Wednesday 8 October 2008

Underhill Sale Confirmed As Illegal

The long awaited PricewaterhouseCoopers report was published this morning. It is a ninety-six page document with three volumes of supporting documentation, each over two inches thick. It will therefore take a little time to work through it all and give a full response. In the mean time, to summarise, the Council's Auditors concluded:

We are of the view that the sale of the freehold of Underhill did breach requirements of section 123 Local Government Act 1972 and it was occasioned by a number of procedural breaches, misjudgement and errors by a number of officers.

Based on the valuation information available to us, the entry in the financial accounts for the year ended 31 March 2002 in respect of the consideration for the sale of Underhill is contrary to law, on the basis that the £10,000 received together with the contingent further consideration does not meet the requirements of section 123 of the LGA 1972.

We have reservations as to whether it was appropriate to use a delegated powers report to authorise the disposal of the freehold interest. Even if this were a legitimate route, there were manifest flaws in the authorisation process, notably:

  • The Borough Solicitor’s concerns were not properly addressed;
  • The Constitutional requirement for publication of the DPR were not put in place;
  • The errors in drafting create doubt as to whether the delegated powers report was properly approved.

We are also concerned at the apparent absence of debate about the benefits to the Council of any disposing of the freehold interest in the Underhill stadium, and the granting of a proportion of any future development gain to the Company.

I am grateful to the Auditor for stating in clear and concise terms that the council acted unlawfully. However I am disappointed that he is not taking action against any individuals involved in this matter.

Given that the transaction was unlawful, I do not see how the Borough Solicitor Jeff Lustig can remain in his job. His excuse is that he had delegated the work to other people. Even if that was so, ultimately as head of the legal department he must carry the can for the failure of his department to carry out its duties lawfully. That is what happens in the real world.

The report says that one officer has been disciplined. That was Mr Dave Stephens, the Borough Valuer. He was given a written warning. But documents provided by the auditor show that just one month after receiving his written warning, he was promoted and given a wage rise. That taught him a lesson!!

I do have very serious concerns regarding the auditor’s comments in connection with the land valuation, but I will write about that in a separate blog in due course.

There is also the matter which PwC could not investigate as to whether an officer of the council gave evidence to the High Court about the sale which was at variance with the known facts. I am taking advice on this aspect and will comment in detail when it is appropriate to do so.

Although the council now recognises that it did not need to sell the freehold in order to help the football club, it is clear that they seriously failed the residents and taxpayers of the Borough. I have yet to see any evidence that processes have been changed to prevent further abuses of the democratic process occurring. Indeed, things actually seem to be getting worse.

I have been advised that PwC’s bill is over £875,000. I am surprised and shocked at that figure. The Auditor was legally required to be mindful of the cost to the public purse. He could not carry out an investigation if he believed that the cost would be disproportionate to the matter at hand. It is therefore reasonable to assume that he had sufficient concerns about the sale to have launched his investigation.

But was it worth it? If steps are taken to improve democracy, improve scrutiny and improve accountability, then the cost will be justified. However if, as I fear, the council sweeps this under the carpet and carries on as normal, then it will have been a complete waste of time and effort.


Anonymous said...

Cock-up rather than conspiracy was the order of the day it seems.

Even Savills disagree with you on the valuation of the land.

Oh well David, maybe you could fund your next vanity tilt at windmills yourself, or with a bit of a whip-round from BRASS, rather than from the public coffers.

Don't Call Me Dave said...


The sale was described by the Harbord Inquiry as “a major breach of the democratic services.” That’s slightly more than just a cock-up! This was an unlawful act, but apparently nobody is to blame. It seems that blame is a word missing from the local government dictionary, along with shame and accountability.

Yes, Savills provided a different valuation - although in my defence I was relying on the valuation prepared by Mr Stephens, Barnet’s Chief Valuer. I will write a separate blog in the near future setting out why I think Savills were wrong and the Council’s valuer was right.

Anonymous said...

So it was undersold by £90k and it's cost £1m to find that out - that's excellent value for money. You must be so proud that you're responsible for this complete waste of tax payers money.

I have no doubt you'll come back with some snide comments about you've been proved right etc etc but you know this has been completely disproportionate and you're responsible for that. Get over it.