Trust has been “damaged” after Dundee City Council withheld hundreds of thousands of pounds of taxpayers’ money.
A Perth and Kinross councillor called the conduct “morally reprehensible”.
Over the course of three years £150,000 was annually kept back by Dundee City Council from the Business Gateway Tayside fund.
Business Gateway Tayside is a collaborative project between Angus, Dundee and Perth and Kinross. It is designed to offer free, expert, local assistance and advice for small businesses.
Dundee City Council is the lead authority and since 2017/18 it has consistently annually received £1,362,000 from the Scottish Government.
However – as lead authority in the partnership between the three councils – it kept back hundreds of thousands of taxpayers’ money from the shared pot.
According to data included in a PKC report, Dundee made a saving of £150,000 in the programme management costs over the course of three years from 2017/18.
While £150,000 was reinstated to the 2020/21 budget, a PKC committee was this week told £450,000 had not been recovered.
After being provided an update at a virtual scrutiny committee meeting on Monday, Conservative councillor Colin Stewart called the actions of Dundee “morally reprehensible”.
Convener Sheila McCole thanked cllr Stewart for first raising the issue with the scrutiny committee several years ago and thanked officers for “their doggedness in bringing this before the committee”.
PKC has been pursuing the issue for several years.
Back in September 2019, PKC’s head of legal and governance services, Lisa Simpson, told PKC’s scrutiny committee part of the issue was the Business Gateway Tayside document PKC signed up to “lacked teeth”.
The former Perth City North councillor and SNP leader Dave Doogan – now MP for Angus – said at the time: “There’s a reason that document is very flimsy and that’s because it’s based on trust.”
At this week’s meeting, PKC’s head of planning and development, David Littlejohn, said trust had been “damaged” and described PKC’s relationship with Dundee over Business Gateway as “relatively fraught”.
He said they could not progress with the “same level of implicit trust between partners”.
Both Angus and PKC challenged Dundee on withholding money from Business Gateway Tayside management costs.
Mr Littlejohn said: “Moving forward we have insisted that Dundee City Council is much more explicit in the breakdown of the management costs.
“I have suggested that if we can’t get that level of transparency I would much prefer that – for example – Perth and Kinross Council took on the overall management of the contract on behalf of the partnership.”
He told councillors Dundee had agreed to the new structure with the new governance and the greater ability for more regular scrutiny by elected members.
He said: “That level of trust has to be more explicit.
“We need to see things written down in a way which perhaps they weren’t before in terms that we’re moving towards a management board with elected members and much more transparency for the contract arrangements.”
He added: “It has been deeply, deeply unfortunate and has probably damaged some professional relationships but we need to do what’s right in terms of the absolute transparency of how we’re using public money.
“What we can ultimately do for the three years of saving I know not, but we’ll see what we can do to provide this committee with information if we can.”
After the meeting, a Dundee City Council said: “Business Gateway Tayside operates in a flexible and responsive way and has provided assistance to help businesses across the Angus, Dundee and Perth areas cope with the many challenges presented by the pandemic.
“It maintains its position as one the best performing operations of its kind in Scotland, adding value to the economies of all the local authority areas.”
By local democracy reporter Kathryn Anderson