The error was discovered as part of council’s ongoing work to review financial governance and practices in line with its recovery and improvement plan.
The HRA is strictly ring-fenced for transactions related to council housing landlord functions and cannot be used for other purposes.
The sum involved is circa £15.86 million and has accumulated since 2014-15.
A draft report on the issue commissioned by the council from CIPFA (the Chartered Institute of Public Finance and Accountancy) has now been received and makes a number of recommendations. Whilst the council awaits a final version of the report, having regard to the nature of the findings, it is acting without delay.
Steps are being taken immediately to refund the HRA from the general fund reserves by the full amount of £15.86 million (uplifted to current prices).
This will not directly affect the council’s revenue budget for day-to-day services.
Coun David Mellen (Lab), council leader, said: “Since I was elected leader in May 2019, this issue had not been raised directly with me by officers or auditors on whose advice elected councillors rely, until in recent months, when I agreed that an external review should be commissioned.
“The initial finding of that review is that the payments concerned are illegitimate.
"I have therefore asked for an urgent investigation to be carried out to understand how this happened and put measures in place to ensure it cannot happen again.
“This report raises significant questions and as leader of the council, I am determined that those questions will be answered.
“We will be taking the necessary steps to ensure the funding in question is paid back into the HRA immediately.”
Mel Barrett, council chief executive, added: “This issue is being taken very seriously by the council and needs to be seen in the context of the significant progress being made with the work underway to improve governance, financial management and organisational culture and underlines the importance of that work continuing.”