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External auditor sounds alarm at Cambridgeshire and Peterborough Combined Authority

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Employment related claims could see the Cambridgeshire and Peterborough Combined Authority (CPCA) unable to meet its statutory obligations.

That's the dire warning sounded by an external auditor as he starts an audit of the authority's finances for the past year.

In a letter to John Pye, independent chair of the Combined Authority's audit and governance committee, auditor Mark Hodgson from Ernst and Young, said: "We have commenced our audit work for the financial year ended 31 March 2022 and have identified a significant weakness in Cambridgeshire and Peterborough Combined Authority’s governance arrangements.

Cambridgeshire and Peterborough Mayor Dr Nik Johnson. Picture: Keith Heppell. (57197274)
Cambridgeshire and Peterborough Mayor Dr Nik Johnson. Picture: Keith Heppell. (57197274)

"We believe this weakness is pervasive as it could lead to a significant impact on the quality or effectiveness of services or on its reputation and could expose the authority to financial risk or loss."

He then goes on to list five areas that have raised those concerns and they are:

• Investigations into key individuals in the mayor’s office following a whistleblower notification;

• Increased number of employment related claims against the Authority;

• Current vacancies in the Authority’s senior management team, particularly at Chief Executive level, and the prospect that this could increase further from July 2022;

• Weaknesses we have observed in how the extraordinary meeting of the Authority Board makes informed decisions; and

• That the nature of the whistleblower allegations and initial findings of independent investigation reports raises significant questions on the culture, behaviour and integrity of key individuals in the mayor’s office.

The letter points out the Combined Authority Board has already agreed a settlement package for the current chief executive, Eileen Milner, who resigned her post within months of taking office. The amount paid to her has not yet been made public.

It continues: "There is the potential for further employment related risks against the authority, which pose a significant financial risk."

That is because the authority mainly has funding for the projects it was set up to drive through, but not a huge amount of income to pay for revenue costs, including staffing.

Mr Hodgson said: "These risks equally have the potential to significantly impact the authority’s senior leadership capacity, which is already undermined by previous resignations and unfilled vacancies at management team level.

"The Authority could find itself without incumbents to statutory officer posts as from the 1 July 2022, without immediate and urgent action, and even with such action, one would have to question the nature of such appointments at short notice."

And Mr Hodgson warns:"Without appropriate leadership capacity with the requisite skills, knowledge and experience, there is significant doubt as to the authority’s ability to discharge its statutory obligations."

Action the Combined Authority must take, he said must include: "Addressing the significant employee related matters emanating from the whistleblowing notification and ensuring that all authority employees are appropriately safeguarded is of paramount importance.

"The authority also needs to be mindful of the impact that implementing these safeguarding actions has on the senior management employees taking those actions."

In response to the letter Mr Pye wrote to Cambridgeshire's Mayor Dr Nik Johnson and urged him to consider cancelling today's (Wednesday) annual meeting of the Combined Authority, however that request has been ignored and that meeting is going ahead.

Mr Pye suggested it be deferred because he said: "The timing of the meetings scheduled for this week is unhelpful, when the focus should be to think through the CPCA’s steps and actions in response to the external auditor’s conclusions."

He also pointed out that the issues raised by the external auditor: "Are serious, systemic and need the CPCA’s careful consideration, which in turn will require time and capacity. The CPCA is also likely to require significant help and support from London."

Mr Pye has deferred this Friday's (10) planned meeting of the audit and governance committee for two weeks to provide time for the CPCA to provide a "thought-through paper" for the committee and enable "an informed debate".

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