'No more funds' for youth regeneration project

"No further funds" will be given by a council to a youth regeneration project after serious concerns were raised about leaders' financial management.

Somerset Council froze funds to Glastonbury's Life Factory in January 2024, after bosses said they were not "able to adequately reconcile invoices" in grant claims with actual spend and progress on site.

The new leadership team at Red Brick Building Centre, which runs the site, said its "deeply disappointed" with an independent audit's findings, which highlighted a lack of accountability.

A council spokesperson said the authority accepts that its level of oversight and monitoring "could have been strengthened".

The report also warned the government could request its £2.89m back if officials decide the "terms of the grant have not been met".

After the grant was halted in January, construction work stopped on site and several contractors were left unpaid.

Some workers told the BBC that they are owed tens of thousands of pounds.

The Red Brick Building C project was previously awarded £2.89m from the government under the Glastonbury Town Deal (GTD) to develop a community space, mainly for young people. Spending of this money was being overseen by Somerset Council.

But a South West Audit Partnership (SWAP) report has now concluded that it has "no assurance" that there were sound governance arrangements and financial controls in place at Red Brick Building Centre Ltd or Somerset Council.

With regards to the Red Brick Building Centre, the report states: "We have seen no evidence of a delivery plan showing how the building will be delivered within budget, scope and on time."

It said a condition of the grant funding was that match funding would be obtained, but this had not gone beyond gathering expressions of interest.

The report explains that a subsidiary company called Beckery Construction was set up to keep costs down, but said the introduction of this company confused the relationship between all parties, leading to a breakdown in communication, poor governance and lack of accountability.

The report said: "The majority of control weaknesses in delivery lie with The Red Brick Building and Beckery Construction Company."

At Beckery Construction, auditors found many standard HR processes were not followed, including no formal recruitment being in place sub-contractors, one employee didn't have a contract and timesheets were either incorrectly submitted or filled out at all.

The report said: "Financial controls such as budget monitoring and cash flow forecasting were not operating, no approval for expenditure was sought from the Red Brick building board, and financial records were not always accessible, complete or accurate".

With regards to the council, the auditors said: "Grant payments were not processed in line with the Grant Funding Agreement.

"Given the complexity of the renovation of Building C and the values involved more assurances should have been sought by [them] that robust governance and oversight arrangements were in place and a competent and qualified project team were in place."

The report pointed out that the government may now ask for its money back, if it feels that the terms of its grant have not been met.

In a statement posted on social media, the new leadership team at Red Brick report makes it clear this "was a collective failure" across all parties.

"While we deeply regret that the Life Factory will no longer be able to continue in its original form, we remain committed to learning from this experience and ensuring it is never repeated," they said.

A former director of Beckery Construction and ex-member of the Red Brick board said the SWAP report "does not fully reflect the complexity, the good intentions, the actions taken, and the repeated efforts to gain clarity on the financial situation".

It added that council representatives had frequent meetings with the project manager.

And while the ex-director of Beckery was in post, he said the financial accounts for Life Factory were externally audited with "no serious concerns raised".

Somerset Council has released a statement saying "no further funds" will be released to the project.

The council said the audit has made clear that despite almost £3m being spent on the Life Factory, "it cannot be successfully delivered in line with the Grant Funding Agreement, and it is therefore not clear if the project will ever be completed".

Duncan Sharkey, the council's chief executive, said the authority "accepts the [report's] findings that our level of oversight and monitoring could have been strengthened".

As a result, the council's management of other infrastructure projects have been reviewed.

The council said it is "not contractually responsible for any payments to contractors", but adds it does "understand the impact this is having on those with legitimate claims".

Council bosses said they would continue to work with the Red Brick Building.

A spokesperson for Red Brick Building Centre said they have "always had the community at the heart of this project and is the reason we took this project on".

"And for these reasons, we called it into question and put a pause on the project at the beginning of 2024.

"We are working very closely with Somerset Council to find a way through this, and our shareholder and creditors are our top priority," they added.

The council's audit committee will discuss the report at its meeting on Thursday.

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