The Board at Cambridgeshire and Peterborough Combined Authority has asked senior staff and member council chief executives to engage with the Department for Levelling Up, Housing and Communities (DLHC) to address "significant" weaknesses in the authority's governance arrangements.
The move is in response to a letter sent to the chair of the combined authority by its external auditors, Ernst & Young, which claimed the authority has "insufficient capacity, capability and an inappropriate culture to support the effective governance and operation of the organisation and how it discharges its statutory services".
The letter, written by an Associate Partner at Ernst & Young, Mark Hodgson, raised concerns over the following issues:
- Investigations into key individuals in the Mayor's office following a whistleblower notification;
- Increased number of employment-related claims against the authority;
- Current vacancies in the authority's senior management team, particularly at Chief Executive level, and the prospect that this could increase further from July 2022;
- Weaknesses the auditor observed in how the extraordinary meeting of the Authority Board makes informed decisions; and
- The nature of the whistleblower allegations and initial findings of independent investigation reports raises significant questions on the culture, behaviour and integrity of key individuals in the Mayor's office.
According to the auditor, there is the potential for further employment issues at the authority, "which pose a significant financial risk, given the specific project-based funding nature of the Authority's business, and its ability to service any revenue based financial obligations outside of these projects".
A number of senior staff have already left the CPCA amid the disarray, including its Chief Executive, Eileen Milner, and the chair of the business board, Austen Adams.
The letter said that the employment issues have the potential to significantly impact the authority's senior leadership capacity, which has already been undermined by the resignations and unfilled vacancies at Management Team Level.
The authority could find itself lacking statutory officers from 1 July 2022 without immediate and urgent action, the auditor predicted. Even with urgent action, "one would have to question the nature of such appointments at short notice," it added.
Without appropriate leadership capacity with the requisite skills, knowledge and experience, there is significant doubt as to the authority's ability to discharge its statutory obligations, EY said.
Addressing the serious employee-related matters stemming from the whistleblowing notification and ensuring all authority employees are appropriately safeguarded is "of paramount importance", according to the auditor.
In addition, the authority needs to urgently ensure that it has sufficient appropriate leadership capacity to be able to deliver its objectives and statutory responsibilities. "In order to do so, we believe more formal intervention is required, and expeditious discussions with the Authority's sponsoring department to this end are time critical," the letter added.
The Mayor of the combined authority, Dr Nik Johnson, almost joined the list of high-profile departures last month after the Board tabled a motion that would trigger his resignation.
However, before the extraordinary meeting to discuss the motion was held, the Mayor dismissed the Deputy Mayor, Cllr Wayne Fitzgerald, who was in favour of the motion. Cllr Lewis Herbert replaced him.
An amendment to the motion, which had been introduced by Cllr Herbert, was then passed, keeping the Mayor in office.
The nature of the whistleblower claims has not been made public. But according to a BBC report, a whistleblowing inquiry found Nigel Pauley, advisor to the combined authority and the Mayor, "caused stress and strain to colleagues".
Mr Pauley told the BBC he "utterly refute[d] any improper behaviour on the part of myself or the mayor, who is a person of utmost integrity".