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Book closed on Sprouts failings – Council Leader pledges not to subsidise loss making facilities

The failings which led to the closure of a local nursery came under fire yesterday, with the leader of the council warning that the local authority cannot bid for grants for facilities when there is no revenue to run them in the future.

Cllr Mark Pritchard issued the message during a debate on the closure of Sprouts in Rhosddu – a part council and part Welsh Government funded nursery, which was closed last September due to no longer being financially viable.

The project itself had largely been funded by a share of a £10 million Vibrant and Viable Places grant, which was awarded to Wrexham Council to help fund nine projects back in 2013.

The closure of the nursery had been brought to the employment, business and investment scrutiny committee by Cllr Marc Jones, who submitted a topic-request form for more information behind the nursery’s sudden closure.

A report presented to councillors yesterday highlighted that ‘lessons needed to be learned’ from Sprouts, including several contributing factors which could have stopped the closure of the nursery, and was likely the closing chapter on the matter.

Such factors include the uptake in the extended opening hours being less than projected, issues with the original business plan and the council not utilising expertise within its own departments.

Cllr Phil Wynn, lead member for education, said that he believed officers had acted in good faith and that Sprouts had proved to be the wrong decision.

He continued: “With Sprouts I have to acknowledge that while capital monies were well spent, it was the revenue side proving a financial pressure on the educational department.

“That’s because the purpose of Sprouts was based on a childcare sufficiency assessment which is a requirement the local authority carry out every three years to ensure parents have access to childcare provision.

“That piece of work identified a shortcoming of supply in provision at early mornings, weekends and evenings which was not being provided at the time. On that basis Sprouts went forward.

“Over the years it becomes obvious that demand did not exist the extent the assessment led us to believe.”

Cllr Wynn added: “In hindsight maybe Sprouts business plan could have been better challenged at time. Maybe the assessment did mislead officers.

“Hindsight a wonderful thing. Maybe we should have partnered up with existing childcare providers rather than running it as a business at the time.”

However Cllr Jones described Sprouts as an “expensive mistake” and that his “fundamental concern” is the expertise that could have prevented the nursery’s closure was ignored.

Cllr Jones said: “Despite using public money to effectively undercut existing provision, it lost money in first and second year and only closed down after last year’s election. My understanding it was kept open to save blushing of certain councillors. If that’s the case it’s shameful.

“We were willing to throw good money after bad into Sprouts, even after we knew it was losing thousands a month, had poor inspection report and wasn’t meeting its initial promises.

“We have heard lost £155,000 in three years. The danger is £155,000 we initially got could be clawed back as not used for initial purpose. I would ask whether the Welsh Government has made any enquiries in getting it back.”

He added: “The lessons from my perspective are don’t chase grants for the sake of it as they need revenue funding or they will fail. Don’t make decisions on need to fill empty building, make sure the business case is robust and listen to expert advice. We had plenty of expert advice in this field and it was ignored.

“I say this with regret because no body wins when these projects fail.”

Cllr Wynn hit back at the questions raised over a financial clawback on capital monies, accusing Cllr Jones of “political point scoring” which could see the council’s education department have “£155,000 less money on school programmes” if Welsh Government asked for the cash back.

Cllr Dana Davies relayed a series of attempts from herself and former councillor Arfon Jones to debate Sprouts at scrutiny – noting that she had been sent to three different committees and told each time it fell within the remit of another.

Cllr Davies said: “I am furious. As a corporate parent, there is no way I could bring those concerns to a scrutiny committee to discuss them and learn lessons then.

“The governance structure is words on a piece of paper, it didn’t work. There are five scrutiny committees in this council and I tried three and couldn’t get the issues heard.

“With regards to clawback, in order to avoid potential clawback, have we moved another service out of council building into this?”

The meeting was told that since the closure of Sprouts, the Wrexham Family Information Service had been relocated from Dean Road to the former nursery. Something, the committee was told, still fulfilled the initial VVP aims of providing a service and creating jobs in the town centre.

Finance officer Mark Owen added that the Welsh Government was aware of how the family facility is operating and that there is “no plan for clawback of funding as current usage is consistent with principles of original funding bid”, also noting that claims over unanswered Freedom of Information requests did not match the data he had before him but did acknowledge there were ‘clearly lessons to learn as part of it’.

Cllr Nigel Williams described it as “concerning” that it took so long for Sprouts to receive any help, noting: “There is a range of expertise in the council. During the three years it was open at no point did people think let’s look at other departments in the council and seek expertise? Why in hindsight did it take that long?”

“It is concerning a business goes for almost three years before it seeks help. If this businesses was set up by a member of the public it wouldn’t wait three years before asking for help as it wouldn’t have the tax payer to pick up the bill. It’s concerning it took so long.”

The meeting was told that during the build-up of Sprouts council departments were working together, however the “operational day to day of service may have been better to have been placed elsewhere with management structure with expertise.”

It was also noted that while the overall “governance of VVP” was operating, Sprouts “probably didn’t receive the level of attention” needed as it was a smaller scale than the “massive multi-million pound projects”.

Commenting on the initial business plan, Cllr Frank Hemmings queried where the figures came from for the service and why they didn’t materialise in the projected usage of Sprouts.

A council officer explained that the figures were based on the ‘Childcare Sufficiency Assessment’ and that feedback at the time from parents was that childcare was required at times such as early in the morning or later in the evening.

However it was acknowledged that the “sample was quite small”, which was taken as a representation that there was demand for the service.

Despite the criticism of the Sprouts project, the meeting was told by a council officer that it had infact “over achieved the majority of targets” in the VVP element itself, with the issues coming later during the actual running of the service.

Cllr Skelland looked to shift any blame to Welsh Government, ‘if there is a criticism of anyone it is Welsh Government’, being critical of the short window of time open to create and submit bids, with the implication poor plans could be a result of that.

At times there appeared to be a divide over what the outcomes of the meeting should be, with Cllr Alun Jenkins stating that on the whole the VVP project had been successful.

However Cllr Mark Pritchard, leader of Wrexham Council, offered a blunt message of the local authority being unable to subsidise a service when the private sector can deliver it.

He added: “Was there a need for Sprouts? We were told the business case was solid and sound and would deliver what we wanted, that’s why it was taken forward.

“That proved to be wrong decision as the market wasn’t there and we had to subsidise it. That’s why it closed. I believe the decision was taken for those reasons.

“We have to be able to say Sprouts was not a success. It was unsustainable and the business case wasn’t right, otherwise we’ll never learn from it

“Sprouts was not right for this council, it was subsidised and we can’t subside services when other organisations that can.”

Cllr Pritchard widened his point in the context of ongoing multi million pound cuts to the council’s budget, adding: “We should learn today that we cannot go out and get grants for facilities when we have no revenue to run them in the future”, after earlier defending the Executive Board’s decision to close Sprouts by saying “We are not in the business of subsidising services that do not wash their face”.

After a more concise debate than we were expecting the committee decided their outcomes revolved around:

– Noting the changes made to the Council’s Project Management Booklet, and get copies circulated.
– More linking between the scrutiny process, with Chairs and co-Chairs being given more information, with topic request forms being used to progress any concerns. This will also include notes on the committee forward work programme, and via information reports.
– Future projects will ensure all necessary consultation with stakeholders is undertaken.
– Thanking Officers for their work, and also recognition of the successes of the other programmes under the VVP programme.

Below are our live tweets from the meeting in reverse order…

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