Tory flagship's house sales ruled unlawful

The London Borough of Wandsworth acted unlawfully when it sold council houses without taking into account its duties to the homeless, according to an auditors' report published last night.

The policy of offering vacant properties for sale rather than for rent was introduced in 1983 when Sir Paul Beresford, now an environment minister, was council leader. He joined the council in 1978, the year it started selling its homes, and was chair of housing policy from 1980 until 1983.

Wandsworth's arrangement was reputed to have formed the basis of the one adopted by Westminster, whose former leader, Dame Shirley Porter, and eight other councillors were surcharged pounds 31.8m by the district auditor. However, yesterday's report, although critical, stopped short of recommending surcharges or High Court action.

The report by Rowland Little, a partner with the accountancy firm Binder Hamlyn, rejected claims that the council - held up as a flagship for Tory local government - had introduced its policy to attract Conservative voters into the area. The council "misdirected itself in law" when it assumed that it was entitled to strike a balance between its desire to increase home ownership and its duties to the homeless, the report said.

It should have considered the consequences of its policy for people with medical conditions and for others in need of social housing. The report also criticised the failure to consider whether the properties would be mortgageable. Many were in high-rise properties and buyers found them hard to sell on.

A council paper which declared the policy a success, published just after Sir Paul became an MP in 1992, was imbalanced and "fell far short of acceptable standards", the auditor found. As a result, members who voted to open up new sales areas were acting on inadequate information.

Last night, Labour condemned Wandsworth and called for nine Conservative prospective parliamentary candidates who have links with the council to reject its housing policies.

Tony Belton, the Labour group leader in Wandsworth who brought the policy to the auditor's attention, said it was "yet another example of Tory sleaze". And he added: "People have had enough of grubby Tory politics - especially those Wandsworth residents in severe medical need of rehousing, those trapped in flats they bought from the Tories but which are now worth peanuts, those facing ever-soaring repair bills and those homeless through no fault of their own."

Sir Paul was in Italy on ministerial business last night but asked an adviser to point out that the report was based on legal advice. Wandsworth had had different advice, he said. In addition, he pointed out that no individual officer or member of the council was criticised.

The current council leader, Edward Lister, said the report set the record straight. Wandsworth had always acted reasonably and had paid proper regard to its legal powers and duties, he added. "The council's policy of encouraging home ownership has been a great success. It has helped to make Wandsworth estates attractive places to live."