Intervention or monitoring: how the government responds to financial, service and corporate failings in local authorities in the UK

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Murphy, P. ORCID: 0000-0001-8459-4448 and Jones, M. ORCID: 0000-0002-0802-6470, 2024. Intervention or monitoring: how the government responds to financial, service and corporate failings in local authorities in the UK. In: International Research Society for Public Management Conference 2024, Tampere, Finland, 16-18 April 2024.

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Abstract

On 5th September 2023 Birmingham City Council, the largest local authority in the UK, issued a Section 114 notice under the Local Government Finance Act 1988 that indicated the council’s forecast income was insufficient to meet its forecast expenditure in their current and next financial year. This was widely reported in the national and local media as Birmingham declaring itself ‘bankrupt’ despite the fact that local authorities, by statute in the UK cannot go bankrupt. On 19th September, Secretary of State Michael Gove announced the government’s intention to intervene in Birmingham City Council through the appointment of external commissioners, who were subsequently appointed. Birmingham CC was, the latest in a wave of government interventions initiated when Northamptonshire County Council issued two Section 114 notices in February and July 2018. More recently in February 2024 the government announced that Birmingham would receive £685m in capitalisation support from the government.

This paper will look at the various forms of central government monitoring and intervention in local authorities in England in the last 25 years as the antecedents to the Birmingham case. The research adopts an exploratory approach, primarily based upon official secondary documentation and archival sources. It draws upon government legislation, ministerial statements, parliamentary committee, audit, inspection, and other publicly available reports to identify the key issues and the changing nature of government monitoring and intervention in local authorities.

It will look at the historical development of monitoring and intervention and will focus on the last twenty-five years since the Best Value regime and the current corporate intervention powers were introduced. It will describe the various forms of monitoring and interventions in terms of the relationship established between the government and the local authority, the objectives of the intervention and the nature and scope of the issues involved. Interventions have been focussed on service, corporate, or financial inadequacies or a combination of all three, although the latest ‘wave’ of interventions appear to have been primarily financially based following the issuing of one or more Section 114 notices. The paper will compare the current wave with an earlier wave between 2002 and 2008. It will argue that in contrast to the previous approach the current approach and the underlying levels of financial distress are unsustainable, and the consequences unacceptable. It suggests that comprehensive and systemic changes in local government finance arrangements and the nature and form of central government intervention and engagement with local authorities requires radical overhaul.

Item Type:

Conference contribution

Creators:

Murphy, P. and Jones, M.

Date:

April 2024

Identifiers: