Tower Hamlets warns Pickles of judicial review over investigation

The London Borough of Tower Hamlets plans to take Communities Secretary Eric Pickles to judicial review.

The letter before action followed Pickles’ decision in April to send in inspectors from PwC to probe alleged irregularities in grant allocations made by the television programme Panorama.

PwC warned this week that it could not complete this work by 30 June as expected and is now due to report in mid-July.

Tower Hamlets will argue that Pickles lacked reasonable grounds to hold the inspection, whose costs have been put by his department at up to £1m, a sum it hopes to recover from Tower Hamlets.

Elected mayor Lutfur Rahman said: “The council has cooperated with the inspection team from the outset and this will continue whilst we attempt to secure reasonable clarification centred on the justification of the audit. 

“In addition the Department for Communities and Local Government has failed to provide the council with any cost estimates for the audit apart from the vague statement that costs are likely to be ‘within £1m’.

“This cost is to be borne by local taxpayers and this lack of transparency – over what is being audited and under what grounds – is not in line with the principles of public sector transparency that the secretary of state has himself championed.”

Rahman said excessive costs had arisen because PwC had used a team of 24 auditors “which dwarfs anything the Audit Commission would have deployed for such an exercise”. 

He said some 10m separate data and information items had been requested to date by PwC.

A DCLG spokesman said: "We will robustly contest this in the courts. There are clear grounds for an investigation into Tower Hamlets in light of allegations about governance failure, poor financial management and fraud."

A letter from the DCLG to the council – saying the department had agreed to an extension in the publication date of the PwC report – claimed that information material to the inspection had been "made available to PwC only after delay, or not at all to date".

Meanwhile, the Electoral Commission this week published a report into the chaotic conduct of May’s election count in Tower Hamlets.

The report contained a range of recommendations. The watchdog will later report separately on allegations of voting fraud and misconduct in polling stations.

The commission found count staff were admitted so slowly that a two-and-a-half-hour delay arose that could not be recovered and “plans for the management of the verification and count on Friday 23 May… proved inadequate for the number of ballot papers to be counted”.

It said the returning officer John Williams should publish a plan for conducting the 2015 general election by December 2014.

Commission chair Jenny Watson said: “We will be monitoring the returning officer’s response closely over the coming months, and if we are not satisfied that sufficient progress has been made by September 2014, we will make clear what more needs to be done.”

Williams said: “The elections were hard-fought and intensely scrutinised. Many additional measures were introduced locally, in discussion with the Metropolitan Police and with the support of the Electoral Commission, to combat fraud, regulate the conduct of participants and build trust in the electoral process.

“These added to the complexity of the elections in Tower Hamlets and the duration of the count, but the overriding aim of a free and fair election was achieved."

He added: “I welcome the report’s recommendations and look forward to developing our plans for future elections in Tower Hamlets.”

Four local voters have lodged a High Court petition seeking to have Mr Rahman’s re-election declared invalid.

Philip Hoult