Tower Hamlets Council is facing intensified scrutiny from the government, with new ministerial directions issued on March 17, 2026, following a Best Value inspection that found the council failing in its duties.
The inspection and subsequent directions were prompted by significant failures in governance, leadership, culture, and partnerships. Inspectors identified a culture of patronage in appointments
and found the council to be failing in its Use of Resources.
External auditors Ernst & Young highlighted significant weaknesses in internal controls, financial reporting, and procurement,
concluding that the council lacked effective arrangements to manage risk and maintain sound internal control.
Specific concerns cited in the ministerial directions include issues with scrutiny functions, recruitment processes, openness and transparency of decision making, procurement and contract management, internal investigations, officer structure and the scheme of delegation.
The directions require the council to disband its Transformation and Assurance Board and establish an Envoy-led Improvement Board. This new board will oversee the council's progress against the ministerial directions, with the Envoys granted significant reserve powers over governance, financial management, service redesign, and senior officer appointments. These powers include approving or amending governance instruments, challenging budget setting and financial strategies, approving major service redesign proposals, and appointing or removing statutory officers.
Councillor Sirajul Islam, Leader of the Opposition, had previously condemned the administration's record, citing government intervention due to these failures. He highlighted a significant reduction in council reserves and broken promises on council tax and rents.
Mayor Lutfur Rahman, however, presented a report highlighting the administration's achievements over the past four years, including exceeding targets for affordable homes and significant investment in council housing. He emphasised the council's commitment to residents and financial sustainability.
In a council meeting on March 25, 2026, discussions also touched upon the housing improvement programme, continuous improvement plans, and the council's response to government intervention. The council is required to continue implementing its Continuous Improvement Plan and address weaknesses identified by external auditors. The ministerial directions are in place until March 31, 2028, unless revoked earlier. The directions mandate the establishment of the Envoy-led Improvement Board promptly after March 17, 2026, to oversee the council's delivery against the directions. While specific quantitative targets are not detailed, the Envoys will monitor progress against the Continuous Improvement Plan and a deep dive project into alleged misconduct.
The council has approved significant investment to support its improvement journey, including £6 million between 2025-28 and a further £4.5 million between 2026-29 for auditor recommendations, plus an additional £5 million per year for transformation. The Authority will also bear the Envoys' expenses and fees. The specific impact on service provision for residents is not detailed, beyond the general aim of improving services.
The external auditors, Ernst & Young (EY), identified significant weaknesses in internal controls, financial reporting and procurement, concluding the council lacked effective arrangements to manage risk and maintain sound internal control.
The ministerial directions require the council to continue to address the Statutory Recommendations and significant weaknesses identified by the auditor on 16 February 2025 and 16 November 2025, particularly in relation to: The Authority meeting its objectives and the requirements of the Audit and Accounts Regulations; The internal control environment; Procurement and contract management; and The internal investigations function.
Proposed actions include continuing to implement the Continuous Improvement Plan and achieving improvements in scrutiny, recruitment, transparency, procurement, contract management, internal investigations, officer structure, and the scheme of delegation.
If clear and sustained evidence of improvement is not seen, the Secretary of State may return certain functions to the Council ahead of the expiration of the Directions, implying that continued failure could lead to prolonged or intensified intervention. The council's progress will be overseen by the newly established Envoy-led Improvement Board.
