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Bullying, intimidation, “dubious” deals and “jobs for the boys” were amongst the themes in the report by local government inspector, Max Caller, called in to investigate last December after a series of arrests for fraud, bribery, corruption and witness intimidation.
Joe Anderson, the then elected mayor of Liverpool, was among those held.
The authority, a Labour stronghold, will now have some of its functions taken from councillors and officers for the next three years and instead the Ministry for Housing, Communities and Local Government (MHCLG) will appoint commissioners, part of an “improvement plan”.
One of the key stipulations is the council will be unable to spend cash on any property transactions without the formal consent of the commissioners.
Robert Jenrick, Secretary of State for the MHCLG, said “many millions of pounds have been wasted” as the report was published.
Liverpool City Council has pledged to address all of the concerns raised and continue its journey of improvement.
The council’s improvement plan will be published after the local elections.
“This is a difficult day for our organisation and we take the report findings extremely seriously.
“The inspector’s report has highlighted several failings, but there is a collective commitment from both councillors and officers to learn from these mistakes.
“We would like to reassure all residents and businesses that we will take action to address all of the issues highlighted. We know we need to rebuild your trust.
“It is reassuring that the inspector believes we have made progress in starting to deliver the wholesale changes needed.
“Expressed in formal terms, I am satisfied that the council is failing to comply with its best value duty. Therefore, I need to consider exercising my powers of intervention to secure compliance with the duty.
“To that end, in line with the procedures laid down in the Local Government Act 1999, I am writing today to the council asking them to make representations both on the Inspectorate’s report and on a proposed intervention package.
“This package is centred on putting in place commissioners who I will appoint to exercise certain and limited functions of the council as required for a minimum of three years.
“I will take whatever steps are necessary to uphold the good name of local government.”
Under the process the local authority is given 10 days to make representations on the proposals.
The focus of Mr Caller’s investigation is on property management, regeneration, highways, contracts and planning at the council over the past five years, which has seen a building boom in Liverpool city centre.
The council’s director of regeneration, Nick Kavanagh, was also arrested as part of the police probe into building and development contracts in the city and this week it was confirmed he had been dismissed from his role at the authority.
Both he and Mr Anderson deny any wrongdoing and have vowed to clear their names.
Merseyside Police said all suspects remain under investigation but bail has not been extended while their enquiries continue.
Liverpool being run remotely from London via commissioners appointed by a Conservative government will not be thought popular in the city, which was last controlled by the Tories in 1972, lost its last Tory MP 38 years ago and has not had a Tory councillor elected since 1998.
The Local Government Act 1999 gives the Secretary of State powers to appoint a person to inspect an authority and to intervene, taking over its functions, either directly or through commissioners, where there is evidence that it is failing in its compliance with what is described as “best value” duties.
Best value means in practice councils must deliver a balanced budget, provide statutory services and secure value for money in spending decisions.
Since 2010, the Secretary of State has previously intervened in four local authorities – Doncaster, Tower Hamlets, Rotherham and Northamptonshire.
Guidance from the MHCLG states each intervention is different and options include other approaches, such as the issuing of directions to provide for specific actions, rather than the appointment of commissioners.
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