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A money saving move to a new town hall by Tower Hamlets LBC could end up costing the council millions of pounds, ac...
A money saving move to a new town hall by Tower Hamlets LBC could end up costing the council millions of pounds, according to an internal audit report seen by LGC.

Two officers have been suspended pending the results of an internal disciplinary investigation and a district auditor's inquiry into the council's relocation to offices in London's Docklands by the Liberal Democrats last July.

The two officers are John Swinney, acting director of contract services, and Tony Senatore, his assistant. It is understood that more officers could soon be suspended by the ruling Labour group.

At the time of the move the council claimed it would save £8.5 million over 10 years. It was hailed as the coming of age of the council's now controversial decentralisation policy.

But an internal audit report, which led to the suspension of the two officers, says the savings from renting the headquarters could be significantly reduced because of miscalculation and irregularities.

The level of savings was revised in January this year to £3.2m but the report says the full costs of the move 'are still emerging and whether value for money has been achieved is uncertain at this stage'.

The report says spending on furniture has reached £1.8m when the council originally only approved £200,000. By July 1993 £1m was spent without committee approval, the report says. Retrospective endorsement was given in January.

The council faces an additional bill of £116,000 for an overrun on a £1.8m refit of the officers by the building's owners, NCC.

The report reveals that a team of independent lawyers, Freeman's, raised concerns about the move but these were not received until after the council had made its decision.

The firm expressed concern that the dismantling of the council chamber may have to be paid for at the end of the lease. Freeman's said it was not clear what would happen to rent levels after the initial 10 years of the lease.

The head of internal audit criticises the payment of £225,000 in service charges. 'There was no specific committee authority to enter into the service charge deed,' says the report. 'There is no evidence that value for money was obtained for the above services or contracts.'

The financial appraisal of the move is criticised in the report, which says: 'The option to purchase rather than rent a building was not investigated fully and reported to committee.'

The lack of budgetary control also comes under fire. 'There is no evidence of the production of regular expenditure reports on the move to Mulberry Place and therefore it is not possible to determine how budgetary control was being exercised.'

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