Minister proposes “unprecedented” intervention into council despite absence of best value inspection or Government review

The Government is “minded to” send commissioners into Sandwell Metropolitan Borough Council as part of an intervention package, the Minister of State at the Department for Levelling Up, Housing and Communities has said whilst acknowledging the move would be "unprecedented".

The announcement comes after a value for money governance review issued in December by the council’s external auditors, Grant Thornton, which called on the local authority to take “effective grip” of longstanding service issues.

In a written ministerial statement, Badenoch said: “Sandwell Metropolitan Borough Council has struggled for many years to resolve a variety of governance issues, including allegations of serious misconduct by both members and officers. The council has had six different leaders in six years and three chief executives over the past three years. This instability has led to a breakdown in trust, respect and confidence between those holding governance roles at the council.”

She said Grant Thornton’s report “paints a deeply troubling picture of mismanagement, a significant breakdown in trust across the authority, and of ineffective scrutiny and accountability arrangements at the authority”. She said this included, but was not limited to:

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  • On governance, a lack of a clear performance management framework and agreed key corporate indicators has impacted on the ability of the leadership team and cabinet to take an effective grip of the key issues. The effectiveness of the scrutiny boards and the audit and risk assurance committee need improvement.
  • On culture and leadership, poor behaviour and a lack of trust across the wider organisation continues to exist. Insularity, along with poor engagement with local residents, businesses, external partners, the West Midlands Combined Authority and the Black Country local enterprise partnership, has resulted in a lack of clarity on the authority’s key strategic priorities.
  • On financial governance, there has been an ineffective approach to budget monitoring and budget setting, and there remains no visible consultation on the council’s budget setting priorities.
  • On services, the time the authority has spent responding to internal allegations and complaints has impacted on its ability to focus on service improvement. Inadequate procurement and contract management arrangements have led to poor decision making and has impacted negatively on key services. While a recent Ofsted rating of fostering services demonstrates some positive progress with children’s social care services, which were removed from council control and have been run by Sandwell Children’s Trust since April 2018, some areas of significant improvement are still required.
  • On capacity and capability to improve, while progress under the interim chief executive officer, Kim Bromley-Derry CBE DL, is recognised, historically senior officers and members have been unable to make the changes required to move away from the past. Recruitment of a permanent chief executive officer has not yet been achieved.

Badenoch said that in light of the evidence in the report, the Secretary of State for Levelling Up, Housing and Communities and Minister for Intergovernmental Relations, Michael Gove, was “minded to” implement an intervention package.

“While the Secretary of State is encouraged by the ‘green shoots’ of progress described in the report, his view is that the risk of progress stalling or slowing is significant. He believes the proposed intervention is necessary and expedient to secure compliance with the best value duty,” she said.

The minister acknowledged that that was not the conclusion of the Grant Thornton report, which stated that the “green shoots” identified mitigated the risk that the council was unable to manage and govern itself.

But Badenoch said she believed that “on balance and in these particular circumstances” the risk of Government inaction in the face of evidence of best value failure was too great.

She said: “Historically, the council has been slow to improve. Furthermore, the report is clear that it is the interim chief executive officer who is now driving change, and a recent recruitment round has failed to find a new permanent chief executive officer. The council’s recovery is fragile and needs consistent leadership capacity.

“This should not be taken as a criticism of those who have been working hard to generate 'green shoots' of recovery, in particular the interim chief executive officer, and I acknowledge the good recent work of the council to take steps in the right direction.”

The Minister said she recognised that it was unprecedented to propose an intervention without a best value inspection or a Government review. “However, I have considered this report carefully and the evidence contained within it satisfies me that there is no need for an additional best value inspection. Instead, I believe what is needed now is support for a council at the beginning of a fragile journey of recovery.”

She added that, expressed in formal terms, the Secretary of State was satisfied that Sandwell was failing to comply with its best value duty and he was considering exercising his powers of intervention to secure compliance with that duty.

Officials from the Department for Levelling Up, Housing and Communities have written to Sandwell asking for representations on the Grant Thornton report and on the proposed intervention package.

Badenoch said the proposed package was centred on the appointment of commissioners to exercise certain and limited functions as required, for two years – “it is envisaged this will be a shorter and narrower intervention than has been seen previously”.

The proposal is for the council, under the oversight of the commissioners, to prepare and implement an improvement plan, and to report on the delivery of that plan to the Secretary of State every six months; and for the commissioners to appoint a permanent chief executive officer within 18 months and then step back from the council.

The Secretary of State is proposing to direct the transfer to the commissioners of all functions associated with:

  • The governance and scrutiny of strategic decision making by the authority.
  • The appointment and dismissal of persons to positions the holders of which are to be designated as statutory officers, and the designation of those persons as statutory officers.

“The new leadership team is putting in place the necessary foundations and the Secretary of State envisages that the commissioners will work closely with them to build on the work they have begun. I hope it will not be necessary for the commissioners to use these powers, but they must be empowered to do so if they consider that required improvement and reforms are not being delivered,” Badenoch said.

The Minister said the Government was also seeking its views on moving to a four yearly election cycle at the earliest opportunity and how best to achieve this.

Badenoch concluded: “The Government do not take these steps lightly and recognise and respect the role of local councils in our communities and our democracy. The Government also recognise the importance of councils having an effective relationship with their local auditor. I urge all councils to consider whether they could be doing more to ensure that they are delivering the good governance that residents deserve, including considering the governance risk and resilience toolkit developed by the Centre for Governance and Scrutiny.

“Despite the rare cases like Sandwell, as a whole, local authorities in England have a good record of service delivery, transparency, probity, scrutiny, and accountability. It is a reputation worth protecting. Local people deserve better than this from their local councils.”

Cllr Kerrie Carmichael, leader of Sandwell Council, said: “The leadership team in Sandwell Council is focussed on embedding the positive changes we have seen in recent months and, while we are disappointed in this announcement, we will continue with this work and demonstrate the political determination to move forward and drive improvement and change.

“As recognised by the recent review into governance by Grant Thornton, we feel we have really turned a corner and demonstrated improvements. The action plan based on the recommendations made during the review was agreed by Council yesterday evening (18/01/22).

“We await further detail about what this will mean for Sandwell and will work with all our partners to ensure that we continue to deliver the services our residents rely upon.”

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