EXCLUSIVE: Finance cover-up exposed

By Dan Peters | 20 February 2018

Whitehall attempted to cover up errors in the provisional finance settlement as it tried to sneak out corrections to the figures it was based on, The MJ can exclusively reveal.

But as soon as The MJ revealed details of the error, Prime Minister Theresa May’s office demanded assurances that the mistake would not be repeated.

Before Downing Street’s involvement, emails between the Ministry of Housing, Communities and Local Government (MHCLG) and the Valuation Office Agency (VOA) – obtained using the Freedom of Information Act – showed how Whitehall officials had discussed ‘not proactively’ publicising changes to the data behind the settlement.

The MHCLG also said it would only explain the changes to the data ‘if pressed’ despite admitting privately it was ‘integral to part of a calculation that affects how much income local authorities get’.

Both the VOA and MHCLG prepared ‘defensive lines’ while the VOA’s Alexandra Hill welcomed that they would be ‘mutually blame-free, as I think that is the best for all of us’.

However, MHCLG deputy director Sophie Broadfield privately told her colleagues she had ‘hopefully convinced’ the Local Government Association (LGA) to be ‘critical of the VOA rather than us’.

The error happened after the VOA ‘used a scan from the end of April rather than the end of March’.

A VOA official admitted on 8 December – just over a week before the provisional settlement: ‘We thought that it would not cause us any problems. Unfortunately, we were wrong.’

When the VOA corrected the statistics, it said they were based on an ‘improved methodology,’ which MHCLG deputy director Ben Toogood wryly called a ‘very uninformative description’.

The email exchanges reveal fevered panic in Whitehall, with MHCLG deputy director Chris Megainey warning on 18 January – minutes after The MJ broke the story that the provisional settlement was wrong – that Downing Street was ‘already asking us if the VOA could set out what steps they are taking to ensure that an error of this kind doesn’t happen again’.

Emails also show how officials in what was then the Department for Communities and Local Government (DCLG) persuaded the VOA not to publicly correct the figures either just before or just after the provisional settlement, which would have been far more damaging.

The DCLG’s Mr Toogood told the VOA’s Ms Hill that ‘any publication before or soon after presents us with very difficult handling challenges for ministers with local authorities’ while a colleague added that ‘publication in January is much better for us’.

On 8 December, one DCLG official wrote to the VOA: ‘Our main concern at the moment is that new data isn’t published prior to the provisional local government finance settlement otherwise we’ll need to recalculate all our figures.’

Then, on 12 December, a DCLG official wrote to the VOA: ‘Before or in the same week as the provisional local government finance settlement would be very difficult as people would see that our calculations are using the incorrect data. Early Jan would work best for us I think. This would give us time for the dust to settle on the provisional settlement but enough time for us to redo our calculations ahead of the final settlement in Feb.’

Mr Toogood wrote to the VOA a day later: ‘What’s not included in this chain is that the VOA team has helpfully agreed publication won’t be until January (and will provide us advance copy of the data to understand the impact of business rates tariffs for local authorities) – this avoids any conflict with the local government finance settlement.’

However, the emails contain no evidence that ministers were informed the provisional settlement was wrong until January.

Advice to ministers exchanged on 16 January – just two days before the data was corrected – read: ‘Changing tariffs and top-ups between the provisional and final settlements will not be welcomed by local government. Authorities will be in the process of finalising budgets on the basis of the numbers in the provisional settlement and late changes, especially for those who will be worse off as a result, will complicate the process.’

A MHCLG spokeswoman said: ‘The secretary of state has made clear to Parliament that officials were notified of an error in the VOA data just ahead of the provisional settlement.

'At this stage, officials did not know what, if any, changes might have to be made to the tariffs and top-ups for individual authorities.’

Read editor Heather Jameson's view here

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Whitehall Finance Local Government Association Politics MHCLG Finance Settlement

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