By Richard Johnstone | 4 November 2014
Local Government Secretary Eric Pickles is to send three commissioners into Tower Hamlets to oversee the work of the authority after an inspection by PricewaterhouseCoopers found it had failed to comply with some Best Value duties.
The report concluded that the London borough had failed to meet duties in relation to the award of grants to community organisations and in three property transactions.
Among the problems highlighted by Pickles in a statement to MPs today was that the council administration, led by mayor Lutfur Rahman, awarded grants with no apparent rationale for awards, with no objective, fair or transparent approach.
Pickles said he would take action to uphold the good name of local government, telling MPs: ‘There can be no place for rotten boroughs in 21st century Britain.’
The Best Value Inspection, which was published today by the Department for Communities and Local Government, concluded these failures had occurred under the council’s current governance regime.
In particular, the report highlighted that the three statutory officer posts in the council’s leadership – the head of paid service, the section 151 officer and the monitoring officer – had been held by a number of people during the period under review, from October 25 2010 to April 4 this year. All posts are currently being held on an interim basis, the report added.
Setting out his response to the inspections, Pickles said the mayor’s administration had overruled officer recommendations, with 81% of all officer recommendations rejected across mainstream grants.
He said the intervention in the authority was intended to end any activities that were not compatible with its Best Value duty, and to remove so far as possible the risk of further failures. It was likely commissioners would be in post until March 31 2017, once the authority has responded to the plans within 14 days.
To rebuild the authority’s governance and financial management capacity, Pickles added he would instruct the council to recruit three permanent officials for the statutory posts.
‘First, 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, all currently only interim appointments,’ he said.
‘I also propose to direct that any subsequent dismissal, suspension, or further appointment of statutory officers must be with the agreement of the commissioners.’
If Pickles goes ahead with the appointment of commissioners, the authority would have to draw up and agree a strategy and action plan to ensure its future compliance with Best Value duties with the commissioners within three months, followed by six-monthly updates.
‘Localism requires local accountability and local democracy,’ he told MPs. ‘Municipal corruption undermines the local checks and balances that are vital in a democracy and which are essential in mayoral systems with their concentration of power.’
Responding to the announcements, Rahman that the PwC report had found no evidence of fraud or criminal activity.
‘All governance issues identified in the PwC report have already been highlighted by our internal processes and are being rectified accordingly,’ he added.
‘Given that Tower Hamlets Council is one of the highest performing local authorities in London, and the wider UK for service delivery to our residents, I am surprised at the secretary of state’s comments today in the House of Commons.
‘I believe that there is a huge disparity between the detail of PwC’s report and the level of the secretary of state’s comments. We will be responding to Mr Pickles in due course.”
