More than £17 million was spent by Peterborough City Council in unlawful payments for emergency homeless accommodation. A report, prepared jointly by the council’s monitoring officer and section 151 officer sets how payments made over almost a decade were incurred without lawful procurement, without written contracts, and without proper decision-making authority.
Their findings have sent shock waves across the city council.
The statutory report, by Graham Kitchen, Director of Legal and Governance (Acting) and Monitoring Officer, and Christine Marshall, Executive Director of Corporate Services and Section 151 Officer, outlines a troubling history.
Between the financial years 2015/16 and August 2025, the council paid approximately £17,406,954 plus VAT to a range of third-party providers for spot-purchased emergency accommodation for homeless households.
These payments, the report asserts, were made without lawful procurement, written contracts, or proper governance.
The report, along with accompanying legal advice provided to councillors, spell out the legal ramifications for the city council.
CambsNews has seen the confidential report that was provided to the executive, setting out the scale of the failures and the statutory obligations now triggered.
It offers a devasting indictment of gross mismanagement at the most senior level at the city council.
The legal duo who examined contraventions have left no one in doubt about the rules, if not the laws, that have been breached.
“In the present case, the failure to properly procure the providers appears to contravene an enactment as does the council’s failure to observe the contract rules,” they conclude.
“In addition, the payments by the council appear to be a contravention of a rule of law, in that they have not been authorised by any member, body or officer with power to do so.
“In the present case, there does not appear to be any authority properly approved by the executive or any officer of the council under delegated power to make the payments.
“In the absence of any proper delegation to approve the payments they are considered unlawful.”
Nearly ten years of unlawful expenditure
The report makes clear that while the council was acting to meet its statutory duties under the Housing Act 1996, this did not remove the requirement to comply with procurement law, internal contract rules, or the council’s constitution.
Officers concluded that throughout the period examined there was no evidence of lawful decision-making authority to support the payments and no compliant procurement exercises in place, despite the scale and regularity of the expenditure.
Contracts worth millions awarded without proper procurement
The report highlights the significant financial value of arrangements entered into without proper procurement or governance.
More than 27 providers received payments during the period reviewed. While some payments were relatively small, others involved substantial sums of public money.
One provider alone received £7,735,207 plus VAT, with £3,955,716 paid between 2022/23 and 2024/25. The highest annual expenditure recorded was £2,533,763 in 2022/23.
At least six arrangements exceeded £500,000, a level of expenditure that, under the council’s constitution, requires Cabinet approval and inclusion on the forward plan.
The statutory report confirms that neither requirement was met in any of these cases.
In addition, at least 15 providers were paid large sums without written contracts in place, contrary to the council’s own contract rules and the Local Government Act 1972.
Failed procurement dating back to 2013
The report traces the origins of the problem to a failed procurement exercise in 2013, when the council attempted to tender for emergency accommodation services.
No bids were received, and the procurement was never concluded. Crucially, the city council did not return to market or establish alternative compliant contractual arrangements in subsequent years.
Instead, the authority continued to rely on spot purchasing, a practice that continued unchecked for nearly a decade while spending increased significantly.
FOI request exposed governance gaps
The issue came to light following a Freedom of Information request submitted in June 2025, which asked when Eastfield Guest House Limited had been awarded a contract by Cabinet.
The council’s response confirmed that no formal contract existed, despite £1,291,119.50 being paid to the company in 2024 alone. Payments were described as spot purchases made to meet urgent housing need.
Council officers basically fobbed off the FOI but crucially did admit that following the request it accepted that “after analysis of the sum involved the council have resolved to put this opportunity to the market with immediate effect.
“And a pipeline will be published with the necessary governance to allow the procurement process to proceed”.
The questioner may have been given a light touch response, but internally the FOI triggered a red flag that has led to this bombshell report.
According to the confidential briefing to councillors “in or around July 2025 the proposed FOI response was sent to the then Head of Legal (and now the Council’s Monitoring Officer, Mr Kitchen) who was concerned about the apparent lack of written contracts, governance and procurement exercise that underpinned the payments to providers of emergency accommodation.
“As a result, a broader review of the council’s historic spending, contracts, and governance arrangements in relation to the services was ordered (the ‘review’). The review was undertaken by officers in finance, procurement, legal and the place and economy directorate”.
Legal breaches set out to councillors
The report and accompanying legal advice provided to councillors set out multiple breaches of legislation and regulation, including:
- Public Contracts Regulations 2006
- Public Contracts Regulations 2015
- Procurement Act 2023
- Local Government and Housing Act 1989
- Local Government Finance Act 1988
Legal advice from Simon Goacher, partner at Weightmans LLP, confirmed that both the monitoring officer and the section 151 officer were obliged, legally, to report the matter to the executive due to the seriousness of the breaches.
The officers concluded that the failures constituted contraventions of enactments and rules of law, requiring formal reporting and corrective action.
Emergency governance introduced
Following the findings, statutory officers required emergency governance arrangements to be put in place for ongoing expenditure.
This was achieved through a series of exemption reports covering the period from 1 September 2025 to 31 May 2026, authorising interim contracts with four providers. These contracts range in value from £31,433 to £235,037, excluding VAT, and are strictly time limited.
Picture by Terry Harris.
Each exemption includes a commitment to undertake a fully compliant procurement exercise under the Procurement Act 2023, with new contracts expected to commence on 1 June 2026.
Council leader: procedures not followed
Council Leader Shabina Qayyum said the statutory report relates to payments that were unlawful because correct procedures were not followed, despite the services being delivered.
She said: “This relates to money the council spent on meeting its statutory duties, which in this case related to providing temporary accommodation for those we have a duty towards. It was legitimate to spend for these purposes and the service that we paid for was received.
“However, officers can find no evidence of the correct decision making having taken place to authorise the payments, nor were the correct procedures followed to procure the accommodation.”
She confirmed that immediate steps were taken once the issue became known, including issuing written contracts to providers still being used by the council.
Planned reforms and scrutiny
Cllr Qayyum said Cabinet is being asked to agree a series of actions to rectify the situation and reduce the risk of unlawful practices in future. These include:
- A fully compliant procurement exercise to put new contracts in place from 1 June 2026
- Mandatory external training for officers on procurement legislation and contract rules
- A comprehensive review of all existing third-party arrangements
She also confirmed that each service will prepare an individual report to the audit and governance committee in 2026/27 to confirm compliance.
“As leader, my administration demonstrates that this is one of the issues we are looking into, to ensure we implement safe and legal processes around our contractual agreements,” she said.
Impact across the council and the city
The findings have already had a significant impact within Peterborough City Council and are expected to prompt wider concern across the city, given the length of time over which the unlawful expenditure occurred and the value of contracts awarded without proper procurement.
The statutory officers have recommended urgent reform, mandatory training, and a council-wide review of procurement arrangements, supported by members.
The Cabinet is due to consider the statutory report and its recommendations as scrutiny of the council’s governance and financial controls continues.
- Additional research and data, Terry Harris
