Introduction
I need to refute some inaccurate comments on Honiton Forum by Stephen Kolek, a director of Honiton Community Complex (HCC) the company who run The Beehive.
I was going to vote for you , however as a Trustee of the Beehive I know your comments are misleading- Honiton Town Council see the Beehive accounts every month and are able to challenge any HTC underwriting- a commitment was given to supporting the Beehive by most of the candidates who stood for Town Council election in 2023- There is no “bailing out” of the Beehive just a fulfilment of a commitment the Town Council made to the community to provide facilities/ events that the town wants, and I understand there was only 1 bidder for the lease, the current Charity.
Stephen Kolek (Honiton Forum)
Some of the history set out below pre-dates Mr Kolek’s recent appointment to the HCC board. However, I cannot let the accusation that I have published “misleading” information stand.
The reality is that councillors have not had access to the full accounts for over 18 months and now receive only brief summaries. The full accounts are only seen by the council’s external accountant, whose role is limited to checking accuracy.
This lack of full financial transparency means elected councillors cannot properly scrutinise how public money is being spent.
The background and a detailed explanation follows.
Confidentiality
Because the information related to Honiton Town Council’s financial underwriting of HCC is dealt with the confidential part of meetings and/or in other confidential meetings with HCC, much of it cannot be disclosed publicly.
I am therefore quite limited in what I am allowed to say or write.
One of the main problems with this level of confidentiality is that the facts get completely lost and are replaced with rumours, gossip and half truths.
Public Consultation
Like many organisations, HCC was badly affected by the Covid-19 crisis and initially gave notice to close the charity and leave the Beehive in February 2022. However, the town council agreed to step in to provide some temporary financial support and to consult the public as to what to do next.
The public consultation took place on Hot Pennies day in July 2022.
In October 2022, the council issued the Results Of The Public Consultation On The Long-Term Future Of The Beehive press release, stating that Option 1 was chosen by most people.
This option was for HTC to continue to provide some financial support in order to try and get HCC financially independent again by the end of the lease in Sept 2025.
Option 1 – To continue to financially support HCC until the end of the 10-year lease in September 2025, to make time for HCC to manage its financial performance back to full independence (with HTC’s £10K service charge) if possible.
HTC Press Release
Full details of the options were given in the Public Consultation Presentation Material issued by the council.
It is important to note that this was not a blank cheque. HCC was expected to try to operate the Beehive without subsidy from the Town Council by September 2025 and if it was successful it could be invited to tender for a further lease.
If HCC bring the Beehive into a situation of sustainable profit to the end of the lease, HCC could be invited to retender for a new lease.
HTC Public Consultation Materials
As a member of the public, I voted to support Option 1 as I wanted to help the Beehive get back on its feet after the Covid 19 pandemic.
New Council Elected May 2023
When planning its budget for the financial year 2023/2024, before I was elected, Honiton Town Council relied on a business plan issued to them by HCC which showed that the charity expected to break even and would need no further financial support from the council.
When I joined Honiton Town Council in May 2023 I was broadly supportive of the Beehive but had given no specific commitments during the election.
Whilst I am not a qualified accountant, I am a company director and (at the risk of losing a shedload of votes) a member of the Chartered Institute of Bankers so I know how to read a balance sheet.
When you join the council you get to look “under the bonnet” of the finances – in this case I was able to see the confidential reports and HCC accounts for the first time.
It was immediately obvious that HCC were in financial difficulties and would need significant underwriting payments in 2023/2024. We initially estimated that HCC would require about £23,400 for the first few months of the financial year in order to stay afloat.
Underwriting HCC
Between May and September 2023, the council received copies of HCC’s Profit & Loss account and Balance Sheet each month to assist it while deciding whether to continue funding HCC on a month to month basis. Later this informal arrangement was formalised into a confidential “Underwriting Agreement” agreed by council in October 2023.
To those of us who understand company accounts, receiving the full management accounts is essential to allow us to scrutinise how public money given to HCC is being spent.
The council also appointed an external accountant to double check that HCC’s Profit & Loss account and Balance Sheet figures match the supporting documents provided by HCC.
Recasting the budget
By August 2023, it became obvious that HCC would require at least £40,000 in underwriting in the 2023/24 financial year.
However, as HCC had told the council that they would break even in this financial year, there was no money available in the council’s budget to cover these losses.
Therefore the council took the painful decision to cut budgets for other projects in order to find money to fund HCC’s losses.
By the end of the financial year, HCC’s losses had increased to over £60,000 so the council had to find £20,000 by cutting other budgets and took £40,000 out of reserves.
We also voted to prepare a contingency plan, a “Plan B” for the Beehive, in case HCC gave notice on the lease or went bankrupt.
HCC Refusing to Share Accounts
In September 2023, HCC decided that councillors would no longer be allowed to see the profit & loss account and balance sheet and that the accounts would only be provided to the council’s external accountant.
They gave two different reasons for this, neither of which I can disclose as they were given in confidential meetings.
Despite this, the council agreed to underwrite HCC until March 2024.
I was very unhappy that we were being asked to provide public money to HCC without any scrutiny.
However, my view was that we needed to agree to this in the short term as we had no “Plan B” yet and the alternative was for the Beehive to close down, which would also cost taxpayers money.
The HTC Full Council 9 Oct 2023 minutes confirm that full council was advised that in future HCC would only provide accounts to the council’s external accountants but not to any councillors.
Members NOTED that:
a. HCC has responded to some of HTC’s questions; and
b. HCC provides accounts to the Council (as reasonably required for Full Council to consider underwriting payments) via the Council’s Accountant to advise the Council, and not directly to Full Council
Minutes of HTC Full Council Meeting 9 Oct 2023 Item 23/159
HCC reluctantly agreed to allow the Town Clerk to receive a copy of the full accounts, but marked the files with a confidentiality notice designed to prevent him from sharing the documents with councillors.
IMPORTANT CONFIDENTIALITY STATEMENT: All documentation, attachment, reports and information provided in this email are strictly confidential and have been provided to the Town Clerk of Honiton Town Council (HTC) for the sole purpose of passing this information to HTC’s external accountant in order for them to verify the financial data provided by Honiton Community Complex (HCC) and to check the underwriting calculation(s) which will be used to determine the accuracy of any claim against the Underwriting Agreement between HTC and HCC.
Example of Confidentiality Notice on accounts provided by HCC from late 2023 onwards
Renewal of Underwriting Agreement
When HCC asked for the underwriting agreement to be renewed for another year in March 2024, the council narrowly rejected the proposal at 11th March 2024 Full Council meeting.
I was one of those who voted against, because I was still unhappy that we were not allowed access to HCC’s accounts and therefore could not scrutinise whether public money was being spent responsibly.
HCC then came back with a revised proposal which was considered at the 8th April 2024 Full Council meeting, in which they said that councillors would be permitted to view “concise qualitative and quantitative financial information” in return for providing financial support.
This proposal was narrowly passed by full council – I voted against because I believed that the proposed information was insufficient to allow proper scrutiny and that we should see the full P&L and balance sheet.
Members NOTED that;
a) HCC provides accounts to the Council (as reasonably required for Full Council to consider underwriting payments) via the Council’s Accountant to advise the Council, and not directly to Full Council; and
b) The “revised proposed” underwriting agreement includes that concise qualitative and quantitative financial information will be provided (in manner described) by HCC to Town Councillors.
c) Members RESOLVED to agree the draft “revised proposed” financial safety net underwriting agreement 24/25
Minutes of HTC Full Council Meeting 8 April 2024 Item 23/350
Since the above votes, and having worked on a Plan B, I have always either abstained or, more recently, voted against underwriting HCC because I believe that councillors should be allowed to scrutinise how public money is being spent.
The council has continued to provide financial support to HCC.
At the March 2025 full council meeting, the council voted to continue the underwriting into another year on the same basis. I voted against this proposal yet again.
The New Beehive Lease
The new draft lease and draft service level agreement for the Beehive (which are public documents) expect that HCC will seek grant funding elsewhere and that the town council will reduce its financial support over the next three years.
Clause 7 of the service level agreement also provides for financial support for HCC in a genuine emergency – but with a requirement for scrutiny of why the money is needed and how it will be spent. The council will need to make provision in its reserves so that funding is available if needed, but such funding should be a last resort for HCC.
It is true that HCC were the only organisation to submit a formal Expression of Interest (EoI) in tendering for the Beehive lease in March 2024. However, the council’s solicitor advised that despite receiving only one Expression of Interest, the council should still proceed with an Open Tender process allowing any organisation to bid.
Unfortunately the council voted to ignore the legal advice and offer a Closed Tender, which meant that HCC were the only organisation invited to bid for the lease.
Conclusion
The statement that “Honiton Town Council see the Beehive accounts every month and are able to challenge any HTC underwriting” is inaccurate.
The only person who sees the accounts is the external accountant, who is only checking them for accuracy.
Honiton Town Councillors have now been prevented from scrutinising HCC’s full accounts for more than 18 months.
It is not the accountants job to scrutinise how public money is being spent – that is the job of elected councillors and we do not see the full accounts, only a brief summary.
This page was updated on 30 April 2025 to correct a minor error – it is the service level agreement (and not the lease as previously stated) which contains the provision for emergency funding.