Council can’t say when it expects income from £30m investment

As reported in September, auditor Grant Thornton found no ‘clear evidence’ that the council acted unlawfully in making the investment.

In January 2017, the Labour-run authority controversially agreed to pay the money to buy a 33 per cent share in the bank.

But the council failed to sign off its 2017-18 statement of accounts before the deadline of July 31 in 2018 due to a valid objection questioning whether the investment was legal.

In addition, the objection – lodged by retired chartered public finance accountant Chris Haggett – asked whether it was in the public interest.

The council also received an objection to its 2018-19 accounts over the investment.

The 2018-19 accounts will not be able to be signed off, until the 2017-18 accounts are signed off.

The council says its external auditors have now nearly completed the audit which has been ‘substantially delayed’ by Covid-19, by sickness of key Grant Thornton staff and by technical accountancy changes that have been implemented since the original draft accounts were submitted.

A spokesman said: “The majority of the auditor’s work on the 2018-19 accounts has been completed, although this cannot be signed off until the 2017-18 accounts are finalised and they have finished work on the further objection.”

The council confirmed the cost to deal with the objection to the 2017-18 accounts is approximately £60,000.

The spokesman said: “We have not received a figure for the 2018-19 accounts yet, this would also need to be approved by the Public Sector Audit Appointment.”

Grant Thornton updated the audit and corporate governance committee on its progress during its virtual meeting on Thursday.

Lynton Green

Members were told there are still some technical issues the auditor is ‘trying to get to the bottom of’ and that the auditor would not want to put a timescale on it.

Meanwhile, Lynton Green, the council’s director of corporate services and deputy chief executive, said ‘we do still have a couple of other issues’ but he believes ‘we’re probably not that far off’ agreeing the 2017-18 accounts.

He said: “There are probably three or four outstanding issues relating to that, so although we’ve got the objection resolved we still have an outstanding issue relating to how the council represents our valuation of our investment into Redwood Bank.”

As previously reported, the council confirmed it faces a £1.3 million-a-year bill to borrow money to fund its investment into Redwood Bank.

It previously said that, by year five, it expects these costs to be mitigated by dividends received from the bank.

However, the council is currently unable to say when it anticipates receiving income.

The spokesman added: “We remain pleased with our investment in Redwood Bank.

“We are not yet in a position to confirm when we can expect to begin receiving income from the investment.”

Mr Haggett has issued a statement on the matter.

He said: “It has previously been reported that my objection to the 2017-18 accounts cost the council £65,000, of which two thirds was reimbursement of legal costs.

“I presume this is the bill that auditor Grant Thornton has sent them. This is a substantial sum – far more than any of us might have anticipated when I lodged the objection in June 2018.

"This cost will, of course, ultimately be borne through the council tax.

"But, as you know, the council has refused to publish Grant Thornton’s decision letter on the objection.

“It seems totally unfair to me that Warrington’s council taxpayers – despite having to foot the bill – are denied the right to find out the result. Nor am I allowed to tell them. I have been threatened with a criminal conviction were I to do so.

“If WBC ‘remain pleased with their investment’, as their spokesman claims, one has to wonder what must have to happen before the council becomes displeased.”

Wendy Maisey OBE, chair of Warrington Conservatives, has commented on the matter.

She said: “There’s a need for the council to come clean, does ‘technical issues’ mean the independent auditors don’t agree with the local authority over the outcome of the audit?  

“It’s vital they are transparent in terms of their borrowing and ability to service the debt and this statement is worrying.

"To hear the news that Warrington Labour have borrowed £1.6 billion to buy supermarkets in Salford, office blocks in Manchester and an energy supply firm but they can’t tell us when any of them will start to pay their way should be a massive concern to every taxpayer in the borough."