The Peterborough Evening Telegraph
Government to probe £23m spend by the city council
The Government is investigating whether Peterborough City Council may have broken the law by selling public spaces to meet its running costs.
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.
News of the Government investigation came a day before last night’s vote on plans to balance the authority’s budget, which are reliant on using another £10.6 million of money made from selling assets just to break even.
The Full Council meeting was taking place last night despite Labour group leader Cllr Shaz Nawaz questioning whether it should be postponed.
If found to be in breach of the rules, the planned spending could be disallowed and the Conservative-led council would have to find another way of bridging its deficit urgently. There are even fears Peterborough could follow Northamptonshire which became the first council in more than 20 years to ban all but essential expenditure after it ran out of money.
Cllr Nawaz said: “These revelations are beyond shocking. I’m afraid of what this will lead to.”
The Ministry of Housing, Communities and Local Government said: “We are examining Peterborough City Council’s use of capital receipts in the light of this information.”
Analysis of the council’s finances shows it has sold 50 building and land assets such as pubs, petrol stations and a former community college - since 2014/15. A further 27 sites are earmarked for sale over the next two years.
The council has now sent the Peterborough Telegraph government legislation which states councils can sell off assets to “pay a premium charged in relation to any amount borrowed”.
Council cabinet member for resources Cllr David Seaton added: “Our strongly held view is that our approach is lawful and the government legislation clearly states that we can use capital receipts to repay debt. Our view is also supported by independent auditors, who have checked and approved our financial management every year from 2015/16 onwards.
“Taking this approach has allowed us to tackle large gaps in our budget at a time when we are facing the most severe cuts to government funding in the council’s history.”
‘I’m afraid of what this will lead to’
Cllr Shaz Nawaz