18 January 2002
The commission this week produced a damning report highlighting a catalogue of financial mismanagement, incompetence and a culture of bullying, fear and intimidation.
The metropolitan borough's failure is apparently so endemic that a supervisory board of legal and financial experts has been parachuted in, the first time the commission has resorted to such an action.
The hung council – run by the Tories with Liberal Democrat support – has been given until March 31 to show evidence of improvement or be referred to Local Government Secretary Stephen Byers.
The corporate governance report, published on January 16, described the council's financial planning as 'hand to mouth', with budgeting processes that were 'operating at the margins of legality'.
Members were too preoccupied with personal rivalries and bitter internal disputes to exert any firm political leadership, but nonetheless bullied and intimidated officers over a number of years, it said.
The commission points to incompetent councillors as the key to the authority's longstanding problems. Faced with an overspend of £6.6m in 2000/01, members decided to increase spending during the year while voting to raise their own allowances by £360,000.
Inspectors described officers as working within a culture of intimidation, facing verbal abuse and disciplinary procedures at 'the whim of members'. Yet the officers were often themselves incompetent, failing to add expenditure into budgets.
In March 2001 the social services department reported a £2.2m overspend when it knew it was closer to £4m. District Audit said it could not be 'confident on the accuracy of its year-end forecast'.
The commission also examined the council's housing benefit service, spotlighted as a success story by members, and found it to be operating illegally. To reduce the time taken to process claims it allowed housing associations to verify the identity of claimants on its behalf.
Paul Kirby, acting head of the commission's inspection service, said the report painted a 'depressing picture of systemic failure'. Foster believes intervention is the most likely outcome. 'There has to be a degree of serious doubt as to whether the council has the will and ability to meet this agenda,' he said.
The council said it was prepared to listen to the charges and was implementing a recovery programme. But Joanne Tyzzer, director of central services, told Public Finance that the report contained several inaccuracies.
'They declined our offer to correct bits of it,' Tyzzer said, adding that she was confident that the 'bottom line' would be balanced for this year.
Leader Tom Ansell said: 'Of course we are taking this very seriously and accept the gravity of the situation. We would like the government to recognise the progress we have made over the past few months.'
PFjan2002
