The findings of a corporate governance inspection of Walsall MBC reveal that there are significant weaknesses across the council. It is plagued by financial problems; poor service delivery; lacks strong political leadership; has poor internal and external communication; and there are instances of unacceptable conduct on the part of councillors.
Andrew Foster, controller of the Audit Commission, said:
'Walsall MBC has failed local people. The council has considerable political and financial problems resulting in poorly run services and wasted taxpayers' money. Although the commission repeatedly highlighted these problems during the inspection process and in earlier audit reports, we do not believe the council fully accepts the gravity of the situation.
'We are pleased that the government's new white paper will introduce comprehensive performance assessment of councils. In future, this will allow failing councils to be identified early on and serious action to be taken before problems deteriorate to the degree they have in Walsall.'
To help the council tackle these deep-seated problems, the commission has established a supervisory board, made up of local government, finance and legal experts. Walsall MBC has agreed to work with this board. This is the first time this approach to tackling failure has been tried.
The board will monitor the council while it implements a required strategy for improvement. It will also check progress and at any time could advise the commission that it is necessary to refer the council to the government with a request for statutory intervention.
The inspection team's report raised significant concerns including:
* The council has poor financial management and goes from one short-term financial crisis to another. There is a reliance on short-term accountancy devices to avoid setting an illegal budget. There is uncontrolled over-spending with unrealistic budgets set too late and serious inaccuracies in the figures. The council has tried to tackle short-term financial problems by spending funds meant for longer-term investment.
For example, last year the council used£10m of its capital funds to meet revenue overspends. This meant a reduction of maintenance and improvement for local roads, schools and houses.
* Management and political roles are not sufficiently defined and relationships between the two are not properly managed. Relationships between officers and councillors are often unacceptable and there are no signs of anyone being able or willing to challenge poor conduct. At senior levels of the council, there is a culture of fear and mistrust.
* Walsall MBC is weak at developing partnerships. Local people are losing out because the council is failing to pull together agencies, which could help improve their quality of life. There are pockets of good practice in relation to local community involvement but no strategic approach to community consultation and involvement. Local people are cynical about council politics in Walsall and mistrust local politicians.
* Although there are pockets of good practice in service delivery, this good practice is rarely extended across the council and so, has no impact on service delivery as a whole. This means local people continue to experience poor services.
As well as setting up the supervisory board, the commission has recommended a range of measures to be taken, including tackling finance and budgetary problems as a matter of urgency.
The findings of the corporate governance report are supported by the findings of the environmental services inspection, also released today. The environmental services inspection found that:
* Walsall's roads are in very poor condition - the principal roads are in the worst condition in the country and non-principal roads are amongst the worst in the country. The situation is now so bad, that even with substantial additional funding from the government, the roads at best will stay the same given the current level of deterioration. Walsall MBC is currently getting very poor value for money from its investment in roads because of weak procurement practices.
* Around these services, the council has demonstrated a culture of feuding and confusion which means there has not been the internal will to solve the problems.
The commission made a number of recommendations to tackle the problems in environmental services including:
* The urgent introduction of strategic management to the service and resolution to internal feuds
* More effective improvement to ensure value for money and more effective use of resources to improve services, especially to tackle the parlous state of the roads
More generally, the commission is already working with partners, including the IDeA (Improvement & Development Agency) to help Walsall MBC tackle its problems. Management and financial advisors are in place and the supervisory board has held its first meeting.
The commission's approach to corporate governance inspection has been guided by best practice in corporate governance drawn from the private and public sectors. This includes the Cadbury principles, work on governance undertaken by CIPFA (Chartered Institute of Public Finance and Accountancy) and SOLACE (Society of Local Authority Chief Executives).
These highlight five critical domains:
1. Community focus - the extent to which a council is devoting its efforts to the things that matter to local citizens
2.Service delivery - the extent to which services deliver what local people expect and what the council itself requires
3. Risk management - the extent to which the council has an adequate understanding of the service and financial risk and has made provision for it
4. Structure and processes - the extent to which a council has the right structure of decision making and business processes to conduct its affairs safely and effectively
5. Standard of conduct and behaviour - the extent to which the council has ways of setting standards of conduct and regulating the behaviour of its officers and members to achieve them
The inspection team was made up of representatives from the Audit Commission; District Audit; Benefits Fraud Inspectorate; a senior councillor from another authority and a former chief executive.
Click hereto download the full report and summary.