02 August 2002
The local government minister has decided not to act on the recommendations of the watchdog, which on July 29 published a fiercely critical report on the authority that urged the government to invoke its powers of direction. Inspectors had identified widespread financial mismanagement, political infighting and a culture of bullying.
Raynsford has instead given Hull a last chance to get to grips with what he described as its 'serious failings', and ordered the authority to submit an action plan by September 13. But he emphasised that he was ready to take direct control of Hull if its leaders did not tackle the criticisms.
'I expect to see continuous progress by the council. But they should be in no doubt that if this does not happen I will use the formal intervention powers at my disposal to ensure that the people of Hull get quality services and leadership,' he said.
A spokeswoman later said this decision was in line with the protocol agreed with the Local Government Association.
Hull's drubbing will be deeply embarrassing for Deputy Prime Minister John Prescott, who is MP for the east of the city. As local government secretary, he would normally make the decision on intervention but, as the problems are in his backyard, he has had to pass it to his minister.
The commission's report said members routinely interfered in management decisions and bullied officers into making decisions based on political considerations. Relations among councillors were equally poisonous: 'infighting and bitterness' were the norm.
Hull's housing revenue account is 'on the point of insolvency', even though the council netted £263m in 1999 by selling off half its stake in telecommunications company Kingston Communications.
The council had been 'living beyond its means' for years and spent £95m refurbishing council housing, much of which is lying empty because nobody wants to live in it. It had also failed to deal with massive over-provision of school places.
Paul Kirby, the Audit Commission's director of inspection, told Public Finance that Hull would have to slash its budget by 10% in three years to balance its books. 'It won't be immediately apparent what the solution to all these problems is. It's something they will have to start working through,' he added.
Since the inspection was conducted in March, Labour has lost control after 60 years in power and the Liberal Democrats are now ruling in a coalition. A new managing director, Jim Brooks, has been appointed. The commission says these changes are an opportunity to halt the authority's spiralling problems.
Council leader Simone Butterworth called the report an 'indictment of a council in crisis' and said she would welcome any government help. 'The people of Hull want action, not rhetoric,' she added. 'Failure is not an option.'
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