Fury over city’s ‘wasted’ £100m windfall

Hull City Council sold shares in communications company Kingston Communications (KC) three years ago, netting £104m. The cash cannot be used for the council’s departmental budget and has to be spent on capital projects such as building maintenance and renovation.

The windfall came eight years after the council’s first major sale of KC shares earned more than £250m – money that was controversially used to pay for the KC Stadium in Hull and to renovate council properties.

The council said the latest funding had been “added to the capital budget”, but it was not possible to identify “how much of the KC money has been spent or on what”.

A spokeswoman said: “However, the receipts have helped fund the council’s capital programme over the last two years which has seen expenditure on, for example, regeneration initiatives, transport projects, improvements to schools, and private sector housing including disabled facilities grants.”

A council source claimed millions of pounds had been used to paper over cracks in the capital budget and, as local authorities face the most severe cuts in living memory, was “frittered away” on small projects.

As a result, the source said, the council “has not taken many of the tough decisions that needed to be made”. He added that “there are serious issues on the horizon that Hull does not have the capability to face”.

In December the scale of Government cuts facing Yorkshire’s councils was laid bare. Hull was one of the hardest hit, officials believing that savings of at least £40m in a single year would be required, with around £80m being cut over four years.

Last week it was revealed that 1,400 jobs could be axed and it emerged that in some areas the voluntary sector and local communities will be asked to step in to cover gaps in service provision.

Under the cost-cutting proposals, the council could stop providing residential care for adults, introduce charges for adult social care, and reduce the number of children in care.

The cuts come in the wake of heavy criticism of the council’s financial management in two independent reports last year. One pointed to a failure to identify credible savings, while another revealed a catalogue of errors in the council’s accounting.

Labour’s council shadow Cabinet member and former finance portfolio holder, Phil Webster, accused the ruling Liberal Democrat group of “bringing shame on the city” over its handling of the KC shares.

He said: “This Liberal Democrat administration has seen the most generous revenue settlements ever from any government, yet have still found a way of wasting £180m in the last three years with apparently no record of what has happened to it.”

Council leader Carl Minns said he was confident all the money in the capital programme had been invested in the best way for the people of Hull.

He said: “It is unfair to say that the money has been frittered away on small projects– given it forms part of a central fund, you cannot say which funding was used.

“We have around £70m in capital receipts – that puts Hull Council in a much better position than most other authorities in Yorkshire.”