An independent inspection of the London Borough of Tower Hamlets has been ordered by government.
The inspection will determine if the authority is complying with its best value duty, with attention being paid to financial, audit and scrutiny arrangements.
Kim Bromley-Derry has been appointed as lead inspector, with Suki Binjal, Sir John Jenkins and Philip Simpkins assistant inspectors.
In a written statement to parliament, minister for local government Simon Hoare said recent changes at Tower Hamlets Council had “the potential to undermine the improvements” that allowed a previous intervention at the authority to end in 2018.
These changes include “significant churn” at the senior management level, which Hoare said had resulted in a number of interims in the senior management of the council. He also raised concern over the use of policy advisors and expansion of the Mayoral office, which “has reportedly resulted in the creation of a ‘two council culture’”.
Hoare also referenced Tower Hamlets’ decision to bring some services in house and its need to “realise substantive savings in the short-term”.
The inspection will pay particular attention to several aspects of the council’s operations, including a focus on budgetary proposals and medium term financial planning, the appointment of senior management posts, the use of policy advisers, the expansion of the Mayoral office, and the policy and practice of grant making.
Hoare told parliament: “This action is not undertaken lightly, and my department is committed to providing the council with whatever support it may need to support compliance with its best value duty.”
One area of potential concern identified by the Department for Levelling Up, Housing and Communities (DLUHC) is Tower Hamlets’ recently agreed draft medium term financial strategy (MTFS). The MTFS shows a reduction in the use of reserves by £19.1m, which means that the authority is “no longer reliant across its life on use of reserves to fund recurring costs”, DLUHC pointed out.
And while Tower Hamlets’ budget is balanced for 2024-25, “this still relies on previously agreed use of reserves, and the positive impact resulting from a proposed change to the council’s Minimum Revenue Provision (MRP) policy”, DLUHC added. Specifically, this change is that ‘the previous [MRP] approach within the HRA is to be discontinued to create additional revenue resources’.
Another potential concern, DLUHC said, is that the £30.8m of savings proposed to balance Tower Hamlets’ budget represents a “significant” scale of challenge, which could be “compounded by some significant insourcing of services which may require additional revenue and capital investment”.
The inspection team’s findings are expected to be reported by 31 May 2024.
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