ANALYSIS DEMOCRACY & GOVERNANCE

Exeter City Futures secondment decision may be unlawful

Backbench city councillors denied scrutiny call-in powers to challenge controversial decision to send chief executive and senior director to work for private company.

Exeter city council Exeter city futures Exeter development fund Net zero exeter Accountability & transparency Democratic deficit

At the end of last year Exeter City Council controversially decided to send its chief executive, Karime Hassan, and another senior director, Jo Yelland, to work for Exeter City Futures for a total of five days a week while continuing to receive their council salaries.

The decision was ostensibly taken to support Net Zero Exeter plan delivery, although both are expected to focus on enabling Exeter Development Fund.

Neither the rationale nor the risk assessment provided by council leader Phil Bialyk in his report recommending the decision stood up to scrutiny.

It subsequently emerged that a cross-party group of backbench councillors attempted to challenge the decision under local government scrutiny call-in powers, but were told they could not do so.

The council claimed that the decision was for the full council, not its executive, to make and so was not subject to call-in.

However local government legislation appears to say otherwise, which would make the decision unlawful, ineffective and subject to judicial review.

Exeter City Council in session at Exeter Guildhall Exeter City Council in session at Exeter Guildhall. Photo: © Sandra Barrett, All Rights Reserved.

The legislation that governs Exeter City Council decision-making requires full council meetings to determine overall policy frameworks and budgets which its executive then implements (sometimes via executive sub-committees or council members and officials using delegated powers).

Accompanying regulations specify what local authority executives may do, what they may not do, and what they may only do in conjunction with the full council.

Backbench councillors are responsible for holding executive decisions and their implementation to account in scrutiny committees on which executive members may not sit.

Some other council decisions concerning regulatory matters including audit, planning and licensing are mostly made by non-executive committees.

Backbench councillors sitting on scrutiny committees have legal powers to “call in” executive decisions, delaying their implementation so they can be subjected to greater scrutiny, with the option to recommend that they are reconsidered and potentially overturned.

Statutory government guidance says that all council “members and officers should recognise and appreciate the importance and legitimacy the scrutiny function is afforded by the law”. It describes scrutiny as a “check and balance on the executive”.

Executive decisions which are likely to result in significant expenditure (or savings) against council-set budgets , or which are likely to have a significant effect on communities living or working in an area comprising two or more council electoral wards are called “key decisions”.

What constitutes “significant” in this context is not defined by the regulations. Many local authorities consider expenditure (or savings) of £100,000 or more to be significant, although Exeter City Council only applies this to expenditure above £1 million. The meaning of “significant effect on communities” is less clear.

Somewhat confusingly, local authority executives may also make decisions which involve significant expenditure but are nevertheless not key decisions, because the executive is restricted to recommending its decision to the full council for approval.

These are decisions which would be “contrary to or not wholly in accordance with the authority’s budget” or “contrary to a plan or strategy adopted or approved by the authority”. They are known as “departure decisions” and must be made by the full council.

The decision to send two council directors to work for Exeter City Futures relied on existing budgets, as the council leader’s report confirms, and it was not related to the council’s current policy framework, as the council’s constitution confirms.

As the decision involved neither budget nor policy framework changes it appears not to be departure decision. If so, it should have been taken by the executive and not the full council.

It apparently should also have been classified as a key decision as, according to the council, it affected all the city’s electoral wards.

As such it should have been subject to call-in too. However the non-partisan cross-party group of backbench councillors which attempted to challenge the decision under scrutiny call-in powers was prevented from doing so by the council on the basis that the decision was not an executive decision at all.

The local government legislation which binds the council appears to say otherwise, which would make the decision unlawful, ineffective and subject to judicial review.

We asked the council to tell us specifically which section of which schedule of the legislation it considers applies such that the decision to send the council’s chief executive and another senior director to work for Exeter City Futures did not constitute an executive decision.

We had to ask four times before we received an answer, more than two months after the decision was made.

Instead of referring to the legislation, the council quoted the sections of its constitution related to its powers to appoint its own chief executive and head of paid service (a statutory role played by the chief executive in Exeter).

These have nothing to do with its decision to send the chief executive and another director to work for Exeter City Futures.

According to the council’s externally-audited accounts, Exeter City Futures is neither a subsidiary nor associate company of the council. The council therefore has no powers to appoint the company’s staff, whether already employed by the council or anyone else.



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