PAC Finds Office Space Cost Taxpayers £1.8m
Date: Thursday, 30 September 2010
Reference: PAC 02/10/11
A report published today by the Northern Ireland Assembly Public Accounts Committee into office accommodation in Campsie and the Synergy e-Business Centre Incubation (SeBI) has found that unoccupied units cost the taxpayer £1.8m.
The Report found that the Industrial Development Board (IDB) entered into 25 year leases in 1991 and 1992 for two units which were never occupied. The leases were later terminated by InvestNI in 2008 and 2010.
Speaking at the launch of the Report, Paul Maskey MLA, Chair of the Public Accounts Committee said: “The Committee has always recognised that the Department of Enterprise, Trade and Investment (DETI) and Invest NI need to take risks in order to stimulate economic development here. However, when risk is part of the process, risk management must also be part of that process. Unfortunately in this case, risk management was not of an acceptable standard.
“The most significant risk in the Campsie units’ leasing agreements was the possibility of missing the chance to break the lease after four years, thereby committing the Department to expenditure of £1.89 million if it could not find tenants. Yet, through an absence of risk management, this is exactly what happened – the break option was missed – and the Department was left for 19 years with two white elephants it was unable to let.
“The Committee was also concerned about the poor quality of project management and record keeping. Significantly, there was no inquiry into why the options to break the leases were missed. Such an inquiry would have allowed the Department to determine whether any individual was culpable of negligence or misconduct and to learn valuable lessons.”
The Report also dealt with the Synergy e-Business Incubator, highlighting similar failings in risk management, project management, record keeping and an absence of monitoring performance or financial aspects. As a result, for the £1.2 million investment in the project, it achieved 41 sustainable jobs in six companies against an anticipated 100 jobs through the incubation of 20 companies.
Notes to Editors:
- Synergy e-Business Incubator (SeBI), situated in West Belfast, was a division of a technology company Synergy Centres Limited (SCL), which was jointly owned by Fujitsu Ltd and the University of Ulster and funded by the Department of Enterprise, Trade and Investment (DETI).
- Invest NI replaced IDB in April 2002.
- The Committee found that despite the fact that significant risks were brought to the attention of the Department at the start of the project, it decided to proceed. Valuation and Lands Office (VLO) had major reservations about the location, size and demand for the Campsie units, but the Department failed to take their advice. As a result, the Committee concluded that these risks were not managed effectively.
- The Committee also found that the Campsie units had been poorly marketed and kept in a poor state of repair, particularly in the period from July 1998. By December 2005, they had deteriorated so much that Invest NI could not contemplate showing them to clients. This triggered a response from InvestNI which ultimately led to it withholding rent from the landlords in July 2007 and eventually resulted in the landlords agreeing to surrender the leases in January 2008 and April 2010 at a premium of £405,000.
- Standing Orders under Section 60(3) of the Northern Ireland Act 1998 have provided for the establishment of the Public Accounts Committee (the Committee). The statutory function of the Committee is to consider accounts and reports on accounts laid before the Northern Ireland Assembly. These are compiled and laid by the Comptroller and Auditor General for Northern Ireland (C&AG), head of the Northern Ireland Audit Office.
- The C&AG is empowered to investigate any area of expenditure and has a statutory right of access to all files and papers in Departments and public bodies.