Paul Feild looks at the governance lessons to be learned from the elections last week at two London boroughs.
Of all the results of the 2022 May elections from a governance point of view two results stick out. No, not Westminster or Wandsworth. It’s Croydon and Tower Hamlets. Both involve England’s opposition party losing control and were contrary to the 2022 trend in London of their net gains. The common factor is governance and two very different outcomes.
Let’s consider Croydon first. In the case of Croydon as ever what really happens is only fully known to insiders, local government is consummate in filtering and presenting a good tale. It would be good to do a deep drill as to voter motivation, nevertheless Croydon has now had two Reports in the Public Interest (RPI) and a section 114 notice in less than two years.
RPI’s are made by the council’s Local Auditor under section 24 and Schedule 7 of the Local Audit and Accountability Act 2014 (2014 Act). They are under a legal obligation to do so under the 2014 if they encounter an item or issue which the Local Auditor considers should be brought to the attention of the accountable body and the public. The first RPI regarding Croydon was published on 23 October 2020.
A section 114 notice is issued by a local authority’s chief finance officer (S.151 Officer Local Government 1972) under section 114 Local Government Finance Act 1988. These notices are specifically referred to in the 2014 Act. Essentially the effect of a Section 114 Notice is a drastic finance measure where all spending except for that required by law is frozen.
Section 114(3): “…The chief finance officer of a relevant authority shall make a report under this section if it appears to him that the expenditure of the authority incurred (including expenditure it proposes to incur) in a financial year is likely to exceed the resources (including sums borrowed) available to it to meet that expenditure.”
To add to Croydon’s woes in January 2022 a further RPI was published. See Report in the Public Interest Fairfield Halls | Croydon Council. This relates to mistakes in the cost management of the refurbishment of Croydon’s famous Fairfield Hall. The Local Auditor states:
By 2016 the need to refurbish Fairfield Halls had become urgent and the venue closed in July 2016 for refurbishment, with a planned re-opening date of June 2018 and an initial Cabinet approved investment of £30 million for the refurbishment project (the project). The project was delivered in September 2019 (over a year late) with a final cost of £67.5 million incurred up to that date (more than double the initial budget). Our review leading to this report arose after we issued a report in the public interest on 23 October 2020 concerning the Council’s financial position and related governance arrangements. Grant Thornton
To paraphrase Lady Bracknell ‘to have one Report in the Public Interest may be regarded as a misfortune but two…’. So, not the kind of story to end up in the national and local press and undoubtably tipped the voting community into wanting a change.
As I have argued before on Local Government Lawyer, the Local Accountability and Audit Act 2014 Reports in the Public Interest are becoming a powerful engine of change because of the objectivity of the professional audit and the legislative requirement in Schedule 7 that its findings must be published and acted upon. The implication is that any such report can have a significant effect. Here it would have been a causative factor in political change. Any council that gets one must give it proper consideration at full council. It cannot be ignored or downplayed.
Tower Hamlets has had a difficult period of governance. Action was taken by the Secretary of State Eric Pickles following the PWC Best Value Inspection and he placed Commissioners to carry out some functions. The Governance was an elected mayor and cabinet. Following an Election Court sitting on 23 April 2015 the elected mayor Lutfur Rahman was found guilty of breaches of section 106 and 113 of Representation of the People Act 1983 and disqualified from political office and being a local authority member for 5 years. He was then struck off the Solicitors Roll by the Solicitor Disciplinary Tribunal in 2018. But he was never prosecuted by the police for any criminal offences. The disqualification time from the Election Court now duly expired, and so he ran for and successfully returned as elected Mayor for Tower Hamlets on 5 May 2022.
Prior to this outcome, after the Commissioners had left, the electorate returned another elected mayor. On 6 May 2021 that Mayor of the time, John Biggs, had led a public referendum on changing the council's governance from elected mayor to leader and cabinet.
His address on the subject is well worth a view on YouTube.
It’s quite short and food for thought. He made the point that unlike the strong leader the full council cannot hold to account in the same way. In the strong leader model, it is the council who selects the leader and he pointed to the need for checks and balances. By a leader and cabinet governance model the members can change the leadership and so get greater accountability. Biggs said that a bad mayor may surround himself with yes-men. He suggested that under the elected Mayoral model it is easier to ignore community groups so, he argues, it is harder to stop a bad mayor doing things.
But what is interesting was the overwhelming 2021 referendum rejection result to the proposal - close on 4 to 1 of those voting supported the retention of the institution of elected mayor. This is not isolated. The fact is the local electorate seem like elected mayors.
In any event the losses in May 2022 for the incumbent party were legendary. Not only did they lose the mayor election they turned a massive majority into a minority losing 21 Members down to 19.
So why did Labour lose? One explanation is that the community and its groups simply preferred a candidate that they could relate to best. No one could not say they did not know what they were getting.
New Town Hall for Tower Hamlets
Finally, on a brighter note, some good news on the subject of Tower Hamlets, something for those like me, who enjoy public building architecture, Tower Hamlets will soon be getting a new council office complex. It will arguably be taking possession of one of the finest and exciting municipal buildings in the country, being the £110+ million-pound refurbished former London Hospital situated nearby the brand-new Whitechapel Elizabeth line station.
In the past many councils including mine had in-house architectural capacity and designed and built (in-house) some great buildings. Arguably only Rochdale Town Hall [i] can outdo the new Tower Hamlets Town Hall in its architectural munificence. There is an irony in that many local authorities across the land are finding with remote working there can be a rationalising of office space, but on the other hand such a historical site in a very deprived borough being used for community and democratic purposes seems as good a use as any. So, let us hope occupation goes to the planned date and it heralds a new chapter for the borough [ii].
Dr Paul Feild is a Senior Standards & Governance Solicitor working in the Barking & Dagenham Legal Practice Governance Team. His 2015 Doctor of Business Administration thesis was ‘How does Localism for Standards Work in Practice? The Practitioner’s View of Local Standards Post Localism Act 2011’. He researches and writes on finance and governance issues and can be contacted by email.
[i] The rumour is that Adolf Hitler admired the building so much he ordered it should not be bombed and dismantled brick by brick and taken to Nazi Germany if he won the war! It is in almost constant use as a film set for courts, Birmingham town hall in Peaky Blinders for example.
[ii] It would be really ironic if the reported extra costs became an issue because the new mayor could point to his predecessor regime’s stewardship.