Ministers ‘played fast and loose’ with financial regulations over a £770,000 review of the National Insurance Fund and welfare system.
That’s the damning conclusion of a Public Accounts Committee investigation into the affair.
The PAC also concludes Tynwald approval should have been sought to confirm beyond doubt government was acting within its legal powers to use money from the NI Fund to pay for the review.
By not following financial regulations in their ‘indecent haste’ to commission the review’s second phase, Ministers may have exposed the public purse to ‘unquantified risks’, it adds.
The report, leaked ahead of publication to the Manx Independent, comes just a fortnight after independent legal opinion concluded government loans awarded to the Sefton Group were not lawful.
The PAC inquiry into the NI Fund review courted controversy even before it heard its first evidence with Ministers accusing committee chairman, Alfred Cannan MHK, of prejudging the issue.
Chris Robertshaw and Eddie Teare called for the Michael MHK to step down as chairman in April, after he accused the Council of Ministers of pursuing the ‘politics of panic’ following the announcement all options need to be considered to prevent the NI Fund – which pays for state pensions, the Manx pension supplement and other social security benefits – from collapsing by 2050.
Consultants for the project’s second phase were appointed after a decision by CoMin in September 2013, without it going to competitive tender or a waiver being issued by Treasury under financial rules.
The PAC report will be laid before Tynwald at this month’s sitting but it is not due to be debated by members till the October or November sitting.
The report states: ‘We conclude that an express Tynwald vote would have put the legal vires for the expenditure beyond doubt. Politically, because of the scale and political significance of the review, the proposal to engage consultants to undertake it should in any case have been placed before Tynwald at an early stage.
‘Express Tynwald approval should have been sought both for the level of the proposed expenditure and for the use of money from the National Insurance Fund for this purpose.’
The PAC recommends Treasury brings forward legislation to prevent funds being transferred out of the NI Fund ‘in respect of novel or significant administrative expenses without the express prior approval of Tynwald’.
Addressing whether the expenditure was properly authorised, the PAC concludes ‘the procedure by which the contract was entered into was not in accordance with financial regulations’.
The report states: ‘We conclude the Council of Ministers appears to have forced the Treasury and the Department of Social Care to commission phase two of the review with indecent haste, believing in its zeal for reform that the ends justified the means, playing fast and loose with financial regulations, and leaving civil servants to pick up the pieces.’
It continues: ‘We conclude in its extreme haste to commission phase two of the review, the Council of Ministers may have exposed Treasury and the National Insurance Fund to unquantified risks.’
The Chief Minister hit back at the Public Accounts Committee’s claim that ministers ‘played fast and loose’.
Allan Bell said: ‘I think it is incredibly unfortunate that the authors of this report have used the language that they have. Ministers have not played fast and loose with financial regulations.
‘They have done a very serious job to try to collect the data to enable us to make the long term strategic decisions to protect the welfare state we enjoy on the island.’
He said ministers would need time to consider the report’s implications and to get behind the ‘headline-grabbing statements’.
The Chief Minister said: ‘If there are deficiencies in the legislation or if the legislation needs clarifying then we will certainly put that right.’
He added: ‘The one thing that clearly comes out of the report is the ministers were quite within their rights not to take this decision to Tynwald. They were perfectly capable of making the decisions separate of that.’
Liberal Vannin leader Kate Beecroft MHK said: ‘With ministers behaving like this, it is hardly surprising that this government is losing all credibility and the confidence of the public.
‘The report by the Public Accounts Committee is excellent and they have all obviously worked hard to produce it in such a short time scale, but it does not actually conclude the matter.
‘There are too many unanswered questions and they are questions that have to be answered.’