WALTHAM FOREST: Auditors decided poor fund fiasco should not affect council rating

11:45am Wednesday 1st October 2008

By Jonathan Bunn

AUDITORS knew the extent of the council’s failure to mange millions of pounds earmarked to help deprived areas but decided it should not affect the authority’s performance rating.

Waltham Forest Council was given three-stars following a recent assessment by the Audit Commission, which pushed the authority’s overall rating to the highest possible score.

This is despite the revelation of widespread and long-term systematic failings to manage money from the Neighbourhood Renewal Fund (NRF).

The performance assessment was conducted while anti-fraud investigations were being carried out into a number of suspect contracts awarded by the council.

The probes revealed many deals had not followed rules to prevent fraud, spending was poorly monitored and, in many cases, no signed contract could be found.

Auditors knew about the investigation’s findings before finalising the council’s rating, but decided the scandal only deserved a passing mention in its subsequent report.

The reports states that the Local Strategic Partnership (LSP), which is the accountable body for NRF and chaired at the time by council leader Clyde Loakes, is “well led and focused in its approach to meeting community priorities”.

It continues: “the Council has identified and reported weaknesses in the commissioning and procurement of contracts for central government grant funded programs between 2004 and 2006.

“Procurement practice supports priorities but lack of compliance with the Council’s procedures could expose the Council to risk of legal action.”

When asked why the serious failings did not affect the outcome of the assessment, an Audit Commission spokeswoman said: "When the corporate assessment took place the investigation into BNI/NRF was still ongoing and the outcome could not be second guessed.

“Although we look at the council's relationship with the LSP and how it manages various aspects such as NRF, it was not assessed specifically as it is a small part of a broader overall assessment.

“That is not to say that it is unimportant, but when the investigations were completed, the decision was taken that it did not affect the score.”

She added that plans are in place to change the assessment criteria to ensure greater scrutiny in the future.

Nick Tiratsoo, whose research has uncovered many of the failings under NRF/BNI, said: “'Many fear that Audit Commission rating exercises sometimes depend upon "tick box" investigations, where Council's use expert advice, gaming strategies, and their network of contacts to gain good results.

“The Waltham Forest case does little to provide reassurance. The facts about the local NRF/BNI fiasco are by now well known. Since 2004, millions of pounds worth of public money, meant to improve life in the poorer wards, has been squandered, largely because of wholly avoidable mismanagement.

“That the Audit Commission apparently did not pick this up unfortunately speaks for itself'.

Police are currently examining allegations that EduAction, the company which used to run education in the borough, used NRF money to boost profits.

Five council officers are also under investigation for not reporting concerns that public funds were being misused.

Cllr Loakes has resigned as chair of the LSP but has refused to take any responsibility for the fiasco.