Eric Pickles takes over 'rotten' Tower Hamlets Lutfur Rahman: an East End phenomenon Council 'guilty of systematic failings'


  • Eric Pickles takes over 'rotten' Tower Hamlets

    Eric Pickles, secretary of state for communities and local government
    Communities secretary takes over key administration at council after an inquiry finds mismanagement

    Eric Pickles, secretary of state for communities and local government
    Eric Pickles, secretary of state for communities, says his direct intervention in Tower Hamlets contradicts everything he believes in. Photograph: PA
    The communities secretary, Eric Pickles, has taken over the administration of Tower Hamlets council in east London for two years after an inquiry commissioned by his department found wholesale mismanagement, questionable grant-giving and a failure to secure best value for local taxpayers.
    Pickles plans to dispatch three commissioners to administrate grant-giving, property transactions and the administration of future elections in the borough.
    The commissioners, who will be answerable to Pickles, will be in place until March 2017 and are tasked with drawing up an action plan to improve governance in the council, including the permanent appointment of three senior council officers including a chief executive.
    Pickles said his direct intervention was against everything he believed in, but he said the report, conducted by the accountancy firm PwC, showed the directly elected mayor, Lutfur Rahman, had sown division and should bow his head in shame at the report’s findings. Executive power had been left unchecked and misused, he added.
    Pickles’ actions represent his biggest intervention in local government since he took over Doncaster council in 2010, but he insisted “there can be no place for rotten boroughs in the 21st century”. His actions were largely supported by Labour.
    Pickles said the report painted “a deeply concerning picture of obfuscation, denial, secrecy the breakdown of democratic scrutiny and a culture of cronyism risking the corrupt spending of public funds”.
    He proposed that all Tower Hamlets grant-making, property disposals and publicity functions be sanctioned by the commissioners. In an attempt to reduce the threat of electoral fraud in the 2015 general elections, Pickles also announced that the appointment of electoral registration officer and returning officer are to be exercised by the commissioners.
    He added that he wanted the council’s written agreement within 24 hours that they would not appoint an officer or make any grants pending the start of his intervention package.
    “The abuse of taxpayers’ money reflects a partisan approach to politics that seeks to spread favours and sow divisions”, Pickles said. “Such behaviour is to the detriment of integration and community cohesion in Tower Hamlets and in our capital city. This is a borough where there has been widespread allegations of extremism, homophobia and antisemitism has been allowed to fester without proper challenge.”
    He said grants had been distributed without rationale, any clear objectives, monitoring, transparency and with officer recommendations systematically overruled. He pointed out that across mainstream grants by the council, 81% of officer recommendations were rejected, and more than £400,000 was handed out to bodies that failed the minimum criteria to be awarded anything at all. He added that Poplar town hall had been sold against official advice to an individual who had helped the mayor in his electoral bid.
    Pickles said he would wait for two weeks before appointing the commissioners in order to give the council time to respond to his intervention package and the PwC report.
    Responding to the PwC report, Rahman the former Labour politician who now runs Tower Hamlets as an independent said: “In April 2014, Eric Pickles announced that he was concerned about potential fraud. These allegations have been rejected by PwC. The report highlights flaws in processes. These are regrettable. We will learn from this report and strengthen our procedures accordingly. I was always confident wild claims about fraud would not be substantiated. Both my officers and I want to get on with our jobs serving all residents in Tower Hamlets.”
    A council spokesperson said: “While the PwC report identifies some process and governance issues that needed to be improved, the council notes that no evidence of criminality or fraud has been identified by the government appointed forensic auditors.
    “In our view there is no evidence that these flaws of process are ‘regular or endemic’ meaning that there is no failure to comply with our best value duty.”
    Council sources said they would comply with the order to give an immediate undertaking not appoint new officers pending the possible appointment of commissioners. Council officers also suggested that a judicial review into the actions of Eric Pickles including the commissioning of the PwC report, and the associated costs, is likely to go ahead on 14 November.
    They also insisted the bar is set high for Pickles to prove the council has been so badly run that it needs in effect for a new level of independent scrutiny to be introduced. Contrary to newspaper allegations, the report had found no evidence of corruption or fraud, the council insisted, adding that it was acknowledged that public services were well run in the borough.
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