Author: Sal and Simon
Ventnor Audit Report: £35,000 of Rent Discounts and More
Sunday, 31st January, 2010 at 11:03 pm, Isle of Wight
Isle of Wight Council, News, Town Council, Ventnor, Ventnor Winter Gardens
OK, so we looked earlier at what the auditors had to say about how the concession contract was unlawfully awarded to (the now Cllr) Perks, next we move onto how it was managed with regards to rent reductions, changes to terms of agreement and other miscellaneous items.
Rent agreed in January 2007
On 8th January 2007, Cllr Graham Perks, the former concessionaire at the Winter Gardens, signed a letter accepting terms and conditions of the concessionaire agreement.
Outlined in this contract, which commenced on 1st February 2007 and ran for five years (with an option to extend for a further two years), were details of the agreed rent.
The schedule of rent payment was as follows:
- £600 per week for the first 13 weeks
- £800 per week for the next 13 weeks
- £1,000 per week thereafter
The £1,000 per week rent was to be reviewed every two years and it was stipulated that the review should NOT permit a reduction below the £1,000 per week figure.
Massive rent discounts
Within Appendix One of the report, auditors reveal that Cllr Perks only ever paid the agreed £1,000 per week figure once.
The report tells us that Cllr Perks went to the Ventnor Town Council (VTC) several times requesting rent discounts which over the period of his concession totalling approximately £35,000.
£35,000 of rent discounts in less than three years
Rent discounts given before discussed at council
The usual format for the series of requests for rent discounts was for Cllr Perks to write to Town Clerk, John Farrant, with his request. Protocol was for this request to be taken to the VTC for consideration.
However, in one instance, on the 23rd September 2008, John Farrant wrote to Cllr Perks granting another rent reduction the day before it was even considered by the Committee.
As an officer, John Farrant clearly had no authority to grant this rent discount.
Another rent reduction
Nearly ten months after signing the contract, Cllr Perks wrote to John Farrant again requesting another rent reduction. This time stating he was dissatisfied with the pre-agreed arrangements.
Paperwork on file shows Cllr Perks felt the agreed rental figure was not comparable to other pubs in Ventnor when looking at rents, location and facilities.
For those who aren’t aware, Cllr Perks has been the landlord of several pubs in town. This experience would give him a fair understanding of what was a reasonable rent for the premises would be.
VTC pay utility costs and more ….
Although Cllr Perks paid a weekly (reduced) rent to use the Winter Gardens, the Ventnor Town Council covered all of the cost of gas, electricity, water, business rates and refuse disposal, figures totalling a substantial annual cost for any business.
The report also reveals that the VTC ended up paying for repairs to a bottle cooler, glass washer and ice machine owned by Cllr Perks.
10% bar split abandoned
The contract that was signed stated that on the night of any events promoted by the VTC, Cllr Perks should pay 10% of bar takings to the VTC.
It was suggested that the contract should be changed as it was claimed that it was “too difficult to be certain how much of the bar income arose from the promotion and how much came from diners and regular customers.”
Again this was carried out, with the 10% of takings being kept by Cllr Perks..
Instead Cllr Perks simply provided a rider (drinks) for any performing artists on those nights.
Further instalments on the findings of the report to follow.
Related posts:
- Ventnor Audit Report: Unlawful and Undocumented Selection of Winter Gardens Concessionaire
A detailed examination and explanation of the evidence of the... - Audit of Ventnor Town Council: A Damning Report
This is where we're gathering all material we garner from... - Ventnor Audit Report Reveals Some of Ventnor Town Council’s Secrets
There's more under the surface.... - Audit Report and Precept To Be Discussed at Next Ventnor Town Council Meeting
Precept and Audit report to be discussed at next Monday's... - Audit Report Into Ventnor Town Council Released (Update 4)
Lots on information in the 38 pages, with worrying terms...
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Doesn’t look good does it?
You would have thought that with such a massive rent reduction Cllr Perks would have been able to pay his staff minimum wage and holiday pay too, as he was legally required to do, but he did not. No holiday pay.
He should also have been able to pay National Insurance contributions, but at least one of his ex staff at the Winter Gardens discovered that her NI contributions had not been paid by Cllr Perks and she was not therefore entitled to benifits.
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Wow, that’s terrible. I guess she reported him for that did she?
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Mr. Perks is a great Mine Host who knows how to run a pub, providing good beer, good food and good entertainment. What more can one ask ? Without him at the helm the Winter Gardens would have degenerated into a Civic white elephant.
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“Without him at the helm the Winter Gardens would have degenerated into a Civic white elephant”
How do you know that? The report says there were four other people interested in running the bar, any one of them could have turned the place around.
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He didn’t realise that £1000 was completely unfeasble as a rent.
Running a pub or bar requires a good business head as well as great front of house skills
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What an interesting story. The other current story lines covering the concessionaire, the concession and the murky dealings regarding the rent and the (recent) departed Town Clerk suggest that this may be the tip of a very large iceberg.
Did the Town Clerk and the concessionaire jump ship before the brown substance hit the fan?
There are many financial models available for working out whether or not a pub can be self sustaining. These are available on Excel spreadsheets and it is straightforward to insert the known costs for rent, gross profit margins, utiities, insurance, rates etc and calculate the sales turnover required to ensure a sustainable and profitable operation. Given the concessionaire’s lenghty experience in most of the hostelries of Ventnor and some beyond, it is surprising that he thought that the business would sustain a weekly rental of £1000 including (how generous, VTC) all the utilities and rates!
The sorry outcome of this is that over the period of his tenure, (3 years) he has effectively deprived the Winter Gardens of £35,000 of revenue which could have been used to effect essential repairs to the structure.
It is disappointing to learn from Cindy (comment no 1 above) that the staff have not received statutory holiday pay and in one case, National Insurance has not been paid. Statutory holiday pay is an entitlement for all staff, not just full timers. Employers who cross swords with the Revenue in this way have usually paid a heavy price after being reported. It will be interetsing to see if those who have been short changed have the mettle to report their predicament.
The story continues to unfold………
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The original contract for the concession was for 5 years, so what about the remaing two years rent of £104,000? That’s a tidy sum and coincidentally would pay for the roof repairs the the WG which IWCC can’t afford………..
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I am Vice Chairman of a(thankfully)non political Parish Council in Berkshire and what I don’t understand in this sorry tale is why the annual report of the external auditor did not reveal this irregular arrangement in the financial year ending April 2007 (Councils have to be audited each year) as the contract was in existence then. Either the auditor did not spot it or the Councillors took no notice. One way or another something wasn’t right.
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Thanks for your comment GJ. Interesting to get a perspective from another parish council – especially one over the water.
Which part do you think should have been spotted? The fact the contract had been broken with the rent reductions, or something else?
Do they go into that much detail in an audit?
S
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If I am reading this correctly, there was a clear conflict of interest when Councillor Perks was awarded the catering contract, and I can’t see how VTC could award a contract to a councillor. I don’t imagine that he voted for it himself, but surely VTC could see that there could be conflicts in the future. It is not as if the contract was for a one off job, such as painting the windows. He should have resigned from VTC before the contract was placed, and certainly when he could not make the contractual rent payments.
Did VTC discuss getting another concessionaire when the contract was breached by rental payment defaults? Was the contract formally renegotiated at that point, inviting 3rd parties to tender?
Whether or not £1000 was affordable – the contract was signed on that basis.
The auditor should have spotted that the contract was with a Councillor – it was common knowledge – and drawn it to the attention of VTC. Perhaps he did.
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Mr Perks was a concessionaire long before he became a councillor, which was in June last year.
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Despite the many and various failings, I fail to see how any money was really ‘lost’ by VTC. The £1,000 weekly rent was never affordable. Cllr Perks should never have agreed to it.
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Sorry but I cannot agree on this point. The contract was a legally binding agreement and whilst I accept that the rent was probably not affordable (with the benefit of hindsight – always an exact science) it still does not excuse the concessionaire from meeting his contractual obligations. Therefore the VTC have been party to reduction in the revenue of the WG.
If you rented a flat for £100 per week and then found you could not afford the weekly rent, then you have a choice of trying to renegotiate the terms with the landlord or giving notice to quit and find acheaper flat.
Councillor Perks chose the first option, which appears to have been unlawful but successful. If the VTC agreed to the rent reduction then they acted ultra vires (outside of the terms of the contract) which could render the lease null and void since both parties were in breach of the terms of the original agreement.
It’s probable that his lease was invalid anyway, since the IWCC report states that there was no provision in the head lease for the WG for VTC to sub-lease the bar or catering operations.
They (VTC) should have benn running it themselves with (by implication) their own salaried staff which is something they would prefer not to do, since they appear to have been unlawfully sub-leasing the catering since the mid 1990’s. What is amazing is that not one of the members of the VTC thought to examine the terms of the head lease with IWCC to check if they could sub-lease, or if they did check they chose not to make any waves.
It is a real tangle, but whether there is a legal remedy is open to debate.
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