A report into a failed £9 million loan granted by the former Scarborough Borough Council to developer Benchmark Leisure Ltd urges North Yorkshire councillors to improve transparency, due diligence, and scrutiny in complex commercial arrangements.
Transparency and accountability are key for North Yorkshire councillors according to a report on ‘lessons learned’ from a ‘risky’ loan to a leisure developer.
Councillors in Scarborough should be mindful of maintaining adequate levels of scrutiny, objective officer assessments, and transparency when deciding on complex commercial arrangements as part of a report on lessons that can be learned from a £9 million loan that was granted by the now-defunct Scarborough Borough Council to Benchmark Leisure Ltd.
Ten years after the loan was granted behind closed doors, the developer went into administration in October 2023, leading North Yorkshire Council to take possession of the site and write off the £7.8m that remained unpaid.
A new report seeks to highlight lessons that can be learned from the project to build Scarborough’s Alpamare water park, which, auditors previously concluded, involved “inadequate due diligence” and “obvious risk”.
Councillors are set to discuss the report at a meeting of NYC’s audit committee on Monday, March 16.
It states:
“Councillors should be appropriately informed throughout the decision‑making process to support transparency and accountability.
“Complex commercial arrangements should be subject to significant due diligence, and the council should receive assurance such that it can manage the arrangement and be aware of the inherent risks.
“Both pre‑decision and post‑decision scrutiny should be sufficiently robust to ensure effective oversight of significant decisions.
Cllr Michelle Donohue-Moncrieff, a member of the audit committee and a former member of SBC, said:
“I welcome the work of the audit committee in identifying lessons to be learned by North Yorkshire Council, however, there is a distinct lack of accountability relating to the performance of the council’s internal auditor.”
She told the Local Democracy Reporting Service (LDRS):
“Councillors who acted as cheerleaders for Benchmark have been promoted to senior political roles on North Yorkshire Council. Where is their accountability?”
A fact-finding review published by the council’s auditor last year detailed how some councillors on the now-defunct Scarborough borough Council (SBC) said they felt pressured to approve the loan despite concerns about the commercial viability of the £14 million alpine-themed attraction.
Scarborough Borough Council’s move to borrow £9 million from the Public Works Board was approved by just one vote, after the public was excluded from the full meeting of the council in 2013.
The report on possible lessons that can be learned highlights that “reports should contain clear officer recommendations, underpinned by a balanced and objective assessment of the associated risks,” and that “officers should provide appropriate professional challenge in all cases where required, regardless of political preferences”.
According to the auditor, council officers at SBC said they were placed “under considerable pressure” to agree to proposals that had been presented by senior councillors or Benchmark Leisure Ltd.
Officers also “failed to provide a recommendation to the full council meeting based on their professional knowledge and assessment of the risks,” the previous fact-finding review concluded.
“This was a particular omission, given the complexity of the proposed agreement with Benchmark,” it added.
The audit committee’s report on lessons learned concludes that the council should ensure that “sufficient resources and specialisms are deployed to support commercial arrangements and in the event that no such resource can be secured, either internally or from the market, then the arrangements should not proceed”.
The findings were previously discussed by the audit committee in December, however, the minutes of the meeting are confidential as they have information “relating to the financial or business affairs of any particular person, including the authority holding that information”.
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