17 June 2022 Follow me @LindaDerrick1 Facebook Linda Derrick for Ridgeway East I am going to warn you upfront that this blog is pretty boring. It is an attempt to explain why HPC has not been able to pay its bills over the past months. I know that a lot of people and organisations, some of them small companies, have had to wait a long time to be paid by HPC. Some still have outstanding invoices with the Council. Many have continued to provide their services nevertheless.
So the first thing I have to say, as a councillor, is I apologise for the difficulties you have had because HPC has been unable to pay its bills. And thank you for your patience and forbearance. Without your patience and forbearance, this Council would have gone under. I am going to start my account around 10 years ago when I was previously a councillor because this colours my reaction to what is happening now. About 10 years ago, the then Clerk defrauded the Council of about £28,000, A few years later, when I first joined the Council, the fraud was still causing anger and a vast amount of work for councillors.
One of the councillors wrote an excellent report setting out how the Clerk was able to commit the fraud and what lessons Council should learn. He said “the fraud was able to happen due to complacency and inadequate controls” and the lesson, which should be permanently learnt by Council was that “proper Council financial controls are recognised as an essential part of Council activity”.
I was therefore sad to see last year when I re- joined the Council that the lesson had been forgotten.
Paragraph 5.2 of HPC’s Financial Regulations (at Fin-Regs-April-2018-formatted.pdf (hughenden-pc.gov.uk) require the Responsible Financial Officer (normally the Clerk) to prepare a schedule of payments for authorisation,from the Council and include it in the Council’s agenda.
Council then approves the schedule (or not) and the schedule of approved payments is included in the minutes of the meeting.
This means that everyone – Council, creditors and other members of the public - can see what Council is to approve and what Council did approve.
That is what happened when I was a councillor before. However, somewhere along the way that stopped happening.
So onward to March 2022
At the beginning of March, the Council had lost all but two councillors and become inquorate. It then had gained 8 councillors and become quorate again. However, both the Clerk and Deputy Clerk had resigned and left.
HPC’s bank requires three authorised people to make payments. The first (usually the Clerk) inputs the payments. The second and third (councillors who are bank signatories) independently check that the payment has been approved by Council and that there is an invoice or similar matching the payment.
However, with no staff, no-one was authorised to input payments and there was only one bank signatory – Cllr Kearey.
Council quickly realised it could not pay its creditors.
11 January schedule of payments
The first job was to find the last schedule of payments that Council had approved. As I said, Council had stopped putting the lists in the agendas and minutes as required by the Financial Regulations.
I eventually found the schedule from my papers as Appendix 22 of the Council meeting on 11 January.
Then came the problem of making the payments from HPC’s account.
An application to make me a signatory in early February was rejected by the bank as it needed two signatories to sign the application form. We didn’t have two signatories. The rejection was e-mailed to the Clerk’s account to which Council no longer had access. So, no-one realised my application had been rejected.
Eventually, the bank was persuaded to accept me as a signatory but this took until 9 April.
Cllr Kearey and I were then able to release outstanding payments approved on 11 January for which we could find invoices. There were only 5 of these.
9 May schedule of payments
Council still had no-one to input other outstanding payments. Council appointed a locum Clerk on 6 April and, when I became a second signatory, Council was able to ask the bank to authorise her to input. She had prearranged holidays so she could not start inputting until May.
Meanwhile, the locum Clerk had to compile a new schedule of outstanding payments for Council’s approval. This meant working with the company which provides HPC with a bookkeeping service and finding the outstanding invoices and other requests for payments.
Eventually, Council authorised a new schedule for payment at its Council meeting on 9 May. This schedule should have been included in the agenda so there was clarity and transparency (see above!) but wasn’t. 2 schedules were presented to Council and there was confusion as to which was approved.
I was particularly keen for transparency as I and another councillor were HPC’s creditors. Needless to say, it is bad practice for councillors to pay for Council services from their personal accounts but we were forced to do so when Council could not make immediate payments.
I could also see that I would have to authorise a payment to myself. Needless to say, that is very bad practice and I wanted this to be in the public domain.
Cllr Kearey and I then started to authorise the release of payments from the bank account. Unfortunately, some of the payments input did not match the payments approved by Council and some did not have an invoice or had a different amount on the invoice. It took 4 sessions and hours of work to align the input payments, the approved payments and the invoices.
It was only on 13 June that all the payments on the May schedule were sorted.
14 June schedule of payments
Council had another schedule of payments on 14 June for approval. This schedule was not included in the agenda either. Neither was the schedule approved by Council on 9 May included in the draft minutes of that meeting. So, there is still not transparency or clarity.
Of the list of 35 payments approved by Council, I have only been able, as of this morning, to authorise 17.
I make no comment about the position the Council was put in in March. However, I will say that HPC’s payment process is inefficient, opaque and vulnerable (particularly to Cllr Kearey or me falling under a bus).
The procedures for payment are being reviewed by the Finance Committee and other councillors will hopefully become signatories in the coming weeks. So, things should get better.
Once again, I am sorry for the difficulties HPC has caused to its creditors and a big thank to all of them who have shown such patience.