Concerns over covid grants to care homes
Questions from auditors over whether grants awarded by the former county council were spent correctly
By Sarah Ward
The final accounts of the former Northamptonshire County Council have not been finalised by auditors partly due to concerns over the management of covid grants.
Auditors Ernst & Young say they have identified a ‘control weakness’ in the former authority’s handling of coronavirus grants.
The concerns centre around £18m given to the council by central government to support care home providers during the pandemic in 2020. This money was then passported into the county’s care home providers to help them pay staff when they had to self isolate and to get rapid testing into the homes for the safety of residents.
The final accounts for the county authority relate to the financial year 2020/21, as the former council closed down on March 31 2021 on government orders after years of mismanagement had led it to go bust.
A note in the audit, which went before the West Northamptonshire Council audit committee at the end of last month, (but has not been put on the agenda of the North unitary), says:
“Our work to date identified a control weakness concerning the Council obtaining confirmation from grant recipients that funding had been correctly used. This is a condition attached to the grant. The total value of the grants is £18 million.
The Council is carrying out further work to demonstrate that the grants were used for the purposes intended and are not therefore owed back to the Government Department. If the Council is not able to support compliance with grant conditions, a creditor will need to be raised in the financial statements for amounts owed back to the Department.”
A statement given to NN Journal by West Northamptonshire Council said:
“We are awaiting for some returns from the organisations who we provided government funding to to help tackle the pandemic. The auditors are flagging that if the returns are not received then the Government department may need the funding to be returned. This is the issue they are raising. We are discussing with the Government department.
“Furthermore, if the outstanding returns are not received we would pursue the relevant organisations for return of the grant. So, in any event the impact is likely to be neutral.
“The issue relates to NCC not WNC but if there was a requirement to repay it would have to be netted off the cash balances that are due to come across to West and North Northamptonshire once the final audit of the accounts for 20-21 are complete.”
The £18m under scrutiny relates to just under £15m given to the council as part of the infection control fund (given in two tranches in May and November 2020), £2.1m which made up the rapid testing fund and £1.4m in the workforce capacity fund.
At the time of giving the money to the then very under pressure care homes (many of which were dealing with covid outbreaks which led to many elderly residents dying) the local authority made a statement on the funding, which said:
“The council is responsible for validating it has been used for those purposes and not fraudulently claimed and it is liable for any incorrect payments which will be clawed back by government - therefore if at any point the authority reasonably believes that the funding is not being used for infection control purposes, we have to withhold further payments until satisfied this is not the case.”
During the pandemic local authorities were told by government to administer a whole range of grants to help people and businesses withstand the health crisis - from small business grants, to money to voluntary groups and charities to help set up groups to combat loneliness, as residents were confined indoors under lockdown conditions for many months.
Despite receiving £93.2m of covid-related funding in its final year before it was closed down, the county authority has never provided a comprehensive report on how the huge sum was spent.
A look through financial papers says the authority did not spend £37.1m of the money it received - and the money was divided by the two new unitary councils which replaced the county councils in April 2021.
The new councils decided last year to no longer host the agendas and minutes of the former county council online, making investigations into how the money was spent extremely difficult.
Neither of the two new unitary authorities have written comprehensive reports on how the covid funding was spent by them in the most recent (2021-22 financial year).
While the county council auditors say their work is ‘substantially complete’ other issues affecting the auditors’ conclusions of the authority’s final accounts include the valuation of former headquarters One Angel Square in Northampton, a review of renegotiated Shaw PFI contract and pension scheme liabilities. The audit committee decided to delegate the sign off of the former county council’s final accounts to West Northamptonshire Council’s director of finance Martin Henry and the chair of the audit committee, Cllr Cecile Irving Swift.
Concerns over how public money was spent during the pandemic have been levelled at national government, with claims some businesses with links to the government received contracts unfairly.
In January the Conservative government confirmed it was going to write off £4bn of funds allocated to the various coronavirus help schemes, a move which was severely criticised by the opposition.