Council formally complains after auditor's report

An audit of Luton Council's finances was "significantly impacted" by issues with procurement, staffing and the impact of Covid-19, according to Ernst & Young

Luton Council says it has submitted a formal complaint after an external auditor issued a public interest report into its finances.

Ernst & Young said the "inability of the authority to produce materially accurate financial statements" should be "brought to the attention of the residents of Luton".

It has suspended work on the Labour-run authority's 2018/19 accounts after identifying issues with procurement, staffing and the impact of Covid-19 that have "significantly impacted" on it.

Luton Council said it had formally complained to the Institute of Chartered Accountants and described the report as "not fair or balanced" and "full of factual inaccuracies".

Ernst & Young said the authority was not able to produce revised 2018/19 accounts because of a "significant and persistent lack of capacity and capability in its finance team that had yet to be adequately addressed".

Luton Council said "there have been challenges in recruiting to a small number of specialised finance roles at the council amid a difficult recruitment market".

But it added the report was "talking about two roles in a team of 94 staff" and "both of those have now been filled".

The auditor pointed to "significant weaknesses in procurement and contract management arrangements in social care starting in 2016 and originally detected by internal audit in 2020" as "evidence of an absence of proper arrangements to secure value for money".

In response, the authority said those issues had been "fully resolved by 2021, after working closely with Ernst & Young", and "could not understand" why they were being highlighted.

The council is the sole shareholder of Luton Rising, which owns the town's airport, while the day-to-day running of the airport is carried out by a separate private consortium.

The report highlighted the "significant impact of Covid-19 on both the operations and finances of the airport and the operations and finances of the authority".

Councillor Rob Roche, portfolio holder for finance, described the decision to publish a Public Interest Report as "deeply flawed"

Luton Council's portfolio holder for finance, councillor Rob Roche, said: "We strongly believe the decision of Ernst & Young to publish a public interest report is deeply flawed."

He added the report was "damaging to our reputation and contradicts a recent government-commissioned independent assessment into our finances that concluded the local authority is financially well-run".

Roche said the authority had "no choice" but to complain, because he felt the report "ignored evidence we’ve provided" but also because "we owe it to our teams who have worked so hard to stabilise our finances over an extremely challenging few years".

In response to the formal complaint, Ernst & Young said: "We stand by the conclusions in our Public Interest Report, which sets out our concerns in full."

Under the Local Audit and Accountability Act 2014, an external auditor can issue a report in the public interest if a significant matter comes to their attention.

The act requires councils to discuss the report within a month, and Luton Council has confirmed it will do this at a meeting on 15 October.

A copy is also sent to the local government secretary.