Cambridgeshire police have launched a criminal probe into alleged misconduct in a public office after a local council “unlawfully” sold a college adult education campus for £1 despite being valued at £4.6 million.
Peterborough City Council is set to discuss a damning report in a cabinet meeting today that revealed concerns over a 2020 sale of the John Mansfield Centre (JMC) to the City College Peterborough’s charity offshoot.
Police confirmed that three people arrested in May on suspicion of misconduct in a public office remain under investigation.
Statutory officers at the council raised alarms over the “unlawful” sale and associated financial transactions of the JMC, occupied by City College Peterborough, and sold to City College Peterborough Foundation (CCPF).
The report found the council had illegally paid the charity nearly £800,000 in rent as no evidence of a written lease being found.
Over £1 million in illegal transactions are being investigated.
It also found the decision to sell the freehold of the campus building was made outside of “delegated powers” and was made using powers that applied to leases not freehold.
“It was, therefore, unlawful,” the report said.
An investigation surrounding the sale of the JMC was requested in 2022 by Matt Gladstone, when he took up the chief executive position at the council.
The concluding report has been passed onto the police and now forms part of an ongoing criminal investigation.
Cambridgeshire Police confirmed a live investigation is ongoing.
A police spokesperson said: “On Wednesday May 21 three people were arrested on suspicion of misconduct in a public office.
“A woman in her 60s from Cambridgeshire, a man in his 70s from Bedfordshire and a man in his 80s from Cambridgeshire. They remain under investigation.”
Tasha Dalton, current principal at City College Peterborough, said: “We are aware of the publication of the report which relates to a historical matter.
“Our priority is to ensure the college learners, supported people and staff are as least affected as possible.”
What happened?
John Mansfield Centre offers adult education courses to learners enrolled at City College Peterborough.
The college, which is owned by the council, registered City College Peterborough Foundation as a charity in 2013.
The council decided to transfer the JMC to the foundation in September 2019. At the time, the book value of the campus was £4.6 million.
By January 2020, it transferred part of the freehold land, which contained the JMC, to the foundation for £1.
Local authorities have the power to dispose of land for “less than the best consideration that can reasonably be obtained” but require secretary of state approval if the value is £2 million or above.
Statutory officers deemed the transfer “fundamentally flawed” for three reasons:
- The officer who made the decision was not “explicitly” authorised and was acting outside of delegated powers
- The delegated powers related to leases, tenancies, wayleaves and easements, not freehold sales
- The £1 sale was “not at best consideration reasonable obtainable” and would have needed minister approval
The council’s report said no consent was sought from the secretary of state and the form stating the council’s intent to sell the JMC incorrectly stated that the foundation was set up “specifically” for the transfer and management of the campus.
After the sale, the council (through the college) paid monthly rent to the foundation to the amount of £17,010 until February 2021, when it was “mutually agreed” that rent increased to £29,010 per month.
In total, the council paid £790,000 in rent, but the report said no evidence was found of a written lease agreement.
“There is a set process for dealing with leases between charities and their tenants and it would appear that this has not been followed. The lack of written lease also creates a significant degree of uncertainty as to the terms of the council’s occupation and as to any liability which may have accrued,” the report said.
Other unauthorised spending was found including £150,000 linked to maintenance costs and £142,000 in maintenance and capital costs.
The council is seeking legal advice whether the sale can be reversed or its ownership of the JMC can be recovered.
Councillor Mohammed Jamil, cabinet member for finance and corporate governance, said: “The publication of this report is proof that where unlawful acts are identified as having taken place, the council’s statutory officers will not shy away from their duty to report that wrongdoing, and we fully support that approach.”
He added: “Our monitoring officer and section 151 officer consider that the council acted unlawfully in relation to the sale of the John Mansfield Centre in 2020 and associated financial transactions. Therefore, it is right and proper that this is brought to light, and steps are taken to ensure as far as possible that similar unlawful actions do not happen again.
“As part of our improvement journey since 2022, we committed to rapid and far-reaching improvements in relation to governance and financial management. Many of the steps we have taken in recent years have led to more robust processes and policies in relation to decision making, however the recommendations which will go before cabinet this week seek to bolster this further.”
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