Politicians in Liverpool are braced for government commissioners to intervene in the city council in an unprecedented move following allegations of corruption. Robert Jenrick, the communities secretary, is expected to make a statement on Wednesday in response to a report from inspectors investigating whether the council has provided the best value to the taxpayer. The report was ordered following the arrests of five men, including the Labour mayor, Joe Anderson, last December. Anderson was arrested as part of Merseyside police’s Operation Aloft, an ongoing investigation into building and development contracts in Liverpool that led to the arrests of 12 people. He denies all wrongdoing. Sources who have been briefed on the report said they expected that commissioners would be sent in to help run the council alongside the chief executive, Tony Reeves, who would remain in overall control. This would be a step down from the nuclear option – in which central government would take full control of the council – but Jenrick could decide that the strongest intervention is necessary. Any decision to intervene in the running of one of the UK’s biggest cities would be unprecedented in modern times, although commissioners have been sent in to run three smaller councils in the past 25 years. Councillors have been warned by Reeves that the report – thought to run to around 70 pages – and its repercussions were likely to be “very painful”. Reeves, who joined the council to oversee change in 2018, told councillors on Monday night that the report was “likely to make for difficult reading” and that they “must remain resilient”. He announced that Nick Kavanagh, the council’s director of regeneration, who was arrested in December 2019 alongside the developer Elliot Lawless, was no longer employed by the local authority. Kavanagh said on Tuesday he intended to “clear my name at an appeal or tribunal”. The emergency inspection was led by Max Caller, a local government consultant who carried out a similar report on Northamptonshire county council in 2015, which resulted in commissioners being appointed to oversee the authority after financial mismanagement. In a sobering moment for the city, Liverpudlians are waiting to see how the local government secretary will interpret Caller’s recommendations. Government-appointed commissioners have intervened in councils only four times in the past, and never in a city the size of Liverpool. Jenrick could announce commissioners to assume total control of day to day council decision-making, including setting budgets. This move, described by one councillor as “political dynamite”, would send shockwaves through Merseyside, a region that dispatches 14 Labour MPs to Westminster. Other possible options include appointing commissioners to oversee specific aspects of the city council under scrutiny, such as regeneration, or a more “hands off” oversight role. The commissioners could be in place for years. Richard Kemp, the leader of the Liverpool Democrats on the council, said it was an “absolutely critical” week for the city. “If we screw this up now we’re damned for a long time. Our reputation as a city council is in tatters and our reputation as a city will go down because of that.” The decision will overshadow local elections in May, due to elect a city mayor, local councillors and a metro mayor for Liverpool city region. Labour party members in the city are voting to decide the party’s mayoral candidate, which is expected to be announced next week. The previous shortlist was scrapped in what one local MP described as “a shitshow”. A council insider said that Labour’s NEC had “taken its time waking up to the situation on the ground in Liverpool with both the police investigation and the government inspection”. Stephen Yip, a former Labour member running as an independent candidate in the city’s mayoral elections said it was an opportunity to get Liverpool “out of the darkness, and into the light”. The children’s charity boss says he has garnered support from Labour members and even councillors who had pledged to restand as independents. He welcomed intervention that would lead to increased transparency, accountability and honesty, but warned that central government coming “in all guns blazing” to take over was not what the city needed.