Not due to fraud: Stockport Council’s £4.7million deficit is due to years of mismanagement, claim councillors

Exclusive by John Paul Shammas

The missing £4.7million in wholly council-owned SSK is not a result of fraud, Stockport’s chief executive Eamonn Boylan confirmed today.

Set up in 2006 by the Liberal Democrat-led council, Solutions SK, or SSK, provides school meals, bin collecting services and environmental services alongside care assistance to the elderly and the vulnerable of Stockport.

When the massive deficit was initially unveiled, talk of fraud was rife – however, it seems that any sinister goings-on are non-existent and instead, incompetence is to blame for the £4.7million black hole.

And Conservative Councillor Syd Lloyd told MM that it will be up to the Stockport Council tax payer to foot the bill.

He said: “It was clear from the start that the company was set up with insufficient working capital and the intention was for it to be able to offer its services to other councils and to take on board private sector work.

“This simply did not happen in any great measure.”

Mr Boylan told MM that the disaster for Stockport Council was not a result of fraud, as some initially presumed.

He said: “Investigators have told us that based on the evidence they have looked at did not identify any evidence of fraud within the company operations.

“The company is now working to a recovery plan to ensure the delivery of effective services.

“The council is now commissioning an independent review of future governance arrangements and of actions in support of the recovery plan.”

While the loss is not being attributed towards a result of fraud, Stockport Council tax payers are unlikely to be relieved as years of mismanagement are now being blamed as the cause of the £4.7million deficit.

Lib Dem Councillor Iain Roberts told MM how this shortfall has been accumulated: “SSK undercharged for work done to the Council over several years – in other words, taxpayers got a better deal than we should have done, and SSK made a loss as a result.

“SSK did more work on some council projects that it was never contracted to do, never invoiced for and so was never paid for.”

MM understands that as a result of this sustained mismanagement over the years, cuts are already being made at SSK, and redundancies could follow.

Another point of contention in the SSK debacle is the subject of bonus-payouts to managers that were made during the crisis.

Calls have been made across the political spectrum for these bonuses to be paid back, however these calls have gone unanswered.

Legal action has been considered by Stockport Council, but the matter is a complex one.

Firstly, it would have to be proven that recipients of the bonuses knew of the developing deficit, but the cost of doing so may vastly outweigh the money recovered and there is no certain outcome.

Councillor Roberts said: “We don’t want to recover money from managers simply to pay it all – and perhaps even more – to lawyers.  It’s a case of not wanting to cut off our nose to spite our face.”

The final details of the SSK story will be revealed the end of the month when the investigation is concluded.

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