Guidance

Addressing cultural and governance failings in local authorities: lessons from recent interventions

Updated 16 June 2020

Applies to England

1. Introduction

This short guide considers lessons about local authority culture and governance that can be learned from recent statutory and non-statutory interventions^{[footnote 1]}. It has been developed in response to requests, including from the Public Accounts Committee^{[footnote 2]}, for greater transparency for local authorities on the intervention process.

In May 2020 we published Statutory Intervention and Inspection: a guide for local authorities^{[footnote 3]}. Additional guides, including the lessons that can be learned from the different inspections and interventions under the Local Government Act are being developed and will be published in due course.

The Local Government Act 1999 (as amended) gives the Secretary of State powers to inspect and, subject to there being sufficient evidence, intervene in a local authority where that authority is failing in its best value duty, namely:

to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.^{[footnote 4]}

Government intervention in local authorities using these powers is rare. In many instances, the sector led improvement approach (co-ordinated by the Local Government Association – the LGA) to performance and governance has proved successful in supporting councils to improve, without the need for formal intervention.

Since 2010, the Secretary of State has intervened formally in 4 local authorities:

• Doncaster Metropolitan Borough Council
• London Borough of Tower Hamlets
• Rotherham Metropolitan Borough Council
• Northamptonshire County Council

There have also been non-statutory interventions in Birmingham City Council and the Royal Borough of Kensington and Chelsea. Although each intervention was unique and the sample size is small, it is important that we identify common characteristics to ensure that lessons can be learned for the future.

Our analysis shows that one common characteristic of recent statutory and non-statutory interventions is weaknesses in the local authority’s culture and governance.

The culture of a local authority is determined by its shared values and beliefs, how decisions are made, as well as how elected members and officers behave, interact and carry out their roles.

Governance refers to the ways in which an organisation is governed and to what purpose. It encapsulates policies, procedures, the way in which decisions are made and how decision-makers are held to account.

This is designed to be a living document which will be updated as we learn lessons from any future interventions. In this spirit, we would welcome suggestions from local authorities as to omissions or additions. Any comments should be made to LocalGovernmentStewardship@communities.gov.uk.

2. Recognising indicators of poor culture and weak governance

Unlike service delivery failure, there are no clear or unequivocal quantitative measures to assess whether a council has a poor culture. Similarly, weak governance can be less tangible and visible from the outside. However, the LGA’s corporate peer challenge offer can provide insight into the culture and governance of individual authorities.

Additionally, our analysis of recently published Best Value inspection reports, which provide the evidence base for a statutory intervention, and Commissioners’ reports, which provide regular updates on progress during both statutory and non-statutory interventions, suggest that the following are potential indicators of a local authority which has problems:

• lack of effective political and/or corporate leadership, including an overreliance on interim statutory officers
• a lack of corporate capacity, resulting in a lack of strategic vision and direction, and inadequate internal processes
• poor and inappropriate councillor conduct
• conflict and distrust among and between councillors and senior officers
• the absence of effective scrutiny, transparency and public consultation, including inadequate protections for whistle-blowers
• a lack of awareness and acceptance of the need for improvement; and insufficient capacity to achieve the change required

We do not consider that this is either a comprehensive or definitive list of the areas that demonstrate weak leadership or governance. These are however areas that have been identified by Inspectors and Commissioners.

Sections 3, 4 and 5 of this document will highlight examples of poor culture and weak governance from recent interventions. They will also describe the different approaches that were taken to address these issues to prevent them occurring again.

3. Addressing ineffective leadership

The role and behaviour of both political and officer leaders is key to a healthy local democracy. When they model poor or ineffective leadership behaviours, this can be detrimental to a local authority’s overall culture and governance. Perhaps unsurprisingly, at the point of both statutory inspection and non-statutory intervention, leadership failings, at corporate as well as political level, have been identified as a key issue.

Corporate leadership

3.1 A lack of effective corporate leadership, including an over-reliance on interim statutory officers, can indicate that a local authority may be experiencing serious governance issues. For example:

• In Tower Hamlets, at the point of intervention all 3 statutory officer roles (Head of Paid Service, s151 Officer and Monitoring Officer) were held on an interim basis and recruitment to these posts on a permanent basis was not being planned. In Northamptonshire, all executive directors were replaced, and in some posts more than once, in the 5 years prior to the intervention. Vacancies were often filled by internal candidates on temporary promotion, who were unable to identify or offer a new perspective on challenges. The statutory inspection team found “there was no sense that the group worked together as a team, seeking to share and jointly solve the Council’s problems”.^{[footnote 5]}

3.2 The proper recruitment and nurturing of a new cadre of permanent senior managers with the requisite outlook and skills to achieve improvement has been shown as necessary to begin the journey to secure compliance with the Best Value Duty for example:

• In Tower Hamlets, Commissioners were tasked with overseeing the recruitment process of all 3 statutory officers on a permanent basis within a given time frame. The council was also directed to obtain the agreement of Commissioners to (a) dismiss or suspend a statutory officer and (b) appoint a replacement.^{[footnote 6]}

• In both Rotherham and Northamptonshire, Commissioners were also granted powers to exercise all non-executive functions relating to the appointment and dismissal of statutory officers.^{[footnote 7]}

• In some interventions, an interim chief executive has been appointed to meet the immediate needs of the authority, examples include:

  • In Rotherham, following the resignation of the chief executive in the wake of the 2014 Jay Inquiry, a Managing Director Commissioner was appointed until the commissioner team appointed a permanent chief executive in early 2016.
  • In Birmingham, the chief executive resigned in February 2017 and was replaced on an interim basis until the recruitment of a permanent chief executive a year later.
  • In Kensington and Chelsea, the chief executive resigned in June 2017 and an interim was seconded from a neighbouring London borough. He strengthened and refreshed the council’s corporate function; and was subsequently made permanent in September 2017.

Political leadership

3.3 There are many different reasons why political leadership can be ineffective, and it can take time for politicians to realise the deep-seated nature of problems affecting their council. In some cases, there can be resistance to addressing problems. For other authorities the political domination of one party with limited political opposition can lead to weaker overview and scrutiny which in turn may hinder a council’s ability or willingness to recognise that change is needed. So too can a low level of turnover among councillors over time which can contribute to a sense of parochialism, insularity, complacency and superiority.

3.4 The indications from the 6 interventions, both statutory and non-statutory, is that in extreme cases a change at the political level (often because of external events such as a Best Value Inspection or a change to the election cycle) can enable positive operational change. Their experiences suggest that residents are best served where the political class within the council is made up of a mix of long-standing and new members. As with any large and complex organisation it appears that democracy is best served where there is a balance between continuity which provides stability, knowledge and expertise, and refresh which provide new ideas and perspectives and can provide constructive challenge to the council.

Examples of this include:

• In Rotherham, publication of the Best Value Inspection Report led to 2 significant political events:
  • in February 2015 the whole cabinet resigned, and the Communities Secretary appointed 5 Commissioners to exercise the majority of the council’s functions
  • the Communities Secretary also issued an order under the Local Government Act 2000 to move from election by thirds to all-out elections. In 2016 this returned 24 new members and refreshed the council (36 out of 63 members had less than 2 years’ experience)
• In Birmingham, the all-out elections in May 2018, including the confirmation of a new leader, improved stability and underpinned the significant subsequent progress to embed improvements at the council.
• In Northamptonshire, the leader resigned following publication of the Best Value Inspection Report.
• In Kensington and Chelsea, the leader and chief executive both resigned following the Grenfell Tower tragedy. A number of councillors stood down at the elections in 2018, leading to a refresh in the majority party.

3.5 Depending on the local situation, authorities may benefit from either a political Commissioner or mentor:

• In Rotherham, 2 years into the intervention, Department for Education (DfE) appointed a political Commissioner for Children’s Services. The Commissioner Team subsequently reflected that this brought an important missing dimension to their make-up and recommended that the role of a political Commissioner should be considered when establishing a team in future interventions. ^{[footnote 8]}
• In Kensington and Chelsea, the unofficial chair of the Taskforce provided similar support to the new Leader.
• Birmingham also benefited from peer mentoring support offered by the Local Government Association (LGA) to elected members.

3.6 However, such support can be less effective in councils run by smaller or local political parties. In Tower Hamlets, the former mayor had established his own independent political party and was therefore not subject to any wider party-political influence. The Commissioners reported that this made sourcing mentoring support impossible and also made working with the LGA a challenge.

3.7 Some authorities have additional political figures who have a direct relationship with the council. In Tower Hamlets, Commissioners asked the council to update its “scheme of delegation” to clarify the roles and responsibilities of both the chief executive and executive mayor which established the limits of mayoral powers in the borough.

4. Addressing poor behaviour across an authority

4.1 In many of the intervention areas conflict and distrust among and between councillors and officers was prevalent. This manifested itself in a variety of ways, including bullying and harassment, provision of poor-quality advice to members, disregard by members for advice (whether good or bad) upon which to make sound decisions, and a lack of understanding of how meetings should be conducted. In some cases it is clear that members have not understood their role, the part they play in a local democracy and the impact their behaviour has on transparency, a key aspect of democratic accountability.

4.2 Different measures were tailored to address these issues:

• In Tower Hamlets, a cross-party forum was established to rebuild member relations, with cross-party working groups established to discuss key issues such as a review of the member/officer protocol, code of conduct, and the process by which members declare conflicts of interest. The council also commissioned an annual independent review of officer/member grievances, to be assessed by the chief executive and group leaders, with the purpose of making recommendations to minimise further occurrences of dispute.

• In Rotherham, the LGA appointed a team of experienced peer mentors to provide confidential and candid advice to the leader and members of Rotherham’s Advisory Cabinet, leaders of the Opposition and Independent Groups, and the Chairs of the Planning Board and Advisory Licencing Board.

• In Northamptonshire, Commissioners required the council to work with the Centre for Public Scrutiny (CfPS) to remind members and officers of the organisation’s code of conduct and ensure that members understood their roles. At the same time, the LGA provided and is providing significant support to provide advice and development to members and officers particularly to strengthen their ability to effectively discharge their roles.

• CfPS, through the LGA, also carried out a review of governance and scrutiny functions and processes in Kensington and Chelsea which was commissioned by the council.

4.3 An agreed set of shared corporate values which are effectively implemented is essential to maintaining positive organisational culture. In Tower Hamlets, the Commissioners felt that although values were in place, they were “just a piece of paper on the wall” and not adhered to. In Rotherham, Commissioners felt the council had lost its moral compass.

4.4 Across the interventions, Commissioners, Panel and Taskforce Members have either led or encouraged a process of refreshing corporate values through focus groups, staff surveys, corporate induction and training. For example, in Kensington and Chelsea, the Taskforce witnessed the council embarking on a comprehensive programme to refresh its values via a series of events with staff which devised a new set of values from the bottom up and which were subsequently embedded in the council’s performance management system. The council also signed up to the ‘Charter for Families Bereaved through Public Tragedy’, a series of commitments to organisational cultural change drafted in response to the Hillsborough tragedy, demonstrating their commitment to being open, honest and transparent, and placing the public interest above their own reputation.^{[footnote 9]}

4.5 Commissioners, Panel and Taskforce Members also have a key role in modelling the good behaviour and conduct needed to secure sustainable cultural change. Across the interventions they have successfully used their authority to challenge poor behaviour and worked to create consensus rather than being drawn into conflicts with councillors or officers. Leading by example in this way provides both councillors and officers the opportunity to understand how their council can be more effectively organised and what behaviours are appropriate.

4.6 Local authorities are accountable to their local electorate. Commissioners in statutory interventions have stressed the importance of valuing this democratic accountability and of working with councillors from the outset, rather than supplanting or undermining them. There is a balance to be struck: whilst Commissioner decisions should be exempt from normal scrutiny arrangements to ensure the intervention cannot be frustrated, Commissioners also need to establish transparency and accountability in their decision-making. To help achieve this, the Commissioners in Rotherham established and published protocols to explain their ways of working and the basis for their decision making.^{[footnote 10]}

5. Strengthening scrutiny, transparency and whistle-blowing support

5.1 The overview and scrutiny function is fundamentally important in holding a council’s decision-makers to account. This is reflected in the LGA corporate peer challenges, which consider overview and scrutiny arrangements and wider governance arrangements within a council. Effective scrutiny acts as a check and balance on the executive, helps drive improvement, and can secure the efficient delivery of public services. In contrast, low levels of support for and engagement with the scrutiny function often leads to poor quality and ill-focused work, and can be indicative of wider governance, leadership and service failure.

5.2 Poor scrutiny functions often lack support or recognition among both members and officers. For example:

• In Tower Hamlets, although there was an active Overview and Scrutiny Committee, according to evidence submitted to the Election Petition relating to the 2014 mayoral election, its recommendations were generally ignored by the executive mayor and he refused to attend its meetings and answer questions. The Election Petition received extensive media coverage.

• In August 2017, the then leader of Birmingham, acted against the legal advice of the council’s monitoring officer to reach agreement with a trade union and resolve industrial action in relation to waste management. Furthermore, the advice was not made available for public and political scrutiny.^{[footnote 11]}

5.3 Communicating the role and purpose of scrutiny to the wider authority has, therefore, been an important focus for Commissioners, Panel and Taskforce Members. Across all the interventions, steps were taken to ensure all members and officers are made aware of the proper role the Scrutiny Committee plays in the council, its value and the outcomes it can deliver. Furthermore, work was undertaken to build the capacity of Scrutiny Committee members to hold the executive to account and ensure they are supported in having an independent mindset. For example:

• In Rotherham, support was sought from the LGA and the CfPS to ensure all cabinet members and scrutiny chairs were allocated a ‘peer’ to provide coaching and support. Furthermore, the council introduced a system of pre-decision scrutiny whereby a panel of scrutiny councillors looked at potential decisions before they were considered by the cabinet.

• In Northamptonshire, the CfPS and the LGA provided behavioural training to members, particularly in relation to how to ask questions without recourse to aggression.

5.4 Another indicator of poor organisational culture is the absence of transparency in decision-making processes. In Tower Hamlets, elected members even resorted to making occasional Freedom of Information Act requests to obtain the information they were entitled to. The lack of public consultation on key issues, and an inability or unwillingness to seek help from peers are also evidence of a council at risk of failure. For example:

• In Tower Hamlets, members’ decisions, particularly regarding the awarding of grants to local community groups, were opaque. A review of grant applications undertaken by the statutory inspection team in 2014 found that the application of members’ ‘local knowledge’ resulted in 81% of officers’ recommendations being overruled.^{[footnote 12]}

• Northamptonshire had had little or no contact with other councils. The chief executive was adamant that his transformation plan would deliver the savings that were required. The council declined offers of help from peers and was resistant to extensive efforts from sector membership bodies, especially the LGA, to wake members up to the reality of their situation. This further restricted their ability to take necessary action. Any appropriate challenge from members, which was stimulated by LGA advice, was not tolerated with senior officers being unwilling to listen or reconsider. Only at the last minute did the council accept formal peer challenge from the LGA.

5.5 By contrast, a culture of transparency, where staff are actively encouraged to flag concerns or risks, can allow authorities to prevent further failure and welcome reflection when failure does occur. Failure to adequately support whistle-blowers suggests a council that is opaque and not open to challenge. For example:

• In Tower Hamlets, Commissioners were repeatedly approached by whistle-blowers who raised concerns of possible fraud and maladministration within the council. Trust in the council’s whistle-blowing policy and officers’ ability to deal with whistle-blowers in a confidential manner had completely broken down.

• In Rotherham, the inspection team found that the council “goes to some lengths to cover up information, and silence whistle-blowers… [which has] created an unhealthy climate where people fear to speak out because they have seen the consequences of doing so for others.”^{[footnote 13]}

5.6 In response, both Commissioner Teams worked with their respective councils’ monitoring officers to redraft whistle-blowing policies as well as design staff training to raise awareness of procedures and the protections afforded to whistle-blowers. Commissioners also oversaw independent investigations of whistle-blowing allegations.

5.7 Efficient and effective complaints procedures are another characteristic of a local authority open to external scrutiny. Commissioners in Northamptonshire have therefore worked with the Local Government and Social Care Ombudsman to improve the council’s processes around the handling of complaints.

6. Conclusion

6.1 This document is one of a series produced by MHCLG to share lessons learnt from both statutory and non-statutory interventions in local authorities. This includes learning lessons from the events which led up to the intervention, as well as the intervention process itself.

6.2 Our analysis of Best Value inspection reports and Commissioners’ progress reports from recent interventions suggests that, despite the unique circumstances which led to the intervention, each local authority exhibited a poor culture and weaknesses in their governance which contributed to the failures requiring an intervention.

6.3 We have identified in this document some of the indicators which can suggest that an authority has weaknesses in their culture and governance. We hope that, by making this information publicly available, it will be used by other authorities and the sector more widely, and thus avoid the risk of failure in their own councils.

Annex: Statutory and non-statutory interventions since 2010

Interventions under the Local Government Act 1999 since 2010

Doncaster Metropolitan Borough Council (29 Jun 2010 – 11 Nov 2014)

Intervention triggered by “serious failings in the council’s corporate governance” and “capacity…to make improvement”. The MHCLG intervention took place alongside a DfE intervention to put in place a Children’s Trust.

London Borough of Tower Hamlets (17 Dec 2014 – 30 Sep 2018)

Intervention put in place following an inspection that found evidence of poor governance and widespread fraud and bribery.

Rotherham Metropolitan Borough Council (26 Feb 2015 – 31 Mar 2019)

Intervention as a result of failures in Council governance and service delivery contributing to child sexual exploitation.

Northamptonshire County Council (10 May 2018 – present)

Intervention followed on from an inspection that found evidence of significant failings in governance and scrutiny and strategic financial management.

Non-statutory interventions since 2010

Birmingham City Council (Jan 2015 – 31 Mar 2019)

Birmingham Independent Improvement Panel appointed following the Kerslake Report which pointed to failures in governance and financial management at the council.

Royal Borough of Kensington and Chelsea (26 Jul 2017 – 26 March 2020)

The independent Grenfell Recovery Taskforce was appointed on 26 July 2017 in the wake of the Grenfell tragedy. It supports and challenges the council and provides assurance to the government.

1. All statutory and non-statutory interventions since 2010 are listed in the Annex to this guide. ↩

2. Local Government Governance and Accountability – the Public Accounts Committee, 2019. ↩

3. Statutory intervention and inspection: a guide for local authorities – published 7 May 2020. ↩

4. Section 3(1) of the Local Government Act 1999. ↩

5. Caller, M. (2018): Northamptonshire County Council Best Value Inspection, page 19. ↩

6. Directions issued to the London borough of Tower Hamlets under section 15 of the Local Government Act 1999 (17 December 2017). ↩

7. Directions issued to Rotherham Metropolitan Borough Council (26 February 2015) and to Northamptonshire County Council (18 May 2018) under section 15 of the Local Government Act 1999. ↩

8. See ‘Lessons Learnt from Rotherham Intervention’, appended to the Rotherham Commissioner’s 42 Month Report (August 2018). ↩

9. Rt Rev John James KBE (2017): The Patronising Disposition of Unaccountable Power. ↩

10. The Commissioners’ protocol “How executive authority might be returned” (PDF, 1.40MB). ↩

11. Birmingham City Council Waste Management Governance Review (20 December 2018). ↩

12. PwC (2014): Best Value Inspection of London Borough of Tower Hamlets Report, page 60. ↩

13. Casey, L. (2015): Report of the Inspection of Rotherham Metropolitan Borough Council, page 134. ↩