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New boss 'horrified' by amount of debt at enterprise agency

PUBLISHED: 10:28 24 January 2019 | UPDATED: 13:25 24 January 2019

New chief executive of Nwes, Jo Clarke, said she was

New chief executive of Nwes, Jo Clarke, said she was "horrified" by the number of creditors and amounts owed at the enterprise agency. Photo: BBC

BBC

The new boss of the region's enterprise agency has revealed she was "horrified" by the amounts of money it owed, as fresh questions emerge about a council loan.

The opening of the KLIC. The council hailed the building a success but questions remain about how it loaned £2.75m to Nwes to build the innovation centre which has never been paid back. Picture: Matthew UsherThe opening of the KLIC. The council hailed the building a success but questions remain about how it loaned £2.75m to Nwes to build the innovation centre which has never been paid back. Picture: Matthew Usher

Jo Clarke took over as chief executive of Nwes, which supports new businesses in east England, in April last year.

But as revealed yesterday in an investigation by the EDP and the BBC, the publicly-funded enterprise agency is facing a series of questions over how it spent money under its previous leadership.

It is also facing financial problems and in November was unable to pay back King’s Lynn and West Norfolk Council a £2.75m loan it was given to build the King’s Lynn Innovation Centre (KLIC) off the A47.

Ms Clarke said: “I was horrified at the level and extent of crediitors. That position will never be allowed to be recreated in the way I manage the business.

“I would like to sincerely thank all those creditors, including some grant recipients, who have been so patient while we remedy the position.

“We continue to focus on ensuring that Nwes is on a secure financial footing and that has included a major cost cutting exercise which included eliminating all and any non-essential expenditure and sadly, making a number of staff redundant.”

Auditors cast doubt in Nwes’ latest accounts, for 2017, about its ability to continue to operate.

Half of its £8m income in 2017 was spent on “administrative expenses”.

John Balch, director at Nwes, helped deliver the KLIC through his firm Nautilus. Pictured in 2016 with then leader of King's Lynn and West Norfolk Council Leader Nick Daubney who was also a director at Nwes until 2016. Picture: Matthew Usher.John Balch, director at Nwes, helped deliver the KLIC through his firm Nautilus. Pictured in 2016 with then leader of King's Lynn and West Norfolk Council Leader Nick Daubney who was also a director at Nwes until 2016. Picture: Matthew Usher.

Meanwhile its property arm, Nwes Property Services, has also been in financial difficulty.

The firm, which manages buildings, including Rouen House in Norwich and the Orbis Energy Centre in Lowestoft, had debts of £4.4m due in 2017 but just £900,000 in available assets.

In response previous directors Kevin Horne and John Balch, who retired in April 2018, said: “The business was solvent, all suppliers were paid in full.”

But King’s Lynn and West Norfolk Council is now investigating the circumstances around how it loaned Nwes millions of pounds which it has not paid back.

Nwes was given £2.5m by the New Anglia Local Enterprise Partnership (LEP) through the council in 2012 and another £1m by the council for the initial build costs of innovation centre.

A total of just under £5m was given by the council and LEP to Nwes over the next four years, including a £250,000 loan in 2016 from the council after the KLIC was built and ran into financial problems.

In 2012, when councillors were first asked to use taxpayers’ money to build the centre, several raised concerns.

That included why only Nwes could deliver the project, what security they had if Nwes defaulted on the loan and why the council would have no ownership of the building despite its investment. Councillors were assured all was in hand.

Chief executive of Nwes Kevin Horne showing The Duke of York around the KLIC. Picture: Ian BurtChief executive of Nwes Kevin Horne showing The Duke of York around the KLIC. Picture: Ian Burt

But Labour councillor Charles Joyce now wants an independent investigation into the loan.

He has tabled a motion calling for an investigation, which will be discussed at tonight’s council meeting.

Nick Daubney was leader of the council while the loans were approved and also a director of Nwes.

At council meetings he declared an interest and excused himself when the loans were discussed.

New chief executive of Nwes, Jo Clarke, said she was New chief executive of Nwes, Jo Clarke, said she was "horrified" by the number of creditors and amounts owed at the enterprise agency. Photo: BBC

But when the centre was opened in 2016 he was publicly thanked for all his efforts in getting it built by a councillor, who suggested he had a major role in it.

In a report to the council’s cabinet in 2016, Alistair Beales, member for regeneration, praised Mr Daubney for doing “more than anyone in getting the job done”.

But a council spokesman said: “We are not aware of any involvement on the part of Nick Daubney in the KLIC delivery.”

Mr Daubney, who is now mayor of King’s Lynn, said he played no role in any discussions about funding the KLIC by the council.

He said he had championed the concept of an innovation centre in King’s Lynn since 2003.

Council leader Brian Long said: “KLIC is doing the job we set out. It is 90pc full.”

A LEP spokesman, meanwhile, said it carried out “extensive due diligence into the KLIC project”, before loaning the cash to the council who gave it to Nwes.

They added: “The council repaid the full amount of the loan, plus interest, on 30 November 2018, as per its agreement with the LEP.”

•The charity which got £96,000

Nwes paid large sums of money to a struggling charity which its directors Kevin Horne and John Balch were trustees of.

Funds of £96,000 were paid to the Bridge Trust of Great Yarmouth in 2015 for “services”, according to Nwes’ accounts.

The charity also had a loan of £122,000 from Nwes which it paid back in 2015.

The March 2015 accounts show the charity spent £282,000, but only had income of £119,000 suggesting it was in financial difficulty.

Mr Horne and Mr Balch both resigned from the charity in December last year after leaving Nwes in April.

They said: “The charity encountered difficulties some years ago and John Balch and Kevin Horne were asked by the Trustees to step in to rescue it.”

They added the charity was now on a “firm financial footing”.

The charity owns two buildings in Great Yarmouth which Nwes leases for it.

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