Tower Hamlets LBC is planning a judicial review of the government’s decision to send in the accountancy firm PwC to assess the council’s governance.
A spokesman for the council told LGC the challenge would take place on the grounds that the Department for Communities & Local Government sent PwC in without having reasonable grounds to do so.
Communities secretary Eric Pickles sent in investigators in April to probe allegations of governance failure, poor financial management and fraud at the authority.
The spokesman said the estimated £1m cost of the firm’s probe was excessive. He said: “This has implications for other councils. If he [Eric Pickles] can just send people into us without good reasons that could happen to others. It’s about central government and local government relations”.
He said the legal move was not intended to delay the publication of PwC’s report.
In a statement published today, Lutfur Rahman (Ind), mayor of Tower Hamlets said: “The council has cooperated with the inspection team from the outset and this will continue while we attempt to secure reasonable clarification centred on the justification of the audit.
“In addition, the Department for Communities & Local Government has failed to provide the council with any cost estimates for the audit apart from the vague statement that costs are likely to be ‘within £1million’.
“This cost is to be borne by local taxpayers and this lack of transparency – over what is being audited and under what grounds – is not in line with the principles of public sector transparency that the secretary of state has himself championed.”
In a statement the DCLG said: “We will robustly contest this in the courts. There are clear grounds for an investigation into Tower Hamlets in light of allegations about governance failure, poor financial management and fraud.”
Mr Pickles told Parliament on Monday that the council would have to pay for the costs of the PwC investigation. “Whether the council likes it or not, this investigation will be thorough and comprehensive,” he said.