The Social Investment Fund (SIF) has had to extend its project deadline by five years and secure over £13 million of extra funding while its application process featured a number of “conflicts of interest which were not appropriately dealt with”, a recent audit by the Northern Ireland Audit Office (NIAO) has found.
The audit reports that while SIF had a £79 million funding target when it was introduced in 2012, its budget was increased to £93 million in 2016, in part because of £6 million being paid in management fees. These fees, paid to lead partners appointed by local steering groups, averaged at 13 per cent of total project cost per project.
Of the £6 million, £4 million was paid to 18 voluntary and community groups who had been appointed as lead partners by steering groups that contained a representative of the group appointed. Cost increases of at least 10 per cent were found in more than half of these projects. The audit criticised the Department of Finance for its handling of the steering groups, which were made up of volunteers, stating that the Department failed to offer satisfactory guidance regarding conflicts of interest. The audit found that the design of the scheme had made conflicts of interest “inevitable” and identified three clear instances in which conflicts were not declared.
Lead partners were appointed without an open tender process, with a preference expressed by the Department that lead partners would come from steering groups given their familiarity with the process. This has made it impossible “to confirm that value for money has been achieved with respect to the fees that they receive” according to the NIAO. The image given by the audit is one where, once steering groups had been organised in the nine zones that Northern Ireland was divided into as part of the scheme, “guidance produced by the Department was inadequate” and they were essentially left to their own devices.
Transparency is a central issue in the audit, which reports that the “documentation around project selection and prioritisation was poor”. Examples given include £1 million given for the construction of a building that will cost a further £2.25 million over 25 years in rent that the audit says did not need public funding and an £870,000 project for which no documentation exists.
Paired with the criticism of the process’ lack of transparency was an acknowledgement that the initial selection process outlined had been too short. Project selection and full funding were originally scheduled to have been delivered in the three years up to March 2015, but that deadline had now been extended to 2019/20. Of the 68 SIF-funded projects, 31 are now complete and the majority have commenced, but five are not yet in the delivery stage.