The mayor of Tower Hamlets, Lutfur Rahman. Credit: Ruby Gregory LDR
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Tower Hamlets Council under government review for the second time in a decade

The government will send inspectors to review the running of Tower Hamlets Council, following concerns about Mayor Lutfur Rahman’s management of finances and grant making.

The government has announced it is sending inspectors to Tower Hamlets Council after concerns about how it is being run by Mayor Lutfur Rahman.

The Best Value Inspection will consider a range of issues, including the council’s handling of finances, the appointment of senior management posts, and the practice of grant making.

The news comes just a week after the council was shortlisted three times in different categories for The Local Government Chronicle Awards. 

In a letter to Stephen Halsey, the chief executive of Tower Hamlets, the Department for Levelling Up, Housing and Communities (DLUHC) raised concerns about the significant level of churn across several senior management posts at the council. There are currently vacancies for three roles covering Children’s Services, Communities, and Housing and Regeneration. 

This is the second time in a decade that the running of Tower Hamlets Council under Mr Rahman has been under review. In 2014, a Best Value Inspection identified serious failings in the management of the council, leading to government-appointed commissioners being sent to take over duties.

In 2014, a report by PricewaterhouseCoopers LLP (PWC) found evidence of serious irregularities and a lack of transparency about the awarding of public grants and the disposal of public buildings by Tower Hamlets Council.

The council must comply with its Best Value Duty under Part 1 of the Local Government Act 1999. The Act says councils must ‘make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.’

In April 2015, Mr Rahman and Councillor Alibor Choudhury were banned from standing for elected office for five years, after an Election Court Judgement found them guilty of corrupt and illegal practices.

The DLUHC has raised concerns that since Rahman’s reelection in 2022, he has re-appointed Mr Choudhury as Deputy Head of the Mayor’s Office.

Maxwell Soule, the Deputy Director of Local Government Stewardship at the DLUHC, said the council ‘risks replicating the circumstances in which decisions were made up to 2014 that were corrupt and/or failed in the Authority’s Best Value Duty.’

Soule also raised concerns about Rahman’s intention to recruit eight policy advisors, not directly employed by the Authority, to an expanded Mayoral office of 27 new staff members at the cost of £1.4m. In December 2023, the Local Government Association (LGA) said this risks creating a ‘two-council culture’, delaying the efficiency of decision-making. 

The Best Value Review comes after the revelation that Tower Hamlets Council chose to award £250,000 of public money to an organisation run by one of Rahman’s close agents, who supported him during his fraudulent electoral campaign in 2014.

The money went to the Tower Hamlets Council of Mosques, chaired by Shamsul Haque, who ‘emerged in the vote-rigging trial as an important figure in the mayor’s campaign to cheat his way to re-election’, according to The Times.

The review will be carried out by Kim Bromley-Derry, and the inspectors have been instructed to report their findings to the Secretary of State by 31 May 2024.

In response to the announcement, Tower Hamlets Labour councillor Marc Francis said: ‘It is no surprise to us as Opposition councillors to see that civil servants have seen enough of the rapidly deteriorating governance and wasteful spending at Tower Hamlets Council under Mayor Lutfur Rahman and his Aspire Party councillors and ordered this best value inspection.  

‘We have been warning about this situation for more than a year, including by debating the woeful “action plan” put forward following stinging criticism by the recent LGA Peer Review.  Instead of accepting those recommendations, the Mayor and Aspire councillors have made it clear they have no intention of changing their ways.

‘Labour councillors will engage fully with those independent experts being sent in by the Government to undertake this best value inspection. But given what happened a decade ago and their response to the Government’s decision so far, we suspect The Mayor and his team will try to block them at every turn.

‘If he does that, there is now a real risk that Tower Hamlets Council will again end up being run by Government-appointed Commissioners just as happened back in 2014.  There must now be a fundamental shift towards full transparency and meaningful democratic accountability in Tower Hamlets Council.’

A spokesperson for Tower Hamlets Council said: ‘We are surprised by the decision however it is of course the prerogative of the government and we are confident in our work and will cooperate fully.

‘Our work has been praised in recent independent reviews by the Local Government Association Peer Review and Investors in People. Although both reviews were positive, we are already delivering action plans to fulfil their recommendations for further improvement as is the culture in our council.

‘In recent months, the council has also made significant progress in resolving historic financial issues of audit, assurance and governance going back to 2016.

‘All of this at a time when Tower Hamlets has delivered innovative measures to improve more lives such as being the only local authority to provide free school meals for all primary and secondary schools. An achievement recognised with an award by a cross party parliamentary group only last month.’

For more local news, read All Points East organisers to hold more events at Victoria Park despite residents’ concerns.

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