Local Government Best Value
Jim McMahon Excerpts(1 day, 10 hours ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
All hon. Members will recognise the importance of having well-functioning local councils that provide essential statutory services local residents rely upon. Government will continue to work directly with a small number of councils in difficulty, and this should be done in a way that is not punitive and is based on genuine partnership to secure improvements. Today, I would like to update the House on the statutory interventions in Slough and Woking.
Slough Borough Council
On 22 October 2024, I announced to the House that the Secretary of State for Housing, Communities and Local Government, my right hon. Friend the Member for Ashton-under-Lyne (Angela Rayner), was minded to issue new directions to Slough borough council, and that I was seeking representations on a proposal. I also announced that if I implemented this proposal, I would reappoint the current three commissioners, and also appoint the interim chief executive, Will Tuckley, as managing director commissioner.
The proposal was to require the council to take actions that are consistent with the priorities that the commissioners have set for the council; provide for commissioners to continue to be able to exercise council functions relating to governance, finance and appointments; and to extend the timeframe of the statutory intervention until 30 November 2026. This followed the publication of the fifth report from commissioners, which, as I outlined on 22 October, provided evidence that there are still a substantial number of areas that require further improvement at the council, and there remains volatility in the council’s overall financial position. In my view, the report provides considerable evidence that the authority is not complying with its best value duty, as outlined in the Local Government Act 1999 and best value guidance published in May 2024.
Following consideration of the two representations that were received, and noting the support from the council for the proposal and the concerns raised about the pace and impact of the intervention to date, the Secretary of State and I have decided to implement the proposals announced on 22 October and issue new directions to the council, which come into effect immediately and will remain in force up to and including on 30 November 2026. The directions issued on 1 December 2021—updated on 1 September 2022 and 22 May 2023—are revoked with immediate effect.
I am therefore today confirming the reappointment of the current three commissioners, Gavin Jones, Denise Murray and Ged Curran. They will continue to work in partnership with the council to support its recovery. Alongside this, I have appointed Will Tuckley, the interim chief executive, as managing director commissioner. This will strengthen the relationship between the commissioner team and council and support the council to lead its recovery. The three reappointed commissioners have been nominated for the duration of the intervention and the managing director commissioner has been nominated for 18 months.
As with other interventions led by my Ministry, the council will be required to cover the costs associated with the commissioners. The fees for each individual are detailed in their appointment letters, published on www.gov.uk'>www.gov.uk. I am assured this provides value for money given the expertise that is being brought, and the scale of the challenge in councils requiring statutory intervention.
Woking Borough Council
As the House will be aware, in May 2023, the former Secretary of State (the right hon. Michael Gove) announced a statutory intervention in Woking borough council, following evidence of extensive best value failure compiled in an external assurance review. The review detailed the exceptional level of financial and commercial risk to which the council had exposed itself, and concerns regarding the quality of its strategic financial decision making and its commercial dealings.
Historic commercial mismanagement and major governance failures led to Woking borough council accumulating an extraordinary level of debt, far exceeding usual levels of borrowing for a council of its size. This is an extreme position for a council to be in, and will require unprecedented support from Government to resolve. Woking clearly requires a significant programme of change to ensure it is operating to the required standard. I am grateful to the commissioners for working with the council to improve its strategic financial management and governance, and in charting a path to reduce Woking’s debt as far as possible.
On 29 May 2024, the commissioners at Woking submitted their third report. I will be publishing this report, and my response, later today. It is clear from their report that Woking still faces significant challenges in its recovery, particularly regarding its financial position, but I am pleased that the council remains committed to working with commissioners to deliver fundamental change through its improvement and recovery plan. There are lots of obstacles ahead, but I am confident that the commissioners and council have a good understanding of the challenge and are beginning to deliver a robust plan of improvement.
I also join the council in thanking their auditor Grant Thornton for their recent public interest report on Woking’s historic investment practices, which the council will consider later today before issuing their formal response. The council has the full support of the commissioners in addressing the recommendations. I will also be reflecting on the public interest report and what lessons it can provide on the drivers of council failure.
I urge all councils to consider whether they could be doing more to ensure they are delivering the sound decision making that residents deserve, including considering the characteristics of a well-functioning authority as set out in best value guidance.
Conclusion
The Government are committed to working in genuine partnership with councils under intervention to support their reset, reform and recovery, making sure residents have what they need from their local council, including confidence in its governance, financial management and service delivery. I will continue to monitor progress over the coming months and ensure these councils get the support they need to secure sustainable continuous improvement.
I will deposit in the House Library copies of the documents I have referred to, which are also being published on www.gov.uk today.
[HCWS235]
Local Government Best Value: London Borough of Tower Hamlets
Jim McMahon Excerpts(1 week, 2 days ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
I have previously updated this House that this Government are committed to resetting the relationship between local and regional government, and to establish partnerships built on mutual respect, genuine collaboration and meaningful engagement. Never is this more important than when individual councils face governance challenges. We are keen to work with local authorities to support focus on recovery and reform. It is imperative that all councils are fit, legal and decent. There must be a clear and deliverable plan in place to address problems where these have been identified to protect the interests of local taxpayers. In that context, I would like to update the House on the London Borough of Tower Hamlets.
It is a matter of public record that the London Borough of Tower Hamlets was subject to statutory intervention under section 15 of the Local Government Act 1999 between December 2014 and September 2018. This followed an inspection by PwC which identified best value failure, particularly in relation to grant making, property disposal and publicity spending. Commissioners were withdrawn and functions returned to the council in March 2017 on the condition that it continued to achieve against its best value plans and report regularly to the Secretary of State on its ongoing compliance with the best value duty. In response to a corporate peer review by the Local Government Association in June 2018, which concluded the council was now “on a positive trajectory”, Ministers took the decision to end the intervention in September 2018.
Following evidence that suggested recent changes to the council’s governance arrangements may have the potential to undermine past improvements that had allowed the intervention to end, on 22 February 2024 the then Secretary of State (the right hon. Michael Gove), commissioned an inspection of the council’s compliance with its best value duty. He appointed Kim Bromley-Derry CBE DL as lead inspector, along with Suki Binjal, Sir John Jenkins and Philip Simpkins as assistant inspectors, and asked them to report their findings to him by 31 May 2024. On 24 May, following the announcement of the general election, this deadline was extended to 31 July. The inspectors completed their inspection and submitted their report to the Secretary of State and, as statute requires, provided a copy to the council.
The report identifies several positive features at the council, such as the finance service and the enthusiasm shown by officers and members for serving the borough. It also notes that the council has already taken steps to make improvements, including in response to the Local Government Association’s corporate peer challenge report of September 2023. However, the report documents serious concerns across a number of areas which I considered against its best value duty under part 1 of the 1999 Act:
On Leadership: The report concludes that a lack of respect and co-operation between political parties prevents councillors from engaging in a culture of genuine improvement. A lack of trust has contributed to officer churn at the top few levels of the organisation. Inspectors also found insufficient challenge of the executive and a perception among many staff that “many good managers had left the organisation as a result of ‘speaking truth to power’”.
On Governance: The report paints a picture of an organisation with a clear drive and mandate to deliver the mayor’s priorities, but for whom due process is often treated as an obstacle to priorities rather than as a necessary check and balance. The inspectors consider the council’s scrutiny culture to be “weak and confused”, and the level of challenge “inadequate”.
On Culture: The report concludes that the entire organisation is impacted by a lack of trust, with the administration “suspicious and defensive in its behaviour”. The culture appears to be one where decisions are taken based on advice from a small number of people who are trusted by the mayor and has been described by many staff and partners as “toxic”. A culture of patronage, even if not at play in every appointment, is perceived as pervasive enough to undermine trust between members, staff and leadership, as well as with external stakeholders.
On Partnerships and Community Engagement: While the report notes the strong community focus of the mayor, councillors and wider council, it concludes how the “significant time and energy” spent in local communities “seems to distract from their critical and statutory strategic relationships”. Inspectors found a lack of co-production and joint planning undertaken by the council and saw insufficient evidence that the council undertook meaningful and comprehensive consultation with key partners, staff, and service users before decisions were taken in some key areas.
On Continuous Improvement: While the council has made targeted and concerted improvements over the last two years, this has lacked a strategic focus or a cultural prioritisation of continuous improvement. The culture set and exemplified by the leadership is to reactively respond and counter criticism rather than honestly appraise and self-improve. On some issues, the inspectors are sceptical of the council’s capability to self-improve.
I have carefully considered the report and other relevant material and am satisfied that the council is failing to comply with the requirements of part 1 of the 1999 Act, namely that it is failing to comply with its best value duty in relation to continuous improvement, governance, leadership, culture and partnerships. I am therefore minded to exercise powers of direction under section 15(5) of the 1999 Act in relation to the London Borough of Tower Hamlets to secure its compliance with the best value duty. I believe, given the evidence of serious concerns in the report, a broad and supportive intervention package, with robust external assurance, is necessary and expedient for the council to secure compliance with this duty. To that end, and in line with procedures laid down in the 1999 Act, I have today, 12 November 2024, written to the council asking them to make representations —if they wish—both on the inspection report and on the statutory support package that I am now proposing.
This proposed statutory support package, to be in place for an initial period of three years, is designed to strengthen and expand the improvement work that the council has already begun. It acknowledges the political mandate the mayor holds, while recognising the need to tackle deeply rooted and persistent issues. It recognises the constructive engagement I have had with the council and acknowledges that they stand ready to work in partnership with Government to deliver the change needed for local people. It also recognises that the council has some corporate capacity to address the challenges identified in the report and has already put in place some of the building blocks for continuous improvement and will help to ensure that the council remains in a stable financial position.
This approach balances the evidenced need for Government support, with the desire to work constructively so that we see sustained improvement. A core element of the proposed support package will be the reconfiguration and strengthening of the council’s transformation advisory board to provide external expertise, challenge and advice to the council. I am proposing directing the council to work with ministerial envoys to reconfigure its existing board into a transformation and assurance board, and to draw on existing and additional members to appoint independent and external leads for leadership, governance and culture and partnerships—all areas where the council is currently failing. I am also proposing directing the council to appoint at least two opposition councillors to the board and for the mayor to continue his role as chair. The council will be required to report to this board on the delivery of its continuous improvement plan every three months or at such intervals as the board may require. The council will also be required to have regard to and respond promptly in public to any recommendations from the board with respect to the council’s improvement work.
In order to assist the council to achieve the necessary improvements, I am minded to appoint a ministerial envoy and assistant envoy to act as adviser, mentor and monitor to the council, and to oversee its improvement work. The ministerial envoys will work comprehensively within the council to oversee the proposed changes to the board, including agreeing its scheme of work and meeting agendas, preparation of the council’s continuous improvement plan and an open recruitment exercise to appoint a permanent lead for the council’s improvement work. They will attend meetings, provide ad hoc advice and challenge, and be available to senior leadership for support. They will also work closely with the board leads for governance, leadership and culture and partnerships to ensure the realisation of comprehensive programmes of cultural change and political mentoring. I am proposing directing the council to co-operate with the ministerial envoys, and to allow them all reasonable access to their premises, documents, employees or members in support of their work.
I would like the ministerial envoys to report on the council’s progress against its improvement agenda after the first four months, and then regularly as we agree is appropriate. Their assessment will provide the assurance local residents, strategic partners and I need to ensure the council’s compliance with its best value duty.
I will carefully consider any representations the council and other interested parties make and decide how to proceed. If I decide to intervene in the manner described here, I will then make the necessary statutory directions under the 1999 Act and appoint the ministerial envoys. Any directions that I make will be without prejudice to making further directions, should this prove necessary.
This action is not undertaken lightly, and I am committed to working in partnership with the London Borough of Tower Hamlets to provide whatever support is needed to ensure its compliance with the best value duty and the high standards of governance local residents and service users expect. I hope with focus and oversight that improvement will come at pace, but I will not hesitate to consider further action and escalation if necessary, in the interests of Tower Hamlets residents. I will deposit in the Library of the House copies of the report and letter I have referred to, which are also being published on gov.uk today. I will update the House in due course.
[HCWS204]
Draft Barnsley and Sheffield (Boundary Change) Order 2024
Jim McMahon Excerpts(2 weeks, 1 day ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
I beg to move,
That the Committee has considered the draft Barnsley and Sheffield (Boundary Change) Order 2024.
It is a pleasure to serve under your chairmanship, Mrs Harris. The draft order is straightforward. It provides for the boundary between Barnsley and Sheffield to be revised so that the whole area of the Oughtibridge Mill housing development will be in the city of Sheffield, as well as providing for consequential changes to corresponding ward and parish boundaries. The councils concerned both support the boundary change, as do the affected parish councils.
Before I go into the detail of the draft order, and with apologies, I must draw the Committee’s attention to the correction slip that has been issued to correct minor drafting and formatting errors. First, it removes the phrase “Ministry for” where the order refers to the Secretary of State for Housing, Communities and Local Government in the preamble; in article 2; in the signature box at the end of the order; and in the second and sixth paragraphs of the explanatory note. Secondly, it provides a clearer map of the boundary change for the explanatory note. A formatting issue meant that the map lacked clarity when it was inputted into the draft order. With the help of the statutory instrument registrars, the correction slip now enables the same map to be sufficiently clear and to cover a full page. Those minor errors in the original draft order have now been corrected. The substance of the order is unchanged, and I hope that the reformatted map provides greater clarity for those who read the order.
Few reviews of the external administrative boundaries of local authority areas in England have been carried out since 1992, so from time to time new developments and population changes have caused small-scale boundary anomalies between local authorities. In practice, local government will put in place informal arrangements to deal with such situations, but the very fact that they need to do so is not conducive to effective and convenient local government. Such anomalies can also impact perceptions of community identity: where residents do not feel, for whatever reason, part of a particular area, they may be less likely to take an interest in their council.
On 14 April 2022, the Local Government Boundary Commission for England received a formal request, made jointly by Barnsley council and Sheffield city council, for a review of the boundary in the area. Because the existing boundary runs along the River Don, the Oughtibridge Mill development has been split between the two councils. Both councils told the boundary commission that, because of the geography of the local communities and the existing road layout, the impact on service demand would mostly be felt by Sheffield city council, and that services would be better delivered by that council.
The boundary commission undertook a review of the boundary and consulted those affected, and a majority of the 19 responses supported the boundary change. Following the consultation, the commission’s final recommendation was to transfer to Sheffield the area of the Oughtibridge Mill housing development that is in Barnsley. Doing so would move a section of the councils’ shared boundary at the River Don so as to encapsulate the Oughtibridge Mill development of 12 existing and 284 future dwellings. There was also a recommendation to realign ward and parish boundaries. After receiving the final recommendations, the Secretary of State allowed four weeks for interested parties to make representations. The Department received none in that period.
The draft order provides for the boundary between Barnsley and Sheffield to be revised, so that the whole area of the Oughtibridge Mill housing development will be in the city of Sheffield.
Jim McMahon
Thank you for that, Mrs Harris. I thank my hon. Friend the Member for Brent West for his contribution. Given his diligence in preparing for his speech, I am happy to recommend to the Whip that he joins us for future Delegated Legislation Committees. I thank members of the Committee for—
Barry Gardiner
On a point of order, Mrs Harris. A point of order was made and I believe a motion was made, but I did not hear any vote taken on the motion. I would have thought that that was the function of the Chair.
Jim McMahon
I do not have a great deal to say in rounding up, other than to reflect on the fact that the consultation included the residents who live in the Oughtibridge site at present, the majority of whom were in support of the move. On the 284 properties that will be brought into the wider development, I would say that most normal people—we are not among them, because we are talking about local government boundaries, which we care a lot about—live in places with identities that they feel connected to. I draw Members’ attention to the sales brochure for the site, which describes it as one of the most attractive developments in Sheffield, and to the fact that the development has a Sheffield address and a Sheffield postcode. I think most people moving into the new development will believe they are moving into Sheffield, and the draft order will allow them to enjoy the services of Sheffield city council.
Question put and agreed to.
Oral Answers to Questions
Jim McMahon Excerpts(3 weeks, 3 days ago)
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Alison Bennett (Mid Sussex) (LD)
The Minister for Local Government and English Devolution (Jim McMahon)
Councils across the country, of all political stripes, work hard to deliver vital public services in our country. We know that 14 years of mounting pressure is biting hard. We are committed to moving towards a multi-year funding settlement, ending wasteful bidding competitions that essentially set one council against another. Last week, I met political group leaders at the Local Government Association conference to understand what specific demand pressures they are facing, and we are committed to working together on those big issues. Members will know that we cannot pre-empt the Budget statement due later in the week, but we are of course fully engaged in that process. We stand ready to speak to any council experiencing financial difficulties, as I confirmed in my letter to MPs just over a week ago.
Mr Forster
As the Minister knows—I have met him to discuss this subject—my local authority, Woking borough council, effectively went bankrupt last year. It has had to cut services that many consider essential, and it will have to consider cutting others. Does the Minister agree that it is time for Government and Parliament to review which services are classed as statutory and non-statutory?
Jim McMahon
I thank the hon. Member for meeting me at one of our regular drop-in sessions. His concern is reflected across the country. Local communities recognise that their council is being forced to choose vital neighbourhood services against targets for adult social care, children’s services and homelessness services. In the end, we need to rebuild the foundation from scratch, and that is exactly what we are committed to doing.
James MacCleary
My constituency is largely rural and, as in many rural constituencies, parish councils play an important role in local government service delivery. Does the Minister agree about the importance of parish councils to rural communities, and what role does he see for parish councils as part of the Government’s devolution agenda?
Jim McMahon
We will of course publish a White Paper on the English devolution Bill. It will set out an ambitious programme for a power shift from this place and Whitehall to combined authorities, to local government and, of course, to communities. We are absolutely committed to that top-to-bottom power shift. We recognise that parish and town councils have a role to play.
Bell Ribeiro-Addy
Rising demand, rising costs and 14 years of Conservative public sector cuts mean that many local authorities and services are at breaking point. My own borough of Lambeth, a deprived inner-London area with higher demand for social housing and temporary accommodation, and for social, public and youth services, has been particularly affected, which has been quite challenging. Will the Minister commit to an emergency increase in funding to combat the immediate crisis for local authorities, and, in the long term, to a much-needed update of the funding formula to better reflect local need?
Jim McMahon
Like every Member of the House, my hon. Friend will know that those 14 years have taken their toll, and that it will take more than three months to repair that, but we are absolutely committed to repairing the foundations, and our multi-year financial settlements will give security. Of course, we recognise that the demand-led pressures in many places are the back-end of a bigger problem. Temporary accommodation relates to the housing crisis that needs fixing. The same applies to children’s services and adult social care.
Alison Bennett
The financial future of West Sussex county council is bleak: it faces a cumulative budget gap of over £200 million for 2029-30. At present, 64% of the council’s budget is being spent on adult and children’s social services, and that is set to rise. How will the Minister ensure that West Sussex county council and others do not have to close libraries, cut bus routes or reduce road repairs in order to meet the growing demand for the most vulnerable members of our community?
Jim McMahon
We always say that local government is paid for one way or the other: either we pay at the front-end through fair funding being fairly distributed across the country, or we pay at the back-end because eventually the system falls over and we must repair the damage. If we take ourselves back to the coalition years, when austerity first came in, the cruelty was that we did not reform public services, repairing them from the ground up, to get ahead of those system changes. That was a wasted opportunity.
Mr Jonathan Brash (Hartlepool) (Lab)
This year, Hartlepool borough council is set to overspend on children’s social care by some £5 million, due in no small part to the outrageous charges levied by private sector children’s homes. What can the Minister do to cap those providers’ charges to ensure that local government can continue to deliver its statutory obligations?
Jim McMahon
I recognise that, in large part, children’s services are the funding pressures that are driving council budgets. We cannot forget, though, that behind every one of those numbers is a child who often is not getting the outcomes they need. Far too often what we are seeing in the system is that high costs are not just sending councils to the point of bankruptcy, but delivering worse outcomes for young people. We want to see far more resilience built back into the system, and there are examples today of councils that are building that public sector provision back into the marketplace.
Sam Rushworth (Bishop Auckland) (Lab)
The previous Government cut County Durham’s budget by 60%, and we have all seen the Royal Tunbridge Wells video in which the Leader of the Opposition boasted about that act. That is having a real impact on my constituents and the ability of Durham county council to deliver vital services, so will the Minister consider a discussion with Cabinet colleagues about revising those funding formulas to take account of social care costs and deprivation?
Jim McMahon
We did see the former Prime Minister taking great credit for essentially shifting money from primarily urban and deprived communities into rural shires in an overtly political way. I want to ensure that in the funding review we are carrying out, whether that is the initial rescue operation that will take place this year or the recovery operation through the multi-year settlement, we do not pit one council against another, but take an approach that genuinely understands the needs, cost demands and cost pressures faced by local authorities. In the end, though, we have to accept that there is no fair funding at all if funding does not reflect the deprivation in an area.
Mrs Kemi Badenoch (North West Essex) (Con)
At the last oral questions, the Secretary of State assured me that she had no plans to increase council tax for anyone. However, when pressed by my right hon. Friend the Member for Beverley and Holderness (Graham Stuart), she would not give the same guarantee that the single occupant discount would be retained. Will Ministers take the opportunity to do so now?
Jim McMahon
I can see the shadow Secretary of State making that point repeatedly, because at this stage we are all waiting for the statement and the Budget that will contain that information, but I can say that the right decisions will be made in the interests of working people. We recognise the cost of living crisis that is being faced across the country. I am sure that she, like all Members of the House, is waiting with interest for Wednesday.
Mrs Badenoch
Local authorities employ 2 million people and commission services such as adult social care. The impact assessment for the Secretary of State’s Employment Rights Bill says that the Bill will increase costs. Those costs are likely to be passed on to councils, so has the Secretary of State assessed the impact of the Employment Rights Bill and an increase in employers’ national insurance specifically on local authorities? If costs do increase, will local councils be compensated?
Jim McMahon
Any decisions related to the Budget will be taken at the appropriate time, as will any decisions on the local government finance settlement. What I can say, though, is that this is a new partnership from this Government: we are not locking local government out, but standing shoulder to shoulder with it. Only last week at the Local Government Association conference in Harrogate, the Secretary of State launched the leaders’ council, a forum where central and local government will reset that relationship.
Vikki Slade (Mid Dorset and North Poole) (LD)
Rough sleeping is the most visible end of the homelessness crisis, but it is also brutal—the average age of death for rough sleepers in London is just 44. The rough sleeping initiative is literally saving lives—in Bournemouth, Christchurch and Poole, 102 people are kept alive every year through that programme—but it is due to end in March 2025. Removing it has been described by local teams as nothing short of catastrophic, so what assessment has taken place of the impact of that initiative, and what assurance can the Secretary of State give local authorities about the maintenance of the scheme so that they can plan for the long term?
Jim McMahon
Again, I ask hon. Members to wait for the spending review on Wednesday, and for the provisional settlement in December. We are under no illusion about the pressures faced by councils on homelessness. In the end, we need to repair the system, which is about providing safe, secure and affordable housing for people to live in. We will do that, but we also recognise that there is a problem today. Further detail on that will follow.
Neil O’Brien (Harborough, Oadby and Wigston) (Con)
Martin Vickers (Brigg and Immingham) (Con)
The Minister for Local Government and English Devolution (Jim McMahon)
This Government are acutely aware of the impact of the cost of living crisis on working people, and that is firmly in our sights as we approach the spending review this week, but we will have to repair a fair amount of the system, not just the finances. The early warning audit has been left shattered following 14 years of mismanagement, and single-year settlements have left councils not knowing from one year to the next how much money they have to spend, so we will have to introduce multi-year settlements. There is a great deal of work to do, and we cannot repair 14 years of damage in three months, but we are well on the way to it.
Mr Clive Betts (Sheffield South East) (Lab)
Let me first draw attention to my declared interest as a trustee of Fields in Trust.
In the last Parliament, the Housing, Communities and Local Government Committee received a large amount of evidence concerning the importance of well-designed open spaces for children and young people, but the national planning policy framework mentions them once and mentions bats twice. Is it not about time we got our priorities right, and did more to improve the design of—
Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)
The Secretary of State will know the financial difficulties facing so many of our local authorities. A recent Local Government Association report shows that one in four local authorities will apply for additional funding. It is fair to say that, for a number of them, March will be too late. What discussions have been had with the Chancellor to ensure that our local authorities get emergency support?
Jim McMahon
May I welcome the Chair of the Select Committee to her place? She will do an outstanding job for local government and housing.
The Government absolutely understand how difficult it is for local authorities to make ends meet. We understand that the pressures in adult social care, children’s social services and temporary accommodation are biting hard, and we are working through those issues with the sector.
Local Government Interventions: Birmingham and Slough
Jim McMahon Excerpts(1 month ago)
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The Minister for Local Government and English Devolution (Jim McMahon)
All hon. Members will recognise the importance of having well-functioning local councils which provide essential statutory services local residents rely upon. Local councils must be fit, legal and decent. Today, I would like to update the House on the statutory intervention in Birmingham, which was a year old as of 5 October, and my plans to reset the relationship between central and local government with a focus on reform and recovery. I will also update the House on the statutory intervention in Slough, which has been in place since December 2021.
Birmingham city council remains in a challenging place. Significant challenges continue to face the council, as outlined in the commissioners’ first progress report which I am publishing today. Steps towards financial stability have been taken, including setting the 2024-25 budget, and I am grateful for the significant oversight and direction from commissioners, who have been fundamental to this progress. The council is committed to leading its own recovery. I want to recognise the progress made by the council to date under the leadership of Councillor Cotton and his commitment to resolving the challenges facing the city. While there remains much more that needs to be done, I am keen that the intervention moves as quickly as possible to a model based around a more equal partnership with the council, working in the interests of the people of Birmingham.
Birmingham city council is committed to achieving financial stability, including finding a resolution to its significant equal pay liabilities once and for all, delivering the necessary savings to bridge the projected budget gap for 2024-25 and 2025-26 to move to a more stable financial footing and transforming local services, many of which still require significant improvement. I know that difficult decisions will need to be taken in the coming weeks and months. I am confident that Joanne Roney CBE, who has recently taken up her post as managing director at the council, will work with both officers and members to improve the culture and governance of the organisation and shift the focus to growth opportunities in the city.
I am exploring options to reset and reform the system to provide a more supportive approach to stewardship for local councils, establishing partnerships across local government built on mutual respect, genuine collaboration and meaningful engagement. In any system with adequate checks and balances there will always be a need for Government to work directly with a small number of councils in difficulty, but I am clear that this should be done in a different way that is not punitive and is based on genuine partnership to secure improvements.
Building a wider partnership to deliver for the city of Birmingham is essential. I encourage Birmingham city council to consider establishing and deepening partnerships with private and public partners in the region, including Mayor Parker of the West Midlands combined authority, so they can be more involved in shaping decisions around asset realisation and the growth strategy, linking in with local growth plans as necessary. Such partnerships will help unlock Birmingham’s huge potential for growth and drive forward skills, jobs and opportunities in the wider region.
I have asked that commissioners provide a further assessment of the council’s progress in January, including their assessment of how the council’s growth strategy can support the council’s recovery and contribute to this Government’s wider ambition for national renewal. I would like to place on record my gratitude to Lord Hutton, who is stepping down from his role as a political adviser to the intervention, for his knowledge and expertise which has been of immense value to both the council and the wider commissioner team.
I also want to acknowledge the diligent and hard-working members of staff at the council who do their utmost to provide essential frontline services for residents. I, in turn, will do my utmost to ensure that all interested parties/partners work collaboratively to guarantee Birmingham’s recovery remains on track so that residents have a well-functioning local authority with a set of statutory services they deserve.
I will keep the House and the public updated on any changes to the intervention, including publishing the second commissioners’ report in the new year.
Slough borough council has been in intervention since December 2021 and this House has received a series of updates on the recovery of the council. The last update was in February, when the view of commissioners was that the council would continue to need support beyond the scheduled end of the intervention on 30 November this year. Significant challenges continue to face the council, as outlined in the commissioner’s report from April and update letter from September, both of which I am publishing today.
While some improvements have been made since the start of the intervention, there are still a substantial number of areas which require further improvement. There remains volatility in the council’s financial position, and there is not yet a target operating model that aligns with the medium-term financial outlook. A robust and resourced transformation plan that aligns to the target operating model is needed to drive change, which must be underpinned by strong leadership and a comprehensive workforce strategy to foster and embed cultural change. Further improvements still need to be secured relating to risk management, governance, including the scrutiny function and audit committee, evidence-based decision making and resident engagement. Separately, the continued progress in children’s social care and SEND services under Department for Education intervention has been noted.
Having considered carefully the findings and evidence presented in the report and update letter, I have concluded that the council is not yet meeting its best value duty and that issuing new directions will provide Slough borough council with ongoing Government support via commissioners. They would continue to assist the council to design, implement and embed the necessary changes and improvements. Accordingly, I am now seeking representations by 4 November on the report and update letter and a proposal to issue new directions under section 15 of the Local Government Act 1999. These would set a new end date for the intervention of 30 November 2026, require the council to take actions that are consistent with both the existing directions and the priorities the commissioners have set for the council, and provide for commissioners to continue to be able to exercise council functions relating to governance, finance and appointments. I understand that the council would welcome the extension of the intervention, given the challenges ahead that they also recognise, and I am keen to explore further opportunities to work in partnership to support their reset, reform and recovery.
If, following my consideration of any representations, I decide to implement my proposal, I intend to reappoint the existing commissioner team of Gavin Jones, Denise Murray and Ged Curran, who I know are working with the council with mutual respect, genuine collaboration and meaningful engagement. To further support the council to lead its own recovery, I also intend to appoint the interim chief executive, Will Tuckley, as managing director commissioner.
I again want to acknowledge the diligent and hard-working members of staff at the council who do their utmost to provide essential frontline services for residents, and reinforce my commitment to support Slough’s recovery remaining on track so that residents have a well-functioning local authority with a set of statutory services they deserve.
I will keep the House and the public updated on my proposed change to the intervention.
I will deposit in the House Library copies of the documents I have referred to, which are also being published on www.gov.uk today.
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Oral Answers to Questions
Jim McMahon Excerpts(2 months, 2 weeks ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Natasha Irons (Croydon East) (Lab)
The Minister for Local Government and English Devolution (Jim McMahon)
I know at first hand how hard councils work to deliver essential public services, and we want to thank councillors, council officials and council workers for the hard work that they do all year round. The Government are under no illusions about the challenges facing local authorities. It is our priority to reset the relationship between local and central Government, and to end the politics that has seen Westminster hoard far too much power, holding back our towns, cities and villages from realising their full potential. We will provide more stability for councils through multi-year funding settlements, ending the competitive bidding process and reforming the broken audit system. Future local authority funding decisions are of course a matter for the spending review and the local government finance settlement, in which we are fully engaged.
Alison Bennett
Can the Minister explain how the English devolution Bill will reduce local authority budget shortfalls, ensuring that essential council services for the public are protected?
Jim McMahon
The English devolution Bill is a landmark piece of legislation that will finally address the imbalance of power between this place and communities up and down the country, but it is not in itself the answer. We know that the financial foundations on which it rests are local authorities, which are struggling. That is why we are committed to multi-year funding settlements and fair funding.
Clive Jones
I understand that there will be a major review of local government funding next year. I represent Wokingham, whose council is the lowest-funded unitary authority per head in the country. Will the review look at the actual needs and costs faced by local authorities, as opposed to the current methodology of allocating funding, which is based on historical data and is disproportionately skewed by simplistic measures of deprivation?
Jim McMahon
Any fair funding formula of course has to address the range of challenges that local authorities face, whether that is their local tax base, and how much they can realistically generate from their local communities and businesses, or the cost of service delivery and the demand within a local community. We will ensure that the fair funding formula, of which multi-year settlements are a part, is done with that rigour.
Natasha Irons
There can be no way of fixing the foundations of this country without fixing the foundations of local government, so I am pleased to hear that this council—sorry, this Government—are looking to reset the relationship with local councils; as a local councillor, I am stuck in the habit. Will the Minister please outline what specific support will be given to councils that have had to issue section 114 notices, to ensure that they can deliver on this Government’s aims throughout the country?
Jim McMahon
Local councils are central to delivering on this Government’s missions, and to changing this country for the better, but we know that many of them are on a cliff edge financially, and many of them will be fearful for their budget going forward. We will work in partnership with my hon. Friend. The Department’s door is always open to local authorities that need to have conversations.
Liam Byrne (Birmingham Hodge Hill and Solihull North) (Lab)
Council funding in Birmingham is inadequate because of a set of sadistic directions based on speculative estimates of equal pay liabilities. No one believes those estimates, not even the lead commissioner, so will the Minister revisit those directions quickly and meet with Birmingham MPs to help us to get them right?
Jim McMahon
First, we need to reset the relationship between the Westminster Government and local authorities. I have seen far too many examples where the Secretary of State and Ministers have, at this Dispatch Box, hung individual councils out to dry. That is not a relationship of equals at all. I thank the leadership of Birmingham for taking the tough decisions and actions that are needed. This Government will work in partnership with them in a constructive way, as equals, going forward.
Blake Stephenson (Mid Bedfordshire) (Con)
Terry Jermy (South West Norfolk) (Lab)
The Minister for Local Government and English Devolution (Jim McMahon)
In the final 2024-25 local government finance settlement, a £3 million grant was announced to assist local authorities experiencing significant pressures on their internal drainage board levy. I am publishing today the allocations of funding for 15 local authorities, and I can confirm that King’s Lynn and West Norfolk will receive an allocation of £254,000 from the levy. We are also working closely with our colleagues in the Department for Environment, Food and Rural Affairs to explore options going forward for future allocations.
Helen Morgan (North Shropshire) (LD)
Residents in rural areas such as my constituency are seeing drastic cuts to local services despite their council tax having gone up this year. That is because councils are struggling to balance budgets. When the fair funding review takes place, will the Secretary of State commit to considering the cost of delivering services in vast rural areas, which is in excess of the same cost in urban areas?
Jim McMahon
We will absolutely ensure that the true cost of public service delivery is accounted for in different parts of the country and in different local authorities—that will be part of it. However, I say gently that although the Conservatives were the architects of austerity, the Liberal Democrats were definitely there sharpening the pencil.
Rachel Hopkins (Luton South and South Bedfordshire) (Lab)
The Government have my full support in making housing more affordable for my constituents and those across the UK, and creating more social rented housing will be important in that. Will the Minister update the House on the Government’s plans to protect existing council stock by reviewing the increased right to buy discounts introduced in 2012?
Jim McMahon
We are well under way in reviewing the consultations that are currently taking place and all the devolution agreements that were not tabled before the election. I am very happy to meet with my hon. Friend outside of this Chamber to discuss the matter further.
Melanie Onn (Great Grimsby and Cleethorpes) (Lab)
Could the Minister expand on his earlier answer relating to devolution, and perhaps provide a timeframe for some of the discussions that are taking place with local authorities about devolution plans that did not go ahead before the last general election? My constituents are very keen to move ahead with improvements to transport, education and inward investment.
Jim McMahon
I thank my hon. Friend for her question, and for her work on the agenda to further devolution in her region. We recognise that in some parts of the country, including Hull and East Yorkshire and Greater Lincolnshire, local authorities worked up proposals for the previous Government that were not tabled before the election. We are currently working through those proposals at pace to make sure areas have clarity about where they are up to, and we look forward to reporting on that as soon as possible and meeting with local MPs as part of that process.
Munira Wilson (Twickenham) (LD)
When the Secretary of State looks at the rules around local authority compulsory purchase orders, and at removing hope value for house building purposes, will she look at having the same rules for playing fields that local authorities want to keep as playing fields and not build on? That would allow sites such as Udney park playing field in my constituency, which has lain derelict for a decade under private ownership, to be brought into community use again.
Shaun Davies (Telford) (Lab)
I know from my time as chair of the Local Government Association that all council leaders, regardless of political persuasion, need more money for local government, but that there is also a commitment from the sector to reforming the sector. Will the Minister confirm his willingness to work with council leaders, regardless of political persuasion, to reform the system, and also to take a look at population under-counting, which is costing my council millions of pounds each year?
Jim McMahon
I pay tribute to my hon. Friend for the work he did in local government, and as chair of the LGA, to make sure that the sector spoke with one voice and worked in collaboration with Government to try to get a better outcome for local councils. This Government will continue in that spirit.
Paul Holmes (Hamble Valley) (Con)
The Minister for Local Government may be aware that Liberal Democrat-controlled Eastleigh borough council is subject to a best value notice, due to its unsustainable £700 million of debt. More audits have been undertaken that show that more borrowing is taking place, so will he meet me to discuss this risk to my constituents and their taxpayers’ money?
Jim McMahon
I am very happy to have a meeting, probably next week, on that issue.
Claire Hazelgrove (Filton and Bradley Stoke) (Lab)
As the housing crisis worsened under the last Government, houses in multiple occupation became more prevalent in a number of communities, including in Filton, Stoke Park and Stoke Gifford. Naturally, with more people living in more homes than were envisaged when the local infrastructure was planned, there is an impact on public services and the character of communities, and routes such as permitted development are regularly being used to start extensions and conversions. Will the Minister meet me, as the Government shape much-needed changes to the planning framework and regulations, to discuss how HMOs might be included in an appropriate way?
Max Wilkinson (Cheltenham) (LD)
Devolution is a positive thing, and we welcome it. Gloucestershire, which has my constituency of Cheltenham within it, has coterminous boundaries for the county council, a police force, a fire service, an economic development function and a health service, but there is fear that, in a devolution deal, it may be grouped with other areas to the north, or perhaps made part of an existing devolution deal to the south. Can the Secretary of State or another Minister confirm that that will not be the case?
Jim McMahon
Within the first couple of days of this Government, the Deputy Prime Minister wrote to local authority leaders, inviting them for discussions on devolution agreements. One of the founding principles is, of course, geography that makes sense—and having coterminous boundaries for public services and the rest does make sense. Without going into the specifics of individual conversations that are taking place, I advise the hon. Member to bring that point into the work on the English devolution Bill, which will make sure that all of England has a voice and a role in devolution.
Peter Dowd (Bootle) (Lab)
The Deputy Prime Minister has shown that her footwork at the Dispatch Box is as good as her footwork on the dance floor. At this year’s election, veterans who brought along their veterans’ ID card to prove their identity were turned away. Will the Minister guarantee that this will change?
Local Audit Backlog
Jim McMahon Excerpts(3 months, 3 weeks ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister of State, Ministry of Housing, Communities and Local Government (Jim McMahon)
Local authorities and other local bodies, including police, fire, transport and waste authorities, as well as national parks, provide vital public services to local communities. Effective local audit ensures transparency and accountability for public money spent on these vital services, and builds public confidence.
The Government have inherited a broken local audit system in England. This is evidenced by a significant backlog of outstanding unaudited accounts. Last year, just 1% of councils and other local bodies published audited accounts on time. The backlog is likely to increase again to around 1,000 later this year, and will continue to rise further without decisive action. This is not acceptable, and it cannot continue.
This Government’s manifesto committed to overhaul the local audit system to enable taxpayers to get better value for money. A growing backlog will severely hamper necessary fundamental reforms to repair the system, and will continue to undermine local accountability and governance. We must act now to get the house in order and to rebuild the system so that it is fit, legal, and decent, and the public have an effective early warning system.
This statement outlines immediate actions the Government—together with the Financial Reporting Council, the National Audit Office, and organisations in the wider system—are taking, which are designed to address the backlog and put local audit on a sustainable footing. The previous Government launched a welcome consultation on this issue in February. Despite a lack of action, there was clear support for the core elements of the approach to clearing the backlog. All key local audit organisations support these bold measures, recognise their exceptional nature, and continue to share the conviction that this urgent and decisive action is needed to reset the system and repair the foundations of local government.
Local authorities and other local bodies, alongside their auditors, are our partners in this plan to restore a system of high-quality and timely financial reporting and audit, while managing the impact of this in a sustainable way. I commend the commitment of local finance teams and auditors in their work to date.
Proposed secondary legislation
I intend to lay secondary legislation when parliamentary time allows, and at the point at which the comptroller and auditor general requests, I will also lay a new code of audit practice, again subject to parliamentary time. Taken together, these measures aim to facilitate a return to timely, purposeful audits of local body accounts. The secondary legislation would amend the Accounts and Audit Regulations 2015 to set a series of backstop dates.
The first backstop date would clear the backlog of unaudited accounts up to and including 2022-23, but given the size of the audit backlog, it is unlikely that all outstanding audits will be completed in full ahead of this date. The Government recognise that this is likely to have unfortunate consequences for the system in the short term, and have been forced to take this difficult decision due to the backlog we inherited. This Government is determined, however, to make the tough choices necessary to begin rebuilding the foundations of local government. Where auditors have been unable to complete audits, they will issue a “disclaimed” or “modified” audit opinion. Auditors are likely to issue hundreds of “disclaimed” audit opinions and disclaimed opinions will likely continue for some bodies for a number of years.
The proposed legislation will include five further backstop dates up to and including financial year 2027-28 to allow full assurance to be rebuilt over several audit cycles. It is the aspiration of the Government and key local audit system partners that, in the public interest, local audit recovers as early in this five-year period as possible. This means disclaimed opinions driven by backstop dates should, in most cases, be limited to the next two years, up to and including the 2024-25 backstop date of 27 February 2026, with only a small number of exceptional cases, due to specific individual circumstances, continuing thereafter. The proposed backstop dates are:
Financial years up-to-and-including 2022-23:13 December 2024
Financial year 2023-24: 28 February 2025
Financial year 2024-25: 27 February 2026
Financial year 2025-26: 31 January 2027
Financial year 2026-27: 30 November 2027
Financial year 2027-28: 30 November 2028
While there will be modified and disclaimed opinions, auditors’ other statutory duties—including to report on value for money arrangements, to make statutory recommendations and issue public interest reports—remain a high priority. Our Government will make that crystal clear.
For financial years 2024-25 to 2027-28, the date by which category 1 bodies should publish “draft” (unaudited) accounts will change from 31 May to 30 June following the financial year to which they relate. This will give those preparing accounts more time to ensure they are high-quality accounts. This in turn will benefit auditors while still ensuring publication shortly after financial year end.
The proposed legislation will outline the following scenarios in which bodies may be exempt: where auditors are considering a material objection; where recourse to the court could be required; or from 2023-24, where the auditor is not yet satisfied with the body’s value for money arrangements. Where such an exemption exists, the legislation would include a requirement to publish the audit opinion as soon as practicable. For transparency, if a body is exempt, they would be required to publish an explanation of their exemption at the time of a backstop date.
Bodies that are non-exempt but have failed to comply with a backstop date will be required to publish an explanation, to send a copy of this to the Secretary of State, to facilitate scrutiny, and publish audited accounts as soon as practicable. The Government also intend to publish a list of bodies and auditors that do not meet the proposed backstop dates, which will make clear where “draft” (unaudited) accounts have also not been published. I intend to keep this under close review and may explore further mechanisms to take appropriate action, should reasons given be inadequate.
As previously committed to, the FRC and the Institute of Chartered Accountants in England and Wales will not carry out routine inspections of local audits for financial years up to and including 2022-23, unless there is a clear case in the public interest to do so.
Communications to support local bodies and auditors
There will be extensive communications and engagement on these measures, to make clear the necessity of these steps and emphasise the context for modified or disclaimed opinions. Local bodies should not be unfairly judged based on disclaimed or modified opinions, caused by the introduction of backstop dates that are largely beyond their control. Auditors will be expected to provide clear reasons for the issuing of such opinions to mitigate the potential reputational risk that local bodies may face. We will work with partners to provide communications support to the system.
Guidance for auditors would be published by the Comptroller and Auditor General and endorsed by the FRC, confirming that there are no contradictions to the requirements or the objectives of International Standards on Auditing (UK). A proportionate approach is required and all system partners including the FRC, NAO and auditors, are aware that this is the Government’s objective. The FRC’s and ICAEW’s regulatory activity would consider auditors’ adherence to the code and whether proper regard has been given to the statutory guidance.
Audit fees
Issuing a disclaimed or modified audit opinion and a subsequent return to being able to fully complete audits will require differing levels of work by auditors. Public Sector Audit Appointments Ltd will set scale fees and determine fee variations where the auditor undertakes substantially more or less work than assumed by the scale fee and will consult with bodies where appropriate. In doing so PSAA will apply the following principles: if auditors have worked in good faith to meet the requirements of the code of audit practice in place at the time the work was conducted—and have reported on work that is no longer required—then they are due the appropriate fee for the work done, and the body is due to pay the applicable fee, including where there is a modified or disclaimed opinion. Conversely, if an auditor has collected audit fees in part or in full, and the backstop date means that the total work done represents less than the fee already collected, then the auditor must return the balance and refund the body the appropriate amount, this ensures that the bodies pay only for work that has been done and reported.
Conclusion
I recognise that aspects of these proposals are uncomfortable. Given the scale of the failure in the local audit system that this Government inherited, however, we have had to take this difficult decision to proceed. Without this decisive action, the backlog would continue to grow, and the system will move even further away from timely assurance. The secondary legislation I will lay will give effect to these proposals and start to repair the foundations of local governance. Significant reform is needed to overhaul the local audit system to get the house in order and open the books. I will continue to review the evidence, including considering the recommendations of external reviews to date, and will update the House in the autumn on the Government's longer-term plans to fix local audit.
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