By Vivienne Russell | 4 April 2014
Local Government Secretary Eric Pickles has sent an inspection team to examine allegations of governance failure, poor financial management and fraud at the London Borough of Tower Hamlets.
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The order has been made under the 1999 Local Government Act, as amended by the 2014 Local Audit and Accountability Act, which took effect today.
Inspectors from PricewaterhouseCoopers will look at evidence of the council's payment of grants, the transfer of property, publicity-related spending decisions and other contractual processes between October 25 2010, when the mayoral administration was formed, and the present day. A file has also been passed on to the Metropolitan Police for consideration.
Pickles said: ‘It is a matter of public record that I have long been concerned about a worrying pattern of divisive community politics and alleged mismanagement of public money by the mayoral administration in Tower Hamlets.
‘Following the receipt of a number of documents, I am now taking legal steps, in the public interest, to appoint inspectors to look into the allegations in respect of Tower Hamlets.’
He added that he hoped his decision sent a ‘strong signal’ that robust processes are in place to investigate allegations of financial management failures and governance.
‘This central action is not undertaken lightly, but localism requires transparency, scrutiny and accountability and these vital checks and balances must be upheld,’ said Pickles.
A Tower Hamlets spokeswoman told Public Finance the authority welcomed the arrival of the inspectors and the opportunity to have conversation with them.
A statement released by the council said: ‘Under an order introduced yesterday, government auditors are today meeting with senior officers of the council.
‘We welcome the opportunity to demonstrate that council processes have been run appropriately and to date we have seen no evidence to suggest otherwise. This inspection affords the borough the best opportunity to demonstrate that the borough has acted in the best interests of all residents. We will release further information in due course.’
Commenting on the decision, CIPFA chief executive Rob Whiteman said: 'The secretary of state uses his powers of intervention very sparingly and so he evidently has concerns that warrant exploration.
'Good governance is an outstanding feature of UK local government that needs upholding and CIPFA will always be supportive of government when it acts to protect the public interest.'
But he added that CIPFA remained concerned that Whitehall proposals to reform local governance risked the loss of essential safeguards and could jeopardise local government's reputation for probity.
