Auditor questions Northamptonshire council consultant's role

13 April 2018 Authored by Consultancy.uk

Cash-strapped Northamptonshire County Council has come under fire from multiple angles, following the institution cutting £40 million from its budget amid claims that it had wasted money on frivolous activities, while neglecting public services. Most recently, this saw auditors from KPMG question the council’s awarding of a £50,000 pay-off to a former executive, before engaging her as a consultant.

Until very recently, the Conservative-run Northamptonshire County Council was perhaps most famous for its launch of a three hour, publicly funded, adult education class, titled 'Discover How To Wear Scarves Effectively'. What in 2016 passed for absurdity, now looks more like decadence, however, with the council having issued a Section 114 notice in February, signalling it had effectively gone bust.

Weeks later, in an alleged effort to avoid outright bankruptcy, councillors voted to approve an austerity budget, cutting spending by  £40 million, closing 21 of the county’s 36 libraries, along with freezing staff pay, removing all bus subsidies, reducing its trading standards budget by 42%, and drastically shrinking its highways maintenance spending.

A government-commissioned investigation into the reported mismanagement of the council later found that the problems at the council were so deep-rooted that it was impossible to rescue it in its current form, and to do so “would be a reward for failure.” Instead, the report called for the council to be scrapped, and replaced with two new smaller authorities.

New Northamptonshire County Council HQ

Following protracted scrutiny, the council’s leader, Heather Smith, stood down after the report’s publication, writing in her resignation letter that she blamed “vicious public insults by four local MPs”, and adding “you cannot win” if the “machinery of government is turned against you.”

Now, auditors from KPMG have further compounded the woes of the beleaguered council’s floundering leadership, after the Big Four professional services firm shone light on a transaction regarding another out-going employee. Northamptonshire County Council made Christine Reed redundant before engaging her company on a consulting basis in 2016. The appointment was referred to KPMG’s auditors by Max Caller, who led the government investigation into Northamptonshire’s local authorities, and in minutes from a meeting of the council’s Auditing Committee, KPMG has since been noted as saying it could not find evidence that all necessary legal measures were taken during the procurement process of the boutique consulting firm.

Reed was working for the Local Government Shared Services (LGSS), a trans-county body funded by Cambridgeshire, Northamptonshire and Milton Keynes councils, before being made redundant in September 2016, as the institution sought to restructure. Her company, Gradon Consulting, was employed by Northamptonshire’s council within the space of a month, on a £650-a-day rate – placing Reed as programme manager of a large IT project called ERP Gold.

One-off

While Reed commented that the firm was employed for "a short-term and one-off contract," KPMG told the Audit Committee that it could not prove Northamptonshire County Council had followed the necessary rules during the appointment process. The minutes elaborated that auditors had not been provided documents showing any business case or value for money considerations regarding the appointment of Gradon Consulting.

The council confirmed it was now working with auditors to review the appointment, while an independent report into the ERP Gold project, which, as of April, will handle all the council's financial transactions, condemned aspects of its implementation as "wholly inadequate".

Following the news, the council referred the press to a statement issued in February, in which it said Reed was "re-engaged" in a position "entirely different" to the role she had been made redundant from.

Related: KPMG faces Carillion auditing investigation

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