Kate Hoey and two Lambeth councillors have attacked the Garden Bridge Trust’s accounts for making no reference to the National Audit Office’s (NAO) critical report on the project
The recently released accounts of the charity developing the Garden Bridge read more like ‘marketing material’ than a fair and balanced review of its financial position, the group of Labour politicians has complained.
Kate Hoey, the Labour MP for Vauxhall and a longstanding Garden Bridge critic who led a debate on the scheme in the House of Commons last year, plus Lambeth councillors Jennifer Mosley and Kevin Craig have written to the chair of the Garden Bridge Trust (GBT), Mervyn Davies, challenging him on why the accounts make no reference to the highly critical report on the project released last October by the NAO.
However, in his response, Lord Davies strongly denied that the accounts are misleading and argued there was ‘no basis’ for referencing the NAO report because the report examined the actions of the Department for Transport (DfT) on the Garden Bridge rather than the GBT, a registered charity.
In her letter, dated 23 January, Hoey wrote: ‘It is of significant concern that the [accounts] report … does not even reference the NAO report and its criticisms of the GBT, despite the fact that the scope of the NAO report directly covers the period and scope of the Garden Bridge accounts.
‘It is not appropriate for a publicly funded project to be used as “marketing material” for its decreasing donor base, as appears to be the case.
‘Throughout your annual report and financial statements you state that the significant delays and increases to costs (which are still not known) are everyone else’s fault but your own as trustees. We also note from the accounts that insurance was purchased to “indemnify the trustees against the consequences of neglect or default on the part of the trustees” at a cost of £6,618.
‘We can only conclude that the Garden Bridge trustees have taken more care to protect themselves against due process and public accountability, in a background of the trustees not applying the same standards to their management of public funds on a failing project.’
Throughout your annual report you state that the significant delays and increases to costs are everyone else’s fault but your own
The letter claimed that the accounts ignore the NAO’s conclusions on four key points, including overstating the transport and tourism benefits of the £185 million project and claiming that the trustees are being prudent with public money.
In his letter of response dated today (February 7), Lord Davies - a former Labour minister who now sits as a peer in the House of Lords unaffiliated to any political party - suggested that Hoey was ‘not prepared to accept the normal democratic means by which local development decisions are made’.
He wrote: ’It [the NAO report] was not an investigation into the charity in any way; it looked at matters relating to the DfT…The NAO drew its own conclusions and did not question or consult with the Trust save for an invitation to comment on the factual accuracy of the references to the Trust in the final report, in the usual way.
’Consquently there was no basis for including reference to the NAO report in our annual report and accounts.’
Turning to the questions of trustees’ indemnity insurance, Davies wrote: ’As I am sure you are aware, such insurance is a perfectly normal provision for charities, and is specially covered by the Charities Act and Charity Commission guidance’.
He concluded: ’We do not accept that it is a legitimate opposition to a project of this kind to make widely published and wholly unjustified allegations about trustees whose only interest has been the proper pursuit of the charity’s objectives and public benefit.’
KATE HOEY’S LETTER IN FULL:
Re: Garden Bridge Trust Report and Financial Statements for the Period Ended 31 March 2016
Dear Lord Davies,
We are writing to you following a detailed review of the Garden Bridge Trust (GBT) Report and Financial Statements for the Period Ended 31 March 2016. As you should be aware, the objective of a Trustees Report and supporting Financial Statements is to ensure that the charity is publicly accountable to its stakeholders for the stewardship and management of the funds it holds on trust. It should provide a fair, balanced and understandable review of the charity’s structure, legal purposes, objectives, activities, financial performance and financial position.
Regrettably, the Garden Bridge Trust Report and Financial Statements for the Period Ended 31 March 2016 fail significantly in these objectives, both in our opinion, and in the opinion of independent specialists. We have summarised our reasons below.
The National Audit Office (NAO) Report – Investigation into the Department for Transport’s (DfT) funding of the Garden Bridge was published 11th October 2016. Whilst the scope of the NAO Report was the DfT, its subject is the Garden Bridge. Moreover, it was extremely critical of the behaviours of the Trustees of the GBT. In case you have not read the report (as would appear from the GBT Report and Financial Statements), we have summarised a few key points from the NAO report below which do NOT align with your annual report and accounts:-
1. Business Case: ‘In its assessment of the business case, the Department concluded that there was a significant risk that the Bridge could represent poor value for money. The Department assessed the business case against the criteria it uses to assess transport projects. It found that the monetised transport benefits arising from faster journey times were minimal. In the Department’s view the Bridge was not predominantly a transport scheme, and as such did not align with any specific transport policies. Wider benefits, such as those associated with tourism, were considered highly uncertain.’ It can only be concluded based on the GBT report and statements under the section Benefits (Page 5), that the Trustees are still misrepresenting the transport and tourism benefits of the project in contradiction to the DfT’s own conclusions.
2. Release of Public Funds: ‘The release of funding for the GBT from the Transport for London was subject to several conditions … On 27 January 2016, the Trust wrote to TfL to set out how it had satisfied these conditions. On 29 January 2016, TfL confirmed to the Department, in an email, that it was satisfied that the Trust had met the conditions and was entitled to the next £7 million of public funding … The Department (DfT) had expected the contract to be awarded only once significant delivery risks related to land and planning had been resolved and there was certainty that the project would go ahead.’ It is apparent from the GBT’S report and accounts that these conditions, clearly, were not met at that point in time nor now – It is therefore improper to present the Trustees as being prudent with public money in their annual report and statements in this respect.
3. Poor Reporting by the GBT: ‘Since June 2016, the Department has received written monthly updates from the Trust on the status of the project and the steps being taken to address the main risks. These reports have included a narrative update on the way the Trust has managed key risks and some have contained a risk register. They have not contained standard project performance information such as progress against schedule and budget, nor have they contained information on the Trust’s progress against fundraising targets.’ The Trustees report and statements has presented its Risk Management and Internal Controls (page 9) as fit for purpose and does not reference any of the criticisms of the reporting arrangements of the GBT and any associated remediating actions subsequent to the NAO report. This is a concern.
4. Behaviour of Garden Bridge Trustees: ‘The pattern of behaviour outlined in this report is one in which the Trust has repeatedly approached the government to release more of its funding for pre-construction activity when it encounters challenges.’ The GBT accounts notably do not refer to some important details transparently – that project was delayed by another year in 2016, that a significant number of donors left the project in 2016; its funding gap increased by £22 million and the original cost increased by £10 million to £185 million. The GBT does state that it is not a Going Concern. On top of this the ultimate cost of the bridge is unknown and could ‘substantially exceed the formal estimate’. But you do refer to ‘the success you have had so far’! Given these challenges we are not confident that the Trust will not yet again call upon the government in the event it proceeds or that it has ‘managed the resources at its disposal responsibly and prudently, by reducing expenditure where possible’. In reality the Garden Bridge Trust has wilfully increased the exposure and risk to taxpayers over the financial period.
It is of significant concern that The Garden Bridge Trust Report and Financial Statements for the Period Ended 31 March 2016 does not even reference the NAO report and its criticisms of the GBT, despite the fact that the scope of NAO report directly covers the period and scope of the Garden Bridge accounts. It is notable, that the GBT Trustees Report (page 9) does refer to a Review by Dame Margaret Hodge and The Compliance Investigation being undertaken by the Charities Commission over the same period as the NAO report, However, there is no reference to the NAO report, its significant conclusions and any response or remediating actions undertaken by the Garden Bridge Trustees. It is not appropriate for a report and financial statements for a publicly funded project to be used as ‘marketing material’ for its decreasing donor base, as appears to be the case.
Throughout your annual report and financial statements you state that the significant delays and increases to costs (which are still not known) are everyone else’s fault but your own as Trustees. We also note from the accounts that insurance was purchased to ‘indemnify the Trustees against the consequences of neglect or default on the part of the Trustees’ at a cost of £6,618. We can only conclude that the Garden Bridge Trustees have taken more care to protect themselves against due process and public accountability, in a background of the Trustees not applying the same standards to their management of public funds on a failing project.
We look forward to your response outlining why the GBT has not reflected the NAO findings in its report and financial statement at all or responded to the significant failings of the Trust outlined in the NAO report. We would expect Trustees to have recognised the important role that the National Audit Office has to play in protecting the use of public money, through responding to the NAO through an action plan or improved governance arrangements.
We can only conclude that the NAO report and findings were either wilfully neglected from the Garden Bridge Trust Report and Financial Statements for the Period Ended 31 March 2016, or that you have not read or recognised their findings. Either of these conclusions does not bode well in respect of the role of the Trustees in delivering a proposed project on the scale of the Garden Bridge and in your responsibility to demonstrate that the charity is publicly accountable to its stakeholders for the stewardship and management of the funds that you hold on trust.
Kate Hoey MP
Councillor Jennifer Mosley (Councillor – Bishops Ward, Lambeth)
Councillor Kevin Craig (Councillor – Bishops Ward, Lambeth)
MERVYN DAVIES’S LETTER IN FULL:
Dear Ms Hoey
On behalf of the Trustees, I acknowledge receipt of your letter dated 30th January 2017, which makes an allegation that the Trust’s Annual Report and Accounts are misleading.
Firstly, may I clarify the nature of the National Audit Office (NAO) Report to which you refer. As I’m sure you know (but notably do not say), the NAO makes clear in the Report that its investigation was about the original and subsequent decisions made by the Department of Transport (DfT) in respect of the grant of £30 million towards the construction of the Garden Bridge, and its oversight. It was not concerned with value for money, nor for any other aspect of funding arrangements with/by the Trust; and its findings were based solely on documents received from the Department, correspondence with its officials and information available in the public domain.
In summary, it was not an investigation into the Charity in any way; it looked at matters relating to the DfT and its internal decisions, many of which the Trust were not privy to and some of which had taken place prior to the Trust’s establishment. The NAO drew its own conclusions, and did not question or consult with the Trust save for an invitation to comment on the factual accuracy of the references to the Trust in the final report, in the usual way. Consequently, there was no basis for including reference to the NAO report in our Annual Report and Accounts.
In contrast, the reviews by the Charity Commission and Dame Margaret Hodge have engaged directly with the Trust, and are accordingly referenced in the Annual Report and Accounts – the latter in view of the impact it has on uncertainty for the project programme and the ability to raise private sector funds.
In addition, the Trust Report and Accounts have been audited by Crowe Clark Whitehill LLP, who are specialists in auditing in the Charity sector. It is clear from the Annual Report and Accounts that the audit opinion is not modified and this opinion states that the financial statements give a true and fair view of the state of the charitable company’s affairs for the relevant period, and have been properly prepared in accordance with the United Kingdom Generally Accepted Accounting practice and with the requirements of the Companies Act.
Secondly, may I address the question of Trustees indemnity insurance. As I am sure you are aware, such insurance is a perfectly normal provision for charities, and is specifically covered by the Charities Act and Charity Commission guidance.
Finally, I am concerned that your letter conveys that you and your co-signatories are not prepared to accept the normal democratic means by which local development decisions are made. We do not accept that it is a legitimate opposition to a project of this kind to make widely published and wholly unjustified allegations about Trustees whose only interest has been the proper pursuit of the charity’s objectives and public benefit.
This letter has been copied to the list of recipients of your letter.
Lord Davies of Abersoch