Auditors say Northampton Borough Council is not providing taxpayers with 'value for money'

Northampton Borough Council has been criticised for the way it handed over 10.2 million to Sixfields in the latest external audit report by KPMG.
Northampton Borough Council has been criticised for the way it handed over 10.2 million to Sixfields in the latest external audit report by KPMG.

Northampton Borough Council has not provided tax payers with the right value for money because of the arrangements for the £10.2 million Sixfields loan, a report by the authority's external auditors has revealed.

Multinational firm KPMG is contracted by the authority to carry out regular inspections of the way it does business and manages its finances.

But in a draft copy of its yearly external audit report for 2016/17, KPMG says it is on course to issue the council with an "adverse value for money" opinion, only handed out in exceptional circumstances.

The draft report states: "The authority has not made proper arrangements to secure economy, efficiency and effectiveness in its use of resources.

"We therefore anticipate issuing an adverse value for money opinion."

The auditors were satisfied the authority has the ability to balance the books under increasingly difficult circumstances and had even managed to increase the amount of money in reserves during the audit period.

But in light of its ongoing investigation into the missing £10.2 million loan to Sixfields, it criticised arrangements in place for loaning money to other bodies.

KPMG is not set to release its full report into the way money was loaned to Northampton Town in 2013 until the conclusion of the police investigation into the matter.

But the recent audit report suggests loaning procedures are still not up to scratch, though it later notes that the council has made no loans to other bodies since its previous annual report.

It states: "Our findings indicate that there is an insufficiently systematic, robust, and objective due diligence process, and framework within which decisions can be made or documented."

Leader of the Labour opposition group, Councillor Danielle Stone, said: "Once again it shows that the decision to give Northampton town Football Club up to £12 million loan was flawed.

"This latest KPMG report explains that there were insufficiently systematic, robust, and objective due diligence processes in place and no framework within which decisions could be made or documented.

"In short, the decision appears to have been made on a whim rather putting together a decent business case. Also indicated in the report is that the borough council were slow to learn from these colossal mistakes and put together a plan for a way forward for future loan decisions. I am not in the slightest bit surprised that KPMG are issuing an adverse value for money opinion.”

Cabinet member for finance at the borough council, Councillor Brandon Eldred, (Con, East Hunsbury) said: “In 2016 we commissioned a special internal audit to get to grips with the issues identified. This was intended to be wide-ranging, to challenge the council's processes, and it produced a large number of recommendations which would make our processes more robust.

"Since then we have made significant progress against those proposals. The KPMG report only concentrates on the period to the end of March this year and we have made great strides since then, but are under no illusion about how much remains to be done.

"While this is a draft version of the report, we don’t anticipate the final version differing to any great degree. We fully expected KPMG's external audit to be particularly exacting in light of the council's recent difficulties and we welcome these latest judgements which will help us continue our work toward a robust and sustainable position."