MONEY paid by developers to improve infrastructure in local communities is being misspent by Reading Borough Council to the tune of hundreds of thousands of pounds, according to insiders.

Council sources say officers have been told to raid Section 106 money to pay for funding gaps in large-scale schemes – including a £200,000 shortfall on improvements around Reading Station and a £1.1million overspend on the new pedestrian bridge.

In one instance, a £100,000 contribution from a developer that was destined to pay towards the new footway linking Reading station to Kenavon Drive was hived off to pay the last invoices for the station upgrade.

The Council has denied the allegations, saying it is confident that its accounting is “clear and transparent”.

But Cllr Isobel Ballsdon, who has long campaigned for more transparency in Section 106 payments, has slammed the "arrogance" of the leading Labour group, calling the situation an "outrage".

The Chronicle has seen evidence that in September this year the Council was forced to refund a developer Section 106 money to the tune of £20,000 - plus interest - after a formal complaint was lodged that it had been mis-spent.

Sources say there is a “systematic mismanagement of resources” and the accounting system that is meant to track payments and make sure they are spent properly is not open and transparent enough.

“There’s no keeping on top of it, it’s very lackadaisical,” said one insider. “The money is just spent without taking into consideration what it’s meant to be spent on. It’s bad mismanagement.”

Under Government guidelines, developers pay an agreed amount of money when granted planning permission – so-called “Section 106” money – which is meant to mitigate the effects of the development on local communities.

Schemes may include, for example, donations to upgrade local schools or to improve traffic schemes such as pedestrian crossings and bus stops. But the insiders claim that the money is often misspent – and developers rarely question it.

“The Council are very clever at not saying very much,” said the source. “It’s only if a developer comes back and questions it that they have to account for it.”

Staff are said to be particularly concerned about money paid by Bellway Homes in connection with the development of 192 housing units at 42 Kenavon Drive.

In June 2014, Bellway paid a total of £266,411 to the Council in Section 106 money. This included a £100,000 “Accessibility Contribution” and £125,000 for RUAP - the Reading Urban Area Package.

It was understood that both these amounts were to contribute towards the construction of a pedestrian and cycle path from Reading station to Kenavon Drive.

However, the source says the money was diverted to finish off the roads around the station after its £900m facelift.

There is no official record of where the money has been spent.

Meanwhile, the pathway to Kenavon Drive has not been finished, and stops at a dead end behind Argos.

He said: “You could argue that the £125,000 RUAP money has gone to a transport scheme nearby, but the £100,000 Accessibility Contribution should have been spent on the footway link. As it is, we were being told that when the next RUAP contribution comes in from Bellway, it must be spent on the footway.”

Cllr Isobel Ballsdon  said the revelations were “outrageous”.

She said: “Conservative councillors have been demanding transparency of the accounting and spending of Section 106 monies for over five years.

“The arrogance of the Labour -led council using S106 monies to fill funding short-falls goes against legally binding agreements. This is an outrageous misuse of tax payers’ money,” continued Cllr Ballsdon.

“The point of developer S106 monies is to reduce the negative impact of a development for local residents. It is wrong to redirect this money and an abuse of power. I will be demanding answers to the very serious questions this continued failure raises.

“Reading’s Labour administration must take their responsibility to handle S106 monies seriously and deliver the benefits the public is legally due.”

Cllr Ballsdon was among the Conservative group which called for an investigation into Section 106 spending in 2010 and writes a regular blog on the matter.

A spokesman for Reading Borough Council said: “The Council is confident the collection and use of Section 106 money is managed in a clear and transparent manner.

“A detailed report on Section 106 spending was considered at a meeting of the council’s Policy Committee in June.

“Councillors were asked to approve £2.3m of spending and a public report detailed where the money was to be spent and where the Section 106 money had come from.

“This included an amount of £206,176 from a development at 42 Kenavon Drive to be spent on work at Reading Station, which was an entirely legitimate use of the funds.

“A similar report is presented to the Policy Committee at about the same time every year.”

@lesleypotter2