Government shrugs off calls to act over Northampton Borough Council's 'unlawful' £13.5m Cobblers loan

The Government has shrugged off pressure to act over a damning report into Northampton Borough Council's £13.25million loan to the town's football club.

A five-year Police investigation costing £1m-plus has so far failed to deliver any charges over the apparent disappearance of more than £10m of the cash lent to fund ambitious plans for a hotel, conference centre and shops at Northampton Town’s Sixfields ground.

Another £2½m of Borough Council cash has been paid to consultants, accountants and lawyers in an effort to recover the missing millions.

Opposition local government spokesman Lord Kennedy asked the Government to step in after an independent audit published last month branded several aspects of the 2013 deal unlawful and identified "serious failings" in how councillors approved the deal.

But the Labour peer admitted local government minister Lord Greenhalgh’s reply was “disappointing” and plans to raise the matter again in the House of Lords on March 3.

The minister’s reply said the Government is "aware" of the report and are "monitoring the situation" but added: "it is for the council to consider and respond to the issues raised in the report."

Borough councillors are due to discuss the KPMG report at a meeting on Monday (February 22) and Lord Kennedy fears the issue could get clouded once the authority is swallowed up by the new West Northamptonshire unitary authority on April 1.

He said: "There are a number of questions that need answering and this is an authority that is about to disappear in a couple of months and it's important the issue doesn't disappear with it.

"It's quite shocking how they could have lent so much council tax payers' money with no business plan and inadequate due diligence.

"We also need to know what steps are being taken to make sure this sort of thing is not happening elsewhere."

KPMG's report identified "serious failings" by the council, saying there were "worrying gaps" in the council's knowledge when they approved the deal and said that some decisions by officers “went beyond the delegated authority and was therefore unlawful."

They added: "This whole episode demonstrates poor decision making based on inadequate reports leading to public money being lost, and demonstrates the need for careful thought, structure, independent advice and monitoring in making such decisions on a transaction which was significant and unusual.

“There was a near complete lack of an approved business case, appropriate independent advice and documented risk management.."

Detectives sent files to the Crown Prosecution Service last year after trawling through five million emails, text messages and computer files during the Operation Tuckhill investigation into claims of bribery, misconduct in public office, fraud and money laundering.

Following the KPMG report’s publication last month, a spokesman for the Borough Council said many of its recommendations have already been addressed.

He added: “We are in the process of carefully considering the contents of the Public Interest Report and will present a full response at our Council meeting on 22 February."