One of the welcome (and I suspect irreversible) reforms of the Eric Pickles era at the Department for Communities and Local Government was to require transparency over council finances. The reforms included the Local Audit and Accountability Act 2014 which has given residents a right to come to their town hall and inspect the accounts.
For “armchair auditors” there is already a lot of material available online. Councils are obliged to publish all payments over £500. But an impressive report into Lambeth Council, by a group of residents, has shown what can be achieved when the chance is taken to go through the books on specific projects.
It’s investigation uncovered:
“Evidence of extensive financial mismanagement and a systemic lack of financial governance costing millions of pounds of public money, discovered by ‘armchair auditors’ using citizens’ powers under the Local Audit and Accountability Act.”
Here are few examples detailed in the report:
- Overpaying building contractors for work on council estates. They checked a sample of three blocks on the Wyvil Estate in Vauxhall and found that Lambeth Council paid its contractors for more than twice the number of concrete repairs that were actually carried out. Lambeth was paying an average £4,000 for kitchen replacements, priced under its Decent Homes contracts at £2,000-3,000. Contractors for repairs at Cressingham Gardens Estate were charging for works that have not been carried out. There were repeat instances of the same repair; and instances of overcharging.
- “Industrial scale” ignoring of rules on competitive tendering had taken place.
- Numerous examples of expenditure being understated on Lambeth Council’s website, when compared with actual invoices, including £3.2m paid to Transport Trading Ltd (a wholly owned subsidiary of TfL)
- Costs of Lambeth’s controversial project to refurbish the town hall have more than doubled from the £50m the council claimed in 2012 and are now estimated at £104m. Part of the shortfall in funding appears to be coming from a raid on council tenants’ rent ring-fenced for repairs to their homes (Housing Revenue Account). Little evidence was found to back up the Council’s claim that the development will save £4.5m a year.
- Over £8 million of invoices they requested in relation to housing repairs “simply do not exist on Lambeth’s accounting system. Apparently the finance department does not hold invoices for housing repairs. These are held by the housing department, so the finance department does not know exactly what they are paying for. This obvious lack of an audit trail is the sort of thing that Lambeth’s external auditor should have picked up, but appears not to have.”
Those who undertook the investigation were local residents:
“A group of Lambeth residents, including finance professionals and experienced campaigners, had a month in the summer of 2016 to request accounts, contracts, invoices and correspondence relating to expenditure. They supplemented this with Freedom of Information Requests and Members’ Enquiries by a councillor. “
However they undertook their research with the support of a organisation called People’s Audit which has a mission to “reclaim local democracy”. It has published a guide to encourage similar investigations in other local authorities.
This is not just about saving money. As the report into Lambeth says:
“In the wake of the Grenfell Tower Tragedy, these failings naturally raise concerns about safety. We found worrying examples of building and maintenance work being paid for but not carried out. Inspection regimes by Lambeth in these cases seemed at best inadequate, and possibly nonexistent. If, as it appears from our investigations, Lambeth is not in control of its contracts with building and maintenance suppliers, how can residents be confident that their homes are safe?”
Nor did the Lambeth residents find it easy coping with the “obstructive” attitude of council staff. The Council issued “a blanket ban on providing contracts or any detailed information with regard to payment of invoices, citing commercial confidentiality” – without seeking to justify the claim:
“It took Lambeth over three weeks to produce the first piece of (minor) information requested. If financial systems are being managed properly, finding such information should take a matter of minutes, hours at most.”
I would hope that other councils would be more welcoming to volunteers checking to ensure that residents receive value for money. If I was a council leader I would want to know if we were paying for the same job twice.
The time is now. Dates vary slightly for each council but most have to provide the books to be inspected for the next three weeks or so. You don’t need professional qualifications. But some ability to understand a balance sheet would be useful. You also need to be available during normal office hours. So it might well suit retired accountants and auditors. I hope that some public spirited Spreadsheet Phils (and Philippas) will come forward.
The people of Lambeth have shown the way. Now we must all do the Lambeth walk.