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.