Government urged to step in over Northampton Borough Council's 'unlawful' £13.5m Cobblers loan

A top Labour peer is putting pressure on the Government to act over the borough council's £13.5million loan to Northampton Town Football Club.

Independent auditors KPMG last week branded several aspects of the 2013 deal unlawful and identified "serious failings" by the council.

The opposition spokesman for local government, Lord Kennedy, believes Whitehall should now get involved.

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

"There are a number of questions that need answering and I have written to the Government asking for their assessment.

"I don't know how this council would get into that situation of lending so much money.

"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.

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

Councillors agreed to lend the cash to fund ambitious development plans for a hotel, conference centre and shops at Cobblers' Sixfields ground.

But work started to the East Stand was never finished after contractors pulled out claiming they had not been paid and more than £10m has 'gone missing' and not been repaid by the former directors of club.

Northamptonshire Police launched Operation Tuckhill to investigate claims of bribery, misconduct in public office, fraud and money laundering in November 2015.

At least 30 people have been interviewed as part of the probe, which has recovered more than five million emails, text messages and computer files.

Files were sent to the Crown Prosecution Service last year for a decision on whether to charge anybody over the missing cash.

KPMG's report identified "serious failings" by the council, saying: "This whole episode demonstrates poor decision making based on inadequate reports leading to public money being lost."

Auditors added there were "worrying gaps" in the council's knowledge before making the deal.

They said: "In our view, the council did not ensure that it followed the correct steps to ensure that the loans were lawful and did not represent State Aid."

A spokesman for the Borough Council said many of the report's recommendations have already been addressed.

"The report contains a series of recommendations for where KPMG feels the council’s processes at that time should have been more prudent and how they might be improved.

"Many of these recommendations have already been addressed as a result of work we undertook following a similar report published by our then internal auditor, PwC, in late 2016. Our current internal auditor, BDO, has since built on that work to ensure our policies and processes are as robust as possible.

"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."