Local Authority Interventions: Sandwell, Liverpool, Thurrock and Tees Valley

Thursday 7th March 2024 Written Statements

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Simon Hoare)]

All hon. Members will recognise the critical role local authorities play in providing services to their residents and being accountable to the communities they serve. I would like to update the House on actions the Government have taken in relation to four local authorities, which demonstrate the importance with which this Government see our role in ensuring the high standards that we set for local government are met. I am updating the House on the developments in the statutory interventions in Sandwell, Liverpool and Thurrock councils and on the Tees Valley Mayor’s initial response to the independent review published on 29 January.

Sandwell Metropolitan Borough Council

Following evidence provided by a governance review from its external auditor, Grant Thornton, Sandwell Council has been under statutory intervention since March 2022. The review included statutory recommendations to the council and detailed years of governance issues, leadership instability, and a breakdown in trust, respect and confidence between members and officers. These led to some significant failures. The review led the Secretary of State to decide that the council was failing to comply with its best value duty and consequently directions were issued and commissioners appointed.

Given Grant Thornton’s observation that “green shoots” of improvement had started to show at Sandwell, the intervention package was shorter and narrower than other interventions. I wish to update the House on the fourth and final report from the commissioners and the end of the intervention.

The commissioners’ fourth report

Since the beginning of the intervention, the commissioners have been clear about the aim of the intervention, setting out in their first report their “12 proxies for success”, as the House was updated on in the statement of 1 December 2022. These proxies brought together all the recommendations of the Local Government Association (LGA), CIPFA and Grant Thornton reviews, and commissioners reported against these proxies in each report.

On 20 December commissioners submitted their fourth report, setting out that the council is

“a far cry from the organisation first encountered”

in March 2022, and noting the considerable progress even since their third report. They observe

“the scrutiny and accountability systems, including performance and risk management, are robust and being upheld rigorously. The improvement work which was once seen as a standalone priority has now been interwoven with the “business as usual” strategic planning of the council.”

They also praise the staff at the council,

“who were eager to...work hard to improve”

from the outset. They conclude that the council is now an organisation that is “resilient and agile enough to provide its services to residents whilst withstanding adversity, and one with the plans, aspiration and people to strive for excellence independently”.

The commissioners conclude that

“the council is now meeting its best value duty and is capable of taking forward its improvement independently”,

recommending that the directions be permitted to expire as planned on 22 March and that they too leave their roles at the council on that date. Having considered carefully the evidence, including triangulation with the council’s own assessment of its progress and the follow up review from the external auditor, Grant Thornton, I am happy to update the House that the Secretary of State and I are satisfied that the council is now meeting its best value duty. Consequently, when the directions expire on 22 March 2024 the intervention will end.

The commissioners’ fourth report and my response to them and to the leader of the council will be published on www.gov.uk today.

It is right that, as the commissioners acknowledge, improvement “is never finished”: Sandwell is not perfect. However, the draft statutory guidance on best value standards and intervention, which we intend to finalise shortly following the consultation last summer, is clear that

“local authorities are not expected to be perfect before an intervention ends”

and that an intervention should

“resolve incidents of failure to the point where the authority can demonstrate that it now has the capacity and capability to sustain its own journey of continuous improvement without the need for further external involvement.”

It will take continued, concerted effort for the council to sustain the rate of improvement, build further resilience and ultimately continue to improve outcomes for residents. The commissioners note that part of that striving for excellence will include the continued development of the council’s partnership working with its neighbours, the wider local government sector and supporting its staff and elected members.

Next steps

To that end, I am pleased to note that the LGA will be working to support Sandwell over the next 12-18 months, to ensure a steady path out of intervention. As I said in the Chamber in the Adjournment debate on 18 January on the governance at Sandwell, “falling back into the old ways...will not be tolerated.” We will keep a weather eye on Sandwell, and continue to be there to support, advise and encourage.

Liverpool City Council

On 13 December 2023, I announced that the Secretary of State was minded to change the scope of the intervention at Liverpool by returning certain functions to the council by March 2024, together with updating the directions as part of a planned and phased transition towards the end of the intervention. Today I am confirming that these proposals will be implemented.

The intervention started on 10 June 2021 following a best value inspection. Since then, the scope of intervention has changed, and there are five commissioners who can exercise functions relating to regeneration, highways, finance, and property and their associated governance.

When I announced to the House that I was publishing the commissioners’ fourth report, together with the Government’s response that the Secretary of State was minded to change the intervention, I invited representations on the proposals by 2 January 2024. Having considered carefully the two representations received (one from the council and one from a member of the public), and other relevant information, the Secretary of State has decided to implement those proposals.

Accordingly, the Secretary of State has returned certain functions to the council, recognising the progress made and as part of a planned and phased transition towards the end of the intervention. The commissioners will no longer exercise the following functions:

all executive functions associated with highways, from 31 March 2024;

the requirement from section 151 of the Local Government Act 1972, to make arrangements for the proper administration of the authority’s financial affairs, and all functions associated with the strategic financial management of the authority, from 31 March 2024, to include:

the power to amend budgets where commissioners consider that those budgets constitute a risk to the authority’s ability to fulfil its best value duty; and

providing advice and challenge to the authority in the setting of annual budget and a robust medium term financial strategy (MTFS) for the authority.

all functions in relation to the appointment, organisation and performance of persons to positions the holders of which are not designated as statutory officers, and the designation of those persons for tiers 1 to 3 from today.

In addition, directions issued to the council today direct the council to undertake a range of actions to the satisfaction of commissioners, including to:

allow commissioners to provide advice and challenge to the authority on strategic decisions related to its finance function, including the setting of annual budgets and medium term financial strategy;

continue to build on improvements to rebuild trust with residents, in particular to improve FOI performance, report writing and systems to record delegated decisions;

complete a review of the strategic risk management and implement a strengthened mechanism based on its recommendations;

significantly progress the implementation of the corporate landlord model, commence the stock condition surveys to understand better the asset base, develop comprehensive asset management plans and produce a revised structure for the property directorate; and

continue to establish and implement a cultural change programme which embeds a customer focus, performance management culture, systems and reporting across the organisation.

The Secretary of State has removed directions to the authority that commissioners have confirmed have been met and revoked the directions issued on 10 June 2021 and 8 November 2022. Outstanding actions have been retained in the new directions issued today, and commissioners will continue to exercise functions relating to governance, regeneration, property management and appointments (for directors of property, human resources/organisational development and statutory officers).

I also wish to put on record our thanks to Joanna Killian who will be leaving the commissioner team on 17 March when she becomes the chief executive to the Local Government Association.

The new directions, accompanying explanatory memorandum, representation from the council, and my response to the commissioners will be published today on www.gov.uk.

The next commissioners’ report, due in March 2024, will provide a full assessment by commissioners of the intervention and will be vital to support our decision on how to proceed. I will update the House at that time.

Thurrock Council

Thurrock has been in intervention, with commissioners appointed, since 2 September 2022, after grave concerns were raised about the scale and commercial risk facing the council. On 1 March 2023 the intervention was expanded.

On 22 January 2024, commissioners submitted their third report on the progress of the intervention. This describes continued progress, with the council “owning its recovery” and demonstrating it is able to take difficult decisions. I am pleased to see the strengthening of member officer relationships and that all councillors agreed to adopt and commit to the enhanced improvement and recovery plan in October; it is important that there continues to be a whole-council approach to Thurrock’s recovery.

While the progress to date is to be commended, there is still much to do, including addressing ongoing governance requirements and ensuring the council has underpinning plans to implement its recovery, including a corporate plan and operating model. The financial situation should not be underestimated, with commissioners making clear that the challenge remains substantial.

There has undoubtedly been good progress at Thurrock, and it is imperative focus is maintained in the months ahead on the long-term priorities, to continue to build upon and drive the necessary improvements. The commissioners’ report and my response will be published today on www.gov.uk.

Tees Valley Combined Authority

On 29 January my hon. Friend the Minister for Housing, Planning and Building Safety made a statement to this House alongside the publication of the report of the independent panel investigating the Tees Valley Combined Authority’s oversight of the South Tees Development Corporation and Teesworks joint venture.

The review was commenced in June 2023 following very serious allegations made in the House regarding potential corruption and illegality. As my hon. Friend confirmed, the independent panel found no evidence of corruption or illegality and the panel made several useful and important recommendations on governance and oversight.

Upon publication of the report the Secretary of State wrote to the Mayor and asked for an initial response to the report and its recommendations by 8 March: this was received on 28 February and also published by Tees Valley Combined Authority. The Mayor has accepted, in principle, all the recommendations for the combined authority and development corporation. His response proposed actions for each of the 26 recommendations for the combined authority, development corporation, and partners, as well as outlining actions he has already taken, including establishing a combined authority working group to take this forward. I welcome the independent support the Mayor is seeking from the LGA and the Centre for Governance and Scrutiny and have encouraged him to make full use of independent peer challenge and support.

I am encouraged by the progress within the first month and keen to give time now for the Mayor to develop his plans further and implement the changes required. These will enhance the successes of the Teesworks regeneration by ensuring governance arrangements and accountability are strong and transparent, and supported by robust scrutiny. Given the issues raised in the report, it is important that rapid progress is made that engages comprehensively with the substance of the report’s findings to implement lasting change. To that end, I look forward to receiving further updates from the Mayor, which I have asked for initially after six months.

I am confident that the Mayor and his cabinet will implement successfully their plans and continue their important work regenerating and bringing new jobs to the Tees Valley. The Mayor’s response to the review and the Secretary of State’s reply will be published today on www.gov.uk.

Conclusion

I want to acknowledge the work of the dedicated staff who deliver the important services of local authorities, on which local residents depend. I also want to thank the commissioners in Sandwell, Liverpool, Thurrock, and other councils in statutory intervention, for all they do. I will deposit in the House Library copies of the reports and associated materials.

[HCWS319]