Mayor Dr Nik Johnson met with Cambridgeshire Chief Constable Nick Dean three times – most recently last month – to press for a police investigation into historic irregularities in the Cambridgeshire and Peterborough Combined Authority’s allocation of multi million pounds loans for housing.
Any such investigation will be informed by the findings of independent auditors commissioned by the Combined Authority who have found “significant weaknesses in the governance, audit trail and control framework in place, leading to risks around value for money and reputational risk”.
Unfortunately, as the audit says and put simply, multiple emails and documents have disappeared, Mayoral decision notices not found, and huge gaps exist in record keeping – and without these the auditors, in many instances, have been left scratching their heads.
You can sense the frustration of the auditors throughout their report.
In one section, for instance, detailing discrepancies in tracking down timelines and decision making on a loan to private house builder Laragh Homes, they refer to “potentially multiple implications” of the scant and conflicting circumstances surrounding loan approval such as:
1: Decisions may have been taken without adequate rationale.
2: The process “did not follow principles of good government, specifically the decision was not reported through the CPCA board (against the advice of the then monitoring officer
3: The Mayoralty Decision Notice was only draft.
4: The Mayoralty Decision Notice was incomplete.
Such behaviour, says the auditors, “increases the risk of reputational damage to the Combined Authority due to poor governance and wider risks relating to value for money. The audit trail of the decision-making is also insufficient”.
Mayor Johnson says the report by RSM reveals evidence of widespread areas of concerns relating to the period before he took office and when the Combined Authority provided loans to Laragh Homes to help in part deliver affordable homes and £100k homes policy of former Mayor James Palmer.
Dr Johnson said on becoming Mayor he was approached by residents of Wilburton who raised concerns about a ‘statement of community benefit’ being used to support a speculative bid to build 115 homes in the village, 35 of them being allocated for affordable homes.
Laragh Homes had teamed up with the Stretham and Wilburton Community Land Trust, chaired by former deputy mayor Charles Roberts to win consent for the homes.
Dr Johnson said there was a “clear conflict of interest” between the Community Land Trust and the Combined Authority in that Mr Roberts (also a former leader of East Cambridgeshire District Council) was also chief of staff to Mayor James Palmer.
The letter had to be withdrawn, and four years later East Cambridgeshire District Council rejected the application for failing to satisfy planning requirements.
It paved the way for an inquiry, championed by Mayor Johnson, into Laragh Homes and the Combined Authority, particularly focused on the awarding of numerous loans on favourable terms with the expectation of delivering a small number of £100k affordable homes and profit sharing on each development.
https://twitter.com/lornadupre/status/1899054279488315467
Mayor Johnson said that no profit share agreements were signed despite the Combined Authority board at the time being assured this was a key element in the arrangement.
Loans via Mayor Palmer’s ‘revolving fund’ also included £23.5m to East Cambridgeshire District Council to redevelop the former MoD homes in Ely and a profit sharing agreement was also drawn up for that; it never happened. But that loan was not in the brief given to RSM to investigate.
It was principally the loans to Laragh, now in voluntary creditors’ liquidation and with huge indebtedness, that RSM focused on.
Palmer’s ‘revolving fund’ took up to £40m of the £100m allocated to the Combined Authority to deliver 2,000 affordable homes but later prompted the Government to express its concern about the arrangements and to halt all funding to the Combined Authority for housing.
Mayor Johnson said: “It was clear to me that the Department of Levelling Up, Communities and Housing had also previously raised significant concerns about the wider expenditure of millions of pounds by the Mayor and his officer team across the housing sector.
“And in particular the use of low interest loans and favourable financial support to commercial developers leading to an unnecessary and unwanted development driven from the start by the developer but dressed up under the Community Land Trust (CLT) badge.”
The Mayor said he first raised his concerns with the Chief Constable 18 months ago and a new team of senior officers at the Combined Authority began to recognise and understand the concerns he had expressed.
“This outcome was the first sign of progress working with new officers confirming to me my concerns about the irregular and concerning actions of previous CPCA officers,” said Mayor Johnson.
Ministerial letters, he discovered, were sent to the Combined Authority “but not fully scrutinised”.
Mayor Johnson says the RSM report confirms that the CPCA “lost considerable sums of money in two inexplicably altered loan arrangements” for Ely and Great Abington which removed plans from profit sharing for housing schemes by Laragh Homes.
The audit also questions why a third loan to Laragh, of £9.6m for homes in Histon Road, Cambridge, had no mention of profit sharing, even though the precedent had been set for the others.
The auditors also focus on a £340,000 grant from Homes England to the Combined Authority to progress 115 homes at Wilburton. The grant was handed over to the Stretham and Wilburton Community Land Trust but within days Laragh received most of it.
“There is no record/audit trail and no evidence of formal approval from an officer, committee or member,” said Mayor Johnson.
“This is serious stuff and all at same time as developing a ‘statement of community benefit’ which was unrepresentative and clearly implied CPCA support for the development. A very important question here was who the landowners were and who was influencing the East Cambridgeshire District Council planning committee to think this was even a possible idea.”
Mayor Johnson added: “Possibly one of the reasons I am so angry about this is because it is clear that there were whistleblowing CPCA officers – good people – in this organisation who were close to these behaviours and were telling senior officers at the time from at least March/April 2022 onwards.
“I am upset because this is also exactly at the same time, I was highlighting similar concerns – starting as far back as July 2021 – but again the most senior officers at the time were all unwilling to take my concerns seriously and investigate.
“In summary, they knew what had happened, they knew who was responsible and either by direct action or omission, they took it upon themselves to cover it all up.”
Mayor Johnson added; “There are many reasons I am so very vexed and agitated but apart from anything for a Conservative candidate (Paul Bristow) to be going around talking about the £100k homes scheme in glowing terms and advocating a potential catastrophic return needs all the facts and evidence of its sewer like clarity to be in public.”
So, let’s turn again to the findings of the audit, and we will focus on the proposal by Laragh Homes, in conjunction with the Stretham and Wilburton Community Trust, to build homes at Camps Field, Wilburton.
The audit reveals that Emily Mulvaney was an employee of the Cambridgeshire and Peterborough Combined Authority (CPCA) who went “above and beyond her role” to secure a Government grant of £342,630 for development costs for the Wilburton project.
Ms Mulvaney was initially employed by East Cambridgeshire District Council in 2016 as a Community Land Trust adviser and in March 2018, became the council’s community housing programme manager.
A structural review the following year saw her become an employee of the Combined Authority in December through to September 2021, before she left to become development manager for Laragh.
Her actions whilst working for the Combined Authority are included in the audit report although there is no suggestion of any impropriety, simply astonishment that she was given so much leeway to act without effective oversight.
In a stinging rebuke to the leadership of the Combined Authority throughout that period, RSM say: “The residential development manager informed us that the community housing team effectively worked in silos, with little or no robust oversight and their role was unclear to members of the established teams in CPCA.
“We identified that when Emily Mulvaney was the East Cambridgeshire District Council community housing programme manager she applied for a grant from Homes England (a Government agency to encourage housing) on behalf of Stretham and Wilburton Community Land Trust (SWCLT) commencing the application around October 2019.
“We reviewed a draft application/ bid document dated October 3, 2019, that showed the total grant application value of £342,630 across two projects. Subsequent review of a letter addressed to Emily Mulvaney (representing SWCLT) confirmed revenue funding totalling £342,630 was awarded to SWCLT from Homes England subject to due diligence checks.”
But the money did not remain with SWCLT because the auditors said that Laragh Homes invoiced the community land trust for predevelopment costs for the joint application to develop the 47 acres of land at Camps Field, Wilburton, for 115 homes.
RSM says: “Through review of invoices this demonstrates Laragh had invoiced SWCLT for the costs.
“We were informed by the residential development manager that Emily Mulvaney completed this application without evidence of formal approval by any member of the CPCA or documented decision made by a senior officer and without oversight from the relevant executive director.
“In addition, we found no formal agreement in place between SWCLT and CPCA for this purpose”.
The auditors add: “There has been no evidence provided to substantiate that this was approved by anyone in the CPCA (and it was CPCA who received the grant funding.
“We were advised by the residential development manager that in doing this, Emily Mulvaney had gone above and beyond her role. “
The auditors say they would have expected to have found “evidenced approval from either an officer, member or committee” but could find none.
Between December 2019 and March 2019, Laragh were paid £316,203 (inclusive of VAT) from the £342,630 awarded to the land trust for two schemes.
RSM conclude: “We would expect, as a minimum, that providing this level of support for the Community Land Trust and contributing to the financial costs of Laragh Homes, via the Homes England bid, in this manner, evidence approval from either an officer, member or committee, would be a requirement.
“There is a risk that the council could suffer reputational damage if an employee worked too closely with contractors and/or a grant or bid was administered inappropriately.”
Touted as a being ‘community led’ most villagers opposed it and after 4 years of wrangling, East Cambridgeshire District Council called time on the application last April.
Laragh Homes finally saw their plans for 115 homes on 47 acres of arable land at Camp’s Field, south of Stretham Road, Wilburton, ditched after an intervention by East Cambs planning officers warned time had run out to get the application in order.
Auditors’ report reveals ‘irregular, unprofessional activities’ with Laragh Homes loans
In essence the plan for Wilburton sounded promising, with 35 houses out of the 115 to be owned and administered by a community land trust.
Those 35 homes would be available for local people at affordable rents and would be built and paid for through the planning gain on the field with the developers using the market price homes to cross subsidise the community land trust homes.
But many villagers were never convinced of the wisdom of increasing the village housing stock by over 20 per cent on a field well outside the village envelope.
Questions began to be asked. Not because CLTs of themselves were considered a bad thing, but the scale, machinations, and seemingly ruthless pursuit of this particular scheme in Wilburton rang alarm bells.
RSM also dug into the loans to Laragh to turn offices at Alexander House, Forehill, Ely, to flats and for a housing scheme at Great Abington.
Investigations found both had initial agreements in place for a profit share scheme and, says RSM, surprisingly a third loan to Laragh for a housing scheme at Histon Road, Cambridge, did not.
On Alexander House – now known as The Tannery – auditors says the profit share agreement disappeared during discussions to change four affordable homes with four £100k homes.
East Cambridgeshire planners ‘heavy-handed and combative’ over 115 homes plan
The head of finance wanted the interest on the loan to Laragh upped from 3.29 per cent to 4.9 per cent to reflect a diminution in the likely profit for the Combined Authority by the changed arrangement. Auditors found an ‘URGENT’ instruction for him to put it on hold and nothing more could be found to explain it.
A later finance report projected an overall profit for Laragh of £822,000 of which the Combined Authority would receive £379,000.
RSM says: “The numbers were based on anticipated profit values however a final cost report was provided to CPCA staff by Laragh Homes which shows an overall loss for the development of £248,000 which therefore suggests CPCA profit share for Alexander House would have been £0”
At Great Abington a limited number of emails could be traced by auditors, and these found discussions about alternatives to profit sharing with Laragh being discussed “however the rationale and reasons for this was not clear from the emails provided”.
Expected evidence of board approval for the changes were not found in a search of CPCA minutes and it was not clear who made the decision to withdraw the profit share agreement.
Concerns were raised about Laragh wanting to ‘dilute’ the profit share proposals but in the end auditors could not conclusively show who or why it was pulled. The Combined Authority’s potential loss was £273,000.
“Record keeping has been very poor,” says RSM. “If a Mayoral decision note was completed for the Great Abington site, this was not shared and not retained centrally to provide a full audit.”
The report adds: “The total profit share foregone by the CPCA for the two sites amount to between £490,000 to £358,000 for Alexander House and £250,000 to £320,00 for Great Abington.”
Officials quizzed about these “were not fully aware of the reasons why the CPCA agreed to foregone the potential profit share”.
A £9.637m loan to Laragh for a site at Histon Road, Cambridge, for 27 homes, some affordable, was never considered for profit sharing, so far as RSM could see.
Concerns were raised by internal audit in 2023 and RSM say they informed by the staff who commissioned their report that “members were suspicious of the risk of irregular, unprofessional activities and working arrangements between the developers and the Combined Authority”.
Footnote 1: Mayor Johnson will not be standing for re-election in May. “I now recognise that the path to a second mayoral term is just one step too far for me,” he said. “I’ve loved being mayor, I’ve done everything I set out to do, and as much as I want to continue, for my own and for my family’s sake, I know that I have to step away.”
Footnote 2: The RSM report will be reviewed by the Combined Authority on March 12 at its overview and scrutiny committee
Footnote 3: Our story will be updated once Freedom of Information requests to Homes England have been answered
Footnote 4: Terms of the loans made by the Combined Authority to the trading arm of East Cambridgeshire District Council will feature in a future article.
Footnote 5: If you are a creditor of Laragh and would like to get in touch please email john.elworthy@cambsnews.co.uk or via social media
6: CambsNews has invited Chief Constable Nick Dean to comment on the meetings he has held with the Mayor Dr Nik Johnson
7: My Freedom of Information request to Homes England
1: According to Cambridgeshire and Peterborough Combined Authority on October 3, 2019, a grant application was made to Homes England for a total of £342,630 for pre-development costs across two projects in Cambridgeshire. May I have a copy of that application,
and all documents associated with that application?
2: Can you confirm who submitted the application (ie the senior executive/chief executive/Mayor)?
3: I understand the money was subsequently paid to the Cambridgeshire and Peterborough Combined and, presumably, handed over to the Stretham and Wilburton Community Trust on whose behalf I understand the application was made.
4: However I also understand that a private developer, Laragh Homes (now in voluntary creditors’ liquidation), subsequently invoiced the Community Land Trust and received, in 2 payments, a total of £316,203 to develop a site in Wilburton, Cambridgeshire. Were Homes England aware of this transaction and content with how their grant to the Combined Authority was dispersed? (The development never materialised)
5: There was no formal agreement in place between the Combined Authority and the Stretham and Wilburton Community Land Trust for this to happen.
6: Can you confirm if at any time any employee of Homes England declared a beneficial interest in any of the land that was to be developed at Wilburton?
7: Were Homes England aware that a supposed statement made by the Combined Authority at the time of a ‘statement of community benefit’ used by the Combined Authority in the planning application for this scheme was shown to be erroneous as the proposal did not have community support in any way shape or form. Indeed, the statement had to be withdrawn from the planning portal of East Cambridgeshire District Council
