Unlawful decision by town council to open café led to £234k debt: watchdog

A town council did not give due consideration as to what powers it had to open a café, the decision was based on a poorly prepared business plan and, as a result, the decision to open the establishment was unlawful, the Auditor General for Wales has found.

Since opening the café in 2011, Connah’s Quay Town Council went on to incur a cumulative deficit of more than £234,000.

Finding failures in its decision making, the Auditor General’s report made three clear recommendations for the council to:

• undertake a full option appraisal for the operation of Quay Café, incorporating a full financial appraisal of each option;
• ensure appropriate advice is received prior to making decisions on the provision of new or novel services;
• review the services it provides and ensure that it understands the statutory basis on which it provides those services.

The town council now has one month to consider the issues raised within the report and to make a decision on whether to accept these recommendations.

The Auditor General’s report is issued alongside public interest reports for Glynneath Town Council, Maenclochog Community Council and Cynwyd Community Council.

These reports set out significant failures in governance arrangements and inadequacies in financial management and internal control at all four councils.

The Auditor General for Wales, Adrian Crompton, said: "Given the scale of the deficit incurred at Connah’s Quay Town Council, I believe it is important that the public has a full and proper awareness of the events concerning the council. When it opened the café, the council did not have the statutory authority to do so and its decision was not supported by a clear and coherent business plan. As a result the decision was, in my view, unlawful.

"There are lessons to be learnt not just by this council, but by all town and community councils in Wales. The public interest reports issued today serve to highlight the shortcomings at four different town and community councils. Councils need to be innovative in dealing with community issues, but they must at all times display appropriate risk management and operate within their legal framework.”

Crompton added: "All four councils now have an opportunity to demonstrate that the risk of such governance failures recurring is reduced to a minimum. The public need to be assured that town and community councils have proper governance arrangements in place to manage the activities of the council both financially and administratively."