Croydon Council has been forced to foot the bill for its bungled venture after staff ignored astonishing budget overruns.
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No contracts were ever finalised for the refurbishment of a south London concert hall, one of several "financial and legal failings" highlighted in a damning report into the mismanaged venture.
Croydon's Fairfield Halls reopened September 2019, incomplete, a year later than planned, and £37.5m over its £30m budget.
The five-year saga came to a head on Thursday (January 27) as auditors concluded there was "no clear contractual basis at all for the project", an oversight that has forced Croydon Council to write off loans to its own development company worth £61.3m.
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Auditors said a lack of documentation has made establishing the actual cost of the project difficult, "which in itself is a serious failing".
"Allowing the project costs to more than double from the original budget without explicit formal reporting to the cabinet represents a fundamental failing by the council."
What was meant to be a cost neutral venture for the authority has become a black hole for spending: more works are needed to get the venue up to scratch. A change in leadership means the people responsible no longer work there.
The council plans to respond formally next week, although it says it is already addressing many of the auditors' concerns.
What went wrong
Council officers failed at every opportunity to raise the alarm about the project's ballooning cost, the report says.
Ignoring legal advice that warned of the risks, Croydon Council agreed a 'land transfer' deal with housing developers Brick by Brick to finance the Fairfield Halls job by building and selling houses on the property - a plan that was later scrapped.
The Council thought Brick by Brick would cover any overruns from its profits; Brick by Brick instead modified the refurbishment to cut costs.
Because no contracts were signed, the authority couldn't challenge this approach.
While there was an active scrutiny committee, it was never told about the magnitude of the overspending.
Several senior officers, former Chief Executive Jo Negrini, former Leader Tony Newman, ex-Councillor Simon Hall, and current Councillor Alison Butler are all culpable, auditors said, as they failed either to raise issues or ask questions of those who reported to them.
"All had the position and experience to understand their responsibilities to escalate the concerns and there is no formal record of any of this small group of officers doing so."
What now?
Croydon Council says it remains committed to supporting the future of the "iconic" venue.
The Fairfield Halls project was intended as part of a £10m cultural quarter for the area, which will be London Borough of Culture in 2023.
However, operator BHLive is in some trouble, having posted a £2.5m deficit last year amid Covid closures, and the council's core finances and governance are also in disarray. The Government is still considering sending in a commissioner.
Council Leader Hamida Ali said residents will be "rightly angry" at the callous spending slated in the report.
“The people of Croydon deserve value for money from every penny the council spends.
"This report shows that the original arrangements for the refurbishment of Fairfield Halls fell well short of that standard."