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Best Value Inspection of London Borough of Tower Hamlets Report 16 October 2014 Best Value Inspection of the London Borough of Tower Hamlets

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Best Value Inspection of London Borough of Tower Hamlets Report 16 October 2014 Best Value Inspection of the London Borough of Tower Hamlets www.pwc.co.uk Best Value Inspection of London Borough of Tower Hamlets Report 16 October 2014 Best Value Inspection of the London Borough of Tower Hamlets Contents Section Page 1. Introduction 1 2. Summary and conclusions 12 3. TheAuthorityandtheBoroughofTowerHamlets 42 4. The Authority’s payment of grants and connected decisions 51 5. The transfer of property to third parties 99 6. SpendingandthedecisionsoftheAuthorityinrelationtopublicity 146 7. Processes and practices for entering into contracts 160 16 October 2014 PwC Contents Best Value Inspection of the London Borough of Tower Hamlets List of terms and abbreviations The table below includes a description of the defined terms and abbreviations used within this report. Term Description the 1972 Act Local Government Act 1972. the 1999 Act Local Government Act 1999 (as amended by the Local Audit and Accountability Act 2014). theAgressoFinancialData AcopyofthedataheldintheAgressoFinancialSystem. the Agresso Financial System The primary financial / Enterprise Resource Planning (ERP) system employed by the Authority from April 2013. AHWB or AHW Adults Health and Wellbeing directorate. AMCSB Asset Management and Capital Strategy Board. AMCSWG Asset Management and Capital Strategy Working Group. the Appointment Letter Letter dated 4 April 2014 appointing PricewaterhouseCoopers LLP to carry out the Inspection. theAuthority ThelocalauthorityoftheLondonBoroughofTowerHamlets. BAFO Best and Final Offer. BBC Panorama BBC Panorama programme aired on 31 March 2014 titled 'Panorama: The Mayor and Our Money'. BNP Paribas BNP Paribas Real Estate Advisory & Property Management UK Limited. the Borough Tower Hamlets as a geographical and electoral area. theCabinet AcommitteecomposedoftheMayor,theDeputyMayorandeight Lead Members appointed by the Mayor. Call in Process through which Executive decisions are brought for consideration and/or challenge by the O&S Committee. CDA Corporate Director’s Actions. CFBSS Community Faith Buildings Support Scheme. CGPB Corporate Grants Programme Board. CGPB Members The two Members who are members of the CGPB. CGPB officers The five officers who are members of the CGPB. CHE Chief Executive's directorate. CLC Communities, Localities and Culture directorate. theCommunicationsAct CommunicationsAct2003. the Communications Protocol The Authority’s best practice document setting out the purpose and extent of Authority communications activity. the Constitution The two versions of the Authority’s Constitution, the first dated November 2010 and then subsequently updated in April 2014. 16 October 2014 PwC List of terms and abbreviations Best Value Inspection of the London Borough of Tower Hamlets Term Description Contracts Listing A listing of 208 contracts provided by the Authority in response to a request for a list of all contracts over £25,000 let by the Authority during the Period. CSF Children, Schools and Families directorate. D&R Development and Renewal directorate. DCLG The Department for Communities and Local Government. Dreamstar Ltd Dreamstar Limited, registration number 07773327. Dreamstar Pictures Dreamstar Pictures Limited, registration number 05143980. ESCW Education, Social Care and Wellbeing directorate. e-tendering portal The public sector procurement portal for the London boroughs. Executive Elected Mayor and Cabinet. Financial Data The combined data contained in the Agresso Financial Data and JD Edwards Financial Data. the Full Council The body of directly elected Mayor and councillors of the Borough. GIFTS Grant Information and Funding Tracking System. the Inspection Best value inspection in accordance with the Appointment Letter. the Interfaith Forum Tower Hamlets Interfaith Forum in operation to facilitate better communication and understanding between the different faiths in the Borough. the JD Edwards Financial Data Extracts from JD Edwards for the data tables PwC identified as relevant to the Inspection. the JD Edwards Financial System The primary financial / Enterprise Resource Planning (ERP) system employed by the Authority prior to April 2013. Key Decision Key decision as determined by the Mayor. Constitutionally defined category of Mayoral Executive Decision which is open to Call in by the O&S Committee. LBTH LondonBoroughofTowerHamlets. LBTHSolicitor ThesolicitorassignedtothePTHtransaction. LPG Law, Probity and Governance. MABSARP Mayor’s Advisory Board Strategic And Resource Planning. theMayor ElectedMayorofTowerHamlets,MrLutfurRahman,electedin October 2010. the Mayor's Office The Authority’s department for supporting the Mayor and Cabinet Members in their Executive functions. MAYP Mayor's Activities for Young People. Mazars Mazars LLP. Mazars' report Report of Mazars LLP dated July 2014 in relation to PTH. MediaAdvisor Anindividualemployedtoprovidespecialistmediaadvicetothe Mayor. 16 October 2014 PwC List of terms and abbreviations Best Value Inspection of the London Borough of Tower Hamlets Term Description Mela The Boishakhi Mela. This is an annual festival promoted as Bengali New Year Festival but open to and attended by other sections of the community. Mellish Street 111-113 Mellish Street. Member An elected councillor of the Borough. MSG Mainstream Grants. O&S Committee Overview & Scrutiny Committee. Ofcom The Office of Communications, independent regulator and competition authority for the UK communications industries. Officer A member of staff of the Authority. PAYP PositiveActivitiesforYoungPeoplescheme. the Period The period covered by the Inspection from 25 October 2010 up until 4 April 2014 which is subject to Inspection. PH&W Prevention, Health and Wellbeing. PMO Project Management Office. the POE Panel Premises Officer Evaluation Panel. PPF Preferred Provider Framework. PQQ Pre-qualification questionnaires in relation to procurement. the Procurement Procedures The two versions of the procedures applied by the Authority in respect of procurement activities (2009 - 2013 and the revised version dated January 2014) together. PTH PoplarTownHall. thePublicityCode TheCodeofRecommendedPracticeonLocalAuthorityPublicity dated 31 March 2011. Purdah The period of time from when an election is announced until after the election is held, also referred to as the pre-election period. PwC or “we” PricewaterhouseCoopers LLP. RCDA Register of Corporate Director’s Actions. RES Resources directorate. SLA Service Level Agreement. THCVS Tower Hamlets Council for Voluntary Service. Third Sector Allocation Process The Authority’s allocation process for “Council-owned” property to third sector organisations. Trust Organisation awarded the concession to manage the Mela. YCS Youth and Connexions Services. 16 October 2014 PwC List of terms and abbreviations Best Value Inspection of the London Borough of Tower Hamlets 1. Introduction 1.1 By a letter dated 4 April 2014 (“the Appointment Letter”)1, PricewaterhouseCoopers LLP (“PwC” or “we”) was appointed by the Department for Communities and Local Government (“DCLG”) to carry out a best value inspection (“the Inspection”) of the London Borough of Tower Hamlets (“LBTH” or “the Authority”) pursuant to section 10 of the Local Government Act 1999 (as amended by the Local Audit and Accountability Act 2014) (“the 1999 Act”). 1.2 The Appointment Letter explains the grounds for the Inspection as follows: “In making this appointment … the Secretary of State has had regard to certain documents that the Department has received about governance in Tower Hamlets, and the review of those documents undertaken by PwC, which recommends that appropriate further investigations are carried out to establish whether allegations about poor governance and possible fraud have any foundation. He has also had regard to the BBC Panorama programme broadcast on 31 March 2014, which made allegations about governance failures, poor financial management and possible fraud at Tower Hamlets, particularly in relation to grant payments.” 1.3 This report sets out a summary of the work we have performed in conducting the Inspection and the findings and conclusions arising from our work. Disclaimer 1.4 This report has been prepared only for DCLG and solely for the purpose and on the terms agreed with DCLG. While, having considered its contents, the Secretary of State may decide to publish it, we accept no liability (including for negligence) to anyone other than DCLG in connection with this report. Terms of reference 1.5 The Appointment Letter instructs PwC to carry out an inspection of the compliance of the Authority with its obligations under Part 1 of the 1999 Act “in relation to the Authority’s functions in respect of governance, particularly the Authority’s functions under section 151 of the Local Government Act 1972” (“the 1972 Act”). 1.6 The Authority’s obligations with regard to governance under Part 1 of the 1999 Act are set out in sections 3(1) and 3(2) thereof. These are defined as follows: “3 (1) A best value authority must make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness. 1 Attached as Appendix 1. 16 October 2014 PwC Introduction 1 Best Value Inspection of the London Borough of Tower Hamlets (2) For the purpose of deciding how to fulfil the duty arising under subsection (1) an authority must consult— (a) representatives of persons liable to pay any tax, precept or levy to or in respect of the authority, (b) representatives of persons liable to pay non-domestic rates in respect of any area within
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