Middlesbrough Council found to have significant weaknesses in damning report

The authority made an unlawful appointment, made wrongful payments to a publicity company and relationships in the council have deteriorated so severely that external help is needed to fix the situation, Ernst and Young said in a review published on Thursday (July 14).

The auditors have not called for government intervention but have not ruled out further action which could lead to independent commissioners taking over some council functions.

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It is rare for government-appointed commissioners to step in but they are currently in place after failings at Liverpool Council and Sandwell Council (West Midlands).

Independent Middlesbrough Mayor Andy Preston who leads the council responded to the report by saying he welcomed third-party involvement and stating there is a toxic culture with too many “selfish and lazy” councillors. Labour has called on the mayor to resign.

Andy Preston

In a separate report prepared by the council’s chief executive Tony Parkinson, he has stated he will not sign off the annual governance statement for 2020/21 until the significant risks that have been identified are acknowledged and addressed fully.

This relates to the “sheer size and scale of cultural change required” and a belief that since April 2021 relationships between elected members and officers have deteriorated further.

In an email seen by the Local Democracy Reporting Service, Mr Parkinson said: “In our opinion, the political dysfunctionality that exists in this authority is too deep-seated to enable this within a reasonable timeframe.

"We, therefore, have no confidence that noticeable improvement will be made and consider the use of further powers to be almost certain – it is a case of when not if.”

In another email, the chair of the Corporate Affairs and Audit Committee Cllr Brian Hubbard also called for intervention.

The council has been ordered to create a comprehensive improvement plan to address the deteriorating cultural and relationship issues which exist within it.

The explosive report has revealed the council made an unlawful appointment, who was in place for more than a year, and unlawful payments.

The local authority is entitled to fund a mayoral assistant but the post has been vacant since September 2019.

Between October 2019 and November 2020, the council paid £32,000 for an external advisor through a local publicity company to work directly with Mr Preston.

The audit report has found the council is unable to explain the exact nature of the services provided, however, has accepted some likely fell under the remit of the mayoral political assistant.

The report adds: “This arrangement was terminated in November 2020 after it was assessed by the council to be unlawful under the Local Authorities Regulations 2002.

The payments made to the publicity company under this arrangement were therefore also unlawful, however, we note they were not material to our opinion on the council’s financial statements.”

The payment was directly approved by Mr Parkinson, the document states.

As part of the review for 2017/18, the auditors reported there was a “mutual level of mistrust” between some councillors and senior officers. The situation has not improved since.

According to the new report: “There is a pervasive lack of trust within the council between officers and elected members, and between elected members, which is having a significant impact on the governance of the council and was a contributing factor to the respective roles and responsibilities of officers and members not being adhered to.”

The report adds: “In our view, these are serious matters indicative of deep-rooted cultural and relationship issues at the council which require urgent action.”

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The report advises that external specialists will be needed as relationships have deteriorated to such a point the council will not be able to fix it on its own. The council will need to do this immediately and the auditors will follow up on the recommendation over the next six months.

If they are not satisfied with the council’s progress they will consider making formal statutory recommendations. This could lead to government intervention.
‘Wider weaknesses’

An audit review published in March 2022, found the mayor had exceeded his remit during the Boho X project after Kevin Parkes, the local authority’s former executive director of growth and place, told him he could, despite not having the power to do so.

The mayor met with Chinese state-owned developer BCEGI without council staff and did not document the meetings, which contravened the council’s constitution.

During this time, huge changes were agreed to the Boho X project scaling it back from a £260ft tower to a low-rise building. In September 2020, project board minutes noted that the mayor had instructed for changes to be made to the project.

Mr Preston has said every meeting he attended was “sanctioned at a senior level of the council.” More than £600,000 was spent on the design costs for the original 260ft tower that was scrapped.

This new audit report added: “There have been significant weaknesses in the council’s management of the Boho X project which undermine the council’s ability to demonstrate that the project represents value for money for taxpayers.”

As well as Boho X, the auditors also raised concern about the purchase of covid antibody tests where £24,000 of taxpayers’ cash was spent on kits that were not approved for use in the UK.

The report also referenced the unlawful appointment of the mayor’s advisor, when it stated: “In both cases, concerns about the proposed transactions were raised by senior officers prior to the transactions being entered into however both subsequently proceeded without following the council’s proper procurement processes.”

This highlights the failings in the Boho X project were not a one-off.

According to the report, the scope of work by internal audit into the management of Boho X, the purchase of covid tests and the completeness of member declarations was not always sufficient, which meant wider risks were not always identified.

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There were also concerns where the involvement of elected members “strayed into operational matters.”

The report adds: “It was often known to officers and insufficient challenge was provided to members on the boundaries of members’ and officers’ respective responsibilities.”

It was recommended that the council provides additional training to members and officers on the boundaries of their responsibilities and also ensure a culture of challenge is understood and expected by all parties.

The report identified a small number of instances where declarations of interest made by elected members were either incomplete or inconsistent with previous declarations.

There is also a lack of trust among elected members that interests are declared at meetings which leads to a lack of confidence from some councillors in the decisions being taken.

Mr Preston’s statement in response to the report said he was keen to see a third party investigate. He said too many councillors were “selfish and lazy” and were wasting time and money with “petty complaints”. He also called it a “toxic culture” and an “unnecessarily hostile environment”.

Labour Middlesbrough MP Andy McDonald called Mr Preston “unfit for office” and claimed that his time as mayor had been an “abject failure”.

The MP and the council’s Labour group leader Cllr Matt Storey, have both called on Mr Preston to resign. Cllr Storey said the local authority was facing an “unprecedented crisis” caused by the mayor and there had been a “colossal waste” of taxpayers’ money because of his incompetence.

Middlesbrough Conservative group said it was “very disappointed, but not surprised” by the findings of the report. Cllr Mieka Smiles, Cllr David Coupe and Cllr Luke Mason, who are all executive members, said “political game-playing” between a minority of Labour and Independent councillors was not helpful.
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