Council Leader Steve Reed has persuaded the Government to think again over plans to claw back £23 million from Lambeth.  Government auditors wanted the money paid back because of an accounting error 16 years ago that no one knew had happened.  If the payment goes ahead, Council services will face multi-million pound cut-backs over several years.   

The debt built up because interest repayments on a Government grant awarded in the early 1990s were wrongly calculated – a mistake not spotted by the Council, the Government or the auditors at the time.  The mistake came to light three years ago when auditors at another affected council realised what had happened.  The Lib Dems and Tories who were in charge of Lambeth at the time simply ignored the problem. 

Councillor Reed has been in detailed negotiations with Government ministers about the issue ever since he was elected Leader of the Council in May last year.  He involved the borough’s three Labour MPs - Keith Hill, Tessa Jowell and Kate Hoey - in a lobbying strategy to persuade the Government that it was unfair to leave Council services facing cuts on this scale because of an accounting error nearly two decades ago.  

Following the latest round of discussions during and after Labour Party Conference in Bournemouth, Local Government Minister John Healey MP has accepted Steve’s argument.  Mr Healey wrote to Councillor Reed this week to confirm that the Government intends to introduce legislation that means the money will not have to be repaid. 

A delighted Steve Reed welcomed the Minister’s response.  He said: “This is fantastic news for people in Lambeth.  The Government has listened and as a result local services should not face cuts to repay a debt that nobody knew existed.  This is a cloud that has hung over the Council for nearly three years, now I hope it will be lifted and that means the money can be spent on frontline services instead.” 

Steve persuaded Gordon Brown's Government to listen to Lambeth's case for keeping £23million for local services