The government-appointed improvement panel is to remain in place at Birmingham City Council – six weeks after its chair proposed stepping aside.
There had been a sense of political stability and strong leadership, with a focus on sorting the council’s finances, under former leader John Clancy (Lab) and interim chief executive Stella Manzie, according to panel chair John Crabtree last month.
But within a week of making his recommendation, communities secretary Sajid Javid asked for an “urgent update” on the situation in Birmingham after emails emerged which raised questions about Cllr Clancy’s role in the city’s long-running bin strike. Later that same day, Cllr Clancy resigned.
In Mr Crabtree’s most recent letter to Mr Javid, he said progress had suffered “a serious setback” and is now in “a period of significant transition”.
“This setback is therefore very disappointing particularly given that in our most recent letter to you we were able to report positively on the progress the council was continuing to make,” said Mr Crabtree.
Having met with Ms Manzie and interim leader Ian Ward (Lab), Mr Crabtree said: “They agree that it will be helpful for the improvement panel to remain in place, providing advice and support to the council until it can demonstrate that the changes in culture and governance still required are truly embedded.
“They both wish to work constructively with the panel to enable it to evolve its role over the coming months to help provide stability and continuity while the council addresses its most pressing priorities.”
Mr Crabtree said it would be “very beneficial” for a permanent leader and chief executive to be respectively elected and appointed “as early as possible”. A corporate director of finance post also needs filling.
A council report published in July, which the panel previously said provided a “credible account” of the council’s position, said results for 2016-17 showed a net overspend of £29m. The council is required to deliver savings of £71m this year, rising to £171m over the period up to 2020-21.
The report said the interim chief finance officer Mike O’Donnell has estimated £10m of planned savings were undeliverable, with a further £4m at risk.
Mr Crabtree said in his most recent letter: “These risks to the council’s budget remain significant and maintaining a relentless focus on achieving the 2017-18 revenue budget and preparing for the 2018-19 budget could prove to be an even greater challenge for the council in the current circumstances.”
He added the council recognised it “still has a great deal of ‘catch up’ work to do” for it to “function with fully effective corporate governance and major change programmes to modernise its key services over the next five years”.