A HIGHLY critical report into the finances of Harlow Council has exposed a number of failings as well as “£139 million cash flow deficit” in relation to controversial purchase of Millbrook House (Burnt Mill Towers).

The report was discussed at a meeting of the Harlow Council Audit and Standards Committee on Wednesday night.

The financial report was written by auditors KPMG.

This Auditor’s Annual Report provides a summary of the findings and key issues arising from their 2023-24 audit of Harlow District Council (the ‘Council’).

Time and time again, the report refers to “significant weaknesses” and strategic risks”.

In relation to Millbrook House (Burnt Mill Towers), it refers to a “cash flow deficit of £139 million”.

As you will see from below, Labour councillors had a number of questions.

Nearly all of them were answered by the leader of Harlow Council, Cllr Dan Swords.

The portfolio holder for finance, cllr James Leppard remained silent throughout.

Councillor Swords went at great lengths to stress that there was no public exposure to a £139 million debt and that if anything did happen it would be borne by Legal and General. He also made reference to an un-named investor.

The report had a number of findings.

The report states:

We issued a disclaimed opinion on the Council’s accounts. The reason we disclaimed our opinion was that we were unable to obtain sufficient assurance that the balances and transactions were true and fairly stated due to a lack of historic assurance over opening balances and information necessary to conclude on the in year transactions not being available.

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The auditors undertaking risk assessment procedures in order to assess whether there are any risks that value for money is not being achieved. The auditors identified risks of significant weaknesses and actual significant weaknesses in Governance: How the Council ensures that it makes informed decisions and properly manages its risks. 

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The Council has established a risk management strategy that sets out the basis on which risks are expected to be managed across the Council. The strategy sets out expectations for the process that will be used to manage risks that have been identified and processes for identifying risks within the Council. The Council has a strategic risk register in place that sets out the key risks that have been identified to the achievement of the Council’s strategic objectives.

At the time of drafting there were 14 strategic risks that had been added to the strategic risk register and were determined to be the most significant risks facing the Council. However, the Council does not have operational risk registers in place for the management of risks that do not meet the threshold to be considered the most significant risks facing the Council.

It is important that there are risk management processes in place at an operational level as well as the strategic risk register so that risks arising within individual services or across the Council that do not currently meet the threshold for a strategic risk are appropriately mitigated. This also enables timely escalation of risks to the strategic risk register should they grow in magnitude. While we understand that the Council is currently planning workshops with operational risk managers to occur during 2025-26 and developing templates for implementation across its operational services we considered that this represented a significant weakness in the arrangements that were in place during 2023-24. This is because we consider this to be a key element of the processes necessary to ensure that value for money is being achieved in the Council’s operations.

An hour long film of the news item is below.

The report can be found below.