Gove proposes sending commissioners into borough council over failure to comply with best value duty

The Secretary of State for Levelling Up, Housing and Communities, Michael Gove, is proposing to send Commissioners into financially-troubled Slough Borough Council for a minimum of three years, after deciding that the local authority is failing to comply with its best value duty.

A letter to the acting Head of Paid Service at Slough asks for representations on the findings of an external assurance review and on the proposed intervention package.

In a written ministerial statement issued today (25 October), Kemi Badenoch, Minister of State for Equalities and Levelling Up Communities, said the proposal was for Slough – under the oversight of the Commissioners – to prepare and implement an improvement plan, and report on the delivery of that plan to the Commissioners every six months.

Badenoch noted that Slough had been one of a small number of local authorities to request exceptional financial support during the COVID-19 pandemic.

She added that the Government had agreed in principle to this request subject to the outcome of an external assurance review, which considered the council’s financial position and the strength of its wider governance arrangements. It also provided an assessment of the council’s ability to achieve financial sustainability without further recourse to public funds.

The Chartered Institute of Public Finance and Accountancy (CIPFA) led on the financial aspects of the review. Jim Taylor, former Chief Executive of Salford City Council, Trafford Council and Rochdale Borough Council, led on governance

Badenoch said: “The reports paint a deeply concerning picture of mismanagement, of a breakdown in scrutiny and accountability, and of a dysfunctional culture at Slough Borough Council.”

She added that the reports found that:

• The council’s internal controls and processes were inadequate, and the overview and scrutiny function was not equipped to operate effectively.
• Service delivery was hampered by ineffective core corporate functions such as IT and HR;
• The residents of Slough were poorly served by the council’s “struggling” revenues and benefits service.
• The council’s contract management was weak and “has resulted in rushed procurement, missed exit opportunities, and has delivered poor value for money”.
• There was little evidence that Slough understood the entirety of its commercial investments and their impact on its finances.
• The staffing structure lacked the capacity and capability to deliver on the challenges the council faced without external help.
• It was only very recently that senior members had grasped the seriousness and urgency of this situation and established it was not just solely a result of financial accounting assumptions.
• The council could not demonstrate a track record of making difficult decisions or of taking decisive action to bring about improvements.
• As indicated in the Section 114 notice issued by the council earlier this year, the council’s expected requirement for additional financial support in 2021/22 had risen from £15.2m to over £100m.

“The review shows unequivocally that Slough Borough Council has failed to comply with its best value duty of continuous improvement, as required by the Local Government Act 1999. The financial challenge is acute, and the review has concluded that the Council cannot become financially self-sustaining without considerable Government support,” Badenoch said.

The minister added that the council was unable to resolve the difficulties on its own.

Under the intervention package, Slough would be required to:

• Complete, within three months, an assessment of the functional capability of all service areas to identify the gaps in capacity and capability.
• Prepare and agree, within six months, action plans to the Commissioners’ satisfaction to address any functional shortcomings.
• Undertake any actions the Commissioners require to avoid incidents of poor governance or financial mismanagement that would jeopardise the council’s ability to meet its Best Value duty.
• Prepare and agree, within three months, a fully resourced Improvement Plan which should include action plans to deliver: financial sustainability; improvements in democratic services, including the audit and corporate governance functions; a scrutiny function that is fit for purpose; improvements in internal audit; properly functioning procurement and contract management functions; improvements in the council’s IT function; an officer structure and scheme of delegation which provide sufficient resources to implement the Improvement Plan.

Badenoch said it is also proposed that Slough would:

• Devise and implement a programme of cultural change to rebuild trust between officers and members within six months.
• Following the review of council companies, within six months consider the roles and case for ongoing operation of each subsidiary company (except Slough Children First).
• Take steps to enable better and evidence-based decision making, including enhancing data and insight functions.

The Secretary of State is proposing to direct the transfer to Commissioners of all executive functions associated with: the governance and scrutiny of strategic decision making by the council; the strategic financial management of the council; the oversight of collection of revenues and the distribution of benefits by the council; all non-executive functions relating to the appointment and dismissal of statutory officers, and the designation of those persons as statutory officers at the council to the Commissioners.

“These powers are for use should the Council not satisfy the Commissioners in their improvement processes. 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 the required improvement and reforms are not being delivered,” Badenoch said.

The Commissioners will report to the Secretary of State at six monthly intervals on progress.

Slough has been asked to invite representations on the report and the Secretary of State’s proposals by 5 November.

Badenoch said: “Government does not take these steps lightly and recognises and respects the role of local councils in our communities and our democracy. Slough Borough Council is a rare case of failure. Most local authorities in England have a good record of service delivery, transparency, probity, scrutiny, and accountability. It is a record worth protecting. We will take whatever steps are necessary to uphold the good name of local government and to root out practices that do it down.

“Finally, I urge council leaders across the country to read these reports. I know the local government sector – officers and members – will be saddened by the news that a council is failing. I would encourage all to make sure that they are not making the same mistakes as those that are described in this review. Local people deserve better than this from their local councils.”

Responding to the reports, the Leader of the council, James Swindlehurst, said: “We have talked before about the severity of our financial situation and the errors uncovered in our governance arrangements and our finances which led to the section 114 notice in July.

“We completely accept both reports’ findings, the recommendations and the comments – and are satisfied the work we have been doing since April this year has been very rigorous and comprehensive and has started to instigate positive action in a number of areas to ensure we address as many of the issues identified as are able to.”

He added: “In light of the work that has gone since we received our auditors report and the 114 notice was issued we are fortunate to be in an improved position now than we were before April and our awareness of the issues and our plans and actions are starting to make a difference already,  however we completely accept that we still have a lot to do.

“Councillors and officers are working together to seek to ensure the level of financial savings the council committed to in March 2021 for the current financial year can be delivered and have made significant progress to do the same for next year’s budget.”

Cllr Swindlehurst said Slough was now starting to work on the subsequent years of the council’s medium term five-year financial strategy as agreed through the council’s recovery and renewal plan and by doing so would be seeking to ensure that the key council services will be sustainable for the future.

“Since receiving our auditors report in mid-May, I have personally taken on the portfolio for finance, a new cabinet member is now responsible for governance, budget strategy and financial monitoring both sit with me instead of being split across wider cabinet portfolios and we have improved accountability of senior officers with weekly meetings with cabinet members to discuss progress on savings.  In addition, we have started a process of providing a full update to each council meeting,” he said.

“The scrutiny of decision making will be boosted with all savings proposals being taken to scrutiny committees before coming to cabinet, so all members will have the chance to look at the proposals in detail, question officers and provide feedback before any decisions are made.

He added: “There are still many difficult decisions ahead of us. We are financially in a very challenging place, and we will be asking government for a level of capitalisation direction which has never before been made by a local authority.

“I accept the government intervention; understand why they feel it is necessary and I look forward to welcoming the commissioners to Slough and working with them until the issues in the report have been fully resolved by us all.

“Together we can continue to make major strides at pace in righting the wrongs of our past and putting the council on a sustainable financial footing, improving our governance and making the right decisions for our residents and town.”