The Chartered Institute of Public Finance and Accountancy (CIPFA) has put aside £500,000 to fund potential legal action against Ealing LBC over a contract dispute.
CIPFA wants to recover its losses from the London Counter-Fraud Hub (LCFH) after the project failed to get off the ground.
London Councils had said that all boroughs intended to participate but, in its early stages, CIPFA publicly admitted that ‘coordinating agreement across 33 organisations, all of which might have their own priorities and political agendas' would be a ‘significant challenge'.
It had been estimated that if the ministerial-backed hub was rolled out across the capital CIPFA would save the sector £0.5bn over the nine-year life of the contract.
CIPFA insists that it developed a ‘cutting-edge viable product' that had been signed off as ‘fit for purpose by piloting London authorities,' including the lead authority Ealing.
But CIPFA's annual report and accounts said talks with councils ‘failed to progress to actual sign up and, with the likelihood of them doing so now considered remote, the asset has been fully impaired'.
Chief executive officer (CEO) of CIPFA, Rob Whiteman, who previously described the hub as ‘one of the most advanced counter-fraud programmes in the public sector,' wrote in the annual report and accounts: ‘As CEO I must state personal and collective regret that, in spite of genuinely best endeavours on our part, we have not seen LCFH in a position to get over the line.'
The document added: ‘The LCFH reached a critical point in 2019, as having created a viable, valuable and proven asset duly signed off as fit for purpose by piloting London authorities, failure by the lead authority to agree contractual issues arising from changes in their pricing model led to significant delays in signing up authorities and the likelihood now of them doing so now is considered extremely low.'
It said CIPFA had written down the development costs of the LCFH and, as a result, will report a loss of £2.7m for 2019.
An Ealing spokeswoman insisted the council ‘acted reasonably and properly' and it did not accept that the ‘project outcome was due to any fault on our part'.
