London Borough of Tower Hamlets

Hilary Benn Excerpts

Tuesday 4th November 2014 Commons Chamber

[Hilary Benn (Leeds Central) (Lab)]

I am grateful to the Secretary of State for allowing me to have advance sight of his statement. Given that he had received serious allegations about Tower Hamlets earlier this year, and given the material that had been submitted to the Department, it was clearly right for him to exercise the powers granted to him under the Local Government Act 1999 to appoint PricewaterhouseCoopers to conduct an inspection of the authority’s compliance with its best-value duty. As I said at the time, that audit had to be full, open and transparent if it was to command public confidence. The publication of PwC’s report today has fulfilled the requirements for openness and transparency, and it has certainly done a comprehensive job, which may well explain why the process has taken slightly longer than I think both sides had originally hoped.

The findings of the report are indeed very troubling. There was a lack of transparency in regard to the giving of grants, the governance of grant awards was not effective, and grants were given to organisations that had been ruled ineligible or did not meet the required evaluation score. As for property transactions, in three of the four cases that were investigated—those of Poplar town hall, Sutton street depot and Mellish street—the inspection concluded that

“the Authority failed to comply with its best value duty.”

In the case of Poplar town hall,

“The Authority accepted a late bid from the winning bidder after other bids had been opened, creating a risk of bid manipulation”,

and the authority did not, in fact, select the highest bidder.

In relation to publicity and the use of media advisers, the report refers to a finding by Ofcom that a broadcast constituted political advertising, and states that

“the clear implication is that Authority monies were spent inappropriately on what amounted to political advertising for the benefit of the Mayor…This in itself constitutes a failure to comply with the best value duty in this instance."

The overall conclusion of the inspection is that the current governance arrangements do not appear to be capable of preventing, or responding appropriately to, the failures identified. The fact that the council is still without permanent appointments to its three most important statutory officer posts should also be a matter of great concern to the House. In the light of what has been found, we support the course of action announced by the Secretary of State, although we must recognise that it is a very serious step to take. It is important for the considerable powers with which the Secretary of State has been entrusted to be used not lightly or because of a political disagreement with decisions made by a local authority, but because that local authority has failed in its statutory duties.

When does the Secretary of State propose to announce the names of the three commissioners, and what background and experience will he be looking for in appointing them? Does he intend to consult anyone in making the appointments? Will the commissioners be paid, and, if so, who will bear the cost? The Secretary of State said that he envisaged that the commissioners would be in place until March 2017. Will the length of their term of office depend on the progress that they and the council make, together with the mayor, in dealing with the problems that have been identified? What progress reports will the Secretary of State, and the House, receive? What relationship will the commissioners have with the elected councillors in Tower Hamlets, and what role does he envisage for wider local government in the provision of support for Tower Hamlets, as happened in the case of Doncaster?

At the time of the Secretary of State’s original decision to send in the auditors, he told the House that a file had also been passed to the Metropolitan police for their consideration. The police subsequently announced that they had found

“no credible evidence of criminality”.

Does the Secretary of State believe that the PwC report contains any further information that might warrant its being referred to the police, or is that aspect of the allegations now closed?

In respect of publicity, the inspection report says that a

“significant proportion of the budget is allocated to the”

—weekly—

“publication of ‘East End Life’”,

which seems to be little more than a vehicle for promotion of the mayor. The Secretary of State knows of my concern about that particular publication. Will he tell us when he intends to make a final decision about “East End Life”?

There are, of course, other legal processes under way relating to Tower Hamlets, and it is right for us not to discuss them here. I will say, however, that given the concerns that have been expressed about the conduct of elections, we also support the Secretary of State’s decision to ask the commissioners to take responsibility for the appointment of an electoral registration officer and a returning officer for future elections.

Local authorities have important powers and duties, which they exercise on behalf of the people whom they represent. They should be free to do that independently, in the way that they see fit. However, with those powers come responsibilities, and, in particular, the responsibility to ensure that all decisions are made on an open, fair and transparent basis. The people of Tower Hamlets are proud to live alongside each other in a community that reflects the face of modern Britain, which is why there can be no place for the politics of division in Tower Hamlets or elsewhere, whatever its motivation. It is the job of every locally elected representative to care for the interests of all his or her constituents.

It seems clear from the report with which we have been presented today that those standards have not been upheld in a number of instances in the case of Tower Hamlets and its mayor. Just as, in April, Tower Hamlets welcomed the opportunity to demonstrate that council processes had been run appropriately—which, as we have learnt today, was not the case—it should now accept the findings of this report, and work with the commissioners to ensure that what has gone wrong is put right.

[Mr Pickles]

I agree with the right hon. Gentleman’s assessment. In particular, I agree with his view that in a diverse and vibrant community, a community to be proud of, it is the job and the responsibility of councillors and the mayor to ensure that no one feels out of place and everyone feels welcome.

The right hon. Gentleman asked me a number of questions, of which I hope I have made a reasonable note. He asked me for the names of the commissioners. I hope that he will forgive me: I have not yet made a decision. He asked whether I would want to consult and discuss matters once I had made a decision; well, of course I will. He asked about pay. The council will pay expenses and a reasonable fee. He asked about progress reports. As I said in my statement, we will expect such reports every six months, and, as in the case of Doncaster, we will of course share that information with the House.

I noted the right hon. Gentleman’s special pleading in respect of “East End Life”, which, perhaps, represents an exception to his usual views. We will listen to representations and make an announcement in due course, but that will be entirely separate from the process that I have described.

The right hon. Gentleman referred to criminal activities. I recall what the police said about the subject. I also recall their subsequent statement that they were continuing to look at the issues. I have no idea whether the report contains allegations of criminality, although we will of course send a copy to the police for their information. However, I have here a statement from the mayor of Tower Hamlets which relates directly to the right hon. Gentleman’s point. He said that I had announced that I was “concerned about potential fraud” and that

“the Evening Standard ran these claims on its front page” .

He added:

“These allegations have been rejected by PwC.

The report highlights flaws in processes. These are regrettable. We will learn from this report and strengthen our procedures accordingly.”

I am afraid to say that it seems to me that the mayor’s test is, “If you’re not actually caught with your fingers in the till, you’re innocent.” There are serious flaws in what has occurred. If I was the mayor of Tower Hamlets, I would be hanging my head in shame, because what he has allowed to occur in Tower Hamlets is shameful—not that I have made a final decision.