Lambeth under Labour - a history of financial incompetence

9.35.33pm GMT Tue 13th Dec 2005

Vauxhall Liberal Democrats have released a new report on the financial disasters when Lambeth was under its most recent period of Labour party control, from 1998-2002.

Constituency Chair Cllr Geoffrey Bowring said: "This list is not exhaustive, but covers the major cock-ups which Labour allowed to happen in Lambeth and demonstrates how wasteful Labour were with public money".

He added: "Lambeth Labour's claims to be careful with people's money is a joke".

Labour's list of shame:

Valuable homes were lost to squatters due to Labour's failure to recover possession before squatters gained rights to the property. One home lost was worth £400,000; the total lost to the Council was considerably more.

Labour moved the Council's Environmental Services department out of Courtenay House in New Park Road in 1998, even though the Council had a 25-year lease which ran until 2004.

The Council had therefore to pay the freeholder £750,000 a year to rent an empty office building.

Labour chose to pay the refuse collection contractor £897,000 in 1999 for the introduction of wheelie bins across the borough, even though there was legal advice that on the basis of the evidence the Council appeared to have a strong case for not having to pay for the bins.

Mismanagement of relations with Lambeth College over the Clapham Academy site (Henry Thornton site) - while the current leader of the Lambeth Labour group was in charge of Lambeth Education - meant that the Council had to pay £1,000,000 to ensure the new school could open on time.

Having got government permission to close ten primary schools as part of its 'Primary School Development Strategy' (PSDS), Labour then reorganised the borough's special schools, closing Thurlow Park Special School, (reopened only months before by David Blunkett), and losing £1,000,000.

Labour completely mismanaged development projects related to its Primary School Development Strategy: in 2000/01, they budgeted £9.7 million for four new schools, but this figure more than doubled to over £18 million for only three schools, denying other schools in the borough crucial investment and new school places.

Despite powerful legal advice that the Council had a strong claim, Labour councillors (including many still on the Council) chose to waive any rights to pursue contractual claims worth £18 million against an outside contractor when taking the Housing Benefit service back 'in-house' in 2001.

When Labour lost office in Lambeth in 2002, the new Joint Administration inherited a £28 million overspend across all departments of the Council due to non-existent financial controls. Since Labour lost office however, the Council has been in the black at the end of each financial year, and now has proper reserves for emergencies - the first time in living memory!

Lambeth's failure to correctly process Housing Benefit applications in the early 1990s (to ensure there were no fraudulent claims) meant the government clawed back £30 million from the Council. In 1998/99 Labour had the opportunity to challenge the government's decision, but instead chose to just accept to pay the £30 million. (Other Councils in similar situations challenged the government's approach in the courts and won. Labour's actions in Lambeth completely undermined the Council's case for not paying the government these sums - £3 million a year).

And how good was Labour at stopping fraud?

The answer is poor; during the last Labour administration there were various instances of fraud, including: -

Inadequate checks by the Housing Department were uncovered by independent auditors in 1999 - there was no regular matching of records to the people who lived in some Lambeth homes, so incorrect or fraudulent amendments to the housing database could go undetected.

A November 1999 report found that 'ghost' employees were being paid salaries, pensions were paid to ex-employees after they were dead, car loans had been obtained fraudulently, cheques forged, as well as submission of phoney or inflated invoices. Although £150,000 of fraudulent activity was uncovered, this was considered to be just the tip of the iceberg.

At a time when the Housing Benefit backlog was peaking, Lambeth's anti-fraud team was prevented for seven months (December 1999 to July 2000) from accessing the housing benefit computer system due to a computer glitch - hitting its ability to take action on fraudulent housing benefit claims.

Under Labour a Social Services worker fed false data into payment system for care homes and phantom children to take £98,000 in less than a month.

A former Lambeth Housing manager was arrested in September 2000 for defrauding the Council of £157,000 by getting a council contractor to do work on his own home.

A report went to the scrutiny committee in November 2001 detailing over £260,000 worth of fraud in the Council.

A Council report in February 2003 noted 89 cases of fraud, mostly in 2001/02, with a total value of £927,000.

Above amounts lost through incompetence or fraud under the last Labour Council were simply unrecoverable and have had to be added to Council Tax.

Please note: this list does not cover Labour financial mismanagement prior to 1998 (building scandals, failure to collect more than 50% of Council Tax, etc) the majority of Lambeth's long term debt - currently over £700 million - was run up during this time).

To download the list as a pdf document, please go to 'Downloads', on the menu on the left-hand side of the site.