City of Culture to be loaned £1m in public cash by council in move that's 'not without risk'

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Parliament to hold debate on Coventry City of Culture Trust



Parliament will hold a debate on the collapsed Coventry City of Culture Trust after a local MP called for answers.

The trust called in administrators in February following weeks of financial challenges.

Coventry North West MP, Taiwo Owatemi, is set to raise an adjournment debate on Wednesday.

In March, Labour MP Ms Owatemi called for a debate on the the trust, "to ensure that there is proper oversight".

She was advised by House of Commons Leader Penny Mordaunt that it would be a topic for an adjournment debate, given it was a "highly local issue".

This type of debate takes place at the end of the day's sitting, allowing a backbench MP to raise an issue and get a response from a government minister.

Ms Owatemi said she was "pleased" to get the debate and called for people who oversaw the mistakes to be held to account.

"With many millions of pounds of public funding provided to the Trust, it is right that MPs will have the chance discuss how this situation was allowed to come about and the lessons that must be learnt for the future," she said.

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Nothing will come of this.

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Assembly Festival 'could collapse' over £1.5m City of Culture debt



The boss of one of the Edinburgh Fringe's biggest venue operators has warned the company may not survive another year due to a £1.5m debt.

William Burdett-Coutts said the Assembly Festival was surviving on a short-term loan.

He said Assembly organised a festival for Coventry's City of Culture year in 2021, but it has still not been paid by the trust in charge.

The Coventry City of Culture Trust went into liquidation in February.

UK City of Culture is a competition run by UK government's Department for Digital, Culture and Sport (DCMS).

Mr Burdett-Coutts, Assembly's founder and artistic director, criticised Coventry City Council and the DCMS for trying to "wash their hands of the situation".

And he said Assembly could be "dragged down in the trust's wake unless those responsible take action."

It comes as the Edinburgh Fringe launched on Friday.

Speaking to BBC Scotland, Mr Burden-Coutts said: "Assembly has been presenting shows since 1981 and is an integral part of the Edinburgh Festival Fringe.

"The company is of local, national and international significance working with arts organisations from around the world.

"We have played a significant role in the development of many world-class shows throughout the years and have helped launch the careers of countless household names, from Graham Norton to French and Saunders and many more.

"Assembly on its own plays to an audience equivalent to the live audience of Wimbledon and larger than Glastonbury - to lose that presence would be disastrous for the Fringe."

Mr Burdett-Coutts said Assembly's short-term loan would run out at the end of the year.

He said the Coventry festival - Assembly Festival Garden - had been very successful and the city had campaigned to have the event return in 2022.

However, he said that the trust had still not paid Assembly for months after the second festival ended.

"They kept on reassuring us that they would pay their bills and the money was coming," he said.

"But then come January or February we found out that the trust that ran the Coventry City of Culture went into liquidation owing us about £1.5m.

"So it's caused a massive hole in our finances - we're a small organisation so it's not something we can absorb. So we've got to find some way and somebody has to take responsibility."

Mr Burdett-Coutts added Assembly was in a "very precarious" position for future events. He said the Scottish government had written to DCMS urging it to step in.

"We're in a position where we basically run out of money at the end of the year," he said.

"We can get through this festival and look after everybody from this festival, but the next festival is in question. It depends on if we can find a solution."

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City of Culture creditors will not be repaid



Creditors who are collectively owed more than £4.2m by the Coventry City of Culture Trust will not be repaid, an administrator has said.

The trust was created in October 2015 to oversee Coventry's bid and subsequent holding of the huge event throughout 2022 and 2023.

However, it collapsed amid financial trouble in February 2023, with debts of hundreds of thousands of pounds owed to creditors, including Coventry City Council and West Midlands Police.

Administrators have recouped about £550,000, but have now moved to dissolve the organisation, meaning most creditors will not be paid back.

The report, authored by joint administrator Mike Kienlen, head of restructuring and insolvency at Armstrong Watson, confirmed the administration period ended on Thursday.

The company, which used forensic accountants during its investigation, also confirmed it would not pursue legal action against the trust, after an agreement was made with a committee of creditors.

The "risks and costs" of doing so "outweigh any potential benefit", the firm said.

As well as £1m owed to the council, the trust also owed £1.5m to arts organisation Assembly Festival and £505,000 to West Midlands Police.

A spokesperson for the city council said it was continuing to comply with the Charity Commission, which was also completing an investigation into the trust.

"The administration of the trust and the now confirmed loss of our loan, alongside the losses of a range of other creditors, is bitterly disappointing and is not the outcome anyone wanted to see," they said.

"We know the loan was spent on maintaining cultural activity in the city and ensured payments to both suppliers and to major and smaller cultural bodies that had provided content and events."

On top of the larger loan, other funds of tens of thousands of pounds were also paid to the trust by Culture Coventry, The Albany Theatre and Coventry University.

Kevin Shaw, chief executive of The Albany Theatre, said his organisation was owed £34,200.

"On top of the money, there was a promise of further work going forward which would have been really helpful," he said.

"It obviously has a detrimental impact on companies like us.

"All theatres operate on a slight knife edge and that's a significant amount of money to try and replace."

The final report said that all former employees of the trust who made claims for wages, holiday pay and redundancy would receive a full payout, while HMRC would receive 53p in the pound in relation to deductions from employees' wages and outstanding VAT.

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'City culture trust failure left us a huge debt'



The founder of an arts firm which is owed £1.5m following the collapse of a city's cultural trust said his firm has had to borrow a "huge amount" of money to survive.

William Burdett-Coutts, who set up Assembly Festival, said he had been left shocked when told his company was not going to be repaid any money after Coventry City of Culture Trust collapsed in February 2023.

The trust left debts of £4.2m owed to a number of creditors, which also included Coventry City Council and West Midlands Police.

Administrators recouped about £550,000, but recently moved to dissolve the organisation, meaning most of those waiting for money will not see it.

Joint administrator Mike Kienlen, of Armstrong Watson confirmed the administration period has ended and also said it would not pursue legal action against the trust, after an agreement was made with a committee of creditors.

"We did the job in good faith and were expecting to get paid," Mr Burdett-Coutts said.

"[It] has left us with a huge, huge debt which has almost killed my company."

His firm has been presenting shows since1981 and is one of the Edinburgh Fringe's biggest venue operators.

In 2023, he said Assembly Festival was surviving on a short-term loan.

There was an irony the company had taken on the work in Coventry in order to try to stabilise financially after the Covid-19 pandemic, he said.

"Rather than solving that problem it's given us an even bigger one," he said.

He felt the organisers of the festival in Coventry did not have the resources they needed to underwrite the projects they had committed to.

He said: "The whole point of running these [City of Culture] years is to build up a fabric of work within the community and for that to carry on in the coming years, and for the relationships that are built between the city and the financial world and the cultural world to have a kind of ongoing legacy.

"Obviously that hasn't happened in Coventry and I think that's a great shame."

Peter Gillet, director of commercial services at West Midlands Police, said the force had expected to be at the top of the repayment list as it was a publicly-funded organisation.

"Disappointingly, that has not happened," he said.

He explained the outstanding money was to help cover policing costs associated with City of Culture status, as the influx of people into Coventry increased demand on services.

Mr Gillet said that despite the financial issues, the policing operation had been deemed a success.

"We're proud of the work we did over the 12 months to use art and culture to reach new audiences allowing us to have challenging conversations on topics such as homelessness, and male violence against women and girls," he said.

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Accounting errors and 'incompetence' led to City of Culture charity collapse



A series of costly accounting errors had a major role in the collapse of the charity that ran Coventry City of Culture, a BBC investigation has found.

New details about the trust's financial problems have been revealed in documents in response to a freedom of information request.

They contain minutes of meetings of the trust's executive board, where questions were raised about the possibility of fraud, but members were repeatedly told there was no criminality.

For more than a year, Coventry City Council refused to release these documents, leading the Information Commissioner to step in and order the local authority to disclose them.

One senior source involved in the trust said the events team continued spending money without knowing accounting errors had caused financial problems.

While another who worked with the trust said: "I don't think at any stage anyone was operating in any way that was Machiavellian or trying to cook the books.

"I think it was pure financial incompetence, which is breathtaking."

The Charity Commission has been investigating the trust's collapse since 2023.

In response to the BBC's questions about the discussions of the trust's executive board, a spokesperson said while a compliance case was ongoing, it had not opened a statutory inquiry, which would give it legal powers to request information and disqualify people from being trustees or senior charity managers.

But there are now calls for a statutory inquiry to establish where accountability lies.

"The scale of what's been uncovered and revealed in this investigation is truly shocking," Councillor Gary Ridley, leader of Coventry's Conservative group, said.

"It tells a tale of incompetence. It tells a tale of chaos."

As the year came to an end in June 2022, the trust's audit committee said there were no "major worries" about its financial position.

But the documents now show serious problems were identified just weeks later.

Martin Sutherland [pictured above]was the chief executive of the trust and Martin Reeves was the CEO of Coventry City Council during this period.

In a meeting on 20 July, 2022, the board of trustees were warned everyone was "operating under challenging financial circumstances" and told "there were real risks to the situation, including running out of cash, which would be catastrophic".

A few weeks later, on 12 August, 2022, Sutherland emailed Reeves to inform him of budgetary issues, including several accounting errors.

He stated multiple invoices had been received which "raised the alarm" and "consequently we have discovered considerable disparities".

He said the biggest losses were related to the Assembly Festival Gardens, a pop-up venue in the city centre.

The email stated losses were reported as £1.2m, but were not allocated accurately, "with more than £600k incorrectly charged to the programme - effectively meaning that the programme now appears to be overspent by this amount".

Another error included double counting income, he said, and described the situation as "very challenging".

Asking if the trust could borrow £1m from the council, he added: "I am truly sorry that this situation has occurred, and of course take full responsibility as chief executive."

In a meeting a few days later, the trust's executive board was told "coding errors" had been found that "had not been picked up earlier by anybody in the trust team nor the auditors when they undertook their recent inspection".

The board was told questions had been asked about whether "there had been intent to defraud" but reassured "this was not the case and the situation had arisen due to human error".

Those responsible "were very experienced, qualified accountants, not operating above their capacity and one had been with the trust for a number of years".

They were not named.

In another meeting, one board member felt it was "not a good idea" to tell "a wider audience" that the financial problems had been caused by coding errors.

One attendee said repaying the loan depended on income from the Reel Store, the UK's first immersive digital art gallery, which opened in Coventry city centre in May 2022.

The Reel Store closed permanently after the trust went into administration in early 2023.

At a meeting on 12 October, 2022, a majority of trustees voted to approve the loan agreement with the council, with eight for and two against.

In an interview with the BBC in 2022, Sutherland said "short-term cash flow", such as grants yet to be paid, was the main reason for the loan and insisted he was confident the trust would pay it back in full.

He declined to be interviewed for this story.

But in an email, he said: "Trustees sought reassurance that there was no fraudulent activity associated with the major accountancy error. This is appropriate.

"As well as seeking reassurance from team members, including myself, they also sought support from external financial experts, the trust's auditors, who raised no concerns."

Sutherland added: "I am sorry that errors we made have contributed to these difficulties."

But he argued missed commercial sales targets, shifting funder priorities and uncertainties related to Covid "were as much a contributing factor to the trust entering administration as human error".

The BBC contacted a number of trustees but they did not wish to comment.

A council report that recommended approving the loan in 2022 did not mention accounting errors.

Reeves, who is now chief executive of Oxfordshire County Council, did not respond to requests for comment.

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Financial incompetence seems to dog CCC on so many ventures.