Some background: a short history of local scandals

Here’s an article that I contributed to the Dec14/Jan15 issue of Labour Briefing (which I reproduce with the kind permission of the editors).

It looks at some recent Waltham Forest history, and gives more than a clue as to why this blog was set up.

Waltham Forest’s missing millions

‘In 2009, spurred on by a spate of bad publicity about its flagship Neighbourhood Renewal Fund (NRF) programme, and premonitions that the Audit Commission was about to halve its star rating, London Borough of Waltham Forest (LBWF) appointed an Independent Panel, chaired by the LDA’s Sir Peter Rogers, to scrutinise its workings. The results were startling. The Panel found that, in its rush to gain Audit Commission stars, LBWF had cut corners and disregarded its own rulebook. Most worryingly of all, there was ‘a deep-rooted culture of non-compliance with procedures to prevent fraud’.

 One of the specific cases that the Panel investigated was emblematic. As part of NRF, LBWF had contracted a company called EduAction to help young people at risk of criminality, paying it £240,000. Yet when the Panel had asked about this project, it had found only confusion and evasion, prompting the withering conclusion that ‘It has been impossible to find any individual within the Council itself who understands what was contracted and what has been delivered for the money. Of even more concern, there appears to be little concern from key people that this is the case’.

 After the Independent Panel’s report, there were predictable assurances that lessons had been learnt, and new procedures adopted. However, as time passed, it became ever clearer that such changes were largely cosmetic. In June 2010, the chief executive who had championed the Independent Panel investigation was sacked with a pay-off of £360,000, and replaced by an insider. In May 2011, O-Regen, a local charity strongly linked to LBWF, not least by two million pound’s worth of contracts, went into administration, with the loss of 31 jobs. And in 2012, it emerged that Worknet, a four-year programme costing c. £9m. which aimed to help local people find jobs, had spectacularly missed most of its targets, with once again, the key weaknesses being poor contract management, lack of monitoring, and indifference as problems surfaced.

More recently, LBWF has become embroiled in a further embarrassing debacle. During 2008, it had helped set up a business improvement district company, the E11 BID Co., and ensured that councillors were on the latter’s board. Subsequently, it had showered the venture with money, either directly, or by indirect subsidy (free office premises) or via cash payments routed through the Waltham Forest Business Board, a somewhat opaque borough-wide pressure group, chaired by a leading property developer, Labour supporter, and philanthropist.

 However, in 2013, it emerged that the E11 BID Co. owed substantial debts, was being chased by HMRC for non-payment of taxes, and thus was near collapse. An independent report concluded that the directors, including the councillors, had ‘failed in their duty to maintain proper accounting records and systems’. Once again a substantial sum of public money remained unaccounted for. To make matters worse, further investigations then showed that other transfers to the Waltham Forest Business Board also appeared to have an uncertain fate, and that neither could LBWF explain what had happened to large sums paid to North London Ltd, a private company which seemingly acted as a general factotum in the twilight world of council-business relations

What lies behind this sorry chain of events? First, it is notable that, while successive ministers and oversight bodies (such as Government Office For London) have been informed in detail about Waltham Forest’s failings, none have publicly intervened. Nor have the two local Labour MPs expressed much interest. So LBWF largely has remained untroubled by outside scrutiny. Indeed, it is only thanks to the Waltham Forest Guardian that the stories touched upon here have broken at all.

 Nearer to home, the local Labour party, too, is culpable. Power in the Town Hall is highly centralised. Discipline is tightly enforced. Many rank and file councillors complain of being marginalised. Consequently, the leadership’s PR machine continues unchallenged. And the malaise extends into the branches, where few are interested in the everyday management of public money, and it is motions about Israel that generate most excitement.

 A journalist who compiled Private Eye’s Rotten Boroughs page once told me he could fill every issue, every week, with stories about council misdemeanours. But there is no reason why we should accept this situation. As Herbert Morrison knew so well, poor local government saps democracy and wastes scarce resources. It is in everyone’s interest to energetically promote reform.’

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