Council eyes Internal Control Commission after £8m+ overspend in repairs service

Councillors at the London Borough of Newham will next week (22 January) consider a proposal from its mayor and Cabinet for the establishment of an Internal Control Commission, in the aftermath of an £8.78m overspend in its Repairs and Maintenance Service (RMS) in a single year.

The Mayor, Rokhsana Fiaz, and Cabinet will then discuss setting up the Internal Control Commission when they meet on 5 February.

The proposed Commission will be led by an independent chair and will review two key lines of enquiry:

1. How does the council make itself a model of best practice for internal control and governance?
2. How did the council not prevent issues in RMS from arising in the first place?

The Commission will produce a report on their findings which will allow the council to review best practice and what can be adopted from other high performing authorities, Newham said.

The report being considered at the extraordinary meeting indicates that:

• Concerns were raised by a whistle-blower within Newham Council. 
• Four members of staff have been dismissed including two senior managers; five members of staff have been given final written warnings.
• The £8.78m overspend took place during the 2017/18 financial year, "under the previous administration of the council".
• The £8.78m overspend was caused by the loss of control of the Keep Newham Moving highways repair programme, which was agreed in 2016.
• “Insufficient due diligence and risk assessment was undertaken” when RMS undertook the Keep Newham Moving programme to assess its capacity to deliver the programme.
• While whistleblowing allegations were made alleging fraud in RMS, after a number of investigations insufficient evidence of criminal activity was discovered by external auditors to bring legal proceedings. The council said any new evidence that was presented would be thoroughly investigated. The bad practice that was uncovered was the subject of disciplinary hearings, it added.

The Chartered Institute of Public Finance & Accountancy has already been called in to carry out a financial health check across the council. “Following the publication of their initial findings, which said financial planning could be better, improvements have already been made to procurement processes.”

The council said that the Mayor had also had discussions with Newham Police Borough Commander, Detective Chief Superintendent Richard Tucker, regarding RMS and whether there were grounds to take the matter further.

Fiaz said: “I am committed to making Newham Council more open and transparent than ever before. In the spirit of that promise, I welcome the consideration to establish an Internal Control Commission.

“This proposal aligns with my administration’s commitment to transparency, and improving the governance of the council in the interests of all Newham residents. We are putting things right. We have been proactive in resolving the financial mismanagement in RMS and taking clear action.

“I have instructed the new management team at RMS to implement a whole series of measures designed to offer reassurance on the effectiveness, governance, and efficiency of management, performance and compliance.”