Government proposals to tackle serious financial and governance problems at Birmingham City Council were announced today by Levelling Up Secretary Michael Gove.
On 5th September, Birmingham City Council issued a 'section 114 notice' - an admission its backdated equal pay liability, currently estimated by the council as being up to £760m, along with an in-year budget deficit that includes the costs of implementing an IT system was too significant for the council to manage.
In an oral statement to Parliament, Levelling Up Secretary Michael Gove outlined the government was minded to intervene at Birmingham City Council, subject to a representation period of five working days, in order to protect the residents and taxpayers of Birmingham. The proposals include the appointment of commissioners and a local inquiry to investigate the root of the issues faced by the local authority.
Levelling Up Secretary Michael Gove said:
Birmingham Council's record is of ineffective, inefficient and unaccountable government. It is failing in its basic duties.
Where local leaders fail, it is residents who are let down. This cannot go on.
I can announce that I am today writing to the council to set out my proposal to intervene and appoint commissioners, and that I intend to launch a local inquiry.
I do not take these decisions lightly, but we must protect the interests of residents and taxpayers of Birmingham and provide assurance to the sector.
The package of proposals, if implemented, would see commissioners provide advice and challenge the council whilst making decisions directly, if necessary. They would be handed powers relating to governance, scrutiny of strategic decision making, finance and senior appointments.
Directions would be issued to Birmingham City Council requiring them to undertake specific actions including the preparation and implementation of an improvement plan within six months, to return it to a sustainable financial footing.
The local inquiry could look at the fundamental questions about how the issues facing Birmingham have developed and would examine the council's ongoing management of issues identified in Lord Bob Kerslake's review of the authority in 2014, and the non-statutory intervention afterwards.
The independent review, commissioned after the 'Trojan Horse' investigation into a number of Birmingham schools, found successive administrations had failed to tackle deep-rooted problems - and highlighted a culture of sweeping problems under the carpet, rather than tackling them head-on.
A representation period for the proposals has been set for five working days, until 26th September, to ensure the views of stakeholders are taken into consideration before a final decision on whether to intervene is taken.
Max Caller CBE, an experienced local government professional and former commissioner, has been named as the preferred candidate to lead the intervention if the package of proposals are implemented.
The proposal comes after the Minister for Local Government, Lee Rowley, requested the then council leader, Councillor Ian Ward, to commission an independent governance review in April. He acted after governance and service delivery concerns were raised by the Local Government and Social Care Ombudsman, the Housing Ombudsman and the Department for Education's Commissioner for Special Educational Needs and Disability at the council.
This review was extended to include the flawed implementation of a new IT system and the council's handling of its equal pay liability. Another letter was sent in August to the council leader Councillor John Cotton, seeking assurances over whether the council was compliant with its Best Value Duty in relation to decisions on equal pay, of which to date there has been no response.
Notes:
- Max Caller CBE was the Chief Executive of the London Boroughs of Hackney and Barnet, and a Chair of the Local Government Boundary Commission for England. He has experience in multiple interventions, including having previously been Lead Commissioner at Slough, Lead Inspector for the Liverpool and Northamptonshire Best Value Inspections, and a Commissioner at Tower Hamlets. Max also has experience of working with Birmingham City Council, having been appointed by the Council as one of their Non-Executive Advisors following the non-statutory intervention.
