Projects costing £67m mismanaged by Corby Council

Council leader Tom Beattie said the people of Corby have been let down
Council leader Tom Beattie said the people of Corby have been let down
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An investigation into Corby Council projects involving more than £67m, including the Cube, were mismanaged and exposed the authority to significant financial risk, auditors say.

KPMG has released a public interest report highlighting flaws in the regeneration schemes which saw the council’s borrowing rise to a high point of £47m.

The report says Corby Council sold land at St James industrial estate in 2010 for £3.8m, considerably less than it could have been sold for, to accommodate the Tesco store and that the authority did not get the necessary statutory approval to do so.

It also reveals that the council may have breached its statutory obligations, exposing the authority to greater risk than need have been and that the council would have been in a better position to face its current financial challenges if the failings had been avoided.

The report follows an investigation launched last year following concerns over the rising cost of the Cube.

Corby Council leader Tom Beattie said the people of Corby have been let down but vowed that the failures were a thing of the past.

KPMG’s audit director Neil Bellamy said: “There is no doubting the very real benefits to Corby residents from the regeneration projects considered in this report.

“However, these were at the expense of good corporate and financial governance.

“We found that decision-making arrangements were unclear, and that there were significant failings in the design and operation of the council’s governance arrangements.

“Together these led to the council making decisions when it was not fully aware of the financial impact they would have, exposing it to unnecessary and significant financial risk, and which led to a likely breach of its statutory obligations.

“In our view these placed it in a weaker position from which to address the current financial challenges it faces.

“On top of this, it is disappointing that the ‘failsafe’ statutory responsibilities of key senior officers did not operate as they should have done, which would have brought these failings to light sooner.

“It is imperative that the council learns from the above and that officers and members work together to strengthen governance arrangements and establish and embed a culture and environment where the arrangements operate as they were intended.”

The report acknowledges the benefits the regeneration projects, such as a housing development on the Kingswood estate and improvements to Rockingham Triangle sports complex, have brought to the residents of Corby and the surrounding areas, that external borrowing has since reduced to £36m and that the council is starting to take action to resolve the failings.

However, KPMG found that the council’s arrangements for managing the projects were ambiguous and ill-defined, leading to uncertainty as to who should have made key decisions.

There was insufficient member oversight at critical periods of the schemes and where established governance arrangements and internal controls did exist they often did not operate as they should have done.

The report makes 18 recommendations for the council to consider covering governance, statutory obligations, council policy and procedure, financial and project management, use of professional advice and actions of senior officers.

Cllr Beattie said: “The failures which have been identified in this report are unacceptable.

“The people of Corby have been let down but they can be assured these failings are a thing of the past.

“The report confirms the outcomes of our own investigations and endorses many of the steps we have already taken to improve accountability and oversight.

“It indicates that the steps the council has taken over the last 18 months have been the right ones.

“At the time when these projects were undertaken there was clearly a lack of oversight by elected members, weak project management procedures and a culture in which officers were fearful of questioning or drawing attention to practices which fall well short of the standards our residents expect of Corby Council.

“These issues are all being addressed.

“Many of the report’s recommendations are already being acted upon following our own investigations and those of an independent review of Corby Council’s financial management, which I asked to be completed last year.

“So far the recommendations that emerged from those investigations have either already been implemented or are in the process of implementation. “I have also put in place an independently chaired, cross-party Improvement Board to ensure that our positive progress remains on track.

“Corby is a place of ambition and growth and I plan to work hard to deliver the improvements local people want to see in their town.

“It would be a great shame and a disappointment if the lasting benefit which will be delivered to Corby as a result of these projects is tarnished by the clear failures identified in this report.”

Cllr David Sims, leader of the Conservative opposition on Corby Council, said: “The following is a Press Statement from the Conservative Group and Official Opposition on Corby Borough Council: “The £67m in taxpayers money which Corby Council has squandered through the four scandals represents unfathomable incompetence on an unprecedented scale. Never in the long history of local government has a council shown such colossal financial negligence.

“The council’s Labour leadership repeatedly fell asleep at the wheel and in doing so they have fundamentally failed in their duty to the people who elected them to be the custodians of the borough’s finances.”

The report will be considered at a meeting of the council in early July, to be held in public, when the authority will provide a response to the points raised. The council will confirm the date shortly.

Copies of the report are available from Corby Council and can be found at {http://www.corby.gov.uk/auditcommissionreport.

It is also available on the Audit Commission website at www.audit-commission.gov.uk.