of some of its financial responsibilities for maintenance of the property - at least until the restoration is completed and the building becomes watertight, weathertight, and has a sustainable income source.

In short, we think the relationship between LTT and HTNW needs to be more of a partnership with shared responsibility for success than one of owner and lessee

We don't know if this can be achieved.

We can only hope that it, or something like it, can.

Dated:  6 March 2017

*  UPDATE: 7 March 2017
We have been advised today by a member of LTT that our recollection about parts of Lytham Green being owned by LTT is not correct. We are obliged for this information and we have corrected it - as we will always correct-  any factual error in our articles when it is brought to our attention.