Is the Levelling Up minister in denial about the extent of financial problems in local government? It certainly seems that way after his speech to the Local Government Association conference yesterday. By STEVEN DOWNES
Minimising: ‘Seriously, the problem is only this big’… Michael Gove did not say at yesterday’s LGA speech
Michael Gove, the Secretary of State for local government who has council chief execs in a queue to his office seeking billions in bail-outs, yesterday as good as admitted that a decade of “Localism”, as introduced by his predecessor, “Big” Eric Pickles, had been a complete failure and had contributed to the financial collapse of multiple authorities including Thurrock, Slough, Woking… and Croydon.
Gove was the keynote speaker at the Local Government Association’s annual conference in Bournemouth, and used the occasion to launch “Oflog”, the Office for Local Government, a new tier of government and regulation.
The set-piece speech is thought to be the reason that an announcement about new arrangements, and wider-reaching powers, for the Whitehall-appointed improvement panel in Croydon, which was due to be made last week, was postponed.
Speaking to an audience made up almost exclusively of senior local government officials, Gove said, “Oflog is about supporting you to get on with the job of running local government and delivering for residents and communities.
“And we will work with you to establish the best indicators of performance that will be upheld via Oflog.” It’s as if the idea of erasing the role of District Auditor, as Pickles did, was all just a bad dream…
“Oflog should also support us and the department in another vital way. And that is identifying potential problems in councils earlier,” said Gove, the minister who has presided over more councils going bankrupt than ever before. Before Croydon went bust in November 2020, only one council had issued a Section 114 notice this century.
In the last three years, five other authorities have followed Croydon and ‘fessed up to not being able to balance their budgets.
But it appears to be Gove’s preferred narrative that Thurrock, Woking and Croydon are somehow isolated examples of bad local governance. When Tony McArdle, the chair of Croydon’s improvement panel, was dispatched to Thurrock to find out what had been going on there, he described their £1.3billion debt black hole as “unique within local government”. Which is blatant hog-wash.
McArdle also suggested that there had been no warning signs over Thurrock’s addiction to borrowing, which is also counter-factual.
The LGA has said recently that there could be another two dozen councils on the brink of bankruptcy.
Was there a hint, yesterday, of an admission by Gove that he and the Department for Levelling Up, Housing and Communities could have, should have acted sooner?
“We all know that there have been local authorities where problems have arisen – notably Thurrock, Liverpool, Croydon, Slough and most recently Woking,” he told the LGA conference.
“A handful of cases, the exception… but the problems did not happen all at once – they were there for some time, and they worsened over time.
“We, collectively and in the department, I think, need to be able to respond to the warning signs.
Toxic legacy: Eric Pickles
“These failures are felt most acutely by taxpayers and residents in higher costs and worse services…” It was Gove that gave permission to Croydon’s part-time Mayor, Jason Perry, to hike Council Tax by 15per cent while axing more services.
“Where government intervention is needed to deal with these problems – in the most serious cases – we must be able to take targeted action. The Levelling-up and Regeneration Bill…”, proposed legislation which probably won’t get enacted before a General Election, “… strengthens our ability to act to protect taxpayers where trouble is brewing.”
Gove then returned to his “small minority of councils” nonsense, “outliers of concern in a sector characterised by excellence”, he patronised his captive audience.
“But we must reflect seriously on what these exceptional cases tell us about how core parts of the framework work in practice. But we must also ensure that framework is designed in a way to support our delivery of services. We need in order to ensure that we both identify problems early and free you to do you even better to reform the external audit system.”
It is the external audit system that was introduced when Pickles did away with the previous District Auditor system. Croydon, as one example, currently has three (or is it four?) years’ worth of accounts that have not been signed off by its external auditors.
“It’s just not working at the moment,” Gove said in an unusual outbreak of truth-telling.
“We need to tackle the delays in external audit and are talking to firms, council representatives and others on concrete steps that will get us back to a system where we all have faster and more effective, swifter and less bureaucratic reassurance in the way money is being used.”
The new totem is to be “Best Value”. Gove is soon to announce a consultation on statutory guidance around responsibilities for Best Value.
Would that have made any difference in the cases of Thurrock, or Woking, or Croydon?
Plenary: Michael Gove giving his LGA audience what they wanted to hear yesterday
Probably not, when the government was so keen to throw millions of pounds worth of low-interest loans at local authorities, and tell them to get on with speculative investments in commercial property, wind farms or housing.
Is there to be a shift in this respect? Gove cited the need for a rational allocating system, fewer ringfences, more rewards for successful authorities, and clear incentives, which would “make funding simpler, more rational and predictable”.
Access to the Public Works Loan Board will also be looked at.
“There have been some local authorities, obviously, that have speculated on property and other assets in a way that was unwise,” Gove said.
In future, he said, there would be a requirement to “ensure that we minimise this sort of unnecessarily optimistic level of borrowing”.
Oflog’s role will be to support local authorities, based on authoritative and accessible data and analysis about performance. And it will use those tools to help detect financial problems in local government much earlier than previously.
At least, that’s the theory…
Read more: Perry admits he can’t take action against council’s bankrupters
Read more: Slough, Thurrock, Sandwell, Liverpool: Croydon’s not alone
Read more: Penn Report wanted police probe into possible misconduct
Read more: Cover-ups and denial over Brick by Brick failure
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ROTTEN BOROUGH AWARDS: Croydon was named among the country’s rottenest boroughs for a SIXTH successive year in 2022 in the annual round-up of civic cock-ups in Private Eye magazine
So OfLog is the new Audit Commission, which the Conservatives should never have closed in the first place. Keeping the Audit Commission wouldn’t have stopped the damage of 13 years of funding cuts, but it might have stopped some of the ridiculous schemes pursued by Councils like Croydon that have made the losses even worse.
OfLog will also not fix the problems on its own. Even sensible Councils are really struggling due to lack of central Government funding and more will go bankrupt unless funding is restored. Even if that miracle happens, Councils will still have mountains of debt to deal with and Gove letting people like Mayor Perry put up taxes by 15% isn’t going to do anything to pay that off.
But Peter, it’s only an isolated problem, a handful of rogue councils…. 🤦🏻♂️
Wit, Raconteur, and a keen dollop of razor irony just the right side of sarcasm!
Surely it cannot be rocket science for Councils to have professional accounting systems, employees and auditors. If commercial business can mange this with multiple Companies operating in different Countries it should be possible to appoint staff and Companies to manage this in a small town like Croydon. Is Government dictating the use of not fit for purpose processes and systems run by people that cannot do a professional accounting job?
Those financial accountants are qualified professionals. They are used to Public funding and accounting. They are probably more astute and canny with public money than their private peers. The ones I have met are very ingenious in a good way.
So ask yourself a different question, how does a Council with that level of skill not get accounts signed off?
How does a Council without signed off accounts borrow huge sums without oversight?
How does a Council not understand that if it knows not what is in the coffers but does know what it is required to spend, still think it should borrow and spend a £1bn with Brick by Brick?
So perhaps the first part of yur question is correct but the second is not.
Do bear in mind that Risk Managment systems have been in place since before 2003 – 20 years – so how are both Negrini and Kerswell unaware?
A better question could be why does a seasoned senior professional prefer to be known and viewed as idiotic, incompetent and useless?
Perhaps the real truth is actually worse?
As a retired Local Government officer dealing with environmental and oether construction projects of a small to medium nature plus a few larger ones, in three London councils (but not LB Croydon), I can truthfully say that adhering to budget was a key requirement. Only very rarely would project costs go over budget. As any overspend above a minor amount would need a Committee approval, and it was certainly not the done thing to overspend, nor endure the embarrassment of having to tell my Departmental Dircetor why they needed to go to Committee ask for more…. it was extremely rare to do so. Purcahsing and tendering were subject to written guidelines which were obeyed. Financial control was not out of control.
The departments I worked for had good people. Finance officers were overstretched, but we paid contractors on time for work properly executed in
accordance with the sec. and contract terms. But Local Government was funded properly, or at least, not as badly as now. But staff numbers reduced year on year.
I have no knowledge of how Croydon performs. My guess is that most sections are hampered badly by having so few staff remaining after years of cut backs, and perhaps poor management.
With no real Committee structure left now, the scope for senior personalities to control and conceal is perhaps stronger than it was, but, to be frank, while most in Local Government are honest and actually, decent and hard working, it has always been prey to the likes of a few self-promoters, self-seekers, empire builders and, far worse, a few who have allowed power or position to corrupt them. Absolutely.
What ever Croydon’s failings, I don’t think we have had anything like that, at least not for over 100 years. The Golden era was always a bit of a myth.
Good on Govey.
Late– but better than never.
Pickles inflicted massive damage on Local Authorities.
Maybe Michael hates Eric.
The thought is, that when Politicians –particularly those in Govrnment- start talking the truth, they lose elections.
Maybe Keir can offer Michael a post if it is a hung Parliament.
We have seen this Government’s regulators in action with regard to the Energy Sector and Water. I would suggest that after seeing them in action that Mr Gove changes his attempt at closing the stable door as OfRocker rather than OfLog.
Did I hear the mention of removing Ringfencing?
Is Gove suggesting that allowing Councils to (mis) use all funding for whatever it wants or is instructed to by his department will be implemented?
Does that mean the removal of statutory duties by the conservatives?
So what if the Housing budget is used to pay of debt?
So what if the Social budget is used or the Education budget.
Every pot of money for required services in Croydon is under pressure. The only thing protecting this Borough from becoming like bankrupt townS in the USA is the Ring fencing of taxpayer money, our money, the money that we pay in tax to HMRC and to this profligate council administration.
It was bad enough Pickle removing all financial controls on Councils and allowing them to rack up huge debt to cover up shit conservative LG funding, But to allow them to spend anything without controls before they have sorted out the borrowing fiasco is just transfering the stupidity.
How about a simple rule – Accounts have to be audited within 3 months otherwise the next years money is not released and this new regulator is sent in to make it comply.
No further loans are given without clear ability to pay and residents voting for it – after all thay are being forced to pay usurious interest on something they never had any say over.
Instead it seems we are to have another meaningless consultation on statutory guidance that usually means – we have decided already to water our responsibilities down and renege on promises made – this is due to financial and operational exigencies, we will take your comments on board – and we will give permission anyway as the alternatives would not see us elected for a Century. All this will take place after the Next Election so we can claim we are dealing with the issues we have raised and stuff starmer with bullshit statements of hot air and spurious claims.
Shit Shape Schapps gave a statement released on twitter – Just Stop Oil are trying to hold Britain hostage – who do you trust to stand up for you?
We have seen Johnson and Goves actions at Brexit, We have seen how Johnson actuall y worked and what his standing up meant to the Country and what it meant to his staff and himself. We have seen how Truss worked. We have seen how Gove works with allowing the 15% without referendum we have seen how Schapps let Ol flip flop take the bullet with Mick Lynch (liar 16 times)
It is difficult at times to have much faith and trust in any politician. But it is easy to know who you would never vote for again under any circumstances based on previous experiences.
If Gove wants support he needs to buck up his ideas – put up the dosh and shut up with excuses and dissembling.