York Liberal Democrats claim a council housing executive should have resigned when he flagged a conflict of interest in a key decision over a Salvation Army contract.

A new report into how City of York Council handled the non-renewal of the Salvation Army’s contract with the local authority has been published.

It shows that housing executive Cllr Michael Pavlovic was unhappy when council officers recommended that the Salvation Army’s £675,273 contract should not be renewed past October 2023.

Cllr Pavlovic removed himself from the decision due to a conflict of interest and left it to Cllr Claire Douglas, the council leader, and Cllr Katie Lomas, the finance executive.

York Liberal Democrat’s Cllr Darryl Smalley said: “This bombshell report shows the difference between the previous [Liberal Democrat] administration and the new one.

“The previous administration treated the Salvation Army with respect, the new Labour administration has treated them with contempt.

“We have a bizarre situation where the executive member responsible for housing doesn’t like the way the decision is going halfway through the process and decides to raise a conflict of interest that didn’t exist at the start of the process.

“It is clear from the report that Cllr Pavlovic did not agree with the decision to end the Salvation Army contract.

“He should have either stood his ground and argued the case for renewing the contract, or done the honourable thing and resigned.”

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Labour’s Cllr Lomas said: “The executive member for housing’s original view was to be sceptical about what felt like a sudden and unplanned ending of the contract.

“However, as more detail emerged, including the fact the old Liberal Democrat-Green administration had broken procurement law in its extension of the contract, his view changed.

“Regardless, his view was not taken into account as he’d identified a potentially prejudicial interest and stepped back from the decision-making process.

“This report reveals the Labour administration’s options as being to follow the previous administration in breaking the law or to bring the contract to its planned end and consider the future scope of rough sleeper prevention support services.

“We took the sensible and legal option.”

Other issues flagged in the report was a “major IT outage” that affected an extension to the contract not being signed.

The Salvation Army was given notice in September that its contract would not be extended after October.

But to reflect the late notice of the decision, the Salvation Army was emailed a one-month contract extension.

The report said “the communication of the potential extension was subject to technical difficulties in that the Salvation Army did not receive the email containing documents and associated information due to a major IT outage”.

When asked whether the IT issue came from the council or the Salvation Army, City of York Council officers didn’t know but it was “quite possible” it came from the council as it does have IT outage issues “from time to time”.

Senior figures at the Salvation Army felt they didn’t have enough time to read the details of the contract and sign the extension and was consequently not signed.

The City of York Council previously acknowledged that the saga had been badly managed.