“Financial and legal failings” by Croydon Council mean taxpayers will foot the huge £67.5 million bill for the refurbishment of Fairfield Halls, a new report has claimed.
The project, which went £37.5 million over budget, has been analysed in detail in an independent report from auditors published Wednesday.
The venue where the Beatles, David Bowie and Queen once performed is owned by Croydon Council and was shut for three years for the refurbishment, reopening in September 2019.
The project was supposed to be funded by development on land next door but this plan has since been scrapped.
READ MORE:Croydon’s Brick by Brick gets new bosses as controversial firm is wound up
Work was carried out by council-owned developer Brick by Brick with the authority loaning the company cash to carry out the work until these homes were sold.
The council has now wiped £69.2 million loans, meaning the full amount will be paid by taxpayers.
The report revealed no written contracts relating to the project could be found.
(Image: Darren Pepe)
It said: “It is a serious financial control and legal failing that payments in excess of £60 million were made to a third party without sufficient clarity as to the powers relied upon or any properly executed written contracts.
“Both the then monitoring officer and the then Section 151 officer had a responsibility to ensure that the legal loan agreements were properly executed prior to making payments.”
Section 151 refers to local authorities making sure proper arrangements are made for the proper administration of its financial affairs.
“In our view, officers treated Brick by Brick as an extended department of the council in terms of the financial payments made, and did not ensure the level of rigour we would have expected,” auditors reported.
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The report goes on to say if proper legal agreements had been put into place the council could have stopped loaning cash to Brick by Brick.
It adds: “The actual cost of the project has been difficult to establish which in itself is a serious failing that the council’s financial arrangements are not sufficiently robust to monitor the expenditure on a significant project.”
The report lays the blame squarely at a handful of senior council officers as well as former council leader Tony Newman, finance and resources cabinet member Simon Hall and member for homes and gateway services Alison Butler.
It also found the council’s then chief executive, Jo Negrini, Section 151 officers and monitoring officers failed to fulfil their statutory duties. All have since left the council.
Mr Newman and Mr Hall have since stepped down from their council positions and while Councillor Butler is still a councillor she is no longer a cabinet member.
The Local Democracy Reporting Service has contacted Alison Butler and Tony Newman. It has also attempted to contact Mr Hall.
The report said: “In our view these officers and portfolio holders failed to exercise their functions and responsibilities adequately.”
And the report adds that incorrect figures for the estimated cost of the project were presented to the council’s scrutiny and overview committee in February 2020.
A Brick by Brick representative told the meeting the cost of the project was £42.6 million. But by this point it was already known that the total project costs were well over £50 million.
Auditors Grant Thornton started work on a review into Fairfield Halls in December 2020, which it halted in favour of the Report in the Public Interest that has been published today.
Leader of the council, Councillor Hamida Ali, said: “I know that people across Croydon will be rightly angry to hear their money wasn’t safeguarded as it should have been and I want to apologise for that on behalf of the council.
“Over the past year we have transformed the way the council operates, appointing a whole new leadership team and strengthening our processes to ensure this could never happen again.
“Fairfield Halls is one of Croydon’s most iconic venues and the council remains committed to supporting the future of this incredible institution.”