Council’s office purchase slammed as ‘waste of money’

Luke Cawley-Harrison, leader of the Liberal Democrats at Haringey Council
Luke Cawley-Harrison, leader of the Liberal Democrats at Haringey Council

Council criticised after paying twice the market rate for Wood Green building, reports by Simon Allin, Local Democracy Reporter

Opposition Liberal Democrats have accused Haringey Labour of wasting taxpayers’ money after the council paid more than double the market rate for an office block.

Lib Dem leader Luke Cawley-Harrison claimed there had been a “serious failure of due diligence” after the council spent £22.6million on Alexandra House in Wood Green – even though it was worth just £10m as office space.

Details of the transaction were revealed at a meeting of the council’s corporate committee last month. The council bought Alexandra House after a developer’s plan to turn the offices into 219 flats was refused. Opponents had claimed the flats would be too small and fall below the minimum space standard for new residential developments.

An audit report revealed the council paid £6m for a shell company and provided a £16.6m loan to allow it to complete the freehold acquisition of Alexandra House.

But the audit papers show the local authority later obtained an existing use valuation for the building of £10.1m. An internal audit concluded the governance arrangement to manage the acquisition of Alexandra House was weak, according to the report to the corporate committee.

It continues: “This led to an ad hoc and largely informal process being adopted and a failure to raise the matter at appropriate fora and with appropriate officers and members at the right time and in the correct way.”

The report adds there was a lack of documented evidence as to who was involved and what decisions were taken or that all options had been considered in “a fully thought-out business case”.

Cllr Cawley-Harrison said: “This is a dreadful and incredibly serious failure of due diligence. In relation to Alexandra House, the council’s auditor told us that ‘somebody’s done quite well out of this transaction’.

“Unfortunately, that somebody is not the residents of Haringey, who have had millions of pounds of their hard-earned money wasted by the council.”

Cllr Cawley-Harrison said Haringey Labour could not be trusted with public money and called for more details of the transaction to be released and “heavily scrutinised”.

A Haringey Labour spokesperson described Alexandra House as a “valuable public asset” that will be used for the benefit of residents, adding that an initial investment in the property will allow the council to save money in the long term.

Alexandra House in Station Road, Wood Green (credit Google)
Alexandra House in Station Road, Wood Green (credit Google)

The spokesperson said: “When completing property transactions on this scale, the purchaser is accountable for a number of fees on top of the value of the property itself. The role of the corporate committee is to take a thorough, forensic approach to council decisions, allowing the council to continuously improve its processes and deliver the best value for money for residents.

“Thanks in part to the rigorous checks and balances provided by the corporate committee, the council has recently enjoyed an accelerated acquisitions programme to support its ambitious housebuilding targets – including purchasing the Chocolate Factory, 1a Ashley Gardens (to be Rosa Luxemburg House), and the IBSA flats, which are now housing homeless families.”

A Haringey Council spokesperson said: “The purchase of Alexandra House is a major step forward in our ambition to transform Wood Green town centre. It means we can now bring about significant change ourselves which will be good for local people, local businesses, the local economy and Wood Green overall. Alexandra House will play a significant role in the future of Wood Green.

“We recognised our processes for significant property decisions were not as robust as we would like at the beginning of this process, which is why we asked our internal audit service to review the decision.

“The audit report is clear that any weaknesses resulted from our corporate processes, rather than the actions of any individual officers or members. To draw other conclusions from the report would be inappropriate.

“The council has already implemented a number of improvements in response to the audit report’s findings and our decision to acquire Alexandra House was robust, taking account of the strategic, operational and financial factors at that time.”