Tower Hamlets grants investigation – DCLG press release

This is the text of the press release just issued by the Department for Communities & Local Government.

Secretary of State appoints inspectors to look into allegations made against Tower Hamlets.

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.

Further information

  1. 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.
  2. 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.
  3. Section 12 of the Act provides that the authority to be inspected must pay PricewaterhouseCoopers LLP reasonable fee for carrying out the inspection.
  4. 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.
  5. PricewaterhouseCoopers will report its findings to the Secretary of State by 30 June 2014.
  6. While the investigation is ongoing it would be inappropriate for the government to comment any further.
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