The Secretary of State for Communities and Local Government, Eric Pickles, has today (4 April 2014) appointed inspectors to look into allegations of governance failure, poor financial management and fraud at the London Borough of Tower Hamlets.
Serious concerns have been raised following the receipt of certain documents. Using new laws that came into effect today the Secretary of State, acting in the public interest, has exercised his legal power today to appoint PricewaterhouseCoopers LLP to carry out an inspection of the council. A file is being passed onto the Metropolitan Police for consideration.
The PricewaterhouseCoopers inspection will look into evidence of the authority’s payment of grants, the transfer of property, spending decisions in relation to publicity, and other contractual processes from 25 October 2010 to the present day.
Eric Pickles said:
It is a matter of public record that I 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.
Following the receipt of a number of documents, I am now taking legal steps, in the public interest, to appoint inspectors to look into the allegations in respect of Tower Hamlets.
I hope this 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.
This central action is not undertaken lightly, but localism requires local transparency, scrutiny and accountability, and these vital checks and balances must be upheld.
Tower Hamlets had been duly informed and PricewaterhouseCoopers is already on site. The inspectors have a legal right to access all premises and documents belonging to the authority which appear necessary for the purposes of inspection.
Anyone who has information which may be relevant to the inspection may send it directly to the inspection team by email at firstname.lastname@example.org
Or write to them at:
London Borough of Tower Hamlets Inspectors EP4
1 Embankment Place
London, WC2N 6RH
All disclosures will be treated as confidential, and every effort will be made to protect the identities of those who submit information, however, evidence of fraud may be passed to the police.
Update 30 June 2014
Following their request PricewaterhouseCoopers have been granted an extension to undertake further investigations into allegations of governance failure, poor financial management and possible fraud at the London Borough of Tower Hamlets.
PricewaterhouseCoopers informed the government that the London Borough of Tower Hamlets had considerably delayed the investigation by delaying the provision of key information or simply not providing it at all.
Ministers will update the House of Commons on the investigation in due course.
Update 11 September 2014
Inspection of the London Borough of Tower Hamlets: concluding stages
In April inspectors from PricewaterhouseCoopers were asked to look into serious allegations of governance failure, poor financial management and fraud.
PwC have now substantially completed their inspection fieldwork and are in the process of producing their report.
PwC has today (Thursday 11 September) sent certain factual information, which they may include in their full report, to Tower Hamlets Council for fact-checking.
Where individuals have given information in interviews which may be referred to in the report, PwC will also be sending relevant information to that individual by the end of the week.
The council and individuals receiving this information will have 10 working days to comment to PwC on its factual accuracy.
All this information has been provided by PwC on a strictly confidential basis solely for the purpose of this fact-checking exercise.
From Thursday 25 September PwC will be considering all the comments received, and finalising their inspection report, which must include any matters identified where the council has not complied with its statutory best value duty.
As required by statute once PwC has finalised its full report, it will then send a copy of that report to the Secretary of State and to Tower Hamlets Council.
Once the Secretary of State has received the report, he will give it careful consideration. Subsequently, in due course, he intends to exercise his statutory power to publish the report, and to make any statement he considers appropriate to Parliament.
If the Secretary of State is satisfied that Tower Hamlets Council is failing to comply with its best value duty, he may exercise his powers of statutory intervention. Statutory intervention may take a number of forms including directing a council to take any action that the Secretary of State considers necessary or expedient to secure its compliance with the best value duty, or directing that certain parts of the council’s functions be undertaken by the Secretary of State or by a person - for example a commissioner - appointed by him for that purpose.
- These steps have been taken using statutory powers under the Local Government Act 1999, as amended by the new Local Audit and Accountability Act 2014, which relate to a local authority’s functions in respect of governance. The new provisions commenced today, as part of the wider abolition of the Audit Commission.
- Section 10 of the Act provides power to the Secretary of State to appoint inspectors to carry out an inspection into a local authority’s compliance with its best value duty.
- Section 12 of the Act provides that the authority to be inspected must pay PricewaterhouseCoopers LLP reasonable fee for carrying out the inspection.
- Section 15 of the Act provides powers to the Secretary of State to intervene in the running of the council, should he consider that necessary, in light of the inspector’s findings.
- PricewaterhouseCoopers will report its findings to the Secretary of State by 30 June 2014.
- While the investigation is ongoing it would be inappropriate for the government to comment any further.