Secretary of State Michael Gove will be given new powers to intervene at troubled councils like Liverpool and be allowed to cap their spending and even force them to sell off assets.
Mr Gove, who is Secretary of State for Levelling Up, Housing and Communities, already has powers over local councils - but is about to get more. As the Local Government Chronicle reports, a 'capital finance risk management' clause was included in Mr Gove's flagship Levelling Up and Regeneration Bill, which was laid before Parliament yesterday.
This move, which came to the surprise of the Local Government Association, states that in order to 'reduce or mitigate financial risk, the secretary of state may direct a local authority to set borrowing limits or require the council to 'divest itself of a specified asset.' In short, Mr Gove could force a council to sell off buildings or other assets.
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The bill states the secretary of state can give these directions when a risk threshold is deemed to have been breached and the council's finance chief reports that expenditure is likely to exceed available resources. The secretary of state can also make a direction without such a report being needed.
These new powers will be a major concern for Liverpool Council. The troubled authority is one of just a few in the country that is currently operating under an intervention from Mr Gove's department. Last year commissioners were appointed by the government to oversee key departments within the council after the damning revelations of a government inspection report, which came amid a police investigation involving the Cunard authority.
Those four commissioners, currently overseeing work in the Regeneration, Property Management and Highways, have yet to report back on their latest findings, asking for more time because further issues have cropped up. One such issue could be the explosive revelations of a series of council mistakes that have added £16 million onto the city's energy bills.
Council bosses will be looking on nervously at the new powers the government intends to award itself, knowing that Liverpool Council will surely be one of the first local authorities they will be examining. While commissioners are overseeing some key departments in Liverpool, there has not been a full takeover of the entire administration, but this remains an option if not enough progress is seen to be made.
Wirral Council will also be keeping a close eye on the new powers being awarded to Mr Gove and his department. Last year the authority was heavily criticised in a government review and ordered to make significant budget cuts, which saw the closure of a number of libraries and other facilities. The council has been warned further interventions could happen if more budget problems arise.
