Council takes control of Marketing Gloucester budget and events including the Tall Ships
By Andrew Merrell | 16th January 2020
Following two independent reports which highlighted failings in overseeing the work of its wholly owned company, Marketing Gloucester, the city council has decided to bring the business in-house.
Grant Thornton's observations and recommendations highlighted a lack of governance of the privately-run publicly-owned company, which created and ran events which have helped put Gloucester on the map - such as the Tall Ships, the city carnival and SoMAC.
The report outlined a lack of scrutiny from all concerned, including the council, which resulted in a failure to hold the wholly owned private company to account.
It was a business described by the accountants as 'technically insolvent due to its net liabilities position', but which the council continued to fund.
In October 2019 the council approved a £240,000 credit facility to "support MGL's cash flow position".
Grant Thornton's report, published in December, stated: "Based on MGL's historical results and its current financial situation, there is a risk that the council's loans (including the new revolving facility due in five years time) may not be repayable."
It also noted there were concerns over how the business could pay its staff team.
The 26-plus page report outlined how the company managed hundreds of thousands of pounds of public funds and ran events generating thousands.
The Tall Ships event helped the FY18 accounts top out at £443,000. FY19 accounts fell to £199,000, largely because there was no Tall Ships.
Marketing Gloucester set up another business which the local authority said it was unaware of - UK: Digital Retail Innovation Centre.
According to the report the council had an agreement that any spend over £100,000 by Marketing Gloucester would be signed off by the local authority.
Marketing Gloucester won £400,000 of public money from GFirstLEP to set up the UK: Digital Retail Innovation Centre, which it did in November 28 2017. That money was spent before the Eastgate Shopping Centre-based operation officially opened in May last year.
"Regular monitoring and review of MGL's performance are undertaken by the council through quarterly review meetings, which are minuted and typically attended by a council's corporate director, the MGL chair and CEO," said the Grant Thornton report.
It added: "We believe the quarterly meetings lack structure and clarity of the council's expectations."
The chairman at the time being former council leader Paul James and chief executive officer being Jason Smith.
Grant Thornton was also critical of the service level agreement between the council and MGL.
It added: "Based on our work, we noted a lack of clarity on what the council expects from MGL. This is complicated by the different roles of the council in its relationship with MGL (i.e. shareholder, customer and funder).
"The SLA has attempted to set out the services to be provided by MGL and the associated funding.
"Nonetheless, we noted that the scope of the services set out in the SLA was too broad and that the agreed funding (which was fixed in nature across different years) did not appear to commensurate with the variable nature of events and services that MGL was expected to deliver as part of the SLA."
It added: "MGL has experienced financial challenges in recent years, which were compounded by the significant reduction in funding from the council particularly over the last three years."
The report proposes: "To authorise the Corporate Director (Transformation) in consultation with the Cabinet Member for Culture and Leisure to negotiate and enter into revised Articles and Service Level Agreement and other related legal documentation, on terms approved by the Council Solicitor and s151 Officer, in order to implement those above mentioned recommendations."
Punchline understands the Corporate Director (Transformation) is the person who wrote the SLA criticised in the report.
At last night's meeting of the city council's full cabinet councillors voted in favour of it taking over the budget and running of the events, including the Tall Ships.
Read more: Marketing Gloucester boss sacked
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