The government’s investigation into Liverpool’s City Council’s property activities has exposed an “intimidating” regeneration style at the council, with missing or hidden detail over property sales.
The inspection follows the arrest of four members of the council and mayor Joe Anderson (pictured) on suspicion of fraud, bribery, corruption, misconduct in public office and witness intimidation last year.
A report from inspectors appointed by the Ministry of Housing, Communities and Local Government said: “Many individuals described the style in regeneration as intimidating.” The report described a “bullying culture” and said there was “pressure to behave in a certain way with certain people”.
Employees said they “could not speak out” and the report said “people who did not comply did not last”. It added: “the only way to survive was to do what was requested without asking too many questions or applying normal professional standards.” After the December 2020 arrests individuals said they were “no longer wary of every email that arrives in the inbox”.
Dubious contracts
The investigation reveals no property filing and poor records around disposals, with documents destroyed or regularly discarded in skips. Inspectors said: “It has been hard to establish what deal actually was approved and who authorised it. There is evidence of retrofitting an approval to the final contract.”
Inspectors found “the awarding of dubious contracts”. Valuations provided by external surveyors were in many instances “dismissed or ignored by the regeneration team”, leading to incorrect pricing in deals, at a cost to the council and taxpayer.
Some 65 sales since 2015 were all found to have issues. The inspector also noted there was no market testing and buyers were selected from “a very restricted pool”.
During negotiations over the lease extension at the Allerton Golf Course, members reported threatening behaviour from solicitors. They were told if terms were not agreed the delay and blockage would be raised the next day at a lunch with mayor Joe Anderson and the regeneration director, Nick Kavanagh.
“It was seen by both the LCC’s retrained solicitors and the officers … as an implied threat,” the inspector writes. LCC conceded and the deal went through on the developer’s terms, despite CBRE’s warning that it could no longer certify this was best value.
‘Challenging behaviour’
The report adds that the regeneration directorate treated the scrutiny of council cabinet decisions as “unnecessary red tape that slowed the process down”. Council employees told the inspection team “often the challenging behaviour came from the mayor and prominent councillors”.
Inspectors have singled out the regeneration directorate regarding “very serious concerns” around governance and scrutiny. According to the report, people didn’t know how to make complaints, there was no ethics committee and a failure to acknowledge a basic code of conduct. The report highlights a pervasive culture that “appeared to be rule avoidance.”
Scrutiny committee chairs complained that they were “prevented from accessing information they had requested” and councillors were not informed of decisions within their wards.
Requests for the council to take enforcement action in cases of development with no planning consent or section 106 were “refused or ignored”, with some only finalised when a scheme was proposed to be sold on.
The report adds that the “mayor sought to undertake a much more active and direct role in the running of the authority” than the constitution lays out.
Damage to future investment
Speaking in the House of Commons today, MHCLG secretary Robert Jenrick said: “It paints a deeply concerning picture of mismanagement, the breakdown of scrutiny and accountability, a dysfunctional culture putting the spending of public funds at risk and undermining the city’s economic development.
“If unchecked, it will allow improper conduct to persist, further undermining public confidence, putting public services at risk and damaging the city’s ability to attract investment from reputable developers and investors for regeneration and to take full advantage of new economic opportunities.”
Following months of examination, inspectors have now recommended the council is monitored for three years. All executive regeneration and property management functions are to be transferred to commissioners.
The government has laid out a detailed improvement plan for the next 12 months to ensure ethical governance, a code of conduct and auditing. Within two years, the council must make a case for all subsidiary companies, with strict requirements for directors.
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