The government is preparing to make its decision on the future of Walsall MBC, which could see the private sector take over the authority. But the council appears unwilling to hand over the reins without a fight.
Leader Tom Ansell (Con) has backed his management team, but it seems the backing may prove to be far too little too late since the majority of directors have already resigned.
Problems at Walsall stem from years of internecine strife, while councillors have
had extensive personal involvement in
service delivery, according to one member of staff.
The source said: 'Officer bashing has been fair game, but when it goes wrong it is the officers who have to take the blame. The council has played with the idea of community neighbourhood offices and councillors have had considerable power.'
The council was given until yesterday to respond to the commission's latest report, but Mr Ansell's initial reaction suggests there is little room for conciliation.
He said: 'We do not accept the Audit Commission's conclusions. It has got it wrong. Walsall's management has put forward constructive and positive proposals, which have been ignored, along with their achievements and hard work.'
The council faced its final warning a fortnight ago when it was told to make urgent progress or face intervention.
This followed a damning corporate governance report in January. The commission made a raft of recommendations and established a supervisory board to monitor progress. The council was given until the end of April to demonstrate change.
A statement from the commission said: 'Some steps have been taken, but the supervisory board reported on 30 May that the steps taken do not go far enough to achieve lasting improvement in services to the people of Walsall.'
The commission recommends a private sector management team should replace the executive management, including the chief executive.
Head of performance and support at the Improvement & Development Agency Patricia Coleman said: 'Walsall did not take the opportunity to positively discuss proposals at an earlier stage and the Audit Commission was left with very little option but to go forward with the referral.'
The council could now face intervention from the private sector or from a team from within local government, added Ms Coleman.
Unison's head of local government Heather Wakefield warned against private sector intervention. She said: 'They automatically suggest a private sector management team when we know there are very good people in the public and voluntary sectors - people from other councils that could have been seconded.
'There are people from national voluntary organisations and the assumption from the Audit Commission is private is best. Obviously the impact on those people who might lose their jobs is devastating and they had begun to turn the organisation around.
'To get rid of the whole team is a draconian measure which has not been well thought out. '
Another senior government figure expressed grave concerns about the prospect of sacking chief executive Hardial Bhogal, who has said he wants to stay.
The source said: 'The culture of local government is not like the private sector. You might get a handshake from one company and get a job at another.
'The view is that the chemistry wasn't right but you've got a track record and skills. In local government, by and large, if a council gets rid of you that's it. You might get a job as a consultant but you don't get another chief executive job.'
The executive team is one of the main areas of failure identified by the Audit Commission. The report said the competency of the top management team was not evaluated and there has been no assessment of whether the post-holders have the skills to turn Walsall around.
The council's local strategic partnership is also criticised. It is the only partnership not to be accredited, because of a failure to address key issues. Other criticisms cite Ofsted and Social Services Inspectorate reports which note serious service failure.
Announcing the referral, commission controller Sir Andrew Foster said Walsall has had six months and substantial support to tackle its failings and ample warning was given that the next step would be a referral for intervention.
But far from everyone is convinced private sector involvement is the key to putting Walsall back on track.
Association of Local Authority Chief Executives honorary secretary Alastair Robertson has written to Mr Prescott saying the organisation will want to make a representation against the plans.
Mr Robertson pointed out that if the chief executive is sacked it has to be on the recommendation of an independent person on the grounds of misconduct or incompetence.
He added: 'I am not aware of any misconduct or incompetence. Despite the problems, he has been in post for the last
two years and in our view, has been the
person who is getting in outside intervention and pushing things forward in a
Walsall's chief executive Hardial Bhogal was meeting MPs and representatives from the Local Government Association in order to rally support for the council ahead of Mr Prescott's verdict on the future of Walsall.
Whatever the final decision, this is the second council to be referred for intervention and seems unlikely to be the last.