The west London council discovered the budget hole in the direct services department late last year and called in Peter Hayday, an external consultant, to investigate. His findings became public this week.
Hayday found that the direct services department, which maintains housing and roads, had been undercharging other departments for five years. Opposition councillors fear correcting the error will mean a steep rise in maintenance bills.
Conservative housing spokeswoman Adronie Alford said: "All the costings and estimates have been made on that rate, so it means that the whole housing budget, in my opinion, is wrong. Where are they going to find the money?"
But a spokeswoman for Hammersmith & Fulham said the cost of works would not necessarily rise as efficiency savings might be made. She said the undercharge on each transaction was a relatively small percentage, but financial breakdowns were not available.
Geoff Alltimes, the authority's managing director, added: "As soon as we were aware of a potential problem, we took swift action to tackle it and brought in an independent expert to investigate. A new interim director has been appointed, the accounting systems are being changed and the contracts will be re-tendered."
Andrew Davenhall, head of the housing department, and his assistants Mike Stringer and Simon Hayes lost their jobs earlier this month as a result of the error.
Just weeks ago Hammersmith & Fulham, the only council to achieve a perfect rating in the Audit Commission's comprehensive performance assessment, said it should be allowed to keep control of its stock and still get extra investment (HT 11 April, page 13).
A spokesperson said the budget crisis had no bearing on the housing department's ability to handle its stock.
Source
Housing Today
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