Written statement to Parliament

Local government improvement

This speech was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Eric Pickles' written ministerial statement on local government improvement and steps being taken to improve local government services.

I would like to update hon. Members on a series of steps we are taking to improve the quality of local government services and ensure value for taxpayers’ money.

London borough of Tower Hamlets

On 4 November, I informed the House that I was satisfied, having considered the report of the inspection by PricewaterhouseCoopers LLP (PwC) of Tower Hamlets council, that that council is failing to comply with its best value duty, and proposed to statutorily intervene to secure the council’s compliance with that duty.

I gave the council until 18 November to make any representations it wished on the inspection report and my proposal for intervention, and I sought and received from the council certain undertakings not to take further specified actions on grant making, appointment of statutory officers, and transfer of property to third parties, until I had reached decisions about the use of my intervention powers.

I have now carefully considered all the representations that the council has made. I have also considered afresh the PwC inspection report and the report the Election Commission published on 1 July 2014 into the elections in Tower Hamlets, and I have had appropriate regard to other representations that I have received about my proposed intervention. I remain satisfied that the council is failing to comply with its best value duty. It is disappointing that there is a culture of denial in the mayoral administration about its systematic failures.

As I said in my previous statement:

Localism requires local accountability and local democracy. Municipal corruption undermines the local checks and balances that are vital in a democracy and essential in mayoral systems with their concentration of power. We cannot risk such corruption.

But this is not just about the money. The abuse of taxpayers’ money and the culture of cronyism reflects a partisan community politics that seeks to trade favours and spread division on the rates. Such behaviour is to the detriment of integration and community cohesion in Tower Hamlets and in our capital city. This remains my view.

I have concluded that it is both necessary and expedient for me to exercise my intervention powers in the Local Government Act 1999 as I have proposed, and accordingly, I have today given the council the necessary directions under section 15(5) and 15(6) of the 1999 Act to implement the proposed interventions.

These are centred on putting in place until 31 March 2017 a team of commissioners to oversee or exercise certain of the council’s functions. It is open to me to review this in the light of the progress made by the council to secure compliance with its best value duty. I have nominated Sir Ken Knight to be the lead commissioner. Max Caller CBE has also been nominated as a commissioner, and I will announce a further commissioner in due course.

In summary, the specific intervention measures are as follows.

(1) To require the council

  • to draw up and agree with the commissioners within 3 months from the date of the direction a strategy and action plan for securing the council’s compliance with its best value duty (to include as appropriate complying with the specific requirements set out below), and to submit this to the Secretary of State

  • to prepare under the direction of the commissioners and submit to the Secretary of State at 6 monthly intervals thereafter until 31 March 2017 a report on progress against the strategy and action plan

  • to undertake as a matter of urgency a recruitment exercise, under the direction of the commissioners, with the aim of making as soon as practicable, permanent appointments of suitable persons to the positions of the 3 statutory officers (Head of Paid Service, Chief Finance Officer, and Monitoring Officer)

  • until 31 March 2017 to obtain the prior written agreement of the commissioners to (a) any dismissal or suspension of a statutory officer; and (b) any proposed appointment or designation of a replacement

  • until March 2017 to obtain the prior written agreement of the commissioners before entering into any commitment to dispose of, or otherwise transfer, to third parties, any real property other than existing single dwellings for the purposes of residential occupation

  • within 3 months from the date of the direction, to prepare a fully costed plan for how the council’s publicity functions can be properly exercised and agree that plan with the commissioners; and until 31 March 2017 adopt any recommendation of the commissioners with respect to that plan or to publicity more generally

  • by 1 February 2015 to prepare and implement an action plan, in consultation with the commissioners, to achieve improvements in the council’s processes and practices for entering into contracts, and until 31 March 2017 to adopt all recommendations of the statutory officers in relation to the processes and practices to be followed in relation to entering into contracts, unless the commissioners’ prior written agreement is obtained not to do so

(2) The commissioners to exercise until 31 March 2017 all functions of the council relating to the making of grants, including responding to Freedom of Information Act requests in respect of grant payments, with the council providing at the request of the commissioners its views on proposed grants.

(3) The commissioners to exercise until 31 March 2017 the council’s functions of appointing persons to and removing them from the posts of Electoral Registration Officer and Returning Officer for local elections (this will also apply to their general election duties).

The council will be required to comply with any instructions of the commissioners in relation to the exercise of those functions for which the commissioners are responsible, and to provide the commissioners at its expense with such services, amenities and administrative support as the commissioners may reasonably require, and with access to the council’s premises, documents, and to any employee or member as appears to the commissioners to be necessary. The council will also be required to pay the commissioners’ reasonable expenses and such fees as I determine.

Intervention was not a decision taken lightly, however I could not allow the overwhelming evidence of the serious failings within Tower Hamlets to continue unchecked. I do not accept the Mayor’s representations that the problems in the council can easily be put right.

Residents need to know that decisions are being taken properly in an open and accountable way. The commissioners I am appointing are experienced and talented professionals who understand that transparency and accountability are vital to the functioning of local democracy.

Local government transparency

The coalition government has taken many steps during this Parliament to place more power into citizens’ hands to increase democratic accountability and make it easier for local people to contribute to the local decision making process and help shape public services. Transparency is the foundation of local accountability and the key that gives people the tools and information they need to play a bigger role in society.

In October, we issued the Local government transparency code 2014 and have made it a legal requirement for local authorities to publish much of the data specified in the code. Today, we have taken another step forward in ensuring that local people have key information to hold public bodies to account by publishing a transparency code for smaller authorities.

Under the new local government audit regime smaller authorities will be subject to the transparency requirements laid out in this code in place of routine external audit. The code will require the on-line publication of information that provides taxpayers with a clear picture of authorities’ activities, spending and governance, improving the ability of communities to hold local public bodies to account.

The transparency code for smaller authorities applies to parish councils, internal drainage boards, charter trustees and port health authorities with an annual turnover not exceeding £25,000. Published initially as recommended practice, we intend, subject to Parliament, to make the code mandatory by the start of the 2015 to 2016 financial year and will offer support to this local government sector to help authorities comply with these requirements.

Backing locally-supported joint working

There are many ways that local authorities can work together to save money and improve services, but there is equally no one-size-fits-all model either. The Dorset Fire Authority and the Wiltshire and Swindon Combined Fire Authority have formally made representations requesting a merger. We have today published a consultation paper on their proposals.

Contrast to the last administration, we do not believe in top-down restructuring. Nor do we agree with the current proposals of the HM opposition to force more mergers. The botched FireControl programme is a prime example of how such restructuring is expensive and distracting. Rather, we will support locally-led partnerships, where there is genuine support from all members of the local community, and the consultation will test this local support.

Improving support arrangements for local councils

It is important to have in place the most effective arrangements to help councils across the country to continue to improve and reform – essential if they are to deliver sensible savings.

Councils have a right to expect services designed to support them are the best they can be, provide the support they need and provide best value for money.

In 2015 to 2016, we intend to provide grant of £23.4 million to the Local Government Improvement and Development (formerly IDeA) to deliver effective support to councils. This will be accompanied by robust scrutiny to ensure that every pound spent by them is spent appropriately and on providing direct support to councils. We expect of them the same standards and value for money as we expect of councils delivering frontline services, and we expect them to be transparent with councils about how they have spent the grant and the services they deliver to support councils.

The coalition government’s policy is to open up budgets to competition wherever possible. We intend to explore how the budget given for improvement services can be opened up to competition with contracts in place for 2016 to 2017, allowing councils, council groupings, think thanks, mutuals and other interested parties to bid for such funding, and drive further best practice in local government.

I am placing in the libraries copies of the document associated with these announcements, and my department’s website will also contain.