Bedford Borough Council has confirmed that an internal audit did not take place on the decision to lease the former Paddington Pub on Bedford’s Midland Road, leading to the taxpayer losing around £200,000 a year.
The property was later declared unsafe and left empty for more than two years.
This came via a response to a Freedom of Information request to either supply copies of any internal audit reports or findings which included any reference to this property, or the decision to lease it, or written confirmation that an internal audit did not carry out a review.
Read: FOI reveals former pub lease was signed without councillor sign-off
Accountant and marketologist, Birute Sutkiene, at It’s Me and You Clinic, told the Local Democracy Reporting Service (LDRS) this was highly irregular.
“The fact that Bedford Borough Council confirmed ‘no internal audit work took place’ on a £200,000 annual spending commitment, which subsequently resulted in a building closure and a substantial wasted expense, is highly irregular and indicates a potential key failure in governance,” they said.
She said internal audit is mandatory and acts as the council’s “critical friend”, providing objective assurance on risk management and control processes.
“Making a six-figure financial decision without this independent scrutiny is simply unacceptable. It signals a deep weakness in the decision-making process where risks are not being properly assessed or challenged.”
Read: Mayor rejects calls to sell former Debenhams building costing taxpayers £450,000 each year
Due diligence
She added that in a well-governed authority, internal audit would typically be involved both during due diligence before signing the lease and again, “the moment a critical asset becomes ‘not fit for purpose’ and is closed on health and safety grounds”.
“The absence of this scrutiny tells us the council’s oversight arrangements are not strong enough to protect the public purse,” she said.
Bedford mayor Tom Wootton (Conservative) said the lease had locked the council into a five-year contract “on a dangerous building that stood empty, getting through around £200,000 a year of public money”.
Read: £11.5m Bedford Borough Council savings plan includes cuts to staff, voluntary service and libraries
He said documents uncovered by the administration revealed “serious health and safety failures”, including missing or faulty fire doors, and “unsafe escape routes”.
“The problems were so severe the entire building had to be emptied and taken out of use,” he said.
He added, “By the time we came into office in May 2023, the council was stuck with a dangerous, vacant building on a long-term contract where the public purse, not the owner, had to pay for most of the repairs and safety work, facing estimates of three-quarters of a million pounds or more to put it right.
“We acted swiftly to stop the money drain, surrender the lease; however, it has cost taxpayers £313,333 to walk away from this disaster.”
“I still don’t understand why the lease was ever signed,” the mayor said. “It is a staggering failure of basic common sense and financial responsibility.”
£700,000 bill
The total cost to Bedford Borough taxpayers of surrendering the lease and other costs since taking on the property is estimated at around £700,000, but the exact figure is yet to be confirmed.
Under the council’s constitution, the internal audit service is required to provide independent assurance on the authority’s governance, risk management and control environment, and to evaluate whether public funds are appropriately safeguarded and used economically and efficiently.
These responsibilities are formalised each year in the annual audit plan, approved by the chief finance officer and the monitoring officer following consultation with the audit committee.
The council previously confirmed that the lease was signed under homelessness delegation powers, meaning it did not require approval from councillors, the Executive, or the former mayor.
“Inward-looking culture”
The decision was not classed as a key decision, so it never appeared on the forward plan, was not subject to call-in, and did not require a written record explaining the rationale or options considered.
Records show the building was used “100 times between April 2022 and March 2023”, but the reason it was later taken out of use remains unclear.
When asked for further information, including a breakdown of usage and details about the costs of making the property fit for purpose, the council declined, citing commercial sensitivity.
Meanwhile, at a full council meeting on 26 November, former employee Mike Hyden accused the authority of fostering “a defensive, inward-looking culture” that “punishes curiosity, rewards defensiveness, and chokes accountability”.
Read: Council’s “inward-looking culture” to blame for financial mess claims former employee
He said this environment had contributed to missed opportunities to save money and rising temporary accommodation costs.
The council disputed his characterisation, but acknowledged historic complaints, and said a data-gathering exercise had been undertaken in response to issues he raised.
Requests for interviews with the council’s executive director of resources, the monitoring officer and the head of internal audit either received no reply or were declined.
Questions sent in advance included whether delegated property decisions represent a recognised governance risk, whether the cessation of use was escalated as a financial risk, where any warnings or formal concerns were issued internally, and whether lessons had been identified from this case.
The officer who declined said the council was “co-ordinating a written response”, but the council did not comment at the time of publication.
The former portfolio holder for finance at the time the lease was signed, cllr Michael Headley (Lib Dem, Putnoe), was also approached with detailed questions about oversight, delegated authority and risk escalation, but did not respond.
By John Guinn
Local Democracy Reporter
