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Dear Mr McGregor,

Please find attached 'Empty Homes Grant Cost Analysis' and 'Approval of
Application of Empty Homes Grant'.

It is significant that £62,450.08p is shown on both these documents as being the

cost of construction. Please note that my client's excess contribution has actually
increased from £24,950.08p to £31,195.09p after taking into account
£16,319.58p worth of omissions made by Best Value (UK) Limited.

I report that RGR Partnership have confirmed they were unaware of any
omissions and they will verify this if you contact them.

I believe the answer lies in statutory provisions contained under 'Housing Grant,
Construction and Regeneration Act 1996' and references to this act are cited on
the attached 'Approval of Application'. I have copied and pasted Section 34
which deals with 'Decisions and notifications' and is highlighted in red below:-

Decision and notification


Decision and notification

(1) A local housing authority shall by notice in writing notify an applicant for a
grant as soon as reasonably practicable, and, in any event, not later than
six months after the date of the application concerned, whether the
application is approved or refused.

(2) Where an authority decide to approve an application for a grant, they shall

(a) which of the relevant works are eligible for grant (in this Chapter referred to
as “the eligible works”),

(b) the amount of the expenses which in their opinion are properly to be
incurred in the execution of the eligible works,

(c) the amount of the costs which in their opinion have been properly incurred,
or are properly to be incurred, with respect to preliminary or ancillary
services and charges, and
(d) the amount of grant they have decided to pay, taking into account all the
relevant provisions of this Chapter.

The total of the amounts referred to in paragraphs (b) and (c) is referred to in this
Chapter as “the estimated expense”.

(3) If the authority notify the applicant under subsection (1) that the application
is approved, they shall specify in the notice:-

(a) the eligible works,

(b) the amounts referred to in subsection (2)(b) and (c), and how those amounts
have been calculated, and

(c) the amount of the grant.

I should draw your attention to Section 34(2)(b) of this act. In practice, Grant
official’s perform a cost control exercise based on the accepted tender submitted
for grant approval. The tender is costed on the 'Priced Schedule of Work'
submitted by the builder. The official then reduces the cost of individual items of
grant eligible expenditure shown on the 'Schedule of Works' , which are in their
opinion excessively priced. In simple terms, if the builder overpriced an eligible
item of expenditure for example a radiator at £500 then the Grant Officer will not
approve grant on the full £500 but will approve grant on £150 which is within their
costing range for that item of expenditure. This is normal practice by all local
authorities in England and Wales, and is a counter-measure against collusion
and over-inflating of contracts for grant purposes. This is the backbone of all
grant policies and is basic common sense.

Surprisingly, Council Solicitor Robin Jones and Internal Auditor's John Fidoe and
Aled Williams were not in a position to discuss the application of Section 34(2)(b)
in a meeting last autumn. They explained, they are not abreast of provisions
contained in this act despite them notifying my client two months before that they
intend recovering the grant for breaching provisions set-out under the HGCRA
1996. This act forms the bases of the Council's Grant Policy Document in force
at the time.

I obtained a copy of the Grant Policy Document last week from another client
who accessed the same grant months before my client. It has to be mentioned
that Internal Audit failed to comply with my client's request for a copy of the Grant
Policy Document.
In summary, it would be prudent for the Council to seek solid legal advice on the
application of Section 34(2)(b). As you are aware the case notes are voluminous
and this E-Mail only deals with one aspect surrounding the 'Empty Homes Grant
Approval' and the 'Cost Analysis'. I have further evidence that suggests the
unsigned and undated Cost Analysis which was produced for the first time in
April, 2009 is the result of fiscal alchemy. I will furnish you with my findings once
you have had time to digest the contents of this E-Mail.

I hope we are on the same wave-length and I truly believe you have the ability to
steer IOACC into less troubled waters. My honest opinion is that your Internal
Audit Section have tied up the tiller and gone to sleep and by doing so have
steered IOACC into uncharted waters.

Yours faithfully,

Andrew Mark Hughes