The Secretary of State for Housing, Communities and Local Government (Steve Reed)
This Government will do what it takes to fix the foundations of local government. That includes taking prompt and direct action in the small number of councils that are failing their best value duty and not meeting the high standards expected by local residents. In that context, I would like to update the House on the London borough of Tower Hamlets.
On 22 January 2025 Ministers announced a statutory intervention for the London borough of Tower Hamlets, to be in place until 31 March 2028. The intervention was established to secure the council’s compliance with its best value duty following failings identified during a best value inspection in 2024. The statutory support package centred on the appointment of ministerial envoys to act as advisers and oversee improvement work that the council had already begun. The Government were clear that the council would need to drive forward changes at pace and that further action would be taken should it prove necessary. This was reiterated following the envoys’ first progress report in July. One year into the intervention, I welcome the early signs of progress and the council’s constructive engagement with the envoys. However, I am concerned that the council has not understood the severity of its situation or moved beyond planning for improvement into action and impact. These are concerns which have also been raised with the council by the envoys as part of their routine engagement.
I consider that the council is not sufficiently mindful of, or able to assess its own position. This is a view shared by the Local Government Association in its October progress review against the 2023 corporate peer challenge, where it describes the council’s “tendency towards optimism bias”. The council’s external auditor has also observed
“an ongoing reluctance within the organisation to fully acknowledge the scale of the challenge it faces”.
The council will not be able to move forward without a clear understanding of where it is now and how it needs to change.
This is slowing improvement. The council’s auditor has raised concerns about a lack of urgency from the council in response to its statutory recommendations issued in February, as well as a slow response to other significant issues such as the departure of the section 151 officer and investigating serious matters of non-compliance. Where the council has recognised issues and made plans for improvement, such as the developing continuous improvement plan, it is unclear that these are translating into measurable delivery. The Local Government Association also noted in its progress review that the council has “lots of plans” and “a plan for a plan”—but that “consistency, coherence and a strong delivery narrative’” and the “use of evidence and data” are needed to develop and demonstrate the fulfilment of any strategic vision for Tower Hamlets.
I also have material concerns about the council’s financial management and governance, which appears to be deteriorating. The significant weaknesses and statutory recommendations from the external auditor represent areas of serious risk and the auditor highlights the ongoing absence of an effective internal controls environment to safeguard public money. This is in the context of continuing allegations about leadership, governance and culture coming from a wide range of stakeholders. These risk weakening public confidence in the council. While not a best value issue, recent reports of councillors abandoning their constituents to stand overseas will only have further undermined the public perception of members’ commitment to the borough and to the improvement journey. This behaviour demonstrates an appalling lack of respect for residents and should not happen in any local authority.
Having carefully considered the auditor’s November draft annual report and interim value for money report for 2024-25, the Local Government Association’s October progress review against the 2023 corporate peer challenge and other relevant material, I remain satisfied that Tower Hamlets council is continuing to fail to comply with its best value duty in relation to continuous improvement, governance, leadership, culture and partnerships. I am also satisfied that the council is now failing to comply with its best value duty in relation to its use of resources.
I am therefore minded to exercise my powers of direction under section 15(5) and (6) of the Local Government Act 1999 in relation to the London borough of Tower Hamlets council to secure its compliance with the best value duty. Given the evidence of ongoing concerns, I believe that a strengthened and expanded version of the current intervention is necessary to get the council on track for sufficient improvement by the scheduled end of the intervention. This Government are committed to taking whatever action is needed to limit the length of statutory intervention to that which is absolutely necessary.
I am proposing a revised package of statutory support, which builds on the collaborative working to date between the envoys and the council, but recognises that the scale of challenge facing the council requires greater capacity for support and oversight. The proposal is therefore centred around increasing the powers available to the envoys and increasing their overall capacity, including through the appointment of an additional assistant envoy with expertise in finance. In detail:
I am minded to issue the envoys with powers to exercise council functions associated with governance, financial management and the recruitment, performance management and designation of statutory and senior officers. These powers are intended to safeguard the process and to be treated as in reserve, similar to the approach in Warrington borough council, to be used only where necessary to ensure compliance with the best value duty.
I am proposing to increase the allocated working days to 150 days for the ministerial envoy, and 120 days for each assistant envoy. This is commensurate with other interventions and proportionate to the scale of work required.
In order to strengthen the council’s finance function as part of its corporate core, I propose to expand the envoy team through the appointment of an additional assistant envoy with expertise in finance.
The envoys have written to Ministers outlining the terms of a new project designed to address the long-standing allegations made against the council, and unfavourable perceptions of the council’s activities which persist among its staff, stakeholders and the community at large. These perceptions are of real concern to the envoys. They are planning a series of “deep dives” regarding patronage in recruitment and staff promotions, resource allocation (community assets and community grants), housing allocations, licensing and planning decisions, and the structure, functions, activities and roles within the mayor’s office and mayoral advisory team. I share the envoys’ concerns, in particular regarding the mayor’s advisory team, and I am pleased that the council recognises this project as an opportunity to demonstrate transparency. However, considering issues faced by external bodies investigating non-compliance and the council’s tendency towards optimism, I propose to issue new directions requiring the council to support the project to the satisfaction of the envoys. This will ensure the project is appropriately independent and delivers its objectives comprehensively and in a timely manner. To that end, and to more broadly establish appropriate governance for this next phase of the intervention, I am also proposing to streamline all assurance mechanisms to sit under a single improvement board, to the satisfaction of the envoys.
In line with procedures in the 1999 Act, I am inviting representations from the London borough of Tower Hamlets and any other interested parties on the proposals on or before 2 February. The council is due to report to me later this week on delivery against the current directions. I have extended this submission deadline until the end of the representation period, should it wish to make changes. The envoys will also report during this period and I will carefully consider both reports alongside any representations before deciding how to proceed. If I decide to amend the intervention package in the manner described here, I will then make the necessary statutory directions under the 1999 Act and nominate a further assistant envoy. Any directions that I make will be without prejudice to making further directions, should this prove necessary.
This action is not proposed lightly. It is clear that there are some officers and members in Tower Hamlets working hard with the support of the envoys to improve the council for the residents of Tower Hamlets, and this announcement should not deter them from their commitment. Rather, I consider that the proposed package will provide them with the focused support and challenge necessary to hasten the pace of improvement and provide local residents and businesses with greater assurance that the council is on a path out of intervention and towards longer-term stability. This Government are committed to providing the London borough of Tower Hamlets with whatever support is needed to ensure its compliance with the best value duty and to realise sources of growth in the borough. Growth is the defining mission of this Government, and I expect all parties to continue to work in partnership to secure Tower Hamlets’ contribution to a stronger economy.
I will deposit in the House Library copies of the documents I have referred to, and publish the relevant letters on gov.uk. I will update the House in due course.
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