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Don’t believe the claims about Tower Hamlets – the devil is in the detail

Rabina Khan, cabinet member for housing in Tower Hamlets council, defends its record in the face of government-led attacks

December 16, 2014
11 min read

rabina-khan-bbcIt’s been quite a year in the London Borough of Tower Hamlets. Its first directly-elected mayor, Lutfur Rahman, swept to victory in May for the second time after having spent years transforming the East End for the better and standing up to austerity. To win an election as an independent leftist against the main parties is no mean feat.

At the same time, the best part of this year has been dogged by the Tories’ Eric Pickles sending in accountancy firm PricewaterhouseCoopers to audit the borough’s finances off the back of a questionable Panorama documentary. This is indeed the same Pickles who spent £500,000 on limos, £76,000 on tea and biscuits and has recently come under fire for ‘exaggerating his Russian fanbase’. It’s also the same Pickles who appears to have saved affluent Tory authorities from cuts whilst hitting the poorest boroughs hardest – and the same PwC that was slammed by Transparency International for its fishy influence over tax policy at the highest levels of government. Who watches the watchers, one might say.

The audit report was published in November and apparently showed ‘damning evidence of cronyism’. Lutfur swiftly responded in the Guardian and the Morning Star, prompting Andrew Gilligan (who holds a £98,000 job as Boris’ cycling commissioner, despite not seeming to have much transport policy experience at all) to call him ‘the biggest liar in London’. 1,200 local people attended a rally in support of Lutfur and our team a week later.

It’s becoming increasingly obvious that this is about politics not procedures, about a dodgy Labour-Tory alliance trying to sweep an independent left-wing administration under the carpet for fear it might poke its nose into the 2015 election. It is also deeply racialised – from the spurious references to the ‘Tower Hamlets Taliban’ to even the Economist framing (false) corruption claims as evidence of the nefarious influence of ‘South Asian politics’.

But for those who have neither time nor patience to read a 200-page accountant’s report but are interested in the strange world of East London politics and its place in austerity Britain, I felt it would be helpful to deal with some of the claims in a little more depth here.

No fraud, no bias

PricewaterhouseCoopers was sent in to find evidence of fraud, and found none. It has since then been pointed out by Andrew Gilligan among others that there are nine fraudulent transactions identified in the report, under investigation by the police. Gilligan neglected to mention that these were potential instances of fraud reported to police by the council – i.e. the Council in these instances is the potential victim of crime, not the perpetrator. Lutfur and the rest of us thought it fairly obvious that saying ‘no fraud’ meant ‘no evidence of the mayor or council committing fraud’.

Then there was the specious claim about grants being poured into the Muslim community/Lutfur’s preferred wards as some sort of pre-election slush fund. In fact, the majority of grants went to organisations that serve the whole borough. Just because somewhere has its office in one ward doesn’t mean it only serves that ward. Indeed most Tower Hamlets borough-wide third-sector organisations are based in the west of the borough. Looking at it by ward makes little sense anyway; given how dense the area is and the nature of transport, someone could easily be closer to a service in a ward other than their own.

It’s also worth adding that not even the PwC report supports the claim of bias in grant distribution. Of the highest twenty grants given out, it seems only one actually went to a Muslim faith organisation. The Community Faith Buildings fund was distributed among churches, mosques, synagogues and other places of worship that provide a service to the community.

Lunch clubs are frequently cited as an area of prejudice, but the reality is that the groups which received funding directly reflect the applications that were received. The report found that only 10 of the 40 lunch clubs funded by the council targeted Somali and Bangladeshi residents. All council-supported lunch clubs are open to all residents whatever their background and a council survey of users of 15 lunch clubs shows users are of mixed and varied backgrounds. Multiculturalism is working here, and well.

They say that £400,000 went to organisations ruled ineligible for money by the council’s own procedures. It is in line with the government’s own localism agenda that local knowledge is used to supplement guidelines. Guidelines are there for just that – to guide but not to define, otherwise we may as well have no elections and a system run by civil servants.

These are just some of the types of organisations that were recommended for higher funding than the initial recommendation suggested. I’ll leave you to judge for yourself whether they were worthy or not.

• Tower Hamlets’ foremost LGBT rights and advocacy group

• Centres that specialise in welfare, disability and debt advice (one in Bow alone handles 1,800 cases a year)

• A women’s trust who wanted to train healthcare assistants

• A much-loved adventure playground

• A sexual abuse counselling and support service

• A local charitable volunteering hub

The truth about the town hall

A great deal has been made of the sale of Poplar Town Hall, the historic home of the great 1920s Poplar Rates rebellion. The sale was a decision made under the Labour leadership of Denise Jones in 2006, and yet supposedly Lutfur decided to sell it off at a knockdown price to a dodgy mate.

The bidding decision was overseen by civil servants, not politicians. At no point was Lutfur informed who the bidders were. The highest bidder was unable to get their finances in order on time, and the property remaining unsold would continue to run up costs for the taxpayer.

Gilligan and others contend that a late bid was submitted. This has not in fact been proven. In any case, civil servants appear to have made a competition-based decision to enter into a contract race. They took the contract on the basis of who could prepare their finances most quickly, in the interest of saving public money. This was seen as preferable to simply letting the second-highest bidder take the contract because the highest was ineligible. PwC found nothing wrong with the Poplar Town Hall valuation.

A company called Dreamstar then won the contract race and secured the building. Their bid was indeed lower – £875,000 was their bid and £876,000 was the other bid. However council costs were estimated to have exceeded £1,000 if the council were to wait for the highest bidder to complete the transaction. It is worth noting that the £876,000 bid was ‘subject to survey’ whereas the £875,000 bid was unconditional. In short, the ‘highest bidder’ could actually have lowered their price. This is all quite technical, but it’s the level of detail necessary to get to the bottom of the claim.

The PwC report does not say that Mujibul Islam and Lutfur were close personal friends – the wording is ‘The winning bidder was, as a matter of fact, connected to a person with other business interests that had an association with the mayor’. Indeed most mayors and council leaders will have met local business leaders.

Of course, as Gilligan points out, Mr Islam hosted the domain name for Lutfur’s 2010 election website. I am certainly not friends or close political allies with the printers that I might pay to print election leaflets. But with a media obsessed with the supposed influence of ‘South Asian clan politics’, such nuance quickly vanishes. It’s the same stunt they pulled years ago when they tried to claim that when Lutfur had the same meetings with an Islamic faith organisation as three former Labour council leaders, it somehow constituted evidence of extremist leanings.

The PwC report found that the council’s procurement policies are sound, and that there was no breach of the best value duty with regards to contracts.

The issue is democracy

Then there’s the claim that Lutfur has too much power.We can debate mayoral systems all we like, but one thing needs to be made perfectly clear. In Tower Hamlets, the three main parties opposed a directly-elected mayor. In Manchester the three main parties support having one. In Tower Hamlets, local people voted overwhelmingly to have a mayor. In Manchester they voted against it. This is at its heart a democracy issue.

In response to the notion that Tower Hamlets spends too much on media advice, the PwC report found that the council’s media budget is in fact modest in comparison to peers. It seems somewhat odd that government departments and political parties have huge press offices and supporters in the national media, while a tiny political group like ours is put under the spotlight.

One of the more facile claims is that we deliberately left senior council posts unfilled. Labour opposition blocked the appointment of a chief executive recommended by a cross-party appointment committee. After experiencing repeated obstruction, the mayor decided that leaving the posts filled by interim staff was the most politically viable and cost-effective option.

Where auditors have recommended that some structures need tightening, the council will do so. Lutfur – and myself, and the rest of Tower Hamlets First – also genuinely appreciate constructive criticism. For instance, in response to central government funding cuts, which we deplore, a proposal was made to cut nurseries. We listened to parents and campaign groups, and scrapped the proposal last week. We are responsive, and with a mayor that’s handled 9,000 pieces of casework in his first term and attended more scrutiny meetings than his counterpart mayors, we are transparent.

Of course, no council is perfect. If PwC spent £1 million and six months combing through any local authority, they would almost certainly find some concerns. In Tory Basingstoke and Deane, where ‘serious failings’ were found in grants procedures, or Tory Croydon where they somehow forgot to collect £40 million in council tax, those failings are quite clear. Neighbouring Newham has just managed to misplace £9 million. But there’s been no government-sponsored audit for such places.

So we finish 2014 with £1 million of our residents’ money – in one of England’s most deprived boroughs – having been splashed out on a questionable accountancy firm prowling around the Town Hall investigating non-existent fraud. Of course, you cannot put a price on healthy democracy. But here in Tower Hamlets, where candidates of all stripes win and come close to winning elections and debate is vibrant, we could teach other sterile one-party boroughs a few things about a democratic culture.

My part in all this is simple. As a Cabinet Member for Housing in an area beset by gentrification and soaring prices, I’m here to do what I can to make sure our residents have secure and sustainable roofs over their heads, and combat the soaring cost of living. A petition in support of us used the slogan ‘Pickles versus the people’. That’s because people know how hard we’ve worked to resist and mitigate this government’s cuts on the ground. With no national party machine behind us, we have led the way in tackling economic inequality – and that is the real issue here.


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