Communities Secretary sends inspectors into Tower Hamlets Council

The Communities Secretary has sent inspectors into Tower Hamlets Council after allegations of governance failure, poor financial management and fraud.

The Department for Communities and Local Government claimed that “serious concerns have been raised following the receipt of certain documents”.

Both the council and its elected mayor have rejected the claims.

The appointment of the inspectors, PricewaterhouseCoopers, was made under the Local Government Act 1999, as amended by the Local Audit and Accountability Act 2014.

The legislation allows the Communities Secretary to appoint inspectors to carry out an inspection into a council’s compliance with its best value duty.

The DCLG said that a file was being passed onto the Metropolitan Police for consideration.

“The PricewaterhouseCoopers inspection will look into evidence of the authority’s payment of grants, the transfer of property, spending decisions in relation to publicity, and other contractual processes from 25 October 2010 to the present day,” the Department added.

Eric 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.”

The Communities Secretary added: “I hope this sends a strong signal that robust processes are in place to investigate allegations of failures in financial management and governance in local government, under the new regime introduced by the Local Audit and Accountability Act which replaces the Audit Commission.

“This central action is not undertaken lightly, but localism requires local transparency, scrutiny and accountability, and these vital checks and balances must be upheld.”

PWC are expected to report to Pickles on their findings by 30 June 2014.

A spokesman for Tower Hamlets Council said: "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."

The Mayor of Tower Hamlets, Lutfur Rahman, said: "I welcome the Secretary of State's decision to send independent auditors to review our grants processes. This review will demonstrate that the Council acts in the best interests of all Tower Hamlets residents.

"I have written to the Secretary of State inviting him to visit the borough. I hope he will make an early visit and observe for himself the great things the council, community organisations and businesses are doing working together with all our residents."

Last week the BBC’s Panorama programme made allegations about increases in grants to Bangladeshi and Somali groups.

However, Rahman insisted that governance in Tower Hamlets was strong and that the picture painted by the programme was “not reflected in any audit or inspection reports”. The authority also said it had a rigorous approach to grant giving.