On 2 September 2022 my right hon. Friend, the then Secretary of State for Levelling Up, Housing and Communities (Greg Clark), announced that after due consideration he was using his powers under the Local Government Act 1999 to intervene at Thurrock Council (“the Authority”), in recognition of grave concerns about the scale of the financial and commercial risks potentially facing the Authority. As set out in Directions made under section 15(5) and (6) of the Act, Essex County Council was appointed to the role of Commissioner and powers have been granted to it to oversee the financial functions of Thurrock Council. Alongside this work Essex County Council was also appointed as a Best Value Inspector in order to assess whether there is best value failure in other functions of the Authority.
The Commissioner began its work to support the Authority with immediate effect and submitted its first report to the Secretary of State for Levelling Up, Housing and Communities, my right hon. Friend the Member for Surrey Heath (Michael Gove), on 5 December 2022. The Best Value Inspection is ongoing, and on 13 December the inspection team provided the Secretary of State with an update letter which contained key findings and recommendations from their work so far and requested an extension to complete their final report. On 14 December it was agreed that the inspection team will have more time to complete their report and will now provide their report to the Secretary of State by 17 February 2023. The Secretary of State and I have reviewed both documents in the context of the intervention.
Taken together, the Commissioner report and update letter lay bare the profound weaknesses in this Authority’s financial function, which has resulted in unmanageable budget gaps in this financial year and in future years. This situation is primarily a result of the failure of the Authority’s commercial investment strategy. The Best Value Inspection update letter sets out that in order to achieve value for money going forward, the Authority will need to undertake a programme of radical transformation in relation to its service delivery. The documents also reveal significant weaknesses in The Authority’s governance function and raise pressing concerns about lack of capacity at Thurrock Council. The Best Value Inspection update letter posits that the Authority’s financial failings are a manifestation of deeper systemic weakness in the historic and recent running of the Council.
Having carefully considered these two documents in the context of the intervention, the Secretary of State is satisfied that the Authority is not meeting its best value duty, both in terms of its known financial issues, and in relation to its governance and staffing functions. He is therefore considering further exercising the powers of direction in the 1999 Act to expand the intervention. While we have not yet received the final Best Value Inspection, the Secretary of State and I agree that the evidence and recommendations presented in the Commissioner report and update letter are serious enough to warrant taking steps to expand the intervention now, in order to prevent further best value failure.
The proposed changes centre on the need to expand the scope of the Commissioner’s existing powers, which are currently limited to oversight of the financial function. The proposed expansion to the intervention package would give the Commissioner powers over the Authority’s governance and staffing functions and would instruct the Authority to take further actions to support its recovery, and the work of the Commissioner, in order to carry out the improvement and transformation work that is so urgently required.
In detail, the Secretary of State is minded to issue further Directions to permit the Commissioner to exercise powers over:
All functions associated with the governance, scrutiny and transparency of strategic decision making by the Authority to ensure compliance with the Best Value Duty. This will include oversight of an audit of the Authority’s governance.
All functions associated with the Authority’s operating model and redesign of council services to achieve value for money and financial sustainability.
The appointment, suspension and dismissal of staff in the top three tiers of the organisation, including powers to determine the process for making these appointments and dismissals, and to design a new officer structure.
The development, oversight and operation of an effective performance management framework for senior officers.
The Secretary of State is minded to make further Directions to the Authority, instructing Thurrock Council to undertake the following actions to the satisfaction of the Commissioner:
To prepare, produce and implement an enhanced improvement and recovery plan—building on the existing improvement plan.
To take steps to ensure that the role of Accountable Body to the Thames Freeport is exercised to the satisfaction of the Commissioner. This should be reflected in the improvement and recovery plan.
To undertake any action that the Commissioner may reasonably require to avoid, so far as practicable, incidents of poor governance that would, in the Commissioner’s reasonable opinion, give rise to the risk of the Authority failing to comply with its best value duty.
The Secretary of State has also reviewed the model of the intervention as a whole and is minded to additionally appoint a Commissioner to act as managing director at the Authority. This appointment is intended to strengthen the intervention model and to increase the Authority’s capacity to deliver vital improvements.
It is important to us that all interested parties, especially Thurrock residents, can express their views on these proposals before a final decision is made. We are inviting representations on the Commissioner’s first report, the Best Value Inspection update letter, and the Secretary of State’s proposals by 7 February 2023. In line with procedures laid down in the 1999 Act, officials in the department have written to the Authority today to notify them of the Secretary of State’s proposals, and the Authority have been invited to submit representations to the same timeframe.
Should the Secretary of State decide to expand the scope of the intervention as set out in this statement, he will make the necessary statutory Directions under the Act. Pending a formal decision after the representations period, the Department would issue new Directions to supersede and replace those issued on 2 September 2022, and an updated explanatory memorandum.
The challenges facing Thurrock Council are unprecedented and will require extensive work over many years to resolve. The Authority is at the beginning of a long journey to improve its finance and governance functions, and the Department stands ready to support the Commissioner in any way necessary as part of this vital work.
We look forward to receiving the Best Value Inspection report in February, which will provide an opportunity for the Secretary of State to consider if any further amendments to the Directions are needed. We also look forward to receiving the Commissioner’s next report in June 2023, per the Directions issued on 2 September 2022.
A copy of the Commissioner’s first report, and of the update on the Best Value Inspection, will be placed in the Libraries of both Houses.