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This is the Written Ministerial Statement from Eric Pickles in the Commons today. It explains why the Commissioners have been sent in and gives his opinion on the representations made by Mayor Lutfur Rahman and Tower Hamlets council on the PwC report.

In short, Eric says: “It is disappointing that there is a culture of denial in the mayoral administration about its systematic failures.”

Here’s the statement (I’ve underlined and put in bold font what are considered the key sections).

I would like to update hon. Members on a series of steps we are taking to improve the quality of local government services and ensure value for taxpayers’ money.

London Borough of Tower Hamlets

On 4 November, I informed the House that I was satisfied, having considered the report of the inspection by PricewaterhouseCoopers LLP (PwC) of Tower Hamlets Council, that that Council is failing to comply with its best value duty, and proposed to statutorily intervene to secure the Council’s compliance with that duty.

I gave the Council until 18 November to make any representations it wished on the inspection report and my proposal for intervention, and I sought and received from the Council certain undertakings not to take further specified actions on grant making, appointment of statutory officers, and transfer of property to third parties, until I had reached decisions about the use of my intervention powers.

I have now carefully considered all the representations that the Council has made. I have also considered afresh the PwC inspection report and the report the Election Commission published on 1 July 2014 into the elections in Tower Hamlets, and I have had appropriate regard to other representations that I have received about my proposed intervention.

I remain satisfied that the Council is failing to comply with its best value duty. It is disappointing that there is a culture of denial in the mayoral administration about its systematic failures.

As I said in my previous statement: “Localism requires local accountability and local democracy. Municipal corruption undermines the local checks and balances that are vital in a democracy and essential in mayoral systems with their concentration of power. We cannot risk such corruption”. But this is not just about the money. The abuse of taxpayers’ money and the culture of cronyism reflects a partisan community politics that seeks to trade favours and spread division on the rates. Such behaviour is to the detriment of integration and community cohesion in Tower Hamlets and in our capital city. This remains my view.

I have concluded that it is both necessary and expedient for me to exercise my intervention powers in the Local Government Act 1999 as I have proposed, and accordingly, I have today given the Council the necessary directions under section 15(5) and 15(6) of the 1999 Act to implement the proposed interventions.

These are centred on putting in place until 31 March 2017 a team of Commissioners to oversee or exercise certain of the Council’s functions. It is open to me to review this in the light of the progress made by the Council to secure compliance with its best value duty. I have nominated Sir Ken Knight to be the Lead Commissioner. Max Caller CBE has also been nominated  as a Commissioner, and I will announce a further Commissioner in due course.

In summary, the specific intervention measures are as follows.

(1) To require the council

to draw up and agree with the Commissioners within three months from the date of the direction a strategy and action plan for securing the Council’s compliance with its best value duty (to include as appropriate complying with the specific requirements set out below), and to submit this to the Secretary of State;

to prepare under the direction of the Commissioners and submit to the Secretary of State at 6 monthly intervals thereafter until 31 March 2017 a report on progress against the strategy and action plan;

to undertake as a matter of urgency a recruitment exercise, under the direction of the Commissioners, with the aim of making as soon as practicable, permanent appointments of suitable persons to the positions of the three statutory officers (Head of Paid Service, Chief Finance Officer, and Monitoring Officer);

until 31 March 2017 to obtain the prior written agreement of the Commissioners to (a) any dismissal or suspension of a statutory officer; and (b) any proposed appointment or designation of a replacement;

until March 2017 to obtain the prior written agreement of the Commissioners before entering into any commitment to dispose of, or otherwise transfer, to third parties, any real property other than existing single dwellings for the purposes of residential occupation;

within 3 months from the date of the direction, to prepare a fully costed plan for how the Council’s publicity functions can be properly exercised and agree that plan with the Commissioners; and until 31 March 2017 adopt any recommendation of the Commissioners with respect to that plan or to publicity more generally;

by 1 February 2015 to prepare and implement an action plan, in consultation with the Commissioners, to achieve improvements in the Council’s processes and practices for entering into contracts, and until 31 March 2017 to adopt all recommendations of the statutory officers in relation to the processes and practices to be followed in relation to entering into contracts, unless the Commissioners’ prior written agreement is obtained not to do so.

(2) The Commissioners to exercise until 31 March 2017 all functions of the Council relating to the making of grants, including responding to Freedom of Information Act requests in respect of grant payments, with the Council providing at the request of the Commissioners its views on proposed grants.

(3) The Commissioners to exercise until 31 March 2017 the Council’s functions of appointing persons to and removing them from the posts of Electoral Registration Officer and Returning Officer for Local Elections (this will also apply to their general election duties).

The Council will be required to comply with any instructions of the Commissioners in relation to the exercise of those functions for which the Commissioners are responsible, and  to provide the Commissioners at its expense with such services, amenities and administrative support as the Commissioners may reasonably require, and with access to the Council’s premises, documents, and to any employee or member as appears to the Commissioners to be necessary. The Council will also be required to pay the Commissioners’ reasonable expenses and such fees as I determine.

Intervention was not a decision taken lightly, however I could not allow the overwhelming evidence of the serious failings within Tower Hamlets to continue unchecked. I do not accept the Mayor’s representations that the problems in the Council can easily be put right.

Residents need to know that decisions are being taken properly in an open and accountable way. The Commissioners I am appointing are experienced and talented professionals who understand that transparency and accountability are vital to the functioning of local democracy.

Local government transparency

The Coalition Government has taken many steps during this Parliament to place more power into citizens’ hands to increase democratic accountability and make it easier for local people to contribute to the local decision making process and help shape public services. Transparency is the foundation of local accountability and the key that gives people the tools and information they need to play a bigger role in society.

In October, we issued the Local Government Transparency Code 2014 and have made it a legal requirement for local authorities to publish much of the data specified in the Code. Today, we have taken another step forward in ensuring that local people have key information to hold public bodies to account by publishing a Transparency Code for smaller authorities.

Under the new local government audit regime smaller authorities will be subject to the transparency requirements laid out in this Code in place of routine external audit. The Code will require the on-line publication of information that provides taxpayers with a clear picture of authorities’ activities, spending and governance, improving the ability of communities to hold local public bodies to account.

The Transparency Code for Smaller Authorities applies to parish councils, internal drainage boards, charter trustees and port health authorities with an annual turnover not exceeding £25,000. Published initially as recommended practice, we intend, subject to Parliament, to make the Code mandatory by the start of the 2015-16 financial year and will offer support to this local government sector to help authorities comply with these requirements.

Backing locally-supported joint working

There are many ways that local authorities can work together to save money and improve services, but there is equally no one-size-fits-all model either. The Dorset Fire Authority and the Wiltshire and Swindon Combined Fire Authority have formally made representations requesting a merger. We have today published a consultation paper on their proposals.

Contrast to the last Administration, we do not believe in top-down restructuring. Nor do we agree with the current proposals of the HM Opposition to force more mergers. The botched FireControl programme is a prime example of how such restructuring is expensive and distracting. Rather, we will support locally-led partnerships, where there is genuine support from all members of the local community, and the consultation will test this local support.

Improving support arrangements for local councils

It is important to have in place the most effective arrangements to help councils across the country to continue to improve and reform – essential if they are to deliver sensible savings.

Councils have a right to expect services designed to support them are the best they can be, provide the support they need and provide best value for money.

In 2015-16, we intend to provide grant of £23.4 million to the Local Government Improvement and Development (formerly IDeA) to deliver effective support to councils. This will be accompanied by robust scrutiny to ensure that every pound spent by them is spent appropriately and on providing direct support to councils. We expect of them the same standards and value for money as we expect of councils delivering frontline services, and we expect them to be transparent with councils about how they have spent the grant and the services they deliver to support councils.

The Coalition Government’s policy is to open up budgets to competition wherever possible. We intend to explore how the budget given for improvement services can be opened up to competition with contracts in place for 2016-17, allowing councils, council groupings, think thanks, mutuals and other interested parties to bid for such funding, and drive further best practice in local government.

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At last. Two of the three Commissioners to be appointed by Eric Pickles to run parts of Tower Hamlets council arrive for work this morning.

They are Sir Ken Knight, who will be the lead Commissioner, and Max Caller. The third will be announced in due course.

Both Sir Ken and Mr Caller are heavy-hitters.

Sir Ken is the better known nationally, while Mr Caller has a huge reputation as a local government Mr Fixit man: he was in charge of Hackney council from 2000-04 when that authority was being transformed under special measures.

First, Sir Ken:

s300_ken_knight

He’s currently a director of his own consultancy company, Ken Knight Consulting Ltd, having retired from the fire service.

He has a distinguished career. He oversaw the London Fire Brigade as London Fire Commissioner from 2003-07, including during the July 7 terror attacks.

Since that stint ended in 2007, he has worked on a number of high profile projects for central governments, both in the UK and abroad. In Britain, he worked until last year as the Government’s first Chief Fire and Rescue Adviser.

He wrote the Rising to the Challenge report on the 2007 floods and was in charge of the review into the Lakanal House fire disaster in Camberwell in 2009.

And last year, he completed the cost-saving review of England’s 46 fire authorities, which found £200million could be saved.

You can see why ministers like him. Unions have a different opinion. How Lutfur Rahman and he will get along is anyone’s guess. However, Lutfur’s mentor Ken Livingstone did once have a legal run-in with him in 2007.

Here’s an extract from Sir Ken’s Linkedin profile.

Sir Ken Knight linkedinThere is more on his own website, here, which states he is the independent chairman of the board of Exova, a large company specialising in providing fire safety materials. I can’t find his name on Exova’s website so that might be an old listing.

He is also one of the Queen’s Deputy Lieutenants for London, so he will probably know Commander John Ludgate, the Deputy Lieutenant for Tower Hamlets who does a fabulous job of looking both bemused and amused during council meetings.

And so to Max Caller.

Max Caller

In this interview here, he talks about how his career started off as a sewer inspector in the underbelly of London. So fantastic training for the current situation in Tower Hamlets.

Actually, I think he will be great for the borough: he’s a former chief executive of Hackney, Barnet and Haringey councils and he’s been an election observer in Albania. What more do you need…

The Government’s biography of him states:

Max Caller CBE has amassed 33 years experience in London boroughs with the majority at Chief Officer level.

As Chief Executive of Hackney, he managed the transition of the authority from the worst in the country to one of the fastest improving.

As Chief Executive of Barnet he introduced a cabinet form of governance and an effective scrutiny system, which was one of the models for subsequent legislation.

Max was appointed the first Regional Returning Officer for London for the 1999 European elections, was Deputy Chief Counting Officer for the UK wide Alternative Vote referendum and has been involved in electoral pilot arrangements on an all-postal/electronic counting system for borough and mayoral elections.

He has also served as a short term observer for OSCE overseen elections in Albania and Montenegro and as a Commonwealth observer for elections in Kenya and Ghana.

Since April 2010 he has been chairman of the Local Government Boundary Commission for England.

He grew up in South Wales and is an engineer by background. He’s also on the advisory board of Norwood, a leading Jewish charity whose president (in the interests of transparency) is my employer (until Friday), Richard Desmond.

Here’s an extract from Eric Pickles’s press release issued this morning:
The team will, with immediate effect, take control of grant making within the council, will approve any sale or disposal of property and will agree a plan for publicity after independent inspectors PriceWaterhouseCoopers (PwC) concluded the Borough was failing in its best value duty in these areas.

The PwC report, published on November 4, severely criticised how grants were handed out to organisations which failed to meet basic criteria for public funding, property was sold without proper process and taxpayers’ money was spent on political advertising for the Mayor.

The authority, under the direction of the Commissioners, will have three months to prepare a strategy and action plan setting out how it will comply with its duty to act openly and transparently, serving all of its communities fairly and securing value for money.

The Commissioners, due to be in place until 31 March, 2017, will drive forward the action plan, updating the Secretary of State every six months on progress.

Secretary of State Eric Pickles said: “Intervention was not a decision taken lightly however I could not ignore the overwhelming evidence of the council’s failure, and allow this to continue unchecked. I do not accept the Mayor’s representations that problems are easilhy put right.

“Residents need to know that decisions are being taken properly in an open and accountable way. The Commissioners I have appointed are experienced and talented professionals who understand that transparency and accountability are vital to the functioning of local democracy.

Lead Commissioner Sir Ken Knight said: “We are determined to restore faith in how Tower Hamlets operates. Local people deserve a council that not only makes decisions in an accountable and transparent way but also with the benefit of all residents in mind

“Today marks the start of a long but necessary journey to ensure public confidence in the council is restored, community cohesion maintained and that Tower Hamlets is no longer a by-word for poor governance.”

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This is cross-post from Democratic Audit, a public policy group based at the London School of Economics. It was published two weeks ago and was written by Professor Michael Keith, the former Labour leader of Tower Hamlets council, who is now the Director of COMPAS at Oxford University.

This precis was written by Democratic Audit’s editors: “The Secretary of State for Communities and Local Government recently appointed commissioners to run the London Borough of Tower Hamlets, following the publication of a Government-commissioned PWC report which was damning about the failings of the current adminstration, led by Mayor Lutfur Rahman. Michael Keith, a former Leader of the Council, argues that the affair highlights some inherent tensions in local and municipal government, which the Mayoral structure is ill-equipped to deal with.

By Michael Keith

Competent bureaucrats commonly believe they protect the public interest by delivering transparent decision making in public institutions. This is commendable. Politicians normally believe that they are elected to carry out the wishes of their voters. This is forgivable. But these imperatives rub against each other when politicians try reshaping things in an image they prefer and the bureaucrat wants to preserve an order they recognize. This is difficult.

This tension is not new. Recent events in the east end of London exemplify an old problem. Max Weber’s thoughtful and commonly misunderstood discussion identifies this tension as one of the diagnostic features of bureaucracy. The bureau is in and of itself without politics. In a vocabulary anachronistic in its use and counterintuitive in its usage it might even be argued that Weber suggested bureaucracy was fundamentally anti-political.

The bureaucrat could serve the Chinese despot, the papal machine or the liberal democratic reforming state equally well. But at its best s/he personified a particular kind of stasis, a performative form of repetition without difference.

The bureau reproduces a specific social, moral and political order; dispassionately and without fear or favour or individual exception. This predictable repetition is at the heart of the bureau’s strengths.  At its best it makes visible transparent process. But our conception of the ‘political’ is at heart about change, the juxtaposition of one moral order against another.

The politician – whether or not democratically elected – is for Weber a personification of the will to advance a preferred moral order and social settlement. A ‘conservative’ appeals to a particular set of pre-existing values threatened by social change, an alternative politics actively promotes a new moral order against an old one.

In cities of flux, characterized by high levels of demographic ‘churn’, migrant urbanisms and processes of regeneration and gentrification the social order is constantly on the move, generating particular challenges for the bureau.

Translated into local government, the most conscientious political actors become engaged in representative democracy for a reason. Councillors normally want to change things in the ward and the local authority they represent. They identify needs, community organisations they believe are doing good things unnoticed, campaigns they want to champion. Such interests sometimes can be advanced through the bureaucracy.

But such interests at other times have to be championed against the bureaucracy. Domestic violence only becomes an ‘object’ of local governmental gaze when community organisations campaign for it to be recognized. The consequences of an ageing population with multiple challenges are only recognized by welfare departments after a lot of knocking on doors at city hall.

And in multicultural settings both entrenched forms of systemic racial disadvantage and a politics of recognition of cultural difference depend on changing the local state to recognize properly the different needs of cultural groups and evolving and at times banal demographics.

In my own experience the mums’ clubs based in certain locations and the provision for the elderly that once appealed effectively to a past East End tradition of gathering, music and alcohol based conviviality worked accidentally to exclude those who did not gather in pubs, did not socialize around a cup of tea and a cigarette after dropping the children at school.

So the bureau only recognizes and changes with pressure. Multicultural realities challenge and change the bureau, belatedly some times, proactively when politcians advance in good faith an understanding of the complexities of new social formations through the architecture of city hall.

But such change is never without friction.

Such tensions can be constructive. But in British mayoral systems we are unsure what the proper checks and balances should be.

In Tower Hamlets when the will of a people so diverse, so rich and poor, so much a mix of different cultures is personified by one man, the challenges are particularly acute.

Price Waterhouse Coopers last week reported to Secretary of State Eric Pickles a situation that led the Secretary of State to suggest that the report “paints a deeply concerning picture of obfuscation, denial, secrecy, the breakdown of democratic scrutiny and accountability, and a culture of cronyism risking the corrupt spending of public funds.”

The report highlighted that in Tower Hamlets the three most senior bureaucrats are all on temporary contracts. The boss (head of paid service), principal lawyer (monitoring officer) and head of finance (section 151 officer) are insecure. They depend on political whim for their pay cheque.

The checks and balances for a mayor in one of the most socially polarized parts of Britain are diminished. As PWC suggest and illustrate by one example after another the result in today’s east end is potentially catastrophic.

This is why we need to think carefully how checks and balances for elected mayors should work, in the east end and elsewhere.

On the BBC Radio 4 Today programme on 13th November (and in other media) reports on recent events in Tower Hamlets have focused on whether or not there has been criminal behavior reported by PWC.

Former Mayor of London Ken Livingstone and former MP for Bethnal Green and Bow George Galloway, both supporting Mayor Lutfur Rahman, curiously mirrored the framing of BBC journalist Zoe Conway in focusing on the issue of criminality and fraud.

But this is a chimera. If the report is judged by whether criminality or fraud is eventually proven, if the mayoralty is judged by convictions in court, misses the point.

The true message of the PWC report and the lesson for putative mayoral innovations, in Tower Hamlets, in Manchester and elsewhere is that if the proper checks and balances on deliberative democracy are not in place then the result is dysfunctional, opaque and – most importantly – to the detriment of democracy and the disadvantage of local people.

It is why most people will welcome the potential role of three commissioners in east London that might mitigate the questionable deployment of democratically elected but executively absolute power in today’s Tower Hamlets.

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A High Court judge today rejected Tower Hamlets council’s long running legal challenge to Eric Pickles’ decision to send in inspectors to the town hall.

Mr Justice Goss refused the council permission to proceed to a full judicial review of the legal basis for the inspection, which culminated in PricewaterhouseCooper’s highly critical report of the town hall last week.

Today was the second rejection of the council’s legal bid by a senior judge and its costs are in the region of £50,000.

In August, Mr Justice Kenneth Parker in a written ruling (here and here) had described the application as “hopeless” and “unmeritorious”.

Undeterred, the council, led by Mayor Lutfur Rahman and advised by Interim Monitoring Officer Meic Sullivan-Gould, then requested today’s oral at the Royal Courts of Justice.

However, the council’s barrister, Jonathan Swift QC, lost his argument.

The council’s legal costs on this case alone are at least £40,000.

Today’s judge also ordered the town hall to pay DCLG’s legal costs of £8,500.

When Eric Pickles announced the inspection in April, the council issued a statement “welcoming” the chance to prove it spent taxpayers’ money in a “best value” way.

The council was then criticised by the Government for dragging its heels during the inspection and while it contested its legal basis.

Local Government Minister Kris Hopkins said after today’s hearing: “We are pleased that the courts have thrown out Tower Hamlets’ legal challenge for a second time.

“However, it is disappointing that local taxpayers are having to foot the bill for the Mayor’s legal costs.

“This reflects a culture of denial in the local authority about the dysfunctional governance of the mayor’s administration.”

Mayor Rahman said: “Our case challenged the £1m cost of the audit and raises fundamental questions about the legal relationship between local and central government.

“We are disappointed that the judge refused permission for us to proceed to a full Judicial Review hearing. We are now fully engaged with responding to the Secretary of State’s proposals and will continue to do all we can to ensure that our residents interests come first.”

…………

This was Mr Justice Kenneth Parker’s written ruling from August:

3 - Tower Hamlets Judicial Review Judgement 3a - Tower Hamlets Judicial Review Judgement

Today, Mr Justice Goss said he could not do any better than his colleague. He read out ground three again in its entirety.

The first ground (on timing) was not considered again today as it was regarded as “hopeless” first time round, and Tower Hamlets decided not to put it forward.

……and two days ago, Ken Livingstone at the Water Lily rally urged Lutfur to hire the best lawyers and challenge Eric Pickles’ proposal to send in Commissioners.

Ken did not say that he would personally fund such a challenge. Funny that.

It’s always easier with other people’s money.

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One veteran of the Respect party said to me as I was leaving last night’s rally at the Water Lily centre in Mile End: “It’s just like the old days again.”

Depressingly, in many ways he was right. Lots of pretty tedious and predictable speeches, a few cheap and several offensive jokes about Eric Pickles’ weight. It’s strange how the so-called Left get off on making these remarks about a man’s appearance.

But how the audience giggled! …And then cried racism against the man one not-so-svelte union official called “the fat controller”.

They also mocked DCLG’s spending on limousines. But failed to mention Lutfur’s four years of travelling around the borough in a chauffeured Mercedes.

The lack of self-awareness and introspection was and is frightening.

The audience was huge. I’d guess easily upwards of 500.

The theme was “Defend Democracy in Tower Hamlets”, but that was a bit of a smokescreen. In reality, it was an election rally of the Left against the Tories.

I understand that Cllr Abjol Miah orchestrated it. The former leader of the Respect group and a serial failure in his attempts to become MP wants another crack at Westminster. He wants to challenge Rushanara Ali in Bethnal Green and Bow.

So too do Cllrs Rabina Khan and Ohid Ahmed.

Galloway, whose aides used to rail against Lutfur when he was in Labour, warned that if Tower Hamlets First didn’t field a candidate, Respect would. Some interpreted that as he would stand again but even he knows he’d be laughed out of the borough again.

His underlying message, I inferred, was he’d endorse Abjol as his candidate. Rushanara is said to be anxious but I think she’s safe.

As for Ken’s input last night:

1. He said he and fellow Labour NEC member Christine Shawcroft (who made the most boring speech of the night, and that’s saying something) would submit a motion at their next meeting calling for Lutfur’s re-admittance into the party. (He really does have a dry sense of humour, doesn’t he?)

2. He called on Lutfur’s hot-headed supporters to find the home addresses of the three Government Commissioners when they arrive in Tower Hamlets, and then protest outside “to make their lives intolerable”.

That remark prompted this response today from Local Government Minister Kris Hopkins:

I am appalled at Ken Livingstone’s comments which run the risk of stirring up a lynch mob mentality in Tower Hamlets. 

The borough is already riven by the politics of intimidation and division, and stupid remarks like his will only worsen community tensions. 

We will not be intimidated from taking any action necessary to ensure a free and fair democracy operates in the borough.

As for the PwC report, the only person to make more than a passing reference to it last night was in fact Lutfur. He said he would learn from the process failures and that the council would “embrace the Commissioners” when they arrive.

Well said, but let’s see.

Radio 4’s Today programme was there last night as well. Their reporter Zoe Conway broadcast this excellent report this morning.

Listen to how she puts Ken on the spot, how he flounders; how she puts Galloway on the back foot; and how she reduces Lutfur to robot mode, monologuing his usual mantra about all things One Tower Hamlets.

A nice hat-trick.

listen to ‘Tower Hamlets, Mayor Rahman rally’ on audioBoom

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And so the creatures begin to leave the ship.

The Press and Journal newspaper in Aberdeen has this as the main story on its website:

Takki Sulaiman, aberdeen

The paper’s David McKay reports:

Council leaders in Aberdeen last night revealed that a PR chief at a “rotten borough” English authority is the man they want to transform the city’s public image – even though he has yet to accept their £80,000-a-year job offer.

Takki Sulaiman is currently employed at Tower Hamlets in East London, which has been at the centre of “cronyism and corruption” allegations in recent weeks.

Aberdeen’s deputy council leader Marie Boulton confirmed that Mr Sulaiman, a former Labour councillor, is the preferred candidate to take on a new head of communications and promotion job in the granite city.

The role was created as part of a restructuring of the council, but prompted complaints from opposition members who argued the money could be better spent elsewhere.

Senior members of the Labour-led administration argued that the appointment would help boost the outward perception of an authority which has been dogged by controversy in recent years.

A divisive battle over the future of Union Terrace Gardens was followed by an attempt to ban First Minister Alex Salmond from all council property in the city.

Criticism has also been levelled at the leadership over the £107million Marischal Square revamp of the former council headquarters.

Mrs Boulton, who convened an appointments panel to fill the post, said she was “hopeful” that Mr Sulaiman would accept the job, but played down the media storm surrounding the London borough council.

She said: “We went through a rigorous interview process, we had stakeholder groups involved throughout, the corporate management team interviewed him and he came in front of elected members and the chief executive. All of the groups recognised that he was the preferred candidate.

“We are aware of the criticism that has been levelled at Tower Hamlets, but based on the conversations we had with the chief executive, she was confident and happy to proceed.

“Aberdeen is obviously quite a tough environment to work in, in terms of the media. The city went through problems with Audit Scotland under the previous administration, we have also had our difficulties.”

Mr Sulaiman, who is understood to be earning about £98,000-a-year in his current role, has not yet accepted the job and did not respond to inquiries from the Press and Journal yesterday.

Mrs Boulton pointed out that he had impressed panel members with his experience during the London Olympics and the regeneration of the Tower Hamlets area as a result.

Labour group secretary Willie Young said he was unaware that the top candidate for the new post was a former Labour councillor for Haringey.

He said: “That never even came into it. This was a guy who we were looking at purely on an employment basis, and he came across as by far the best candidate.

“It was a unanimous decision by a cross-party panel, including opposition members.”

With reference to the ongoing troubles at Tower Hamlets, Mr Young added: “I think there is a huge difference between the political administration and an individual, and this individual went through a rigorous process.”

However, Callum McCaig, leader of the opposition SNP group, said: “The very fact that this person who has been offered this spin doctor position at Aberdeen City Council is coming from somewhere branded as a rotten borough begs the question of who in their right mind thinks that this is a good idea.

“When you add the irony of the fact he is a former Labour councillor and Tower Hamlets has been described as a hotbed of cronyism – it would be funny if huge amounts of public money were not being spent on a position that we don’t actually need in the first place.”

Aberdeen City Council’s media team did not respond to a request for comment last night.

Journalists and SNP members in Aberdeen can research some of Takki’s record here.

I was told on the night of the Tower Hamlets election count in May that Takki was looking for a new job, so his job search seems to have been going on for a good six months.

He may be many things but he’s not that stupid (although his refusal to engage with critical elements of the press has been dumb): he can see which way the wind is blowing.

Eric Pickles is on a war footing with East End Life, which Takki oversees as head of communications. It’s almost certain the DCLG Commissioners will also take some control of Takki’s department when it comes to council publicity planning.

If he didn’t think his position was actually under threat, he’ll know it’s going to become less enjoyable.

But if he does leave, this might be a good chance to start the much-needed renewal of the borough’s reputation. Slashing the role’s £98k salary would be a first step.

Anyone tempted by the role?

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Predictably, there seems to be a rearguard action among Lutfur Rahman’s supporters to try and downplay the PwC report.

We can sum up their arguments thus:

1. PwC found no evidence or fraud or corruption

2. What about other councils such as Newham, Basingstoke and Dean, and Timbuktu (ad nauseam): why not investigate them, why pick on Tower Hamlets?

3. How dare PwC lecture Tower Hamlets taxpayers on the best value of public money when it ‘creams’ off millions in Government contracts.

4. It’s a Tory plot.

Numbers 2, 3, and 4 are the arguments of student common room (where 9/11 truthers might even find a home).

On Number 1, the report says it was made aware of nine cases of suspected fraud involving grants and contracts during its inspection, but it agreed to leave these alone as further questioning might jeopardise police/council investigations.

We can assume that money linked to the Brady Youth Forum was one of those nine and, as I pointed out in this post here in April, the council has some explaining to do on that.

The report, when you read it in detail, is excellent. As I’ve said before, the PwC auditors were clearly shocked by what they found.

And from the tone of the report, you can see where they believe the problems lay. I suspect they had some (probably more than some) sympathy with most council officers (although there are one or two significant exceptions to that).

On the other hand, they seemed wholly unimpressed with certain elected members and their powers of recall to remember important facts and details. The Mayor himself, lawyer, suffered from that problem, but he is much busier than his underlings.

The devil is in the detail, as they say. There was unjustifiable political interference in decision-making. Grant awards could easily have been made on the back of an envelope.

What I’d like to see is much more evidence on how the grant monies were/are actually spent. Which salaries are b eing paid for, what do they do etc etc?

When, in 2012, I highlighted the questionably invoices submitted by Gulam Robbani for his work as a mayoral adviser, there was outrage across the political spectrum, including from inside Lutfur’s camp.

Those invoices, which ‘detailed’ some pretty dodgy timesheets for his work, were signed off by the head of Lutfur’s office, Murziline Parchment. Did she check work done against his invoices? No. He may well have done work to justify his contract but those invoices didn’t show it.

There was no financial or management control in place. And when there are no such controls, you create an environment where wrongdoing can happen. Or where you don’t get the best value for public money.

That’s what PwC have highlighted. How many of these groups receiving grants are submitting solid invoices to back up their original applications?

Surely Lutfur’s supporters can see this? You wouldn’t run a business with your own personal money in that way, so why should a council be any different?

As for Number 2: let’s not forget that the politics of Tower Hamlets have been a nationally known basket-case for many years. It’s reputation become increasingly poisonous. You only have to watch to the video of Alibior Choudhury labelling former Labour councillor Ann Jackson a fascist-type ‘black cardigan’ (when she was in mourning for her ex-husband) to see how low it has stunk.

The dysfunctional politics (together with the challenging transformation to a mayoral system of governance) has caused real problems at officer level. The lack of a strong chief executive and a decent monitoring officer is both a symptom of that, and a contributory factor to the reputational chaos.

On Number 3. This is another form of whataboutery. Shoot the messenger. There are of course concerns about corporate lobbying of government and Whitehall waste. The latter has been something of a political mantra for Eric Pickles himself. But banging on about the bigger macro picture does a disservice to the actual cause.

If we have more scrutiny and adherence to processes at a grassroots/micro/town hall level, then there’d be less need (and work) for the likes of PwC. PwC were brought in because there were obvious failings in that respect.

Take care of the council pennies and the national pounds will better (to some degree) look after themselves.

As for Number 4: if it’s a Tory plot, might you argue: Why hasn’t Pickles gone after the country’s biggest Labour dominated authority, ie Newham?

Lutfur was an easier target, of course, because he was no longer part of the political mainstream. He didn’t have Labour support. But again, this is all part of the dysfunctional politics.

So where are we at?

The council has given its assurance to DCLG over the distribution of further grants, as required by Eric. It has until November 18 to make its representations on the proposal to send in Commissioners.

Some in Lutfur’s team want to take an aggressive stance and examine a possible legal challenge…another misguided David vs Goliath battle.

I know there are senior council officers who would rather now just knuckle down and take the medicine. Further legal challenges would just further erode the borough’s reputation.

Lutfur should see the appointment of commissioners as an opportunity. With them there, it’ll arguably be more difficult for people to criticise him. He’d benefit, both politically and as an administrator. He’d be better able to concentrate on his messages such as housing.

And when/if the Commissioners leave in 2017, a year before the next election, he might even have a good success story to sing about.

In the meantime, I leave you with PwC’s report on how the council co-operate with the inspection team (this, remember, after the town hall had ‘welcomed’ their arrival). The penultimate paragraph, 1.46, is particularly telling. The Interim Monitoring Officer is not named: It’s Meic Sullivan-Gould.

Timing and duration of the Inspection

1.28 The Inspection commenced on 4 April 2014, the date of the Appointment Letter. Our field work was substantially complete by 5 September 2014, since which time we have focused on fact checking with the Authority and with individual witnesses (see below for more detail) and in finalising this report.

1.29 In the Appointment Letter, we were directed to report our findings from the Inspection by 30 June 2014 or such later date as might be agreed between us and the Secretary of State. This flexibility reflected the inherent uncertainties at the outset of the Inspection. Examples of these uncertainties included the

volume and ease of access of information that might need to be examined; the extent, nature and implications of any issues that might emerge; and the level and timeliness of co-operation we would receive from the Authority.

1.30 By a letter dated 27 June 2014, PwC informed DCLG that it would not be in a position to report by 30 June. This letter formalised the position that had been apparent for some time prior to that date and which had been discussed between PwC and DCLG on a number of occasions. The primary reason given in the 27 June letter for the need for an extension beyond 30 June 2014 was the failure of the Authority to provide information on a timely basis, or at all, in relation to a number of important requests made by the Inspection team. Given the inherently iterative nature of the Inspection, the delay in provision of information had a significant impact on our overall progress in pursuing our enquiries in the various areas of focus, as well as our ability to plan for and arrange interviews, which were expected in turn to bring to light further information and documents that we would need to review and consider.

1.31 By a letter dated 30 June 2014 DCLG replied, agreeing to a postponement of the reporting deadline. It was proposed that further discussions should take place between PwC and DCLG in the first half of July 2014 to determine by when PwC could reasonably be expected to report under the circumstances. Those discussions led to the conclusion that we were unlikely to report before the middle of September 2014, but that the position would be kept under regular review.

1.32 For the sake of completeness, it should be noted that by a letter dated 4 July 2014 (received by PwC on 7 July 2014), the Mayor wrote to PwC objecting to the manner in which the Authority’s level of cooperation and responsiveness to requests had been characterised in PwC’s letter to DCLG of 27 June 2014 and asserting (in summary) that such characterisation was inaccurate and partial. PwC responded to the Mayor’s letter by a further letter dated 17 July 2014. In the 17 July letter, PwC rejected the Mayor’s assertions on the basis that there were no material errors of fact in our 27 June letter, and also took the opportunity to expand on some of the aspects of the Authority’s stance that had contributed to delays in the provision of requested information and documentation.

1.33 On 25 September 2014 we received a further letter from the Mayor responding to our letter of 17 July 2014 to him. The Mayor reiterated his view that our 27 June 2014 letter did not present an accurate and impartial view of the Authority’s co-operation with the Inspection. We remain of the view that our 27 June 2014 letter presented a materially accurate and fair view of the position. We will respond formally to the Mayor’s latest letter shortly.

Approach to our work

General principles

1.34  As directed by the Secretary of State through the Appointment Letter, our primary focus throughout the Inspection has been the four areas outlined at paragraph 1.8. Our approach to each of these areas is set out in more detail in the relevant sections of this report, however, at a general level, our approach to each area has typically included the following common elements:

Fact finding meetings with relevant officers (i.e. employees of the Authority) (“officers”) to gain an understanding of the operation of the area in question;

“Walk-throughs” of relevant processes to confirm our understanding;

Requests for information, data and documentation of relevance to the Authority’s financial systems, relevant processes generally, or individual programmes or transactions, as appropriate;

Detailed analysis of individual transactions or categories of transactions targeted on a risk based approach; and

Formal interviews with selected officers, councillors and the Mayor.

1.35  The above steps are iterative and often overlapping, rather than strictly sequential. Furthermore, while each of the four areas has been the subject of a separate work stream within the Inspection, there are certain points of cross-over between them, which are brought out in the relevant sections of this report.

Selection of items for detailed examination

1.36  Within the four primary areas of focus, the selection of specific transactions or categories of transaction for detailed examination has been judgemental and risk-based rather than purely random or statistical. As intimated above, the Inspection has not occurred in a vacuum. It was instigated as a result of concerns brought to light by a variety of sources, some of which have been aired in the media. In addition, further sources, from both inside and outside the Authority, have approached us with information during the course of the Inspection. We have also had regard to matters escalated through the Authority’s own governance processes, including the deliberations of the Overview & Scrutiny Committee (the “O&S Committee”) and the work of the Authority’s Internal Audit function. Finally, we have made our own judgements about where risks might lie given the nature of the transactions in question.

Information sourced other than from the Authority

1.37  In the early stages of the Inspection, we established a dedicated and regularly monitored email address (lbth.inspectors@uk.pwc.com) through which anyone wishing to provide information in confidence could contact us. This email address was featured on the DCLG website. Over the course of the Inspection, we have received 256 communications into that email address from 38 individuals. In addition, other sources have approached us directly (i.e. other than through the dedicated email address referred to above), again with information of varying degrees of relevance to our remit. Not all of these communications were relevant to our terms of reference, but those that were have been factored as appropriate, into our approach.

1.38  In addition to the above, we have also had dialogue with a number of former officers of the Authority about their contemporaneous knowledge of matters relevant to the Inspection.

1.39  We have actively sought to engage with those sources who have come forward and who appeared to have information of potential relevance to our terms of reference and where we required further detail or clarification. Not all sources have been able to back up their concerns or allegations with tangible evidence and in those instances, where we have not been able through our Inspection to fill this evidential gap, we have been unable to give the information they have provided much, if any, weight.

Fact checking by the Authority and by interviewees

1.40  The extensive factual components of sections 3 to 7 inclusive of this report have been subject to a fact checking exercise between us and the Authority. The Authority was given a 10 working day period from 11 to 24 September 2014 to review factual extracts and provide comments and, where appropriate, any additional evidence which it wanted us to take into consideration. In parallel, individuals whom we have interviewed, and from whose interviews we were proposing to cite particular statements (with or without attribution), were given the opportunity over 10 working days to review and comment on those citations. We have received responses from the Authority and the majority of the relevant individuals, which at our discretion we have reflected as we deemed appropriate in this final version of the report.

The Authority’s stance vis-à-vis the Inspection

1.41  On 4 April 2014, the date of our appointment, the Mayor’s Office4  issued a statement welcoming the Inspection stating “I welcome the Secretary of State’s decision to send independent auditors to review our grants processes. This review will demonstrate that the Council acts in the best interests of all Tower Hamlets residents ”.

1.42  On 1 July 2014 (some three months later) the Mayor wrote to the Secretary of State informing him that he had asked the Authority’s Interim Monitoring Officer to initiate a judicial review of his decision to instigate the Inspection. We note that, in refusing the Authority’s application for judicial review, the judge considered each of the grounds advanced by the Authority in its application as “unmeritorious” and the first ground as “hopeless”. We understand that the Authority has now applied for an oral hearing and that this is due to be heard by a High Court judge on 14 November 2014.

1.43  It should be acknowledged that the Authority gave assurances to us that the initiation of judicial review proceedings would not affect the on-going cooperation of the Authority with the Inspection. Notwithstanding the issues outlined below and elsewhere concerning the level of cooperation of the Authority and its responsiveness to our requests for information and documentation, it is fair to say that the commencement of judicial review proceedings did not in itself have any significant effect on the Authority’s dealings with the Inspection team.

1.44  At the outset of the Inspection the Authority established a Project Management Office (“PMO”) to oversee and manage the flow of information and documentation to the Inspection team and to assist in the arrangement of meetings and, in due course, more formal interviews. This was in principle a helpful step and created a useful mechanism for liaison between the Inspection team and the Authority, very much in accordance with our desire for there to be a clear line of communication and a single point of contact for formal requests. The Inspection team has met regularly with the PMO team to discuss the status of information requests and provide further explanation and clarification where necessary. Initially, such meetings took place on a daily basis, reducing in frequency as the Inspection progressed and the need for such frequent meetings reduced. We recognise the PMO team and no doubt many other officers have put in considerable effort to collate and provide the requested material.

1.45  Over the course of the Inspection, we made a total of 290 requests via the PMO for information or documentation. Some of these were quite broad, in some cases involving the provision of large volumes of documents or data, while others were for targeted items mentioned to us in meetings or interviews or referred to in other documents already provided to us. Inspectors are required to give three days’ notice of a request. In practice, we have not generally insisted on being provided with full responses to all requests within three days, recognising that some of our requests were substantial in scope or that the requested information or documentation might reasonably be expected to take longer to collate.

1.46  As discussed at paragraph 1.41 et seq, despite its public assertions of support for the Inspection, the Authority has at various stages raised a number of obstacles to our progress which have significantly delayed the provision of information or documentation and which in large part led to our request for an extension of the time table for the Inspection. These obstacles broadly related to the Authority’s concerns about the legality and/or scope of the Inspection. Additionally, the Authority raised issues as to whether or not we were entitled access to documents that might be covered by legal professional privilege.

Taking each of these in turn:

On 12 May 2014, we were informed that the Interim Monitoring Officer required us to “certify” a significant number of requests. There is no legal basis upon which the Authority could require such certification, and we were not prepared to do so. Furthermore, the form of words the Authority sought to prescribe in the certification defined the scope of the Inspection too narrowly and were therefore not in a form which we could accept, even if we had been prepared to do so in principle. All requests for which the Authority was taking the position that it needed individual certification were put on hold. On 13 June 2014 (just over a month later) without further explanation, we were informed that certification was no longer an issue.

On 7 May 2014 we requested access to certain legal files. This request was followed up as outstanding on a number of occasions until 4 June 2014 (almost a month later), when the Authority informed us that we were required to sign up to a number of written conditions and undertakings in relation to the requested material. These included an acknowledgement up front that all the said material was privileged, which we pointed out we could not know without seeing it first and which was unlikely in any event, given the probability that even legal files would contain material that was not itself privileged by virtue of the circumstances in which it had been created. Without our acceding to all of the Authority’s demands in relation to this material, we started to gain access to it on 16 June 2014, some six weeks after first requesting it.

1.47  One example of a request of central importance to the Inspection which was subject to very significant delay was the provision of basic accounting data covering the majority of the Period. Until 1 April 2013, the Authority used a JD Edwards Financial System, migrating to an Agresso Financial System during that year. While in discussions with the Authority about the provision of data from the current Agresso Financial System (which also resulted in some delay) we requested data from the JD Edwards Financial System on 29 April 2014. We know from discussions with relevant Authority staff that the data was extracted and ready to be provided to us by 12 May 2014. However, the Authority challenged the legality of this request, and it has continued to reserve its position on this matter, even as it finally authorized the release of the data to us on 20 June 2014, almost two months after the initial request and just ten days before our original reporting date. We have referred to the data from the JD Edwards Financial System and the Agresso Financial System together in the remainder of this report as the “Financial Data”.

 

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