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SIC Hearing Transcript ACCOUNTS COMMISSION FOR SCOTLAND PUBLIC HEARING on SHETLAND ISLANDS COUNCIL held at the Town Hall, Upper Hillhead, Lerwick ZE1 0HB on Monday 28th June 2010 Before: John Baillie (Chair) Christine May Bill McQueen Graham Sharp Douglas Sinclair (Deputy Chair) Mark Brough (Secretary) PROCEEDINGS DAY ONE --------- Transcribed from the official recording by Ubiqus Reporting Cliffords Inn, Fetter Lane, London EC4A 1LD Tel: +44 (0)207 269 0370 ---------- 1 [SESSION 1] 2 CHAIR: Good morning, ladies and gentlemen. Can I extend a warm welcome to 3 everybody to this hearing of the Accounts Commission? My name is John 4 Baillie and I am chair of the Accounts Commission. Let me start by 5 introducing my colleagues on the Accounts Commission. On my extreme 6 left is Graham Sharp; next to me is, on my left is Bill McQueen; on my 7 extreme right is Douglas Sinclair; next to Douglas is Christine May; and on 8 my immediate right is the Secretary of the Commission, Mark Brough. 9 This is a formal meeting of the Accounts Commission. The Accounts 10 Commission was established in 1975. It’s the public’s watchdog that 11 oversees the audit of Scottish local government; it considers reports arising 12 from such audit work. Now the Commission – and this is important – 13 operates independently of local authorities and of the Scottish Government 14 and reports in public. Its members are appointed following a public 15 appointments process. 16 In May this year the Controller of Audit delivered a report on 17 Shetland Islands Council. That report is on the Audit Scotland website and 18 copies are available here today. The Commission considered that report at 19 its meeting on 13 May of this year and, in the light of the matters raised in 20 the report, we decided to hold a hearing. The purpose of this hearing is to 21 allow the Commission to consider further the issues arising from the 22 Controller of Audit’s report so that we can make findings. The findings may 23 include recommendations for action. 24 So we’re here to explore the circumstances in more detail and to 25 understand the issues at the council. We’ll be hearing from a wide range of 26 witnesses over the next two days, as you will see from the programme of 2 1 evidence, which is available to you. We’ll be asking questions of the 2 witnesses. The witnesses will not be cross-examining each other. The 3 witnesses were asked to make written submissions in advance, and I thank 4 them for that. Those submissions are all available on the Commission’s 5 website along with some from other interested parties. 6 Now I aim to conduct the proceedings today and tomorrow in a 7 straightforward and businesslike way, always consistent with the aim of 8 allowing a fair process. I aim to allow witnesses to express their views and 9 tell us of their experiences so that the Commission can get a clear 10 understanding of the issues. 11 We expect all witnesses to co-operate fully and to answer questions 12 put to them. Obligations of confidentiality on any particular matter do not 13 give grounds for declining to answer questions. Witnesses should have no 14 concerns about answering fully and honestly provided that no statement is 15 given maliciously; that is, untrue statements that are given knowingly, 16 negligently or recklessly. 17 We may consider in the light of the evidence heard, the need to 18 recall witnesses towards at the end of the hearing. This will be agreed and 19 announced during the course of the hearing. At the conclusion of the 20 evidence tomorrow the Commission will then adjourn to consider its 21 findings. The findings will be published as soon as possible. If it’s 22 necessary for the hearing to be reconvened at a later date to take further 23 evidence, then we will do so, but we anticipate this being unlikely. 24 Now as I said, our aim in broad terms is to examine further the 25 circumstances at the council as highlighted by the concerns raised in the 26 Controller of Audit’s report. The report covers some specific matters but 3 1 does so – and this is important – in the context of important general 2 concerns about strategic leadership; about roles and responsibilities; about 3 working relationships; about governance and accountability; and, finally, 4 about financial management. It is these more general concerns that are of 5 particular interest to us. 6 And I would stress that we can make recommendations but we do 7 not have the powers to make or overturn any decisions of the council. I 8 stress also that the Commission is not investigating specific incidents or 9 people. Matters relating to the behaviour of officers or members or specific 10 decisions of the council should be raised through the council’s internal 11 procedures or with the Standards Commission. 12 Now as I said when I started speaking, members of the public here 13 today are most welcome. This is a public hearing and the purpose of the 14 Commission conducting it is to consider how the council can best act in the 15 interests of the people of Scotland. 16 Finally, ladies and gentlemen, can I ask you please to remember that 17 the hearing needs to be conducted in a way that is fair and allows everyone 18 involved to be heard and to hear. So I ask please, everyone, to hear all 19 witnesses with respect, without applause, calling out or any other disruption. 20 And finally finally, can I ask everyone, please, to switch off their mobile 21 phones now. Thank you. 22 Can I ask the first witnesses to come forward, please? Just as the 23 witnesses are getting themselves together, the secretary has pointed out 24 that a slip of the tongue meant that I referred to ‘the local people of 25 Scotland’, rather than ‘the local people of Shetland’ – it is, of course, the 26 latter. Thank you. 4 1 I welcome to give us evidence the Controller of Audit and other 2 representatives from Audit Scotland. Can I ask you please, ladies and 3 gentlemen, to introduce yourselves briefly for the record by stating your 4 names and your position? 5 CAROLINE GARDNER: Thank you, Chair. I am Caroline Gardner. I’m Controller 6 of Audit and Deputy Auditor General with Audit Scotland. 7 FRASER MCKINLAY: Good morning. Fraser McKinlay, Director of Best Value 8 and Scrutiny Improvement. 9 MARTIN WALKER: Good morning. My name’s Martin Walker. I’m a portfolio 10 manager at Audit Scotland. 11 CAROL HISLOP: Good morning. I am Carol Hislop, Audit Manager. 12 LYNN BRADLEY: Good morning. I’m Lynn Bradley, Director of Audit Services for 13 Local Government and the appointed auditor for Shetland Islands Council. 14 CHAIR: Thank you very much. I am going to start the questions and then my 15 colleagues will pick up either on the answers or with their own questions, 16 and that’s how the pattern of the questioning will go for each series of 17 witnesses. 18 Let me start then by referring to the Best Value report that was 19 published in 2005. Can you help us to characterise the progress? How do 20 you see progress the council has made over the time since then? 21 CAROLINE GARDNER: I think, Chair, we’d have to say that we believe progress 22 has been slow since 2005. If you look back at that original Best Value Audit 23 report, it did raise a series of concerns about the strategic direction of the 24 council and the capacity of the council to take difficult decisions to ensure 25 that the islands’ services and economy were sustainable in future, with a 26 whole range of pressures around the cost of services and the demands and 5 1 difficulties of sustaining communities in such a remote and rural part of 2 Scotland. Although there have been some elements of progress since then, 3 it’s often appeared to be the case that the council has had difficulty in 4 seeing those through and making sure that they have the impact they were 5 intended to have across the piece. 6 Since 2005, I have reported in formal terms again to the 7 Commission: in 2007 with a follow-up Best Value Audit report; in 2008 and 8 2009 on the back of the annual auditor’s report to members and to me as 9 Controller of Audit; and, finally, this May on the range of issues that have 10 come into play over the last 12 months. And it’s fair to say that, although 11 some movements have been made, there has not been a sustained attempt 12 or success in dealing with the range of challenges that the council faces. 13 CHAIR: Thank you. Now, there have been some criticisms in written submissions 14 to us that, after identifying problems at the council, your report was too high 15 a level; it didn’t provide any recommendations for the future. What’s your 16 response? 17 CAROLINE GARDNER: The issues which were identified in my report to the 18 Commission in late 2009 were wide-ranging but, in my view, they were all 19 symptoms of an underlying set of problems around strategic leadership, 20 around decision making, and governance and accountability. And I 21 therefore took the decision that the follow-up report, which the Commission 22 requested at that stage, should be looking at the underlying issues rather 23 than investigating all of those manifestations of the issues in a bit more 24 detail.
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