Westminster `hid lost millions'

Britain's leading Tory flagship council waived millions of pounds of repair bills to people who bought council homes to ensure a policy of bringing potential Tory voters into key areas remained on course. The accusation, in a confidential internal Westminster council report leaked to the Independent, threatens to compound last year's "homes for votes" scandal, which is still being investigated.

In a 316-page report, kept secret for more than a year, Westminster's own auditors found no major works bills were issued to leaseholders from 1987 to 1991. The report claims senior officers misled the full council about the cost of schemes designed to reduce or remove repair charges to leaseholders. It says legal advice about the entire policy was twisted and misrepresented by the time it reached the council.

Next week the three-month hearing into the "homes for votes" report, published in January last year, ends. The district auditor, John Magill, is expected to give a final report this July. Six councillors, including Dame Shirley Porter, and four officialsface being surcharged £21m if Mr Magill upholds his earlier finding. His provisional report said 10 people acted with "wilful misconduct" in a gerrymandering operation to sell council homes in marginal Tory wards.

However, the scale of lost income in not billing leaseholders for major repairs over four years, and the internal report's worries over the legality of an "amnesty" from the charges, threatens to prolong investigations into Westminster's Tory administration since the mid-80s.

Mr Magill is investigating the "amnesty" repairs schemes. He is expected to deliver a provisional finding next month. If the schemes are ruled illegal, and were introduced with "wilful misconduct," the potential surcharges facing key officials and councillors will pass £50m.

The political dimension of the non-billing policy is revealed in the report. On 16 September 1987, it reveals correspondence between the then director of housing, Graham England, and the housing committee chairman, Peter Bradley. It is admitted that a planned five-year maintenance policy...will result "in substantial capital costs to be met by our lessees". Mr England states, according to the report, that "existing lessees will become increasingly disenchanted with the city council as landlord and will be susceptible to pressures from the opposition".

The success of the "whole home-ownership policy, both right to buy and designated sales, could be affected by adverse publicity," it states. A memo between the two says: "We must, therefore, find a solution to this problem urgently."

Mr England's note in September 1987 says "it may be possible by exploiting loopholes ...to avoid collecting charges from certain lessees".

By March 1989, after a first "no-repairs-bills" scheme was abandoned because lessees thought it not generous enough, auditors found a more generous scheme was recognised by a key official to be open to the risk of judicial review. The concerns were neverfully dealt with.

Potential lost income will have cost council tenants and borough council tax payers an estimated £650 for each tenant and £250 for each council tax payer. Latest estimates put the borough's leaseholders at 6,759.

The current Labour leader in Westminster, Andrew Dismore, said: "I would be extremely surprised, given the importance of the homes-for votes sales drive, if the associated problem of the high leaseholders bills was not brought to the attention of the handful of leading members running the council at that time."