Government's HIPs experts 'could make millions out of scheme'

Christopher Legrand and Richard Theobald had a financial interest in ensuring the packs were introduced, a report by Britain's spending watchdog found.

The National Audit Office condemned the Government for employing consultants who it said had a "clear conflict of interests".

The findings are yet another blow to the HIP scheme, which came into force on August 1 after substantial changes in the light of widespread opposition.

Under the scheme, those selling homes with more than three bedrooms must provide buyers with an information pack, which gives details about the property, including energy efficiency ratings and title searches.

It can cost up to £600 to put the packs together.

An independent report found that when they were employed by the Department for Communities and Local Government, Mr Legrand and Mr Theobald each held 10,000 shares worth £200,000 in a company called National Energy Services.

This was the parent company of Surveyors And Valuers Accreditation, the first firm approved to vet the army of energy assessors who work on the packs.

If the firm, which trains, accredits and regulates assessors, is successful, the share dividend will soar.

Mr Legrand also sat on the panel that gave the go-ahead to run the lucrative certification scheme.

The pair also founded a company called Property Industry Research to help develop the HIPs programme.

Mr Theobald is no longer believed to be involved with this company.

The NAO investigated a conflict of interest after a complaint from the Royal Institution of Chartered Surveyors, an opponent of HIPs, in November last year.

Teresa Graham, the chairman of the RICS regulation board, accused the department of stalling for time to prevent the HIPs scheme collapsing.

"If this report had emerged prior to HIPs coming into force it is likely HIPs would have been abandoned."

Mr Legrand and Mr Theobald were appointed by the Government in 2000 to help develop HIPs policy, especially the certification of assessors.

Even though they sold shares in SAVA to National Energy Services in 2003, they retained a chunk of shares in NES.

Department officials told the NAO they took at "face value" Mr Legrand's assurances that the NES shares were at a fixed price and would not increase in value.

However the department later called in accountants Grant Thornton which found "the appointment of SAVA to run the first certification scheme...had the potential to increase the share options held by the two consultants".

Mr Legrand and Mr Theobald had their contracts terminated a week later.

A spokesman for the department said: "We are satisfied that no impropriety took place."