Local Government Best Value

Jim McMahon Excerpts

Thursday 8th May 2025 Written Statements

[The Minister for Local Government and English Devolution (Jim McMahon)]

I have previously updated this House that this Government are committed to reset the relationship between local and regional government, and to establish partnerships built on mutual respect, genuine collaboration and meaningful engagement. Local councils must be fit, legal and decent and this Government are taking the action necessary to fix the foundations of local government and to support the sector to build to strength. Today, I am updating the House on the steps we are taking in partnership to support five councils to recover and reform: Spelthorne borough council, Warrington borough council, Nottingham city council, Cheshire East council and Newham borough council.

Spelthorne Borough Council

On 17 March, I informed the House that I was satisfied, having considered the best value inspection report, that Spelthorne borough council is failing to comply with its best value duty. Inspectors found that the council demonstrated a limited track record in proactively driving meaningful change and effectively implementing external recommendations. I proposed an intervention package to secure the council’s compliance with that duty and asked the council and others to provide representations by 28 March.

I received 12 representations which I considered carefully. I remain satisfied that the council is failing to comply with its best value duty in relation to continuous improvement, leadership, governance, culture and use of resources. I have concluded that it is both necessary and expedient for me to exercise powers in the Local Government Act 1999 as I proposed, with minor amendments. Today, I issued directions under section 15(5) and (6) of the 1999 Act to implement the proposed intervention package.

That intervention package, to be in place until 31 May 2030, comprises four commissioners appointed to exercise specific council functions, alongside specific actions the council is required to take. I am confident that this package will address the failings identified and is necessary for the council to secure compliance with its best value duty.

Given the importance of creating sustainable unitary local government for Surrey, there is a case for urgent and decisive Government action to protect the interests of Spelthorne’s residents and taxpayers, and the public purse. I have therefore appointed the inspection team: Lesley Seary as lead commissioner, and Peter Robinson, Deborah McLaughlin and Mervyn Greer as commissioners, due to their extensive knowledge and experience.

I have issued directions which, in summary, require the council to:

Prepare and agree an improvement and recovery plan within six months and publicly update commissioners on progress after the first three months, six months and thereafter every six months.

Ensure the council has sufficient skills, capabilities and capacity to implement the plan.

With support of commissioners, work with Surrey councils on issues in relation to local government reorganisation in Surrey.

Initiate a full and open recruitment exercise within one month for a suitable permanent appointment to lead the improvement work in the authority and progress against these directions.

Fully co-operate with the commissioners and undertake any exercise of functions that would avoid further failure, in commissioners’ opinion.

The scale of the challenge in Spelthorne means that they must take immediate steps to address their governance, commercial and financial challenges and to make transformative change across its entire operations. Commissioners will be able exercise the following functions:

those associated with the source of Spelthorne’s failures—to strengthen the commercial decision-making, regeneration, property management and procurement functions of the authority;

those associated with delivering financial sustainability by closing any short or long-term budget gaps and reducing the authority’s exceptionally high level of external borrowing;

those associated with any changes needed to the authority’s operating model and transformation of council services to achieve value for money and financial sustainability, taking account of any decisions relating to proposals for unitary local government in Surrey; and

those that will ensure the council has the right skills and structures to make ongoing improvements across the entire organisation—including governance and scrutiny of strategic decisions, and the appointment, dismissal and performance management for senior and statutory officer positions.

The commissioners’ appointments and directions take effect from today. The commissioners will provide their first report in six months, with further reports every six months or as agreed with the commissioners.

As with other statutory interventions led by my Department, the council will meet the costs of the commissioners and provide reasonable amenities and services and administrative support. The fees paid to individuals are published in appointment letters on gov.uk. I am assured this provides value for money given the expertise being brought and the scale of the challenge.

As the council works with other Surrey councils on proposals for sustainable unitary local government for Surrey, creating simpler structures that will deliver the services that local people and businesses need and deserve, the needs of Spelthorne are likely to change throughout this period. Although commissioners will not input into local government reorganisation proposals before submission on 9 May, they will provide their views and oversight for the next stage. I have appointed the commissioners until January 2026: they will provide the requisite oversight, expertise and grip on Spelthorne’s position. I will also review at the appropriate time the directions and the commissioners’ roles, to ensure that Spelthorne has the support required to accelerate recovery and protect the public purse.

As always, I remain committed to working in partnership with Spelthorne borough council to provide whatever support is needed to ensure its compliance with the best value duty.

Warrington Borough Council

Best value inspection report

A capital review of Warrington borough council conducted by the Chartered Institute of Public Finance and Accountancy highlighted concerns around governance and decision making and following this, on 8 May 2024 the then Secretary of State (the right hon. Michael Gove), commissioned an inspection of the council’s compliance with its best value duty. Paul Najsarek was appointed lead inspector and was later joined by Richard Paver and Michael Hainge. The inspectors submitted their report to the Secretary of State, and I am publishing this today. I am grateful to the inspection team for their thorough work, and to the council and all participants for their co-operation.

The report identifies strengths within the council, including within children’s services and public sector partnerships and community engagement. However, it documents serious concerns:

On continuous improvement: The report describes “resistance” in the council’s response to external challenge processes. The inspectors are not confident the council has the “will and capacity” to make the necessary changes without external intervention.

On leadership: The report identifies a lack of strategic direction and “low challenge culture”. The council’s priorities are not aligned with its revenue budget and commercial programme challenges.

On governance: The council’s commercial programme lacks transparency, with key decision-making “disproportionately influenced by a small group of officers”. Despite concerns raised by external bodies, meaningful reforms have not been implemented. The absence of audited accounts since 2018-19 further leaves the council in a precarious position.

On culture: The report highlights that “members are highly respectful of powerful officers and there is a defensiveness to internal and external scrutiny”. This culture has contributed to a high-risk commercial programme, leaving the council “in a very exposed position”.

On use of resources: The council manages a complex, high-risk borrowing and investment programme without a clear strategy or the required expertise. It faces “an increasingly precarious revenue budget position with rapidly diminishing reserves”. The inspectors raise concerns about a potential breach of PWLB guidance.

Compliance with the best value duty

I have carefully considered the report and other relevant material, including the CIPFA review and the Local Government Association’s corporate peer challenge. I am satisfied that Warrington borough council is failing to comply with its best value duty in relation to continuous improvement, governance, leadership, culture, and use of resources. I am therefore minded to exercise powers of direction under section 15(5) and (6) of the 1999 Act to implement an intervention package that ensures the council’s compliance with its best value duty.

The proposed intervention includes the appointment of ministerial envoys who specialise in leadership, governance, finance and commercial investment. This proposal represents a further evolution of our approach as this Government continue to test and learn how best to support councils to recover and reform. As part of our commitment to reset the relationship with local and regional government, I am seeking to develop the “envoy” model, which prioritises building a council’s own capacity to improve, by supporting its recovery primarily with expert advice, rather than taking over functions.

Under this model, my clear expectation is that the council will remain responsible for driving its own improvement with the support, challenge and advice from the ministerial envoys. To safeguard the process, some envoys will have power to exercise certain and limited functions to be treated as in reserve, intended to be used only as a last resort to ensure compliance with the best value duty. The proposed approach balances the evidenced need for government support with the leader’s commitment to work constructively so that we see sustained, long-term improvement.

I propose the intervention will be in place for five years, but should there be sufficient evidence of progress, functions will be handed back to the council earlier. The council will be directed to prepare and agree an improvement and recovery plan and progress against the plan must be demonstrated, through regular reports from the ministerial envoys.

Representations

I am inviting representations from Warrington borough council and any other interested parties, including residents, on the inspection report and proposed intervention package, by 22 May 2025. I have taken steps to ensure that this report will be seen by councils who are working together on proposals for devolution.

I will carefully consider all representations before deciding how to proceed. The proposal to intervene is not taken lightly but is designed to strengthen and accelerate improvement to ensure the council delivers for its residents and in partnerships. With council focus and support from the ministerial envoys, I expect the council to demonstrate the swift and sustained progress necessary to ensure compliance with its best value duty.

Nottingham City Council

Nottingham has been in intervention since January 2021; and commissioners were appointed in February 2024, led by Tony McArdle OBE. I am today publishing the commissioners’ latest report, received in March, which highlights good progress in planning, including the development of the strategic plan, medium term financial plan, and improvement plan. It is clear that the council continues to work closely with the commissioner team to move itself towards a more sustainable position. It is vital that this continues, with the full support of both officers and members throughout the organisation, and that the full range of reforms at the council must now be embedded alongside the collective work on developing proposals for local government reorganisation. I look forward to receiving the commissioners’ update in August.

Cheshire East Council and Newham Borough Council

Finally, I am updating the House on steps we are taking in relation to Cheshire East council and Newham borough council.

After carefully considering the relevant evidence, my Department has today issued these authorities with best value notices. These are not statutory interventions but provide a formal notification of the Department’s concerns. We found no evidence of current best value failure at the councils, but significant issues need addressing at pace to avoid future failure.

The councils are expected to continue driving their own recovery and are requested to engage with the Department for assurance of improvement. The notices will be in place for 12 months, after which progress will be reviewed. I am pleased that both councils are already supported by independent improvement boards, established with the LGA. I urge the councils to make full use of their boards’ expertise, and the Department will seek updates from them.

Conclusion

I am committed to working in partnership with these councils to provide the necessary support to ensure their compliance with the best value duty and the high standards of governance that local residents expect.

I will deposit in the Library of the House copies of the documents referred to, which are being published on gov.uk today. I will update the House in due course.

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