Allegations Peterborough council may have broken the law to plug budget gap branded ‘fake news’

Allegations Peterborough City Council may have broken the law by selling public spaces to meet its running costs was branded as “fake news” by the man responsible for the authority’s budget.

By Joel Lamy and Rob Alexander
Thursday, 14th March 2019, 5:00 am
Cllr David Seaton speaking during the meeting
Cllr David Seaton speaking during the meeting

Addressing councillors at last week’s Full Council meeting, cabinet member for resources Cllr David Seaton left them in no doubt as to his true feelings following media reports the Government was investigating the authority’s finances.

A major investigation into councils up and down the country by the Bureau of Investigative Journalism has revealed that in the past four years the city council appears to have used nearly £23 million from selling property to help balance its books.

While councils are allowed to use money from selling properties for certain purposes, they are not allowed to use it simply to plug holes in their budgets. The cash-strapped city council strongly denies any wrongdoing and insists it has used the sales to pay off debt, which is legal.

The Government has yet to reveal its findings as it continues to probe the Conservative-run council’s finances.

Opening up the debate on the final budget proposals for 2019/20, Cllr Seaton said: “I want to address the Fake News about the council’s financial management in the media this week. The article was misleading and did not explain the situation fully.

“Our approach is lawful, and the government legislation clearly states that we can use capital receipts to repay debt.”

Cllr Seaton added that the council’s budgets had been independently audited by Ernst & Young every year from 2015/16 onwards, and that a “leading financial QC” has given the opinion that “he cannot see that Peterborough City Council has acted illegally in any way”.

He concluded: “Taking this approach has allowed us to tackle challenges in our budget at a time when we are facing the most severe cuts to government funding in the council’s history.

“As a result, we have protected the vital services that our growing numbers of residents rely upon and need.”

After a lengthy debate, budget proposals - including a three per cent rise in council tax - was agreed by 32 votes to 20, with two abstentions.

Labour’s own budget plans - which included building 3,000 council houses in five years, a new app where people can request being picked up by a minibus, and a £10 million Investment Fund for local business to invest in technology - were also defeated.

The council tax rise will help the cash-strapped council wipe out its remaining £8.2 million deficit for 2019/2020.

However, it means the average council tax payer will see their bill rise by £30.35 a year, on top of rises to the police and fire precepts.

Cllr Shaz Nawaz, leader of the Labour group, said: “This Conservative administration is raiding the reserves and selling off assets to balance the books, and if it continues year after year then soon there will be nothing left of value.

“We need a better strategy than that, because what this administration is doing is flogging off the future to make themselves look good to voters today.”

Council deputy leader Cllr Wayne Fitzgerald criticised Labour for the late timing of their budget proposals. He added: “The current Conservative Government is still paying for the disaster that was the last Labour Government, and if the Labour group were ever to gain power over this administration they would do what Labour always does to pay for these things, they would raise taxes massively.”

Liberal Democrat group leader Cllr Nick Sandford said: “The consensus is that while the amendment by the Labour group has raised many good points, it has come too late in the process to be of significance tonight.”