Liverpool Council has a “organisation-wide culture where people do not feel accountable for managing public money” according to its government appointed commissioners.
The damning second report into performance at the Cunard Building has highlighted the management of city finances as a major area of concern in their 26-page update to Greg Clark MP, Secretary of State for Housing, Communities and Local Government. As the Whitehall officials recommend the appointment of a fifth member with responsibility for finance, their report has highlighted the monetary challenges still in situ for the local authority.
It said the financial situation at Liverpool Council was stark and faces “an increasingly difficult year ahead unless urgent action is taken across the organisation. The report said urgent stewardship of the finance function was required as “core functions that support the management of public money, notably procurement, are under-resourced and under strain.”
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It added: “The report points to an organisation-wide culture where people do not feel accountable for managing public money, an out-dated system that relies on top-down budget setting with limited ownership of resources by individual budget holders, and poor-quality data to track spend and commitments.” The commissioners cited an external report by Chartered Institute of Public Finance and Accountancy (CIPFA) that indicated the council “is exhibiting many of the symptoms associated with financial stress and stated that ‘there needs to be a step change in how the council manage its resources and an urgency if it is to build financial resilience for likely pressures ahead.”
The commissioners identified that Liverpool Council has been “consistently in the bottom quartile for Council tax/business rates collection and its performance was the lowest in the country in 2020/2021. Their findings said that “no substantial progress” had been made following on from an inaugural meeting of the finance improvement board to oversee delivery in April.
Of this year’s controversial budget, which led to splits in the ruling Labour group, the government officers said despite greater engagement, “it is not yet at the standard required. The budget was a top-down plan with insufficient engagement from senior managers, who need to identify, own and deliver efficiencies and savings.”
Former chief executive Tony Reeves’ role in the process was criticised, with commissioners reporting the council boss should have led a strategy “to govern all aspects of the strategic planning process especially understanding the capacity and prioritisation issues that would so obviously be a brake on delivery of not only the budget, but the overarching improvement goals.” The appointment of former cabinet member Cllr Paul Brant, to the role of Assistant Mayor for finance, has also been called into question.
The report added: “The Mayor has taken the finance portfolio into her leadership and has appointed an Assistant Mayor to support the budget planning process. This is an unusual arrangement.
“The Assistant Mayor is not a full Cabinet Member, and Commissioners need reassurance about the focus that will be required to improve financial resilience.”
The mistakes around contracts have also been highlighted as cause for concern, with commissioners describing “failings in procurement are a whole-council challenge. As well as reform of the procurement function, any solution requires direct responsibility of the service directors to own the improvement and awareness in their areas.”
Concluding their assessment, the officials said the “financial resilience of the council is challenged. The progress towards the recommendations set out by CIPFA has not had the pace and urgency required.
“Support functions that need to perform well to support financial and organisational transformation are under-resourced and under strain – for example, procurement. This makes the execution of required change even more fragile.”
The commissioners also called on “clear leadership” from the senior team at the Cunard Building to address its financial improvement and highlighted the absence of a director of finance and resources asa “major risk in terms of capacity, leadership and control.”
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