A blunder by council officers saw £66,000 of taxpayers’ money awarded to a developer that illegally built flats in Mitcham.

Two years after the gaffe, Merton Council is still trying to recover the money but has refused to say how much it is still owed.

Last year, four families were told they would be evicted from the former Prince of Wales pub in Western Road, Mitcham, after their flats breached building regulations because they were too small.

Despite this, developer Collierbridge Properties still received three grants of £22,000.

A council source said three tranches of the grant, had been paid through the London Development Agency’s Empty Homes Grant, while a fourth was agreed but never paid.

Councillor Mark Allison, the council’s cabinet member for finance, said the gaffe happened because one council department did not speak to another.

He said: “What happened under the last administration was disgraceful and we have been trying to clear up the mess they left behind.”

But Merton Council refused to reveal what action had been taken since last year to recover the money.

A council spokeswoman said: “An agreement has been reached between the council and Collierbridge Properties Ltd. The terms of that agreement mean that it remains confidential, and as such, we cannot make any further comment.”

Neil Malcolm, chairman of Lavender Fields Residents’ Association, said it was “outrageous” the council was being so secretive about what action was being taken to clear up their own mistakes.

He said: “These grants should be a matter of public record and this whole situation has become a farce.

“I don’t know what is worse – a substantial sum of public money now sitting in a property company’s bank account or there appearing to be a conspiracy to hide the facts behind this affair.”

The Wimbledon Guardian was unable to contact Collierbridge Properties, which did not appear to have a publically listed contact number, email address or website.

The tenants are set to be evicted from their homes in January.

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