Should Waverley Borough Council be left carrying the financial can for the clear up costs of Guildford Borough Council £13.5million overspend mess?

That is the question being asked by some opposition councillors who feel the full financial costs of investigating the potential fraud within Guildford’s housing team should rest squarely in-house – because the historic issues began before the two local authorities embarked on their collaboration.

The investigation conducted by the legal firm Heminsley concluded that senior directors at Guildford Borough Council, including those at the very top, missed key ‘red flags’ that potentially led to a multi-million pound contract overspend.

The matter is currently being investigated by police over a potential fraud and an arrest has been made.

The report, which cost about £115,000, laid out who knew what and when, with Waverley Borough Council being dragged into the situation as named senior officers would later share duties across the two authorities.

The leadership at Waverley Borough Council highlights the £600,000 in savings generated by the merger, emphasising that both good and bad times must be shared for the partnership to thrive.

Opposition members argue that Waverley residents are being forced to pay for mistakes that had nothing to do with them.

Councillor Jane Austin, leader of the Conservative Group, said: “We recognise the real tragedy here which is that millions of pounds, which should have been spent on improving Guildford residents’ lives and homes is no longer there.

“We only hope justice is served via the ongoing criminal investigation because this report is shocking.

“It outlines a catalogue of failures and states that senior managers, entrusted to run both of our councils, have on the balance of probabilities not acted in the way they could or should have been expected to.

“We see in the report failures of the council of governance of leadership, accountability of process of culture and of training; but this is a Guildford matter.

“I am a Waverley councillor and my concern is for Waverley residents.”

She added: “Waverley residents are now needlessly drawn in experiencing reputational and other damage because of the serious failings of a completely different council’s making.

“Now, Waverley residents are even having to pay a 50 per cent share of Guildford’s legal and other costs in respect of this alleged fraud, and for what?”

Senior officers, under interview, blamed the collaboration saying it created unmanageable workloads with the former chief executive Tom Horwood asserting the impact of the collaboration between the councils should be taken into account,. He told Heminsley that the collaboration created a “fundamental strain on senior management being able to access information and creating a healthy and functioning governance environment”.

Cllr David Beaman (Farnham North West; Farnham Residents Association) questioned whether there had been enough transparency prior to the two councils forming closer ties and whether that could have spotted potential issues sooner.

He said: “Hindsight is a wonderful thing when you look back but what concerns me is that this could have been going on for some time.

“We don’t know when it started.”

He added: “I wonder, and again hindsight a wonderful thing, but if we’d perhaps had more due diligence before we’d gone into collaboration would this have been revealed?”

Waverley Borough Council leader Paul Follows told the extraordinary meeting that what had happened in Guildford was both regrettable and serious but praised those who stuck their necks out to raise the alarm.

He said: “It’s a great credit to them and a great reason to me personally, as the leader of this council, that our joint officers feel they can raise matters like this in the matter they have.

“I’m extremely concerned that many red flags including matters relating to whistleblowing were ignored and not communicated to members at Guildford Borough Council and indeed as has been commented on as part of the collaboration was also therefore not communicated to anybody at Waverley Borough Council at any point.”

He added: “It has been asserted in some places that collaboration has had a role in some of these.

“These matters go back at least 10 years when you look through the reports through three different parties control of Guildford.”

He said it also happened against a backdrop of huge funding cuts.

“Some of the officers have stated collaboration as a mitigation, that of course is their opinion. The investigation does not support or oppose these statements as it was not its remit.

“Finally it has been stated that Waverley residents have paid for this investigation and of course we have paid our part because there were joint officers.”

However, he cited the overall benefits of the merger including that it, created a costs saving of about £600,000 but added “partnerships such as this come with positives and negative gains and risks”.

Cllr Follows said: “Costs are shared because the benefits are shared.

“By seeking the costs that we incur you also potentially ignore all the benefits too which an independent report say is outweighing those.”

Collaboration as long as it is delivering savings and other non-financial benefits to both councils, he finished, are allowing services to be maintained for the people who desperately need them.

He said: “We have a duty to do it.”

Mr Horwood, who announced his decision to stand down in September 2023 citing health reasons, said in a statement: “During my time at Guildford Borough Council (December 2021 to February 2024), I and my team identified many governance and financial problems that originated before I arrived.

“This included the main housing maintenance contract that was in place by October 2021.

“It took time to find these problems, and we reported them to councillors, the public and the police.

“With councillor support, we commissioned a financial recovery plan, an independent governance review by Solace and an investigation into alleged wrongdoing.

“I made many improvements to governance and encouraged more internal openness.

“This work was hampered by an organisational culture of reluctance to raise concerns and the pressures of working across two busy councils, as noted in the latest report.

“Peeling the Guildford onion was very difficult and stressful.

“I was determined and worked very hard to identify the council’s problems, and I took action as and when I became aware of them.“When I left, several councillors acknowledged the positive impact I had made. I wish the councillor and staff team well in continuing their improvement journey.”