Spending watchdog accused of errors

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The Independent Online
MPs on the Commons Public Accounts Committee have been criticised for producing a report containing errors and failing to consider fresh evidence. Tony Danaher, a partner in Tamesis, a London-based marketing company, is writing to the PAC to ask for the inquiry into financial irregularities at the Plymouth Development Corporation (PDC) to be reopened after publication of its report this month.

The complaint raises the issue of whether investigations by the committee, whose findings are privileged and so cannot be challenged in court, are thorough enough. There is also the question of natural justice, as an organisation criticised in the report was not given the opportunity to respond or provide evidence. Mr Danaher said: "We were quite willing to give evidence and explain details of what went wrong ... But no one asked us to. The first we heard about the report was when it appeared in the Independent."

The National Audit Office, whose investigation formed much of the PAC's report, admitted Tamesis had not been spoken to directly. A spokeswoman said: "Most of the work was carried out by the external auditors. The former chief executive, John Collinson, and the department provided information." The PDC was set up in 1993 to stimulate redevelopment of three waterfront sites in the city.

The PAC report criticised Mr Collinson for claiming pounds 9,200 expenses he was not entitled to. But it also criticised the contract with Tamesis. In particular, it says it was not let by competitive tender, but Mr Danaher was able to show the Independent detailed tender documents. He said: "There were three other companies involved and we had to do a lot of detailed work in order to win the contract."

The report concluded: "The corporation, by accepting insufficiently specific invoices from their marketing consultants, in effect relinquished control of the marketing budget." However, Tamesis says this style of invoices was specifically requested by the corporation. The report also says Tamesis sent three staff members to the US for a prize-giving ceremony for the two- handed transatlantic yacht race, which the corporation sponsored. Mr Danaher said: "We only sent one member of staff, on the request of the corporation, to provide press-officer services. They must have confused us with the two civil servants who travelled to the US with their families."

Mr Danaher says the MPs' inquiry missed the main point: "The ... whole way the corporation was set up, run and funded was wrong. It would have been much better to have given the pounds 37.5m to the local council to regenerate the area, rather than parachuting in a whole new agency which had enormous setting-up costs. The local councillors on the board of the corporation were far more competent than the private-sector people, who were there because they were hoping to make a profit."

The concept of urban-development corporations, introduced by the Tories in the 1980s, has had a mixed record.

There have been some successes at attracting private finance but critics have pointed out that a lot of money has been spent on unsuccessful schemes and there have been several instances of waste highlighted by the NAO.