Hope of deal in council wrangle over huge bill for fraud-hit unit

South Yorkshire’s four local authorities were left with an unexpected bill for around £13m after the county’s Trading Standards Unit unexpectedly collapsed with large debts.

Sheffield Council was paid to manage the service on behalf of the four partner authorities, although its officers and auditors failed to spot a long-running fraud by the boss of the trading standards unit in the years before his death in 2005.

It has now emerged that in April 2007 Sheffield Council issued invoices to its three neighbours for the proportion of the £13m bill they were deemed to owe, but the matter has never been settled and the cash remains unpaid.

Under the calculations completed in 2007, Rotherham Council was invoiced for £2,625,000, with Doncaster expected to contribute £3,007,000 and Barnsley £2,300,000.

Sheffield itself would bear the remaining £5,368,000, with the bills worked out on pro-rata basis for the size of the population in each council area.

Almost five years later, it remains unclear how much each of the councils will end up contributing, however.

A spokeswoman for Rotherham Council confirmed the authority had received an invoice in regard to the former South Yorkshire Trading Standards Unit.

She said: “Although provision has been made for this within Rotherham’s budget, any payment can only be made when the full costs have been calculated and the results of the independent review have been fully discussed with Sheffield City Council.

“This is a hugely complex situation and discussions between the authorities are still on-going and so the invoice has not been paid.

“Hopefully, the matter will be finally settled before the new financial year,” she said.

Sheffield Council has failed to comment on the situation and Barnsley Council said it had no comment in addition to the points made by their colleagues in Rotherham.

The independent review has resulted in the Newton Report, an assessment of what went wrong in the TSU which was compiled by outside specialist Nicholas Newton.

Problems arose in the department under the management of Mike Buckley who died from a heart attack in late 2005.

Although he had been able to deceive auditors and his managers at Sheffield Council for years, serious discrepancies in his accounts were discovered within days.

Police were called in and it emerged Buckley had been fiddling figures to create ficticious profits when his department was in fact making large losses. The department had been set up to provide the weights and measures services, like calibrating shop scales, that local authorities must provide but Buckley expanded the unit to offer a range of specialist services to businesses and was able to buy lavish equipment many of his private sector competitors were unable to afford.

A large part of the £13m “black hole” was due to the costs of cancelling expensive leasing arrangements for equipment agreed by Buckley.

In an assessment of how the losses were incurred, Sheffield Council said: “The leasing companies took a hard line on discounting termination payments.”

There were also problems with selling some of the equipment Buckley had bought. Because it was so specialised, potential buyers were hard to find.

Despite the failure of Buckley’s managers to identify his behaviour, the only person to be disciplined over the issue was his immediate deputy.

Several businessmen involved in the buying and selling processes which allowed Buckley to show supposed “profits” on his accounts were also prosecuted and went to Crown Court two years ago.

The Newton Report was expected to be published after the criminal proceedings ended but it has not yet officially been made public, although details of a draft have appeared in the Yorkshire Post.