Inspectors have been sent in to the council over its financial strategy, among other concerns.

A letter to Tower Hamlets Council sent last week (February 22) by the Department for Levelling Up, Housing and Communities (DLUHC) details a number of issues which are said to be cause for alarm.

They include budgetary proposals, financial planning, appointments to senior posts and the expansion of the mayor’s office, currently occupied by Lutfur Rahman.

In 2015, a High Court ruling found Mr Rahman had won the 2014 election in the borough with the help of “corrupt and illegal practices”.

This included the wrongful portrayal of his rival candidate John Biggs as a racist and the allocation of grants in a way that amounted to bribery.

The election was subsequently declared void and Mr Rahman was disqualified from holding office for five years, but he was re-elected as executive mayor in 2022.

The letter said Mr Rahman appointed Alibor Choudhury, who was also found guilty of corrupt and illegal practices in 2014, as deputy head of the mayor’s office in June 2022.

Mr Rahman also intended to appoint eight policy advisers to an expanded mayoral office costing an extra £1.4 million.

This move, the letter said, would create “a risk of a ‘dual council’" which side lines Tower Hamlets Council officers in decision-making.

The letter identifies a “significant level of churn” across management posts and notes evidence of the mayor’s office model causing unnecessary delays in decision-making.

A decision to bring Tower Hamlets’ homes and leisure services back in house, despite officer warnings about the financial implications, will also be scrutinised.

This is part of broader concerns about the council’s financial strategy, with a balanced budget in 2024/25 relying on the use of reserves, the success of untested adjustments to revenues and £31 million savings.

A Tower Hamlets Council spokesperson said: “We look forward to working in partnership to show the progress we have made as a council under our current administration.

“We are surprised by the decision. However, it is of course the prerogative of the government and we are confident in our work and will co-operate fully.

“Our work has been praised in recent independent reviews by the Local Government Association Peer Review and Investors in People.

“Although both reviews were positive, we are already delivering action plans to fulfil their recommendations for further improvement as is the culture in our council.

“In recent months, the council has also made significant progress in resolving historic financial issues of audit, assurance and governance going back to 2016.”

Former chief executive of Newham Council, Kim Bromley-Derry, will lead the inspection and is expected to report the findings to Communities Secretary Michael Gove by May 31.

Reporting by PA.