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Walsall Metropolitan Borough Council Corporate Governance

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Walsall Metropolitan Borough Council Corporate Governance Walsall Metropolitan Borough Council Corporate Governance January 2002 © Audit Commission, 2001 January 2002 Walsall Metropolitan Borough Council – Corporate Governance Best Value The Government has placed a duty of best value on local authorities to deliver services to clear standards – of cost and quality – by the most economic, efficient and effective means available. 1Best value is a challenging new performance framework that requires authorities to publish annual best value performance plans and review all of their services every five years. Authorities must show that they have applied the 4Cs of best value to every review: ' challenging why and how a service is being provided; ' comparing their performance with others’ (including organisations in the private and voluntary sectors); ' embracing fair competition as a means of securing efficient and effective services; and ' consulting with local taxpayers, customers and the wider business community. Authorities must demonstrate to local people that they are achieving continuous improvement in all of their services. The Government has decided that each council should be scrutinised by an independent Inspectorate, so that the public will know whether best value is being achieved. The purpose of the inspection and of this report is to: ' enable the public to see whether best value is being delivered; ' enable the council to see how well it is doing; ' enable the Government to see how well its policies are working on the ground; ' identify failing services where remedial action may be necessary, and ' identify and disseminate best practice. 1 This report has been prepared by the Audit Commission (‘the Commission’) following an inspection under Section 10 of the Local Government Act 1999, and issued in accordance with its duty under Section 13 of the 1999 Act. Page 2 of 52 January 2002 Walsall Metropolitan Borough Council – Corporate Governance Contents Best value statement 2 Contents 3 Introduction 5 Features of a Well Run Council 5 Summary and Recommendations 7 Summary 7 Recommendations 10 Supervision 10 Report 14 Context 14 The Locality 14 The Council 15 Corporate Governance in Walsall Metropolitan Borough Council 17 Inspection Context 17 Findings 17 Community Focus 17 Structures and Processes 26 Financial Stewardship, Risk Management and Internal Control 33 Service Delivery 40 Standards of Conduct 46 continued over.../ Page 3 of 52 January 2002 Walsall Metropolitan Borough Council – Corporate Governance Appendices 49 Who were the inspection team? 49 What the inspectors did? 49 Documents reviewed 49 Reality checks undertaken 50 List of those interviewed 51 Page 4 of 52 January 2002 Walsall Metropolitan Borough Council – Corporate Governance Introduction 1 This is the report of the Corporate Governance Inspection Team and sets out our conclusions following an inspection of Corporate Governance in the Metropolitan Borough of Walsall. Our findings are based on two judgements: ' How well is the Council doing? (Are its corporate governance arrangements satisfactory?); and ' What is the Council’s capacity to do better? Features of a Well Run Council 2 Our approach to the 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 CIPFA2 and SOLACE3. 3 These highlight five critical domains: ' Community Focus – the extent to which a council is devoting its efforts to the things that matter to local citizens; ' Service Delivery – the extent to which services deliver what local people expect and what the council itself requires; ' Risk Management – the extent to which the Council has an adequate understanding of service and financial risk and has made provision for it; ' 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; and ' Standards of Conduct and Behaviour – the extent to which the council has ways of setting standards of conduct and regulating the behaviour of its members and officers to achieve them. 2 Chartered Institute of Public Finance and Accountancy 3 Society of Local Authority Chief Executives Page 5 of 52 January 2002 Walsall Metropolitan Borough Council – Corporate Governance 4 These are all brought together in three key aspects of a council’s working: its culture, its politics and its people. Dimensions of Corporate Governance in a Local Council Informed by …. five domains of corporate governance. Community Service Focus Standards Delivery of conduct and behaviour Culture Politics Structures Risk People and Management Processes 5 This report describes the Council and its context, goes through our findings and the evidence supporting them, highlights the priorities for action and proposes measures that can ensure these are acted on. The inspection team was made of inspectors from the Audit Commission, the Benefit Fraud Inspectorate, colleagues from District Audit and others with experience of leading local government. The membership of the team and the activities undertaken are detailed in the appendices. 6 This report is issued by the Audit Commission under Section 13 of the Local Government Act 1999 (the “1999 Act”). Page 6 of 52 January 2002 Walsall Metropolitan Borough Council – Corporate Governance Summary and Recommendations Summary 7 The Metropolitan Borough of Walsall covers a total area of 106 square kilometres to the north of Birmingham. It is one of the Black Country boroughs of the West Midlands. The area has a heritage of heavy manufacturing industries characteristic of this part of the Black Country. 8 Walsall has a population of 259,488 (1991 Census). This is expected to decline by 2.6% between 1998 and 2008. Walsall has a diverse population. The 1991 census shows 9.7% of the population are from black and minority ethnic communities. The area has wide-spread deprivation with 45% of the population living within the top 10% most deprived wards in England, making this the 20th highest English Council for such widespread deprivation. 9 The Council has 60 members covering 20 wards. There is no party in overall control. For much of the 1990s the Council suffered from political instability, and it has a history of short-term, changeable decision-making. The Council currently operates through a committee system and service areas. It intends to move to a Leader and Cabinet model by June 2002. 10 The Council has an annual spend of around £270 million. 49% of this is spent on education and 21% on social services. For the last 10 years the Council has faced financial challenges in setting its budgets. The District Audit Management Letter of December 2000 identified that the Council’s financial situation was critical. 11 We found significant weaknesses in Walsall’s corporate governance arrangements. We have summarised our findings under the our key headings and our chief concerns are set out below. We go on to make clear recommendations to address our concerns and enable Walsall to move forward and solve its problems. Community Focus; 12 The Council does not have a corporate vision for Walsall and as yet has no community strategy. There are pockets of good practice in relation to local community involvement but no strategic approach to community consultation and involvement. There is cynicism about council politics in Walsall and mistrust of local politicians. Page 7 of 52 January 2002 Walsall Metropolitan Borough Council – Corporate Governance 13 External working and partnerships have a strong heritage in parts of the Borough and local regeneration (community relations in the wider sense) has had a strong beginning. But this is now in some turmoil and a lack of effective forward planning and implementation – there is a danger that some of that heritage will be lost. 14 The Council does not have a communications strategy and there is no overall management of communications or image. This leads to a fragmented and reactive approach, and results in negative media coverage and a poor external perception of the Council. 15 Without clear political leadership which brings people together and a more planned approach Walsall’s community focus is unlikely to improve. Currently Walsall lacks the capacity to lead the future partnerships which will deliver sustainable improvements for the area and for the people of Walsall. Structures and processes; 16 The Council lacks the infrastructure for effective modern local government. The management and political roles are not sufficiently defined and relationships between the two are not properly managed. 17 There is no systematic approach to planning or performance review to drive service improvement and the Best Value process is not being used to challenge and make significant service improvement. 18 On the management side, the Strategic Executive Team (SET) has recognised the need to develop service planning and performance review processes but the pace of development evidenced so far is too slow given the enormity of the change to be achieved. The basics are not yet in place and there is insufficient sense of urgency. 19 The lateness of addressing new governance arrangements means that the future pace of change required to meet legislation is considerable. There has been little planning and the Council appears to be doing the minimum required by law and not taking this opportunity to improve the way its conducts its business. Risk management; 20 The Council’s finances are critical and precarious. Action taken to date is inadequate given the longstanding nature and seriousness of the problems. There is a hand to mouth existence in which a series of one off actions have been taken to put off resolving the underlying problems. There has been no review of how resources are spent, nor any attempt to take a strategic approach to the budget or use best value to look at fundamentals. Medium term financial planning is virtually non existent. Page 8 of 52 January 2002 Walsall Metropolitan Borough Council – Corporate Governance 21 The approach to risk is inadequate and major potential partnerships or service transfers are being undertaken without adequate risk assessment or safeguards for the Council.
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