To ask Her Majesty’s Government what assessment they have made of the report by KPMG Northampton Borough Council: Report in the public interest regarding the Council’s loans to Northampton Town Football Club, published on 27 January; and what steps they are taking in response to any such assessment.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and in doing so I declare my registered interest as a vice-president of the Local Government Association.

We are aware of the public interest report concerning Northampton Borough Council. However, it is for the council to consider and respond to the issues raised in the report. On 22 February, the council set out its response to the report’s recommendation, and it will be for it and its successor council to implement.

My Lords, does the noble Lord, Lord Greenhalgh, agree that this is a terrible scandal—a failure of due diligence, of governance and of leadership which has let down the residents of Northampton and lost them over £10 million, and has let down the supporters of Northampton Town Football Club, who have a half-built stand? The club was formed in 1897 and was affectionately known as “The Cobblers” in recognition of the town’s historic connections to the boot and shoe industry. Northampton Borough Council is about to be abolished, so can the noble Lord tell me how those responsible for this scandal will be held to account and made to pay?

My Lords, I join the noble Lord in condemning any situation where money is lent in a way that does not secure the amount that has been lent, resulting in taxpayers being out of pocket. We recognise the importance of carrying out the recommendations that were outlined in the public interest report and will monitor the situation and see how things progress.

What lessons can be learned from the Northampton Town Football Club case and what steps, if any, should the Government take to ensure that all councils have rigorous procedures for protecting and safeguarding public funds?

My Lords, there is a trend towards an increasing reliance on commercial income as a way of balancing the books. Therefore, the Government are doing two things. We are undertaking a complete review of the prudential framework that governs loans of this nature, and the Public Works Loans Board has changed the lending conditions to ensure that local authorities cannot take on debt as a way of pursuing commercial income.

My Lords, the Minister is missing the point. Will he confirm that David Mackintosh was leader of the council when this loan, which is the subject of irregularities, was made, and that the chairman of Northampton Town Football Club and some of the businessmen associated with it then gave money to David Mackintosh’s election account when he stood as a Tory Member of Parliament? These donations were not declared, and the Electoral Commission has asked the police to investigate this as well. Will the Minister explain what the police are doing, when they will report, and when the Conservative Party will admit that this has been a terrible scandal on its watch?

My Lords, if there are criminal matters, it is for the police to investigate those, and it is for the Electoral Commission to investigate any other wrongdoings. It is important that we learn the lessons of this, so that it does not happen again, and that the recommendations that follow from the public interest report are carried out in full.

My Lords, if we take it as read that something has gone very wrong politically here, could the Minister cast his eye over the situation of Northampton football club? Would its situation be better if the Government had taken seriously the suggestion by the Minister’s Honourable Friend Helen Grant that there should be a commissioner to look at football finance, which could be funded by football? Surely that might have taken the edge off the situation.

My Lords, I am not an expert in football finance, but I can say that it is very ill-advised for the leader of any council to undertake a loan that is not properly secured; this has resulted in the loss of a tremendous amount of income to the people of Northampton.

My Lords, I am very pleased to hear that the Government plan to try to deal with the situation, but it is not a petty party-political thing. The noble Lord, Lord Kennedy of Southwark, is of course not involved in petty party politics; he was just trying to make sure that this situation did not arise in the future.

My Lords, I take that as a comment on the intentions of the noble Lord, Lord Kennedy, rather than a question.

There are good examples abroad of effective state investment into football facilities; for example, the huge Ajax stadium owned by the council in Amsterdam. Should not the Government consider, in good time, looking at the relationship between local government and major sport and learning some of the positive lessons from abroad, where money has been invested but with good returns and some community benefit guaranteed?

My Lords, in preparation for this Question, I asked my officials whether it was in any way illegal to loan the money to Northampton Town Football Club. It is not illegal. The issue at hand is that the terms and security that were guaranteed were not sufficient. I am sure that there are lessons to be learned on the involvement of public expenditure in supporting sport in the way described.

My Lords, building on the point made by the noble Lord, Lord Mann, would my noble friend agree that there are good examples of local authority investment in sport stadia and other commercial entities and that it can be a clear part of place-based growth and a real sense of community? What went wrong here? Is there any need to review the legislation governing local authorities in this regard?

My Lords, there are plenty of examples of investment in community sport infrastructure by local authorities and a lot of them make sense. What does not make sense is the pursuit entirely for commercial income. We saw in the London Borough of Croydon the investment in the Croydon Park Hotel, for instance. Another example is the Robin Hood Energy company in Nottingham, where there was an overreliance on commercial income to balance the books.

My Lords, will the Minister promise to bring this exchange to the attention of his colleague Nigel Huddleston, the Minister for Sport, and suggest to him that it is time for the Conservative Government to fulfil their manifesto commitment to a fan-led inquiry into the governance of football?

My Lords, I am happy to take away all these suggestions around how we can improve the governance of our national game.

My Lords, this is sad, because football is about romance, not just finance. Fans love their local club, whatever Division it plays in. Although this is about a council loan, the loyal fans of Northampton Town Football Club, which formed in 1897, had their hopes of a new stadium dashed. Will the Government take into account the findings not only of the KPMG public interest report but the report of the then internal auditor, PricewaterhouseCoopers, in 2016, which also made various recommendations?

My Lords, I am sure that the successor council will take on board the recommendations of the public interest report and any recommendations that have come out of the local audit system. It is important that those are acted on.

[Inaudible]—the football club will not be able to repay the loan in view of the pandemic restrictions.

I am not entirely sure I got the gist of the question. I am sure that the noble Lord agrees with the sentiment that we should learn the lessons of this transaction and ensure that future investment is properly secured.

My Lords, all supplementary questions have been asked and we now move to the second Oral Question.