Auditors concerned by Corby's regeneration projects
By Vivienne Russell | 18 June 2013
Auditors have today issued a public interest report on Corby Borough Council's management of several flagship capital regeneration projects.
KPMG, the auditor appointed to Corby by the Audit Commission, found examples of governance failures and poor financial management. It concluded that the council had breached its statutory obligations, made decisions against its own internal policies and exposed itself to greater risk than it needed to have done. If these failings had not occurred, the council would be a better position to respond to the financial challenges it faced.
The projects of concern are three major construction and refurbishment schemes costing over £67m over the past six years: the Cube civic offices; the Kingswood estate developments; and improvements to the Rockingham Triangle sports complex. Management of a fourth project – the £3.8m sale of land in the St James area of the town – was also criticised.
During this period, the council had limited usable revenue reserves over its designated minimum balance of £0.8m and its borrowing increased from nil to a high point of £47m in 2011/12.
The auditors found the council’s arrangements for managing the projects were ill-defined and ambiguous, leading to uncertainty over who should be making key decisions; there was insufficient member oversight at critical points; established governance arrangements and internal controls often did not operate as they should have done; and financial and project management was poor. In addition, the land at St James’ was sold for less than best consideration without the requisite statutory approval to do so, a problem that was compounded because the checks and balances, including the statutory responsibilities of key officers, did not operate as they should have done.
The report made 18 recommendations about how the council could improve governance and financial management. It noted that the council had now reduced its borrowing to £36m and started tackling some of the weaknesses.
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.’
Bellamy added that it was ‘imperative’ the council learned from the auditors’ findings and that the officers and members worked together to strengthen governance arrangements.
Responding to the auditors’ report, Corby council leader Tom Beattie said the failures identified were ‘unacceptable’.
He said: ‘The people of Corby have been let down but they can be assured that these failings are a thing of the past.
‘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.’
The council will consider the report and its recommendation at the next full council meeting.