‘Significant weaknesses’ at Tower Hamlets Council

Tower Hamlets Council risks being stuck in a cycle of government intervention due to “significant weaknesses” in the way it is run, an auditor has warned.

External auditor EY outlined 10 issues at the council, which is controlled by Lutfur Rahman’s Aspire Party, including “significant turnover” of senior management and the management of social housing.

The council’s chief executive Stephen Halsey said they welcomed the report and were acting upon its recommendations, according to the Local Democracy Reporting Service.

However, Labour councillor Marc Francis accused the council’s leadership of being “defensive”, saying it needed a “less rose-tinted view of itself”.

The report said the council had been “slow” in efforts to find a permanent replacement for its former chief finance officer (CFO), who left in April.

It also said the council should have referred itself to the Regulator for Social Housing sooner, after taking its housing management service in-house in 2023.

However, the council’s corporate director for housing said he did not think the timeframe in which the council referred itself to the regulator was “unreasonable”.

Meanwhile, Mr Halsey said the council’s efforts to recruit a new CFO were hampered by a “competitive” employment market.

Other weaknesses identified in the report included procurement and management of contracts, and how the council conducts internal investigations.

The report was presented to the council’s audit committee on Wednesday, following EY’s audit in the 2024-25 financial year.

It gave the council a C3 grade, the second worst out of four possible marks.

EY partner Stephen Reid told councillors that many of the issues in the report had persisted for “many years”, and that “the pace of improvement has not matched the scale of the challenge”.

“Without urgent and sustained action and clear accountability, the council risks remaining in a cycle of statutory intervention and limited assurance,” he added.

The government sent ministerial envoys to intervene in January, after inspectors raised concerns about failing governance and local accountability.

Rahman was banned from public office in 2015 when it was found he had won the previous year’s election in the borough with the help of “corrupt and illegal practices”.

These included smearing another candidate as a racist, and bribery.

Rahman was re-elected mayor in 2022 after the ban expired.

Mr Francis said members of the audit committee had already raised “every single one” of the weaknesses identified in the report.

However, another Labour councillor, Asma Islam, questioned the reassurances given by the council that things were changing.

“There’s a systematic, cultural issue that is actually weaving through a lot of what this council does through all of its decision-making,” she said.