Tower Hamlets Council's Audit Committee has been presented with reports highlighting persistent issues in procurement and contract management, which have contributed to overpayments and financial losses for the council.
An interim value for money report from external auditors Ernst & Young (EY) revealed that many of the ten significant weaknesses identified in the previous year remain outstanding. In addition to these, a new risk concerning financial sustainability has been identified. The report notes that many findings remain unchanged from the prior year, with the exception of arrangements relating to the Annual Governance Statement.
While acknowledging the Council's efforts to address these issues, EY noted that most actions were implemented too late in the financial year to demonstrate effectiveness. Many key actions were implemented during, or after, 2025/26 and therefore were not in place for a sufficient proportion of the year under review. In addition, a number of improvements remain in progress, including changes to the Constitution, Procurement Procedure Rules, operating model and service offer for the procurement function. The Progress Update on Action Plan Delivery
report indicates that all four statutory recommendations and six significant weaknesses remain open at the September 2026 reporting point, though the path to closure has recently been accelerated.
EY identified a significant weakness in contract management and procurement. Although progress has been made, including two series of procurement training covering ten modules (with a third series under development) aimed at assisting officers in using templates and finding guidance, many key actions were implemented late in 2025/26 or remain in progress. Internal audit reports issued during the year identified continuing weaknesses in procurement, contract management, and payment controls. Reviews of capital programmes within both Housing and Regeneration and Children's Services received Limited Assurance opinions and identified weaknesses in contract monitoring, budget oversight, compliance with established procedures, and controls designed to prevent duplicate or inappropriate payments.
Progress has also been made in implementing enhanced contract monitoring tools,
including more PowerBI dashboards that display contract values and expiry dates, with spend tracking to be integrated soon. These tools are intended to improve oversight by providing greater transparency and enabling variances to be identified, investigated, and addressed more effectively.
If these weaknesses are not addressed effectively in the next financial year, the council remains exposed to risks relating to its best value duties, internal control environment, risk management arrangements, compliance with laws and regulations, and the potential for fraud or unethical behaviour. The Council is currently in statutory Best Value intervention
with updated Ministerial Directions in March 2026 indicating continued dissatisfaction.
Responsibility for ensuring the timely implementation of remaining actions is distributed among specific officers and directorates, with oversight from the Corporate Leadership Team, Audit Committee, and Ministerial Envoys.