Councillors in Northumberland have called for another police force to look into ‘damning’ and ‘serious’ concerns over the council’s former company Arch.
This call came at the end of a two-hour meeting of Northumberland County Council’s audit committee to discuss a 98-page report into arrangements at the wholly council-owned company under the previous Labour administration.
This report was commissioned after the Conservatives took over at County Hall in May 2017 and completed in October that year, but has not been released until now at the request of Northumbria Police.
The force has since confirmed to the council that it would not object to the report’s disclosure and last week said ‘no criminal offences have been identified’.
However, having discussed a number of the issues in the report, which raised concerns around nepotism, collusion and a ‘culture of entitlement’, as jobs and perks were handed out to ‘the chaps’, the committee members still had questions.
The county council’s chief internal auditor, Allison Mitchell, told the meeting: “At the beginning, the police did say that an investigation was warranted.” However, the word ‘investigation’ then wasn’t used any more in correspondence with the council, she said.
Coun Gordon Castle asked if any advice was sought from the Crown Prosecution Service or if anyone had been interviewed about these matters – which Ms Mitchell could not answer – and said he was ‘surprised’ that the police had had this information for 14 months and then decided to do nothing.
Coun Mark Swinburn made the proposal that another force should be asked to get involved and that the Home Secretary should be informed of this request, while Coun Castle also called for the police to be asked to respond to some further questions about how they carried out their inquiries.
This was approved by five votes to one, with Labour’s Coun Lynne Grimshaw the only one opposed, saying she was very concerned that it ‘undermined’ Northumbria Police, but committee chairman, Coun Georgina Hill, said the issue at the moment was the lack of public confidence.
Introducing the report at the outset, Ms Mitchell said: “This isn’t speculation, this isn’t conjecture, there’s a factual evidence base for everything that’s discussed today.”
Coun Nick Oliver, cabinet member for corporate services, then set out his overview of the report, highlighting what he saw as some of the main issues.
He opened by warning that the situation ‘could have got a lot worse’ as the council budget agreed in 2017 – before the Tories took over – allowed the then leader, Grant Davey, and chief executive, Steve Mason, to borrow and then lend to Arch up to £450million.
“Some of the things in this report could have gone on at a much larger scale,” he said. “We would have been putting the taxpayer in Northumberland at risk.”
One of the matters Coun Oliver highlighted was Arch buying a house from its then chief executive, Peter McIntyre, for £395,000.
This was revealed and reported publicly last January, but the audit report provides far more details on this transaction – including that the property, at Hepscott, near Morpeth, was not included in reports to Arch’s investment committee seeking approval for property purchases on May 26, 2016, but emails a fortnight later refer to it being approved.
There were several assessments of how much the home could be rented out for, but the report says: ‘The property was ultimately rented out at £1,200 and subsequently £1,250 which is a much lower monthly cost than the initial approval document stated was achievable.’
Coun Oliver told the meeting: “In my view, they paid around £100,000 more than they should have done.”
Asked by Coun David Towns if there was deliberate collusion so that Arch could buy Mr McIntyre’s house, Ms Mitchell replied: “We don’t know, but it was a possibility.” Coun Oliver added: “It’s a reasonable prospect that’s true.”
Mr McIntyre, who now works for Sunderland City Council, did not respond when the story first came to light. He was approached again today, but declined the opportunity to comment.
Another of the major issues highlighted by Coun Oliver was the ‘unduly generous benefits and remuneration package’ given to consultant C for ‘strategic PR advice and support’. He was named at the meeting by Coun Hill as ‘Labour spin doctor’ Graham Harper.
In December, a judge ordered that Mr Harper, who has since died, be evicted from the £180,000 home in Blyth provided by Arch, after a hearing at Newcastle County Court was told that the 52-year-old, who was not present, paid no rent or mortgage and had provided no evidence of a written agreement, although he disputed this.
The meeting heard that he also got a car and asked for money up front when starting work for Arch in order to help him and his poorly dog move back to Northumberland.
Between the county council itself and Arch, he received a total of £115,000 for ‘no real clear work’, according to Coun Oliver, with the only evidence found being seven press releases and three electronic magazines.
Coun Oliver concluded: “It’s quite damning, it’s very serious, there’s a clear culture of entitlement. That’s the kindest way to describe it, what I read is much worse.
“A lot of questions are unanswered, there needs to be further work and it’s important that people are held to account.”
Lib Dem Coun Lesley Rickerby said: “The people we need answers from aren’t here. Something has gone very badly wrong, but we can sit here all day and we are still not going to get the answers.
“The public wants to know wants to know who is going to be held to account.”
A Northumbria Police spokeswoman said: “We can confirm that Northumberland County Council contacted police with concerns relating to finance and governance at Arch.
“Police have been working with the council and reviewed a large quantity of documentation that they provided continually throughout this period to establish if there were any criminal offences.
“Officers thoroughly reviewed the documents provided and we can confirm no criminal offences have been identified. Therefore the matter has been finalised.”
Ben O'Connell, Local Democracy Reporting Service