An external auditor has issued a stark warning that Tower Hamlets Council risks remaining trapped in a cycle of government oversight unless it takes urgent and sustained action to address deep-rooted problems.
Auditor's Warning of a Persistent Cycle
The warning came from Stephen Reid, a partner at auditors EY, who presented a damning report to the council's audit committee. He stated that many of the issues identified are not new but are long-standing weaknesses that have persisted for many years.
"Without urgent and sustained action and clear accountability the council risks remaining in a cycle, in my view, of statutory intervention and limited assurance," Reid told councillors. The council is currently under a statutory intervention, meaning its work is overseen by government-appointed envoys.
Ten Significant Weaknesses Uncovered
EY's audit for the 2024/25 financial year outlined ten specific areas of significant concern. A major issue highlighted is the significant turnover in the council's three most senior management positions.
The report criticised the authority for being slow to appoint a permanent chief finance officer after the previous post-holder left in April 2025. Council chief executive Stephen Halsey acknowledged the challenge, citing a competitive job market where suitable candidates are "gainfully employed elsewhere".
Another critical failure involved housing. EY found the council should have referred itself to the Regulator for Social Housing sooner after bringing its housing management service in-house in 2023. The regulator later gave the council a C3 grade—the second worst possible—following an investigation in April.
Other key weaknesses included:
- Problems with how the council procures and manages contracts.
- Deficiencies in the way internal investigations are carried out.
Council Response and Political Reaction
Stephen Halsey responded to the report by stating that he and the council's leadership absolutely agree with the content of the report and welcome it, adding they are "acting upon" its recommendations.
The corporate director for housing said his department was taking the social housing regulator's findings "very seriously", though he defended the timeframe of the self-referral as not "unreasonable".
However, the response from the council's political leadership was met with scepticism. Councillor Kabir Ahmed of the ruling Aspire Party noted some issues have been around for close to a decade.
Labour councillor Marc Francis described the leadership's response as "defensive", arguing that audit committee members had already raised every single weakness. Fellow Labour councillor Asma Islam pointed to a systematic, cultural issue weaving through the council's decision-making, stating, "There’s too much of a similarity now to be in denial about what the problem is."
The external audit lays bare the scale of the challenge facing Tower Hamlets, with the authority now under intense pressure to demonstrate that its promised actions will lead to tangible and rapid improvement.
