Council and DCAL feud over finances exposed in newly released documents

One third of the way through the City of Culture year, Derry City Council was accused by senior Department of Culture Arts and Leisure officials of failing to properly address major issues, including legacy planning. Efforts to use the programme to promote equality and social inclusion were described as an “abject failure”.

The claims came as the council apparently wanted to cut back on delivery of the Cultural programme as it faced financial pressures. But DCAL’s acting permanent secretary, Peter May, said DCAL had agreed to invest over £12m 7and it expected the council to deliver at its end.

In July, as the City of Culture year entered its second half, he told the council’s chief executive, Sharon O’Connor: “I believe the Council should be prioritising investment on the City of Culture project budget ahead of other events not agreed as part of that programme.”

He also demanded details of the council’s legacy plans and marketing budget.

Divisions between the council and Culture Company have already been well-documented but three documents newly released by the Department of Culture Arts and Leisure shine a light on another area of friction between the bodies responsible for making 2013 a success.

For instance, the council is accused of an “abject failure to produce a viable and detailed plan to promote equality and tackle poverty and social exclusion through targeted and timetabled goals and outcomes directly linked with the Cultural programme”. This claim was made in a letter dated April 29 - a third of the way through the year.

At the heart of the discussion appears to be a desire by Derry City Council to cut back on the Cultural Programme as it wanted to invest no more funding, while DCAL demanded that the council prioritise the 2013 project. After a Freedom of Information request was refused by DCAL last year, on the grounds that free expression of views was necessary in such a project, and that releasing documentation could harm the project, the request was submitted again when the year had ended.

Three documents were then released.

The exchange begins with a letter to Derry City Council’s chief executive, Sharon O’Connor from Cynthia Smith, of DCAL.

Ms Smith says she has been advised of a shortfall in identified sources of funding to deliver the agreed City of Culture programme, and that Culture Company has submitted a paper setting out projects which could be reduced, managed or postponed to manage the shortfall.

She said DCAL’s Letter of Offer to council stipulated that DCAL approval be sought for significant changes, adding: “I believe these changes to be material as they would impact significantly on benefits realisation and legacy objectives.”

She added: “Having considered the manifestly detrimental impact on potential benefits realisation and legacy objectives, and moreover in the context of the abject failure to promote equality and tackle poverty and social exclusion through targeted and timetabled goals and outcomes directly linked with the Cultural Programme, the Department cannot approve the proposal to alter these projects’ budgets or delivery timescales. The City of Culture project must be delivered as currently set out and agreed with DCAL.

“The DCAL Letter of Offer requires the Council to secure match funding to successfully deliver the City of Culture project and you should urgently identify an internal or external source of funding to meet the identified shortfall.

“The council has not yet delivered a satisfactory Legacy Plan or ward level analysis of the City of Culture’s project’s impact on those affected by greatest inequalities or suffering greatest objective need...

“You should provide these documents as a matter of urgency.”

Sharon O’Connor delivered her response in a letter dated May 7, 2013, saying that Council’s “working understanding is that the City of Culture project is a partnership and that all adjustments would be mutually agreed as per the previous two scale-back proposals”.

The council’s chief executive said there was insufficient evidence to assess any impact of the proposed changes at this stage, adding: “The City of Culture Programme cannot be delivered as currently set out and agreed with DCAL.”

Ms O’Connor said the council never intended to have a legacy plan completed at this stage and that as it evolved DCAL would be presented with “the emerging legacy strategy”.

She also said: “Culture Company must provide the evidence of the targeted approach to address inequalities and poverty.”

Registering her surprise at the “tone” of Cynthia Smith’s letter, Ms O’Connor said the council had made a significant investment in the project, and claimed there was “limited evidence” of the CC’s executive to “understand and make savings to assist Derry City Council”.

“When DCAL first became involved, the original understanding was that Council would ‘underwrite’ the running costs of the Company which necessitated a further cash investment of £500k at that time which brought DCC’s investment to £4.1m. With the recent commitment, that figure now stands at £4.7m,” she wrote.

She said there had been an oversight as the council did not have sight of the original DCAL business case and so could not influence the contents. This, she said, continued to “have consequences which are causing difficulty for Council.”

Ms O’Connor said her concern on a number of components and management arrangements was a matter of record but she and the chairman were “instructed by DCAL” not to progress matters to “manage the substandard performance of the company” which she said was responsible for the “’abject’ failures you describe”.

Ms O’Connor said that there were additional costs incurred including £500,000 for the Fleadh, that the project did not have an adequate marketing budget and that Council’s ability to repond to this “is further impacted by deficits in the programme budget.”

“Our commitment to legacy will be substantially reduced by meeting deficits in this year. Council must also manage the funds most effectively and ensure that there are no major budget over-runs...You will appreciate that I cannot put the Council in financial difficulty,” she told Ms Smith.

“Since Council is unable to provide any further financial assistance and given DCAL’s expressed wish that the programme cannot be reduced, can I have an indication as to whether the remaining OB (Optimum Bias) can be applied to the remaining deficit?”

By early July - more that half-way through the year - the issue remained live.

On July 2, Peter May replied.

He wrote: “Your letter of 7 May and verbal updates to the Department have raised wider issues and these are the cause of concern for DCAL as main funder of the project, in relation to the approach to prioritising the project and ensuring the successful delivery of benefits and a lasting, sustainable legacy.

“Derry City Council, as the licence holder for the City of Culture title, is the initiator and owner of the project. It is for the Council to prioritise the City of Culture project despite any compelling funding pressures and demonstrate leadership and ownership of the overall project. A clear plan should be in place to manage the risk of any future shortfall which jeopardises delivery of the project and its benefits as agreed with DCAL in return for the Department’s investment of £12.6m in the project.”

Mr May said he rejected the comment in the May 7 letter that DCAL had instructed the DCC chief executive not to progress actions to avoid further risks.

Mr May added: “You have referred to the Council’s City of Culture legacy budget, indicating that any further allocation of funding to the City of Culture project will impact on the legacy budget. Please provide details of the Council’s legacy budget and proposals to allocate funding to legacy actions.

“I am also now seeking sight of a comprehensive legacy plan...I believe the Council should be prioritising investment on the City of Culture project budget ahead of other events not agreed as part of that programme. I would be grateful for your confirmation of that position.”

He concluded with a reference to Ms O’Connor’s comment that the marketing budget was inadequate, saying he welcomed the council’s recent decision to allocate additional funding.

“I would be grateful to receive a more detailed breakdown of marketing activity undertaken by the Council in relation to marketing the City and the City of Culture Cultural Programme,” he wrote.

Derry City Council was asked to respond to specific questions raised by the exchange of letters as were Culture Company and its chairman, Martin Bradley.

A spokesperson for Derry City Council said it did not wish to respond other than to say City of Culture 2013 was a hugely successful year for the city and region and: “The success of 2013 can be attributed to the important role played by the extraordinary people of the city who supported all the events and worked in close partnership with city partners to make the year the success that it was.”

It said it was focusing its efforts on the future and working in close partnership work with partners and agencies to harness commitment to take the three year legacy plan forward in a sustainable way.

“We are all looking forward to an outstanding Music City year in 2014 that will build upon the achievements so far,” said a spokesperson.

The council’s legacy plan can now be viewed online and it is understood that Ms O’Connor cancelled her leave to ensure it was completed.

A statement from the Culture Company said: “Our Board, including a number of Council representatives, performed a challenge function for the project and ultimately made the key decisions relating to the project finances and company business. The Board never raised any performance concerns but rather, as has been formally recorded on a number of occasions throughout the project, acknowledged the high performance levels of the executive team of the company and the hard work and commitment of the entire team. Culture Company has been endorsed as recently as last week by the Board for prudent financial management which has seen savings of at least £200,000 against the running costs of the company, prior to early termination of staff contracts, and substantial programme savings now materialising as projects close out. This could not have been known in May 2013, while the worst case scenario had to be quantified at that time to facilitate decision-making. The full extent of savings will not be clear for another couple of months.

“It was mandated by DCAL and other third parties that certain aspects of the project must be delivered directly by Derry City Council. Culture Company worked alongside Council officers (and representatives of other Oversight bodies) throughout the project, and would never seek to diminish the role that they played. Rather, we would like to extend thanks to our counterparts along with our thanks to all parties and individuals who helped to deliver the year, and to all those who bore with us when resources were stretched. We would like to pay tribute to our hardworking and dedicated staff and are proud that we remain a strong unit with enduring friendships. A more accurate measure of performance might be the unprecedented success of the year both in terms of programme content and citizen participation.

“Culture Company staff have received very heartening and in a number of cases extremely touching feedback from third party organisations and members of the public, and feel privileged to have had the opportunity to play our parts in this project.”

Mr Bradley has not yet responded.