London Borough of Tower Hamlets

Lord Pickles Excerpts

Monday 7th April 2014 Written Statements

[The Secretary of State for Communities and Local Government (Mr Eric Pickles)]

It is a matter of public record that Ministers 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.

My Department has now received certain documents which make serious allegations about poor governance and financial management at the council. Having considered these carefully, on Friday 4 April, I exercised the powers granted to me by Parliament under the Local Government Act 1999 (as amended by the recently commenced Local Audit and Accountability Act 2014) to appoint PricewaterhouseCoopers LLP (PwC) to carry out an inspection of the authority’s compliance with its best value duty. A file has also been passed on to the Metropolitan police for consideration.

The inspectors arrived at the council on Friday morning. They will be speaking to the council and to external sources.

The matters to be covered initially by the inspection will in particular relate to: the authority’s payment of grants and connected decisions; the transfer of property by the authority to third parties; spending and decisions of the authority in relation to publicity, and the authority’s processes and practices for entering into contracts. The inspection will cover the period from Monday 25 October 2010 (when the mayoral form of governance was implemented in Tower Hamlets) to the present.

I have asked PwC to report their findings to me by 30 June 2014, or such later date as the inspector agrees with me.

I hope this decision 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.

I hope hon. Members will appreciate that we cannot be drawn into more detail while investigations are ongoing. Once the inspection team has completed its work, I will carefully consider the inspection report before taking any further action. Should it be necessary, I have powers to intervene in a council under section 15 of the 1999 Act.

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