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The Audit Commission's referrals panel has considered the latest report on the corporate governance and performance...
The Audit Commission's referrals panel has considered the latest report on the corporate governance and performance of Hackney LBC.
The panel decided to recommend to the secretary of state that he give a
Direction to the council under section 15 of the Local Government Act 1999,
(this gives the secretary of state wide powers to intervene where he is
satisfied that an authority is not meeting its obligations under best
value). In making their decision the Audit Commission panel considered:
* the commission's best value inspectors' draft re-inspection report
* the appointed auditor's report on the council's 2001/02 Best Value
Performance Plan
* the response dated 2 July 2001 from the council's managing director
to the two reports
The commission has found that deep-rooted problems remain at Hackney and
less progress had been made in addressing them than was necessary to restore
financial stability and public confidence to the council's services. In
* the council's current financial position is demonstrably worse than
anticipated in November 2000 and is not yet under control. The council lacks
the ability to achieve control
* the council has not been able to make sufficiently quick progress in
identifying alternative suppliers and securing assistance with improving
* the council lacks the management capacity to procure services
* the need to sell valuable assets presents a substantial risk to the
achievement of financial balance in the near future
However it has noted that the council has taken a number of
encouraging steps. These include:
* the council now has a much more complete and accurate picture of the
scale of its financial and management problems
* the council's political leadership and senior management have
demonstrated some recognition of the need for urgent action
* some of the gaps in the council's senior management have been
* there have been some improvements in service quality, for example in
waste management
Andrew Foster, controller of the Audit Commission said:
'We do not believe that Hackney has made sufficient progress in implementing
the recommendations made in our November 2000 report. Urgent action is
needed to improve the services the council delivers to its citizens, and to
bring its finances under control. We have decided that it is now
appropriate that the Secretary of State consider exercising his function
under Section 15 of the Local Government Act 1999 to give a Direction to the
'We therefore recommend that the secretary of state give a Direction to Hackney LBC under Section 15 of the Local Government Act 1999.
'Should the secretary of state accept our recommendation, the form and
content of any Direction will be a matter for him to determine. However, it
is our view that the thrust of any Direction should be aimed at reinforcing
the measures already underway. These include addressing the fundamental
issues of building the council's management and service delivery capacity
and strengthening the council's will and resources to implement the November
2000 recommendations.'
In his report on Hackney LBC's 2000/01 Best Value
Performance Plan, the appointed auditor recommended that the Audit
Commission carry out an inspection of the council. The commission accepted
that recommendation and undertook a corporate governance inspection between
August-October 2000. The commission published the report from that
inspection in November 2000.
The council accepted the recommendations and action plan contained in the
Inspection Report of November 2000. The DTLR has provided assistance and
funding to help the council implement those recommendations and the
Commission has carried out two re-inspections - in February 2001 and June
2001- to assess the council's progress.
In the light of the latest report from our Inspectors, the council's
response to that report and the appointed auditor's report on the council's
2001/02 Best Value Performance Plan, the commission panel remain of the view
that the actions recommended in the November 2000 report need to be taken.
They reflect the steps that the council must take if it is to meet its
obligations under the Local Government Act 1999.
The Audit Commission highlights the following areas of highest priority upon
which it suggests any Direction by the secretary of state should focus:
1. Financial control and accountability
* The council needs to impose effective financial control and clear
financial accountability: both the council and the secretary of state need
to be satisfied that Hackney's managers are accountable for, and in control
of, their budgets.
* In relation to the current budget, the council must ensure that it
receives the best price on all planned disposals of assets.
* The council must develop realistic options for forthcoming budgets:
the council cannot rely in future on asset sales as a means of balancing its
1. Improving the delivery of key services
* The council should implement the findings of the review of
outsourcing and partnership options already undertaken by DTLR's framework
contractors. This process should be extended and might look next at housing
management and repairs and any other areas specified by the secretary of
* Any additional finance available to the council should be used to
support improvement by increasing the council's ability to commission and
procure services effectively from external suppliers. This applies across
the whole range of the council's services but, in the first instance,
priority must be given to improving housing benefit administration, through
the procurement of IT and document management systems and extended hours for
processing housing benefits and council tax claims.
* The council should seek assistance to appraise rigorously the
performance of all its existingservice providers, across the whole range of
the council's services, including education and social services, to ensure
that poor performance and high costs are identified and tackled
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