Former New Labour minister Sir David Hanson has been chosen to lead Labour’s internal investigation into Liverpool’s “dysfunctional” city council.

Hanson will take on the job after senior figures on the National Executive Committee (NEC) pushed back at moves by allies of Keir Starmer to install former home secretary Jacqui Smith as the head of the probe.

The NEC Officers Group defied pressure to appoint Smith, who was seen by some as potentially too “factional”.

The investigation follows a damning report last week by local government expert Max Caller into the council, which in turn triggered a government decision to send in Whitehall-appointed commissioners to help run key services.

His report concluded there had been “a serious breakdown of governance” and “an environment of intimidation” in Liverpool.

Caller’s emergency inspection followed the arrest last December of 12 people, including Mayor Joe Anderson on suspicion of witness intimidation and conspiracy to commit bribery. Anderson, who has not been charged, denies the allegations.

Liverpool-born Hanson, who will be assisted by former Leeds City Council leader Judith Blake, will lead a “review of the issues raised by the Caller report”, a party spokesperson said.

Work on the Labour review will begin next week and is expected to report in three months.

“Our priority is the people of Liverpool. We will do whatever it takes to tackle the problems set out in the report,” a spokesperson said.

“And we pay tribute to the vast majority of hard-working, decent and honest people working at the council and as elected officials whose dedication will help to pull us through this difficult time.”

Last week Labour welcomed the Caller report in full and supported the move to send in commissioners to help the council’s new temporary leadership in running highways, regeneration and property services.

But the party has since been embroiled in further controversy after it tore up its original shortlist of three candidates to replace Anderson. On Monday, party members selected Joanne Anderson to be their contender for the May 6 election.

The apparent chaos within the city’s governance has prompted Starmer to set up his own review of the party’s record and conduct, with the NEC Officers tasked with finding a senior figure to lead it.

Smith had been seen as the leadership’s pick, although critics feared she would lead a “Progress-style hatchet job”, a reference to the former Blairite group within the party.

Some also pointed to the optics of any such appointment, given the controversy in 2009 Smith’s MPs’ expense claims were exposed.

Instead, the job will now be done by Hanson, who lost his seat in 2019 in the Tory assault on the “Red Wall”, and Blake, a widely respected former leader of Leeds City Council and newly appointed peer.

Although Hanson was Tony Blair’s parliamentary aide, both he and Blake were viewed as sufficiently independent-minded for the role, sources said.

Hanson was MP for Delyn in north Wales from 1992 to 2019, and before that was a council leader in Cheshire.

Starmer can normally count on control of the NEC Officers’ Group, which is a small body of senior office holders, but it is understood that NEC chair Margaret Beckett was the key vote in backing the appointments.

Local MPs and activists in Liverpool have been split over the party’s endorsement of the sending in of Whitehall commissioners to help run the city.

Some have condemned it as a “Tory takeover”, while others support the move as a way of getting the city council back on a stable footing and stress local councillors and officials will still be in charge.

Tony Reeves, chief executive of Liverpool City Council, admitted that findings in the Caller report were “shocking” but claimed the criticism was mostly “historic”.