Tower Hamlets Council under Lutfur Rahman warned over governance issues

EY audit highlights senior management turnover, social housing concerns, and risk of continued government intervention

Tower Hamlets Council has been flagged for persistent governance weaknesses, including delays in appointing a permanent chief finance officer, social housing management issues, and long-standing problems with contracts and internal investigations.

An external audit by EY outlined 10 issues at the council, including “significant turnover” of senior management and concerns over the management of social housing, the BBC reported.

The Bangladesh-born politician Lutfur Rahman controls the council.

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

Rahman was banned from public office in 2015 after winning the previous year’s election with the help of “corrupt and illegal practices”, the broadcaster said.

These included smearing another candidate as a racist and offering bribes. Rahman was re-elected mayor in 2022 after the ban expired.

Council Chief Executive Stephen Halsey welcomed the report and said the council was acting on its recommendations, the BBC said.

Labour Councillor Marc Francis accused the leadership of being “defensive” and said it needed a “less rose-tinted view of itself”, it added.

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

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

The council’s corporate director for housing said he did not consider the timeframe “unreasonable”.

Halsey told the BBC that recruiting a new CFO had been hampered by a “competitive” employment market.

Other weaknesses identified in the report included procurement and management of contracts, and the way internal investigations are conducted.

The audit, presented to the council’s audit committee on Wednesday for the 2024-25 financial year, gave Tower Hamlets a C3 grade, the second lowest of four possible marks.

"Without urgent and sustained action and clear accountability, the council risks remaining in a cycle of statutory intervention and limited assurance," Stephen Reid said.

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

Councillor Asma Islam said there was a “systematic, cultural issue” affecting much of the council’s decision-making, it added.