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Archive for November 4th, 2014

On April 16, 12 days after Eric Pickles sent PwC to Mulberry Place, Takki Sulaiman, Tower Hamlets council’s £100,000 a year head of communications and marketing (and publicity), wrote this in an email to me:

Maybe those who followed your lead may regret they rushed to judgment about LBTH and our processes? Meanwhile we get on with the business of running services – and working with the auditors.

I’ve been looking forward to publishing those words today.

It’s always easy to jump to judgment with Tower Hamlets council. Some of the “damning report” headlines that appeared across the media this morning were quite probably pre-planned.

I said in my last post I’d reserve judgment until I’d gone through some of the details and listened to the exchanges in the Commons.

Well, the exchanges among Tory and Labour MPs were universally damning, there’s little doubt about that. My prize goes to Ealing MP Steve Pound, who can always be relied upon for vivid language. He said the mayor’s office was responsible for a “foul, fetid, reeking stench” emanating from wonderful Tower Hamlets.

Eric himself was also up there. “There can be no place for rotten boroughs in 21st Century Britain,” he said…(to which Tim Minogue, the editor of Private Eye’s Rotten Borough column, tweeted: “Is that a threat?”)

But what of the substance of the report itself?

There was no knockout blow, but I have to say, the more you read the details, the more damning it is.

The tone suggests the PwC auditors were shocked by what they found.

The council and Mayor Lutfur Rahman are today trying to downplay its importance. They claim “no criminality or fraud” was found and that council processes had already picked up much of the PwC findings.

Pull the other one.

To paraphrase Takki, maybe he and Lutfur may regret they rushed to judgment about the journalists investigating and reporting on Tower Hamlets.

Lutfur, whose hopes of returning to Labour are now dead, may also regret the day he decided to “reform” the way grants were decided at the town hall. One of his early decisions as mayor was to abolish the Grants Panel, an open committee of councillors that published in full the background papers for their decisions, and replace it with a behind-the-scenes committee of mates and officers…with himself having the final say.

I warned at the time this was a mistake and I included it in a lecture to delegates at the Centre for Investigative Journalism in 2012. It was also the area I advised the Panorama team to go hunting when we first met in the summer of last year.

As it happens, the PwC report is a full vindication (not that one was needed) for the Panorama programme.

It’s worth noting this statement today from the BBC and Films of Record, the production company behind the Panorama programme:

We welcome the findings of the report. Panorama’s investigation uncovered serious concerns about the use of public money, and today’s report vindicates the strong journalism we have continued to defend amid inaccurate commentary and misinformation surrounding the programme. 

John Ware, Panorama reporter, said: “Even before transmission of Panorama, the Mayor insisted there was no merit in any of the very serious questions I and my colleagues at the BBC and Films of Record raised over his approach to governance. He said our motivation could only be explained by racism and Islamophobia. This was manifestly never the case and today’s report shows our journalism was 100% justified.”

Before we get into the detail of some of the report, let’s get a few other statements out of the way.

From John Biggs:

This is a shameful report that shows a disregard for proper, transparent, accountable decision-making by the current administration. If money has been allocated to preferred organisations or areas of the borough then it follows that others have missed out.

The Mayor cannot dismiss this damning report by independent auditors as an attack by his political opponents as he always has done until now. He now has nowhere to hide and should think very carefully about whether his actions are compatible with remaining Mayor.

Labour group leader Cllr Rachael Saunders:

Cllr Rachael Saunders, Leader of Tower Hamlets Labour Group said:

“Labour demands the highest standards of probity in our elected representatives, and this damning report vindicates the decision to expel Lutfur Rahman from the Labour Party.

Councillors in Tower Hamlets have been fighting unjust grants allocations and opaque, rotten decision making since Lutfur Rahman was thrown out of the Labour Party and stood as an “independent” Mayor.

Earlier this year we sought to start a recruitment exercise for a Chief Executive – we do not currently have one. Lutfur Rahman has chosen not to co operate.

Now PwC has called into question the adequacy of the council’s governance arrangements. It is a cause of sorrow and shame for this great borough that Luftur Rahman as Mayor has taken us to the point of government intervention.

He should consider his position. Tower Hamlets deserves better.

And Lutfur Rahman:

We need to be clear that there was no evidence of fraud or criminal activity identified in the PwC report published today.

All governance issues identified in the PwC report have already been highlighted by our internal processes and are being rectified accordingly.

Given that Tower Hamlets Council is one of the highest performing local authorities in London, and the wider UK for service delivery to our residents, I am surprised at the Secretary of State’s comments today in the House of Commons.

I believe that there is a huge disparity between the detail of PwC’s report and the level of the Secretary of State’s comments. We will be responding to Mr Pickles in due course.

This certainly sounds as if those clever lawyers at Tower Hamlets are urging some kind of legal challenge.

I think they and their masters would be wiser to pipe down, take the medicine, and get on with the business of governance. And prove to the Commissioners who will soon arrive to oversee parts of the authority that they’re semi-competent.

So what’s actually happened?

Eric Pickles was scathing in the House today, and he clearly enjoyed himself. Politicians like taking action, no matter how much they say they don’t.

Based on the PwC findings he’s proposing to appoint three Commissioners to oversee the distribution of grants, the sales of properties and council publicity.

The Commissioners will also oversee the recruitment of three senior positions on a permanent basis: a new chief executive, monitoring officer (bye-bye Meic Sullivan-Gould) and a new chief finance officer.

None of these positions is currently filled on a permanent basis, and that, according to the PwC, has been part of the problem.

In Tower Hamlets it’s easy to become immune to some of the goings-on. We’ve seen them time and again for far too long. But for newcomers, the situation is surely shocking.

So it’s not good enough for the mayor’s supporters to downplay important process failures or to suggest similar discrepancies would be found in a £1m audit of any other local authority.

As The Guardian’s political editor Patrick Wintour reports:

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 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.

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.

The report is almost 200 pages long and I’ll do a series of write-ups over the coming days.

It is also likely to have cost more than £1m to produce. I had been expecting Eric to announce DCLG would pick up the tab, but he said the burden must fall on Tower Hamlets taxpayers.

That’s surely unjust–and a mistake politically. It gives Lutfur’s team an attack line. The politics of martyrdom plays well in Tower Hamlets, after all.

Would this report, had it been published before the election, persuaded many Lutfur voters to desert him? My instinct is not many, and I do wonder whether Rabina Khan might now be emboldened to go after Rushanara Ali in Bethnal Green and Bow in May.

In fact, there are some Lutfurites pondering the possibility he himself may resign and call a Mayoral by-election to re-establish legitimacy. I doubt he would.

As I said, more on the detail tomorrow.

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It’s going to be a busy day for me today so apologies for being brief.

The PwC report is here.

I’m reserving judgment on exactly how “damning” it is. On a first glance there are serious criticisms on council process failures. These could amount, in series, to a damning verdict.

Eric Pickles is due to make a statement at 12.30pm but I suspect a new chief executive is inevitable. He’ll also possibly announce he’s appointing commissioners to take over the grants system and to oversee the sale of council properties.

PwC have certainly found governance failures.

They also hint that too much executive power has been given to one individual regarding the mayoral system. Tower Hamlets may be the extreme example which demonstrates a broader need for improvement in the system.

Politics in Tower Hamlets has been dysfunctional for many years. The arrival of Respect in 2005 blew apart Labour’s monopoly in the borough and that was the catalyst for instability.

The resulting revolving door of councillor defections and swapping of Labour group leaders created a factionalism that even highly regarded senior council officers found difficult to deal with.

We then had the worries over the influence of the Islamic Forum of Europe and its links with certain councillors. Then we had the Respect-led petition which paved the way for the directly elected mayoral system.

And then the Labour party imploded with the row over the selection of Lutfur Rahman.

So Lutfur became a powerful executive mayor as an independent without the checks and balances of a party group. He hired a brand new mayoral office, and that created its own power plays at officer level in the council.

On top of that, he was an angry man under extreme pressure, with one fundamental aim: to get re-elected.

I think he was then badly advised. He took direct control of grants and was surrounded by fawning bidders from external groups.

The dysfunctional politics also meant that when Kevan Collins resigned as council chief executive in 2011, we had an almighty bun fight over his successor.

In short, the successor never happened.

And we’re here today.

Note that East End Life was not examined by PwC and nor were nine examples found by the council of possible fraud in the delivery of youth service grants.

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