LIVERPOOL CITY COUNCIL DIRECTIONS UNDER SECTION 15(5) AND (6) OF THE LOCAL GOVERNMENT ACT 1999 EXPLANATORY MEMORANDUM 1. The Secretary of State for Housing, Communities and the Local Government (“the Secretary of State”) has exercised his powers under section 15(5) and (6) of the Local Government Act 1999 (“the 1999 Act”) in relation to Liverpool City Council (“the Authority”) to secure its compliance with the best value duty. 2. This Memorandum is intended as a companion document to the Directions issued on 10 June 2021. It summarises the circumstances in which the Secretary of State has made the Directions, his reasons for this exercise of his powers, and the implications of the Directions for the Authority. The context for the Directions 3. Following the seriousness of the issues identified through the Merseyside Police investigation into fraud, bribery and corruption in public office, which involves a significant connection to Liverpool City Council (LCC); and LCC’s submission to the department of 11 December 2020 regarding their governance arrangements, oversight and control measures, including details of the measures and controls implemented during the previous eighteen months, the Secretary of State appointed Max Caller CBE under section 10 of the 1999 Act to carry out an inspection of the compliance of the Authority with its best value duty (as set out in Part I of the 1999 Act). The Secretary of State asked that the inspection should consider whether the Authority has effective arrangements in place for securing best value in its planning, highways, regeneration and property management functions and the strength of associated audit and governance arrangements. 4. On 19 March 2021, Max Caller CBE, having undertaken his inspection, sent to the Authority and the Secretary of State a report (“the Report”) setting out his findings. The Report, which reflected the thoroughness and detail of the Inspector and Assistant Inspectors’ investigation, set out a picture of serious failings by the Authority in the areas of highways, regeneration and property management functions, together with their interaction with planning functions and associated audit and governance arrangements in the exercise of those specified functions. The Report concluded that the Authority had failed to comply with its duty under Part I of the 1999 Act over a number of years. 5. Having considered the findings of the Report, on 24 March 2021, the Secretary of State published the Report and a letter from senior officials to the Authority setting out a proposed intervention package to secure the Authority’s compliance with its best value duty (“the minded to letter”). He invited the Authority and any other interested parties to make representations to him on or before 24 May 2021 about the Report and the proposed intervention package. 6. The minded to letter explained that the proposed intervention package reflected the recommendations of the Inspector, and contained two key elements: a. Proposals to put in place Commissioners to take over functions associated with regeneration, highways and property management, together with associated audit and governance arrangements at the Authority; and b. Proposals to introduce electoral changes, in particular: i. to make an Order using powers in the Local Government Act 2000 to provide for whole council elections in 2023 and every fourth year thereafter; and ii. to consider and consult upon a new submission to the Local Government Boundary Commission for England as part of the current boundary review, which includes consideration of a proposal to reduce the number of Councillors to those consistent with elections on a single member ward basis and be approved by the Commissioners. 7. The minded to letter included a detailed description of the Directions that the Secretary of State proposed to make under section 15 of the Local Government Act 1999. The proposed Directions provided for the Commissioners to exercise for a time certain of the Authority’s functions, gave to the Commissioners certain responsibilities and reserved powers and required the Authority to take certain actions. This Memorandum explains the content of the Directions as finalised in the light of representations received from the Authority and other interested parties. Representations 8. Before making Directions, the Secretary of State is required under section 15(9) of the 1999 Act to give the Authority an opportunity to make representations about the Report as a result of which the Directions are proposed, and about the proposed Directions. 9. Representations were received from the Authority, dated 24 May 2021 from the Chief Executive Officer, Tony Reeves. The Council accept the findings of the Report in full and acknowledge they have failed to comply with the best value duty over a number of years. The Council are supportive of the proposed intervention including to appoint Commissioners. The Council have committed to consider and consult upon a new submission to the Local Government Boundary Commission for England (LGBCE) as part of the current boundary review. 10. Representations were also received from: a. Centenary Action Group, a coalition of over 50 organisations and activists campaigning to eradicate the barriers that prevent women taking part in politics. The representation expresses concern that single member wards may discourage women from seeking elected office, stating multi-member wards are helpful because the workload can be shared between colleagues; and voters in single member wards could be left without representation if councillors need to take maternity leave or are absent for caring-related reasons. b. Unlock Democracy, an organisation that campaigns for a vibrant, inclusive democracy that puts powers in the hands of the people. They express concern about the proposed single member wards and reductions in the number of Councillors, arguing multi-member wards allow councillors to share their workload, which means those with other commitments can serve as Councillors. Multi-member wards can also provide checks and balances on each other’s activities. They also cite their research which highlights that the UK already has fewer Councillors than other European countries. c. Eight members of the public who welcomed the proposed intervention package. d. Five members of the public who were not supportive of the proposed intervention package. 11. This Memorandum, together with the Directions and material taken into account for the purposes of making Directions, is published on the Government website at www.gov.uk. The intervention package 12. Having carefully considered afresh the Report, together with letters from the Authority (24 May 2021), Centenary Action Group (12 April 2021), Unlock Democracy (22 April 2021) and members of the public (various dates), the Secretary of State is confident that there is a sound basis on which to found his considerations and, accordingly, is satisfied that the Authority is failing to comply with its best value duty. 13. The Secretary of State, having considered the representations made by the Authority as required under section 15(9) of the 1999 Act, considers it necessary and expedient, in accordance with his powers under section 15(5) and (6) of the 1999 Act, to put in place an intervention package in order to secure the Authority’s future and sustainable compliance with its best value duty. This intervention package is in line with his proposals as described in paragraph 6 of this Memorandum, with the following modifications: a. The Commissioner’s functions relating to the appointment and dismissal of statutory officers are expanded to include the role of Assistant Director Governance, Audit and Assurance; b. The Direction to the Council to consider and consult upon a new submission to the LGBCE as part of the current boundary review has been amended to clarify that the submission should include consideration of a proposal to reduce the number of Councillors to those consistent with elections on the basis of predominantly single member wards, completed to the satisfaction of and approval by the Commissioners. That is single member wards across the whole Council area save where the LGBCE consider a multi member ward is essential to balance their statutory duties of delivering electoral equality, reflecting interests and identities of local communities, and of promoting effective and convenient local government; and c. As part of the Secretary of State’s intention to make an Order using his powers in the Local Government Act 2000 to achieve the fresh start the Authority requires by providing full Council elections from 2023, is an intention that the Order specifically provides for: i. Liverpool City Council to hold all-out elections every four years from 2023 and adjust retirement dates for existing Councillors accordingly; ii. Postponement for one year of the May 2022 elections of one third of Liverpool City Councillors and extend terms of office accordingly; and iii. The movement of the next election for Liverpool City’s Mayor to 2023 from 2024 and shorten the term of office accordingly. 14. The first modification is to reflect what was proposed in the Report and has been accepted by LCC. The second modification is in response to representations received by the Secretary of State. The modifications to the Electoral Order will help address the Report’s recommendation of ensuring as much stability as possible during a period of significant change. Going forward, the city mayoral and council elections will take place in the same year every four years. The Order will be subject to the negative resolution procedure and will be made as soon as practicable and well in advance of the local government elections currently scheduled for 2022. Following the making of the Order, the independent Local Government Boundary Commission for England will be able to undertake their electoral review, with its necessary legislation, subject to Parliamentary approval. 15. The Secretary of State considers that this package will address the failings identified in the Report.