Hackney faces intervention

20 Sep 01
Years of financial mismanagement and political chaos have earned the London Borough of Hackney the dubious distinction of being the first local authority to face a central government takeover.

21 September 2001

Local Government Secretary Stephen Byers joined forces with Cabinet colleagues on September 18 to demand that the authority balance its budget and massively improve its crisis-hit services. He slated Hackney's 'years of failure' and said he would insist on 'very big changes' to the council's performance.

This is the first time ministers have invoked powers in the 1999 Local Government Act allowing them to tell failing councils where to focus their efforts and, if necessary, take over the running of services. They decided to act after a highly critical report from the Audit Commission in July called for government intervention.

Byers, along with ministers including Education Secretary Estelle Morris and Work and Pensions Secretary Alistair Darling, is demanding substantial improvements in education, social services, housing benefits and waste management. He is also insisting that the council get to grips, once and for all, with its massive budget deficit.

'The government is simply not prepared to let the present situation continue,' Byers said. 'It is unacceptable that people who live or work in Hackney should have to suffer poor services because of the council's corporate failure.'

Ministers have ordered Hackney to 'establish a new body' to run its education services, which is almost certain to include a substantial role for the private sector. The council has also been instructed to clear the massive backlog of benefits claims by December 31, boost rubbish collection, and address skills shortages in key areas such as contract management.

Hackney refused to say how much its deficit for this financial year would be, but one insider told Public Finance that a report passed to members in recent weeks estimated it was 'in the region of £34m'.

Chief executive Max Caller and finance and performance director Anna Klonowski have to produce a strategy for plugging this gap by November 30.

It is unclear to what extent the government's intervention is due to frustration with the current political and management team. A spokeswoman for the Department of Transport, Local Government and the Regions would say only: 'We have worked with them for a year to try to improve things, but it's now felt these directions are needed.'

Hackney has been given 14 days to respond to these orders, after which ministers will finalise the demands the authority must meet.

Council leader Jules Pipe issued a statement which said: 'The political leadership and senior management of Hackney are committed to achieving significant and sustained improvement in the services provided.'


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