Oral - Communities First

Over recent months, the Assembly Government’s internal audit service, jointly with the Wales Audit Office, has undertaken a detailed investigation into the affairs of the Plas Madoc Communities First partnership in Clwyd South, in the Wrexham county borough. That work is now complete, and I have been briefed on the findings. The report will be published shortly by the Assembly Government and the WAO within the next few days, in line with normal arrangements for publishing reports.

I am making this statement today, ahead of the report’s publication, in view of the public interest and media speculation surrounding the findings. I am particularly concerned to quash mischievous and unfounded speculation that this report signals the end of the Communities First programme, which plays a vital role in supporting our most deprived communities across Wales.

The audit report makes disturbing reading. It identifies serious and widespread weaknesses in the financial control and governance of the Plas Madoc partnership. It is critical of the failings of the partnership board and of the improper actions of individual members. I want to state quite clearly that I deplore the deliberate actions and the omissions of oversight and stewardship that have led to public funds being diverted from the overall intended purposes of the programme. I am sure that other Members, like me, will wish to condemn the behaviour of those who have put personal gain above the benefit intended for local people in one of the most deprived communities in Wales.

In considering what went wrong, it is necessary to set the failings of Plas Madoc in context. Plas Madoc is one of 157 Communities First partnerships across Wales. Of the total £47 million that was invested in Communities First during 2009-10, around £480,000 has gone to Plas Madoc. The specific audit concerns relate to the financial mismanagement of a small proportion of the funding routed through the Plas Madoc partnership to those funds available for spending at local discretion and internal management purposes. There is no suggestion that the majority of the funding awarded has been used for purposes other than those intended, and a wide range of important services has been delivered to the local community, including support for local children and young people, in particular. In general, these services have been provided to a high standard and are valued by the community. I am anxious to keep those valued services delivered there, and I shall make a further statement on the future of those services when the report is published.

The formal independent audit certification upon which the release of Assembly Government funding rests has been satisfactorily provided for each of the three years during which the Plas Madoc partnership has been a direct grant recipient. In accordance with normal practice, that has triggered ongoing payments of approved grants to the partnership.

I want to offer my reassurances to all the other partnerships of the Communities First programme. It has been suggested that the failings of the Plas Madoc partnership can be generalised across the wider Communities First programme. Those suggestions are not made on the basis of any evidence of which I am aware. Indeed, I am sure that other partnerships will be very keen to distinguish themselves from the behaviours evident in Plas Madoc. Those genuinely working for the benefit of disadvantaged communities in Wales can be reassured of my support. However, while I wish to see investment in the Communities First programme continue, I will be requiring specific additional assurances from partnerships that their financial management and governance arrangements are robust before committing further substantial funding to them. My department has already begun the process of securing additional assurance by putting in place detailed checks of the financial control and governance in all partnerships.

The action that I am announcing is a proportionate response to the reputational damage to the programme caused by the failings in Plas Madoc. I expect the great majority of Communities First partnerships and their respective grant recipient bodies to be able to satisfy me in this regard, and they will want to do so promptly.

Members will be aware of other reviews and reports relating to Communities First. A review of the robustness of the governance framework for the Communities First programme was initiated last autumn. As a result, I have asked my officials to undertake a programme of detailed and urgent audit inspections of partnerships. I want to be assured that the failings in Plas Madoc cannot be allowed to happen again. Therefore, I will take a close interest in this work and will make a further statement to the Assembly when it is completed.

In addition to the audit of partnerships, we are implementing a further series of actions to strengthen financial control and governance arrangements, responding to failings such as those seen at Plas Madoc. Actions are already in hand to test and provide reassurance about arrangements in place across the programme. I am writing to the chairs of Communities First partnership boards, drawing the Plas Madoc report to their attention and reiterating the importance of adherence to the high standards of conduct in public life that I expect. My department will follow that up with formal guidance to ensure that there can be no question but that the importance of adherence to these standards, the Nolan principles, is understood by those involved in delivering and supporting the Communities First programme. I will inform the Assembly when that further audit work on other Communities First partnerships is complete.

Members will also recall that the Public Accounts Committee recently published a report on Communities First, and the Assembly Government will be responding to that shortly. That report dealt not with detailed issues of management and propriety within partnerships, but with the impact of the programme in achieving improved outcomes for people and communities. Let us not forget that, across Wales, Communities First is delivering for local people, providing valuable services such as childcare, youth activity, help into work, and much more to people in our most deprived communities. Many of you will know that well and will value that work in your own areas.

The steps that I am announcing today provide a proportionate response to the failings identified in the Plas Madoc partnership and will secure and strengthen good financial control and governance across the wider Communities First programme. The Assembly Government remains fully committed to ensuring that the most deprived communities in Wales are supported, and is fully committed to improving outcomes for the people who live there. I will not be deflected from that objective by the failings of a few individuals or a partnership that sullies the reputation of others through its deplorable actions.