Notes taken at the Meeting of the Finance and Corporate Services Scrutiny Board of Coventry City Council – March 29th 2023 for circulation to F13 and other artists in the city. Please note that these are not the official minutes – those will become available via the City Council’s website in due course.

Scrutiny Board Members: Councillors R Auluck (Chair), J Blundell, R Brown (By Invitation), R Lakha, J McNicholas, J Innis, J Lepoidevin, T Sawdon

There were several Council officers including Barry Hastie and Kirsten Nelson the joint Acting Chief Executives, David Nuttall who was Strategic Lead for City of Culture, and Julie Newman, Chief Legal Officer, in attendance. Cllr Welsh was unable to attend and sent apologies.

David Burbidge who sat on the Board of City of Culture Trust until May 2022 was in attendance. Cllr Khan who was also a CoCT Trustee was due to attend, but had to give apologies.

There were 10 observers including: Alan W, Jazz M, Mary C, Heather D, Janet V and two journalists, including Simon Gilbert who first broke the story of CoCT entering administration.

The papers prepared for the meeting included some of the Trust’s accounts and a detailed briefing note regarding the £1m loan made by Coventry City Council (CCC) to City of Culture Trust (CoCT) in October 2022 and the subsequent events that led to CoCT entering into Administration in February 2023. At the previous meeting of the committee, Councillors asked a series of questions in relation to CoCT – attached with responses was a letter from the CoCT’s Administrators – all this paperwork is available from the Council’s website.

Cllr Auluck opened the meeting by reminding everyone:
– The Council and this committee are committed to transparency
– There are officers here to answer the Committee’s questions, including David Nuttall who was the strategic lead for the Council on the City of Culture project.
– Former Trustee of CoCT, David Burbidge is also here by invitation.
– The Administrators are currently investigating (please refer to their letter in the meeting paperwork). This is an important investigation and, as a consequence, several staff and trustees have been advised not to attend today because this investigation is ongoing. This may limit this meeting.
– We should also note that, at a full Council meeting, Councillors voted last week to write (and have indeed now written) to Government to ask for a public enquiry.

She then handed over to Cllr Richard Brown who referred the meeting to the information about how the appropriate checks etc were undertaken as detailed in the comprehensive briefing note. He reminded the meeting that, of course, CoCT was an independent charity, but he would attempt to answer as many questions as he could.

Questions to Barry Hastie and Cllr Brown:
Q: Note from accounts that 46% of the total funding was still to be raised. Why is that?
A: It’s a normal process for charities, so it didn’t raise alarm bells. Much of it is grant funding, and there’s always a bit of speculation. You should look at the funding tracker – 6.8 million had been raised 3.5 million was in applications.

Q: If a large percentage of the money had not been raised, was our due diligence process in order? Were the Trust asked, after the loan, how much of the Reel Store projected income was confirmed? And should they actually have been asked to pull the plug on the Reel Store in October?
A: The Frida Kahlo exhibition was already committed, so pulling it would not have saved any money. And it proved popular and was extended as this was not exacerbating the financial situation.

Q: University representatives on the board of directors resigned the week after the Council granted the loan, so obviously some of the directors were unhappy. Can I clarify that the university statement says it was the loan agreement that caused the resignation?
A: Obviously from the paperwork, the fluid nature of the finances were problematic for us to unpick after the uni had walked away over the loan.
Q: Was this fed back to us to give us the opportunity not to pay?
A: David Nuttall did a good deal of work on understanding the Trust’s finances over the summer, so it was definitely much less fluid by October. It was a do or die situation – either we supported the CoCT or it would have folded then. We could have given CoCT a grant, but decided a loan on competitive terms was a better option.

Q: Do we need to see the Trust Board minutes from the meetings prior to the loan? Surely in those minutes partners would have shown a level of concern. And maybe we could have thought twice about giving the loan?
A: If there weren’t concerns, I’d be surprised, given the cashflow situation.

Q: Are you saying that without the loan that there would have been an immediate closure, is that right?
A: Yes. It was an issue of grant fundraising cash flow. This loan was to get CoCT over that hump between putting bids in and funds being awarded. And it did help – local people got paid and some popular projects, for example Frida Kahlo and Cosy Creative, happened.

Q: Was there any attempt by CoCT to contact a commercial lender? The loan was supposed to allow all outstanding bills to be paid. But obviously there are still creditors. What direction or influence did we have over how the loan was spent?
A: Don’t think there were any attempts to apply for a commercial loan, because the known limited lifespan of the company would have limited the options. But of course, it’s our city, our culture. Why wouldn’t they come to us? I’m very proud of what was achieved, especially with the pandemic and other unprecedented headwinds. Despite all that, we achieved a great deal.

Q: Legally the CoCT and the Council were two separate entities, but there are a lot of overlaps, especially in view of the loan agreement. Will this stand up legally? CCC’s role as guarantor no longer applies, is this right?
A: Yes, see question 32 on the matrix and question 34. CCC was a guarantor for the bid, and at the point where the title was awarded to the city and the paperwork was signed, CCC was no longer required as guarantor, apart from on two occasions which were separately contracted. These were (as you will see in the Q&A matrix in the paperwork) Coventry Glides and the lease of the land forming the Assembly Festival Gardens site from Coventry University.

Q: How many staff and trustees were invited here to answer questions today? And what reasons were given for not attending?
A: We invited 21 trustees, and 14 responded. Obviously we cannot be sure that those who did not respond definitely received the invitation. A number of trustees have been advised they cannot attend this meeting today, and this is because of the insolvency practitioner’s ongoing inquiry into the trust. Originally there were two accepted invitations – David Burbidge and Cllr Khan, who is now unable to attend.

Questions to David Burbidge:
Q: Before I ask my question, I’d like to pay tribute to David for all his hard work and his commitment. City of Culture, and the investment it has brought, has been brilliant for the city. Okay, questions. When you stepped down from the CoCT board in May, the accounts did show a loss, which was not surprising, given the pandemic, etc. When you resigned, having done your job, were you happy that the £12 million legacy programme was all in order?
A: Yes. After seven years, I felt like I’d done my job. All this is a bit of a sting in the tail. It’s very regrettable – and that’s why I’m here. The accounts were audited at the end of March 2022. I left at the end of May as I’d always planned to do, and it was all tickety-boo at that point.

Q: There was a loss in that last year and extra employees?
A: That was the actual year of programme, of delivery, so we needed more people. The loss had been provided for in the previous years with reserves built up to cover it. We had £2.5m in reserves with two months (of the delivery year) to go, so I have no doubt it was in a good place when I left.

Q: In the current circumstances, do you think the Council loan was a good idea?
A: After May 2022, I stepped back, so I can’t answer. I don’t know. It’s difficult to say. I can understand the difficulty on both sides. But I can’t comment because I just don’t know.

Q: Additional thanks for all the work you’ve done, it’s truly appreciated. There’s a huge amount of regeneration etc, and that in itself is a great legacy. We don’t want to lose sight of that.
A: That’s a very important point. The massive benefits the city derived mustn’t be forgotten. I don’t diminish the terrible situation here now, but we mustn’t allow it to cloud our successes (here he read some of the headline evaluation points). We really mustn’t throw this away. We do need to do the investigation. Get that out of the way and then get the PR machine out.

Q: As chair, how did you get on with the Executive Director? Were there times when you had a difference of opinion? And how did that go?
A: In the last two years, an Executive Board was established. I was on it, but I was not the chair. I had a good relationship with Martin Sutherland, and I have the highest regard for him. We did have lots of conversations. I can’t remember strong disagreements. At one point I wanted to keep a close eye on the cash situation – I was a bit worried early on that we were committing too much. I raised a concern, or maybe Martin alerted me, about spending money we didn’t have – but then the funding did come in, and it was okay.

Q: Up until May when you left, when creditors were paid, were artists given priority?
A: I don’t know. I had no involvement in that. I wasn’t aware of any particular stresses or people not being paid on time.

Q: The Legacy Project was an integral part of our successful bid, but we’re now unable to fulfil this. Can I clarify that I understand correctly what you said? You said the Executive Board was set up and was meeting every two weeks to ensure the Legacy Project happened?
A: The Executive Board was actually set up 18 months ago, well, halfway through the delivery of the CoC programme, to help with the efficient management of the delivery phase – which it did. Legacy was a separate thing to that, and was being considered at least six months before the end of the main programme. I distanced myself from that, because I knew my job would have been done by then. Legacy was steered, quite rightly, by Martin Reeves.

Q: As directors/trustees resigned, what was the mechanism for appointing new directors? After May and the end of the CoC delivery, it appears that many left and few came. How was continuity ensured?
A: About halfway through delivery, we became aware that the makeup of the board was not particularly representative of the, especially ethnic, diversity of the city. We had a big and very successful successful recruitment drive.

At this point, Cllr Auluck pointed out the time – David Burbidge had to leave at 3.30. Before he left, he repeated that, in his view, the investigation process needed to be completed as quickly as possible so that the focus could move onto the positives in the evaluation report. He expressed his disappointed that this situation has happened and left the meeting.

Questions to David Nuttall:
Q: The evaluation was carried out by the universities – was it part of the original work and have the universities been paid?
A: It’s a significant programme and it’s publicly available. It’s completed as far as I know.

Q: How much of that was in kind? And how much of it was on a commercial basis? This isn’t a question for now. I’d just like to know at some point.

Q: Did officers realise that the there was difficulty at the Trust and is that why they took the reins? If so, why were Councillors not informed?
A: I became aware of the situation in the summer. And then there were lots of conversations between that point and the time of the loan offer. The Trust Board and the Executive Board increased the frequency of meetings. Plus there were lots of info requests from CCC Finance Department. Officers did respond and members (Councillors) were kept fully briefed. It was a dynamic situation.

Kirsten Nelson: At the point of the January conversations, which were also fully briefed, the situation looked salvageable at that time. Conversations with funders of the Legacy programme continued, and will continue. We don’t believe this is the end of the Legacy Programme – we want this to continue and the universities agree with us.

David Nuttall: We’re asking the funders how do we secure the legacy, and we hope to do this through the Cultural Strategy refresh, that the policy and legacy are owned by the cultural sector and the residents.

Q: So we’re hopeful money will come to the city and some Legacy programmes will happen without the trust?
A: We’re committed to securing what we can to deliver going forward.

Q: The Trust was good at putting in bids for funding, so why were they suddenly in a cash flow crisis?
A: They were not able to draw down the next lot of grants due to the threatened insolvency. There was an accelerator effect once funders began to know about the situation, they they ceased to want to invest, which made the Trust’s position worse. I can reassure you, though, that in discussions we’re having with funders, they’re very open to conversations about further funding for the city.

Q: If ticket sales for The Reel Store were falling far short of projections, that’s not a good sign. How were the ticket targets arrived at?
A: Figures were continually being adjusted as time progressed. And there was advice on this from the Audit and Risk Committee. The board took it seriously, had serious discussions about it.

Barry Hastie: There were no guarantees because this (the Reel Store, digital gallery) was a new model. It hadn’t been done before. So we were testing it out.

Q: When we reviewed the budget on the 11th of October, was that the budget that we made the loan based on or was it after that? Because it’s dated the week after?
A: It was actually the budget from before.

Q: Why did the projected programme expenditure go up from £3.2m to £5m in a short space of time?
A: We don’t know
Q: We’re quite concerned about this.

Q: Did Martin Reeves have a conflict of interests?
A: These were separate roles and he wasn’t involved in the conversation around the loan. It was kept very separate.

Councillor John McNicholas made the point that, although this meeting was happening after the Council had already voted to ask Government for an Inquiry, the committee was very glad that this meeting happened, as they had learned things:
1. There are still ambitions for a Legacy Programme – and that’s important.
2. David Burbidge’s hard work meant that some good really good stuff got done. Let’s not forget that.
3. It would be useful for this information to be circulated to all members.

Cllr Auluck moved on to the agenda item on the Works Programme, and the meeting closed at 4pm.

(Notes taken by Janet Vaughan on behalf of F13)

Further reading: City of Culture

This is obviously a developing situation, and quite a lot has already been written in local and national press, as well as by local residents and artists.

Simon Gilbert is the Coventry journalist who broke the story, and you can find his articles via BBC Coventry.  There are various takes on the Trust’s collapse and what it means for the city, including these blogs from a few weeks back by local writers Alison Manning and Margaret Egrot as well as Janet at Talking Birds.

Heather Davison from Sitting Rooms of Culture has set up Lost City of Culture, a new pressure group which is doing a lot of investigative work around the Trust and it’s collapse. They also attended the scrutiny meeting and have posted thoughts and comments on that via their facebook page.

Finally, here’s an interesting study on the very concept of Cities of Culture.

If you are aware of any other relevant reading that you think we should share, please do let us know.