The council's governance and leadership structures have been challenged in the wake of Operation Aloft

Whitehall poised to send in Liverpool takeover squad

Sarah Townsend

Government officials are to take over the running of Liverpool City Council amid an ongoing corruption investigation by Merseyside Police, communities secretary Robert Jenrick is expected to announce this week.

Place North West understands that a report into procurement practices within the council, commissioned by central Government at the end of last year, has been completed and given to Liverpool City Council chief executive Tony Reeves and acting Mayor of Liverpool Wendy Simon for review.

The report is to be examined more broadly by the council in the coming days, before secretary of state Jenrick makes an anticipated statement on Wednesday announcing the outcome of the study – as tipped by the Daily Telegraph at the weekend.

A Liverpool City Council spokesperson said: “The inspection report is due to be published by the Government in the coming days. Until that time, we are unable to comment.”

The Government commissioned strategic advisor Max Caller, a former electoral commissioner and chief executive of London boroughs Hackney and Barnet, to produce the report on Liverpool City Council following a string of local scandals including the arrest of former Mayor of Liverpool Joe Anderson in connection with Merseyside Police’s ‘Operation Aloft’ probe into building and development contracts.

Anderson was arrested on 4 December on suspicion of conspiracy to commit bribery and witness intimidation and was later released on bail. He is currently suspended from the Labour party on unpaid leave and no charges have been brought. The police had arrested 10 other people, including the city council’s head of regeneration Nick Kavanagh, in connection with Operation Aloft over the course of the previous 12 months.

Shortly after Anderson’s arrest, the Ministry of Housing, Communities and Local Government sent a letter to Liverpool City Council asking for evidence that the council “is now operating properly and in line with its duty…given the seriousness of the issues”.

The council was ordered to disclose by 11 December details of any of its upcoming property development or disposal plans, and its strategy to secure “effective governance” given the string of high-profile arrests.

Caller, meanwhile, was tasked with examining processes within key departments as well as general auditing and governance at full council level. Jenrick said at the time that “given the seriousness of the issues identified through the police investigation”, he wanted “direct, independent assurance that the council was compliant with all performance measures set by the Government”. A deadline of 31 March was set for publication of the report.

Frank McKenna, chief executive of Liverpool business membership organisation Downtown in Business told Place North West: “We’re not 100% sure yet that Whitehall will send in officials – though it may continue to view the city council as a bit of a basket case even if it doesn’t. I think the handling of the Liverpool mayoral process in recent weeks has not given Whitehall much confidence in how the council runs its processes.

“On the plus side, I believe Tony Reeves and his executive will be able to demonstrate that they are turning things around and this will give the Government some cause for optimism. Looking at all the significant development projects planned at present, and the strength of the city’s private sector, the latest events are clearly a distraction, and I believe Liverpool can look forward with confidence.”

Notably, however, today is the last day of the council-run disciplinary hearing for  Kavanagh following his two arrests by Merseyside Police last year, and any decisions and subsequent action taken by Liverpool City Council will be closely scrutinised by Government officials.

It is rare for Whitehall to send in officials to take over the running of a local authority – though not unheard of. In 2014, then-communities secretary Eric Pickles ordered a team to go in and manage the finances and management of the London Borough of Tower Hamlets for a two-year period.

A Government-commissioned report by auditor PwC had identified a “worrying pattern of divisive community politics and alleged mismanagement of public money by the mayoral administration of Tower Hamlets”, and Pickles reportedly took action after failing to receive assurances from the council’s leadership that it would take steps to strengthen its governance.

Similar Whitehall intervention measures have been either put in place or threatened at the London Borough of Barnet and at Northampton Council in recent years, amid concern over local finances and leadership.

Separately, Liverpool City Council came under fire at the weekend for the price at which it sold land to a property developer in 2017. Cllr Richard Kemp, leader of Liverpool’s Liberal Democrats, challenged the council on why it had sold a plot on Norfolk Street to Elliot Group for £925,000, which Elliot had subsequently valued at £5.7m in 2020.

However, the price differential was due to Elliot securing planning consent for the development plot in the interim, which significantly boosted its value, the company’s founder Elliot Lawless said in a statement.

“’Planning gain’ is a widely-accepted concept in the development industry and, of course, among local authorities,” the statement said. “On buying the plot, Elliot Group went on to incur significant expenditure to bring forward a planning application.

“The price for the site was set by the vendor and the sale process overseen by lawyers from both sides of the transaction.”

Liverpool City Council declined to comment.

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A drastic step but the problems run deep, Liverpool has so much potential, as has the City Region, but poor direction and malpractice are hampering progress, you just need to walk around central Liverpool to see the grandeur of it`s buildings, even after so much damage from world war 2, to realise what a financial force it once was. Better council leadership is needed, with a more business-like approach, so investors feel more confident when submitting proposals, it could be for the best.

By Anonymous

Surely the planning uplift value should be considered in the initial sale, via a clawback covenant for example. It is common practice when councils sell land that they include a covenant that should the use of said land change, resulting in an increase in value of the land, then the Council receive an agreed percentage of the uplift in value upon any future sale.

In this case, it was clear to the council at the time that the purchaser intended to seek permission to change the use and redevelop the land – so that begs the question, why was there no clawback covenant?

Alternatively, assuming the council knew Elliot Group’s intentions to seek permission for a hotel at the site, why didn’t they agree a sale subject to that permission being granted? Elliot Group could still have purchased the site for a fair price (less the cost of the planning application) and the Council would have benefitted from the uplift in value.

By SillyGoose

To be mentioned in the same breath as Tower Hamlets would indeed give credence to the ‘basket case’ comment. This will be a long and painful process for Liverpool to endure but if it means there will be even a glimmer of light at the end of the tunnel when it comes to the poison of local politics then it must be worth enduring.

By Wirralwanderer

I think it’s a good idea to take things out of the hands of the local politicians.

By Anonymous

This is for the best. The corruption is all over this city. It’s pathetic and embarrassing. THe council has lowered Liverpool’s standards and unfortunately the city will have to begin building back its reputation from scratch (which is not necessarily a bad thing) – so Liverpool needs this intervention. Unfortunately due to the way conservatives ruined Liverpool back in the 80s, people have not forgotten and will just vote for Labour for the sake of it. What people need to realise is that Labour has been just as bad behind the scenes. Let’s take this opportunity to look at it as a positive. It’s a way of starting up again and building our reputation in a new, unique light.

By Davi

Liverpool does have some grand buildings but they were built thanks to Empire trade. That’s not how modern free trade works. Liverpool needs to stop looking back and assuming that the past is a guarantee or a pass of entitlement to future prosperity. Sorting out local malpractice is the first step, the second step is putting together a visit that is both ambitious but critical, realistic. Wishing for the return of Empire is not realistic.!

By Realism

Look at the public dialogue between Labour Party members in Liverpool and you soon realise why so few people of genuine quality get involved in Liverpool’s democracy. If you want evidence just check out some of the Twitter threads surrounding the recent news of the revised shortlist for the mayoral candidacy. Just appalling.

And the outcome? We have people with insufficient gravitas, maturity, experience, intellect and ability running our city. Many are well-meaning, committed and very hard-working but they have presided over a slide into cronyism and sleaze – abetted by a governance model that has removed all oversight and concentrated power in the hands of a single person. Whilst I believed Mr Anderson to be sincere and well-meaning it was perfectly evident to anyone with a critical faculty that he lacked the life-experience and ability for such high office.

A clear-out is overdue. The question is: will the Liverpool electorate deliver?

By Sceptical

communities secretary Robert Jenrick is at the forefront of cronyism.

Good luck with whoever he parachutes into this great city.

By D Isturbed

Desperate news to see a city that was once so great in the 19th century brought so low. The worst of it is those politicians and local councillors that have resided over decades of neglect and malpractice are still largely going to be there at the end of this process. You can take a horse to water but you can’t make it drink.

By Newyorker

What on earth must investors think when this plays out across the globe not just the UK. Investment in the coming years will be hard enough to come by after the great money printing presses have ceased and we all have to start picking up the bill for many years to come. There is a virtuous circle with investment in offices , infrastructure and jobs that Liverpool just does not seem to get and now we see why.

By Realist

People seem to forget that the Liberal Democrats were in control of the city between 1998 and 2010….12 years in power. They achieved a lot when they were in power….applied for and put on a fantastic eventful Capital of Culture year and conceived and completed the Liverpool One development with a top partner in Grosvenor. My point being, the residents of Liverpool are not as politically myopic as people think, and can and will vote for alternative parties other than Labour.

Come this May, I believe there will be a reckoning for the local Labour party. Also, if, the day to day running of the council is to be put into the hands of independent Government commissioners, then perhaps that wouldn’t be a bad thing….persons in power from outside the city would not have any history and allegiances to certain locals who stand accused of being mixed up in the murky world of Liverpool’s development.

By Old Hall Street

Old Hall St, 2010 was an awful long time ago in local politics. Not as long as wishing for the days of Empire but long enough. The Liberal Democrat’s are not the Party they once were and sadly the problems in this city run far deeper than electing a few councillors.

By Anon

Anon – I agree that the local Liberal Democrats might, might, be different now, but my point was you do not have to go as far back as the 1950s/1960s to see that the citizens of Liverpool can and will vote for alternative political parties other than Labour. “The lady doth protest too much methinks”

By Old Hall Street

I agree with Anon , no amount of juggling with councillors is going to make much difference, not that there’s going to be much change in actuality. The usual suspects are still largely going to be there and no amount of wishing for times gone by is going to change that . The Government will come in and run the council for a while and that’s a good thing but I find It sad that some people can’t see the truth and Liverpool city won’t change until they do.

By Red Setter

Is it confined to City of Liverpool? Should look at whole of Liverpool City Region.

By Dori

I think the last helpful thing Labour nationally did for Liverpool was award the European City of Culture title for 2008, however not much financial help was on offer. At the time the Liberals were in control and did a reasonable job , especially delivering Liverpool One, but I think now they are not the force they were and seem obstructive to developments like the Cruise Liner Terminal.
When you are being ignored nationally, by both Labour and the Tories,and local leadership deteriorates, this gives the left wing activists , local oppositionists and anti development groups the chance to increase their influence.

By Anonymous