An inquiry into why £2 million was borrowed by Craven District Council has been ruled out by the leader of the controlling party.

Some councillors are calling for an independent probe into why the money was borrowed by a senior officer – who is no longer with the authority – without councillors’ approval in late 2007.

They also want to know whether it was taken out unlawfully and, if so, whether the council can now take any action.

The councillors – including David Ireton, who was chairman at the time – say they believe the public and councillors have a right to all the facts.

The calls at last week’s policy committee follow revelations from the council’s then treasury manager that full reports had been prepared for councillors, but the reports never appeared at committee meetings.

David Harper told the Craven Herald last week that the loan, from the Public Works Loan Board, was fully documented and that a retrospective report was submitted to his bosses for a December 2007 meeting.

A council spokesman last week confirmed the report had not gone before councillors and the loan only came to light a year later.

But the current chairman, Conservative Marcia Turner, whose party was in opposition at the time, said at last Wednesday’s meeting that some councillors had been party to discussions about the loan.

The council leader and chairman at the time both told the meeting they had not been included in those talks.

However, senior members of the Conservative group, who took control after last June’s elections, are keen to see a line drawn under the issue.

Council leader Chris Knowles-Fitton (Cons) told the policy committee: “There is no way we will have an inquiry. We have wasted enough time on this. It has been approved by John Prentice (district auditor) and I don’t want to pursue it any further.”

At the meeting, both the council’s interim director of corporate services, Susan Goodhall, and the district auditor, John Prentice, were keen to point out that the loan had been taken out by the then finance officer, acting properly under delegated powers.

And although it could not be explained why the money had been borrowed – the council had not identified any need to do so in 2007/08 – the transaction had been lawful.

Although the loan was taken out in December 2007, it was only discovered by council officers a year later. They then raised it with the Audit Commission.

Mrs Goodhall said the £2 million was still on the council’s balance sheet and had been fully discussed with the Audit Commission.

“The money was borrowed; the reason why is not easy to understand. It is on record that in 2007/08 the council did not anticipate borrowing anything,” she said.

Mrs Goodhall said that the loan had been taken out at favourable rates at the time and could have been to support an aspirational capital programme that ended up not being delivered.

She explained that there would be a penalty if the loan was repaid early and what it was eventually used for would be subject to further discussion.

Mr Prentice said he had been satisfied the loan had been taken out lawfully.

He said he was recommending that the council’s accounts for 2007/08 should be finally signed off, several months after they should have been.

“I am satisfied that the transaction was within delegated powers and, from that point of view, it was legal,” he said. “Transactions took place and it was properly recorded in accounts. We are where we are and we have to move on from that.”

But former chairman Coun David Ireton (Ind) said he was unhappy that despite his senior position in the administration at the time, he had been unaware of what was going on.

“I was part of the administration and I want to get to the bottom of it,” he said.

Coun Ireton asked whether it was lawful to borrow £2 million for it to then be invested.

“If that money was borrowed unlawfully – and it appears that it was – then that money should be returned,” he said.

“I want to know what this council can do about it if it turns out it was unlawful.”

Coun Carl Lis (Ind), who was leader of the council when the loan was taken out, stressed he too had known nothing about the discussions.

“I would have expected to have known about a £2 million loan,” he said. “Coun Turner said that some members were aware of it, but I had no knowledge of it in any shape or form and I was leader at the time.”

Coun Robert Heseltine (Ind) said an external, independent inquiry was needed.

“This £2 million and the way it was borrowed concerns us all and the fact that the leader of the council at the time was not informed beggars belief,” he said. “I am led to believe that the chief executive at the time also did not know.”

Coun Heseltine said he was concerned that if the money had been taken out unlawfully, the council should not benefit from it and that it should be returned.

“What we need is a full, public, external, independent inquiry so that it can be bottomed and put to bed,” he said.

Although other councillors either remained silent or insisted they had known nothing about the loan, chairman Marcia Turner (Cons) revealed she could recall discussions in 2007.

“I seem to remember this being talked about two years ago, around the time HML came up,” she said – a reference to discussions about a new headquarters on Gargrave Road for the financial institution, a subsidiary of Skipton Building Society.

“It was said that we could do with some capital to go ahead with some of the things that were going on. As it was very economical to borrow at that time, that is why the decision was taken, but not all of us were happy about it.”

Coun Turner said under council rules, the finance director could borrow up to £2 million under delegated powers.

“I was with one or two other people, with the internal auditors, and we went through the things that were going on,” she said.

But she said the issue had not been discussed at a council meeting. “It never came before the members. It was a good idea at the time for us because of the rate of interest,” she said.

Mrs Goodhall confirmed that it was common practice for heads of finance to have delegated powers for loans of such a size, but that a retrospective report to councillors would be expected.

But other councillors called for a line to be drawn under the loan and for the council to move on.

Coun Paul English (Lib Dem) said: “We are where we are. I don’t know what it was borrowed for; it could have been borrowed for a superb plan. Whatever plan it was, it never got to us,” he said.

And he said that it appeared the transaction had been legal.

“The officer acted within his powers and, hopefully, the council has learned by it.”

Coun Ady Green (Cons) pointed out that the money was still in the council’s accounts.

“I think we should look forward and get this place knocked into shape,” he said.

After the meeting, Coun Heseltine repeated his calls for a full, external, independent inquiry.

“It is difficult for members to proceed on this because the person who knows is the former chief executive, Gill Dixon, and all members have a gagging order on them as part of her severance agreement,” he said.

“Unless we get her in front of a public, independent inquiry we will never know. And until then, all we will get is spin.”