News

04.11.14

DCLG commissioners to take financial control of Tower Hamlets

The communities secretary is appointing three commissioners to take over financial control of Tower Hamlets Council, following a PwC report that found governance problems and a ‘failure to comply’ with best value duties.

Eric Pickles told Parliament that he was writing to the local authority with a proposed package that would see him appoint commissioners, accountable to him, to oversee the awarding of grants and property sales.

The commissioners, who will be put in place until March 2017, will “oversee or as appropriate exercise certain functions of the council,” said Pickles.

In addition he said: “I propose to direct the council as a matter of urgency to undertake, as the commissioners may direct and to their satisfaction, a recruitment exercise to make permanent appointments to the positions of the three statutory officers (Head of Paid Service, the Chief Financial Officer, and the Monitoring Officer), all currently only interim appointments.”

The announcement comes after the government-commissioned PwC report, which cost £1m, said that Tower Hamlets had failed to comply with its ‘best value duty’ in relation to three of four property transactions the professional services firm looked at in detail – Poplar Town Hall, Sutton Street Depot and Mellish Street.

Pickles commissioned the study earlier this year after a BBC Panorama investigation found that Lutfur Rahman, Tower Hamlets’ directly elected mayor, had more than doubled funding recommended by officers for Bengali-run charities during his time in office.

With regards to the matter of grant making, PwC concluded that the authority is failing to comply with its best value duty. “We have in the course of our Inspection identified failures to comply with the best value duty, these failures have occurred under the Authority’s governance arrangements as they have existed throughout the Period and continue to exist at the present time,” the auditors added.

However, it was noted that the report does “not ascribe any particular failure to any particular individual”. But the failures identified demonstrate that, as a whole, the existing governance arrangements have weaknesses which have resulted in these failures not being prevented.

The secretary of state said a copy of the report would be sent to the police for their information, he added: “If I was the mayor of Tower Hamlets I would be holding my head in shame, because what he's allowed to occur in Tower Hamlets is shameful.”

He has given the council 14 days to make representations over the report and the proposals. As yet, the council has not issued a response to Pickles’ proposals.

But in response to the PwC report, published this morning, Rahman had said: “In April 2014, Eric Pickles announced that he was concerned about potential fraud and the Evening Standard ran these claims on its front page. These allegations have been rejected by PwC.

“The report highlights flaws in processes. These are regrettable. We will learn from this report and strengthen our procedures accordingly. I was always confident wild claims about fraud would not be substantiated. Both my officers and I want to get on with our jobs serving all residents in Tower Hamlets.”

A council spokesperson added that whilst the PwC report identifies some process and governance issues that needed to be improved the council notes that no evidence of criminality or fraud has been identified by the government appointed forensic auditors.  

(Photo credit: Oyebola Opaneye, Creative Commons)

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