National Audit Office confirms they are considering report submitted by MP Steve Barclay over investment decisions by local enterprise board

PUBLISHED: 14:22 20 March 2017 | UPDATED: 14:22 20 March 2017

Letter to MP Steve Barclay from National Audit Office

Letter to MP Steve Barclay from National Audit Office

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The government and its spending watchdog have launched an investigation into the running of two major bodies responsible for millions of pounds worth of investment in Cambridgeshire and Suffolk.

In a letter to MP Steve Barclay, National Audit Office (NAO) controller Sir Amyas Morse has said his value for money director is considering a 25-page report compiled by the North-East Cambridgeshire MP containing allegations about the Greater Cambridge Greater Peterborough Local Enterprise Partnership (LEP) and the Greater Cambridge City Deal. The government has also confirmed it is investigating.

Mr Barclay’s report:

<t> Raises concerns that the relationship between prominent local developers, the LEP and City Deal, is opaque and open to abuse given the overlapping private business interests of board members and developers

<t> Claims the LEP has failed to answer questions about the close relationship of key LEP board members with a small number of property developers who have enjoyed significant increases in profits whilst benefiting from large grants or loans from the LEP or bodies working closely with the LEP.

<t> Raises particular concerns about the relationships and declarations of interest provided by Mark Reeve, chairman of the GCGP LEP, who is also chairman of the privately owned Chalcroft Holdings Ltd of King’s Lynn. It is currently building a £20m, 24,000 square metre new factory for MM Flowers and MMUK (Grape) at Alconbury Weald near Huntingdon, supported by the LEP.

<t> Concerns over a £500,000 loan by the New Anglia LEP to kick start a petrol station and a McDonald’s drive through restaurant at Fiveways roundabout near Mildenhall. The £3 million contract to develop the site was awarded to Chalcroft.

The LEP has always insisted that the decision to award the contract to Chalcroft was a “separate commercial arrangement” and therefore did not involve any conflicts of interest so far as Mr Reeve was concerned.

The National Audit Office – which scrutinises public spending on behalf of Parliament but is independent of any ministry or minister- has extensive powers to examine documents and to interview staff if they feel an inquiry is warranted.

In his response to Mr Barclay’s submitted report, Sir Amyas he took the issues raised on governance, transparency, accountability and ensuring value for money “very seriously”.

“Once we have considered the points you raise, I will decide what course of action to take and will then write to you again explaining what I intend to do.”

A GCGP LEP spokesperson said: “The Greater Cambridge Greater Peterborough LEP is compliant with the Government’s Assurance Framework. We would be happy to answer any further questions the National Audit Office or Government may have regarding the matters raised.”

A spokesman for New Anglia LEP said Chalcroft Construction has been involved in two projects funded by New Anglia LEP.

“In 2014 New Anglia LEP awarded a £500,000 loan through its Growing Places Fund to developers Pigeon (Fiveways LLP) towards the redevelopment of a site on the A11 at Barton Mills,” said the spokesman.

“This was repaid in full with interest in January 2017. Pigeon appointed Chalcroft Construction to carry out part of the works. New Anglia LEP played no part in the appointment of any of the contractors involved in the project.

“In 2014 New Anglia LEP awarded Easton and Otley College £2.5m funding from its Growth Deal with Government towards to building of a new Construction Skills Centre. Easton and Otley College appointed Chalcroft Construction to build the centre. The contract was awarded by the college under public procurement rules. New Anglia LEP played no part in the awarding of the contract.”

A government spokesman said: “We take these allegations extremely seriously and will work closely with the National Audit Office to investigate this case.

“We want to see greater transparency about how taxpayers’ money is spent – that’s why we’ve strengthened the rules Local Enterprise Partnerships must follow and won’t hesitate to act if they fail to comply with these new tougher standards.”

Mr Barclay said: “For a senior figure – appointed by the Queen and Parliament for 10 years and to work independently - to be writing to a senior member of Parliament underscores the very serious nature of the issue.”

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