COUNTY HALL: Audit all of the options

An open letter to Northumberland County Council chief executive Steven Mason.

There was a clear understanding that there would be a full council debate on the single issue of the new County Hall project on December 2, at which we would have had the opportunity to question in public some of the claims which have been made to try to justify this scheme.

My group deplores the cancellation of this debate and considers that this is a clear attempt to avoid challenge, so hiding away from public scrutiny. I find it impossible to believe that this unnecessary move of the headquarters building is either efficient or commercially justified.

Many members of the public across Northumberland have expressed fundamental concerns with regard to the way that the County Hall project has been commissioned. With a construction cost rising to over £40m and a lifetime cost in excess of £60m for the building, it is only right that the council and taxpayers should be fully informed in an open and transparent manner about all matters leading to this important decision, which will have repercussions on the council’s operations and finances for years to come.

A number of claims have been made which my Conservative group has fundamental issues with. For example, the initial GVA ‘options review’ did not include the interest costs on the borrowed capital and we now find that the cost of servicing the borrowed capital amounts to a significant sum, £29.32m on top of the total build cost.

However, as the last few months have brought very substantial changes to the proposal, and as there are still many fundamental issues which have not been resolved, my group has made it clear that there should be an independent review looking at all aspects of the ‘business case’.

We do have serious reservations with regard to a number of the claims which have been made to try to justify this capital spending.

1. There is the issue of the need for change. There is an unjustified claim that it is necessary to spend a sum of £12.38m on the existing building. Although this amounts to a near total rebuild, there is no basis for this as there has been no structural survey to act as a basis for any estimate. This figure of £12.38m we find to be extremely misleading.

2. As it is the council’s aim to move a number of staff to premises in the market towns, there should be even less of a need to invest in expensive new facilities in the corporate centre.

3. The original ‘options appraisal’ that the council is relying on in the decision making process does contain a number of flaws. The lack of any allowance for the cost of capital is clear and this would have altered the figures significantly.

4. The operational and planned maintenance costs of the existing County Hall seem to be exaggerated. The claimed need for all-new furniture is questioned, as well as the £4.73m figure for ‘relocation costs’ and, if the existing building is large enough, why make an allowance of £1.65m for ‘off-site archive storage’?

5. The options were not originally considered on a like-for-like basis. So the existing building with the capacity to house up to 1,400 staff is being compared to one for 1,000.

6. Indeed, if the council was to relocate its headquarters, other geographical possibilities in Northumberland, such as Cramlington, should have been considered and scored against factors which would provide the most effective operational environment for the council.

7. In terms of the final proposal, my group is concerned about project cost inflation and, in light of recent experience, we have doubts about whether the building will be delivered within the given budget. In addition, we do not consider that the full costs of relocation to a new site have been provided, with an allowance of only £275,000 for such a large move and no HR-related costs.

8. The need to rationalise the various council office buildings in Ashington is understood. But those projected savings cannot just be claimed by one option only. Surely any savings in this regard are general and should apply equally to all options, including remaining on the existing site where spare space would be provided. There is a bias in the figures amounting to £12.98m as a result of this one assumption.

9. There remains a lack of any clear, defined plan for the use of the existing County Hall site. There is no sign of public support for any of the current proposals and no indication of the significant financial burdens which may be undertaken by the council as a result of these proposals.

10. Finally, a project of this size should certainly be subject to an open and transparent procurement process. It is not satisfactory for this to be done in a way which may not provide value for money for the taxpayer. The decision is to place the entire contract in a cosy, behind closed doors arrangement with Arch, without any form of competitive process. Even though this company is wholly owned by the council, it is not at all clear that the claimed Teckal exemption will stand up to legal challenge.

I understand that there is general agreement within the council to undertake a full external audit review of the whole decision making process regarding the new County Hall project.

I would only request that this is carried out by a senior audit partner with significant commercial experience.

I have outlined the main issues which need to be looked at, however I look forward to reviewing all of the information line by line with the external auditor once the review is under way.

As, in the view of the Conservative group, the entire proposal for a new County Hall is based upon a premise that has not been adequately justified, it is now essential that all of the options in a potential relocation are subject to a full external audit.

Coun Peter Jackson

Leader of Northumberland Conservative Group