28th July 2014

The London Borough of Tower Hamlets is currently under investigation for allegedly diverting £2m in public grants to Bangladeshi and Somali groups

This investigation was triggered by a prime time Panorama investigation into goings on in the London Borough and allegations that the Mayor (then and current) has pressured officers to allocate funds to organisations which under a fair and free process would not have received them. According to latest blog from the Guardian this investigation is still ongoing with PWC requesting 10 million pieces of information and Tower Hamlets requesting a Judicial Review into the proportionality of the investigation.

I was reminded of this last week after reading this excellent post from Toby Blume about the award of grants to the Big Society Network. Toby reviewed a recent NAO report into funding given to the Big Society Network and Society Network Foundation and reported:

Among the findings NAO report were:

That the Cabinet Office meddled with the administration of the Social Action Fund that it had commissioned Social Investment Business to run. They told SIB to ‘look again’ (subtext – until you find the right answer) at four bids it had deemed ineligible, including one from Society Network Foundation. And just to make sure the correct answer was arrived at they changed the eligibility criteria after the closing date for applications. When the project was going badly, they put more money in to ‘try and bring the project back on track’….rather than accepting they had made a horrible mistake. They also made further payments even though Society Network Foundation’s own figures showed that the project hadn’t spent the money they’d already had.

This was followed up by a report over the weekend from the Independent which reported that, among other things, the grant process to award funds to the Big Society Network was unduly pressured by Government Ministers. To quote the paper:

Two senior figures on government grant awarding bodies have also made allegations that they were pressured into handing over money to the Big Society Network despite severe reservations about the viability of the projects they were being asked to support.

Liam Black, a former trustee of Nesta, which was then a public body sponsored by the Department for Business, said Nesta had been “forced” to give grants that totalled £480,000 to the Big Society Network in 2010 without a competitive pitch. He described it as a “scandalous waste of money”.

Another senior figure involved in the decision to award £299,800 from the Cabinet Office to the organisation said the funding request had initially been turned down.

“When we did the analysis we turned them down because the bid did not stack up,” they said. “But we were told to go back and change the criteria to make it work.”

The Big Society Network is currently being investigated by the Charity Commission although as I read the story they’re being investigated for reasons not related to the giving of the grants but instead to do with their governance. However, the Labour Party have written to the Cabinet Secretary asking for an investigation into the grant giving much as Eric Pickles sent in PWC to investigate Tower Hamlets.

If we move past the obvious disparity in the way the two issues are being dealt with – where’s the PWC investigation into the Cabinet Office and Panorama investigation? – the more interesting question is whether political interference in grant processes is actually ok.

A generous interpretation of the Big Society Network grant process is that Conservative Ministers influenced the grant process because they wanted to ensure that the grants were given to organisations who shared their ideology; part of which had been a central plank of their manifesto. Similarly in Tower Hamlets a generous interpretation would be that Mayor Rahman had wanted to ensure that a complex grant process did not deny community groups which he knew were good service providers from getting funds.

In both circumstances isn’t that the role of politicians? After all, designing the perfect grants process is nearly impossible and I don’t know of any one that hasn’t resulted in at least one slightly perverse outcome (all of which we learn in hindsight). Likewise, politicians are directly accountable for the grants so why shouldn’t they have responsibility for influencing that spend?

The less generous interpretations both revolve around nepotism.

I have been weighing these issues ever since the Panorama ‘expose’ and despite the obvious risks (as possibly demonstrated by the Big Society Network and Tower Hamlets examples) I would rather have politicians involved and  actively influencing the grants process. The key issue, if we allow this, is to ensure that whenever a grant is given based on a political overview it is made clear in the grant notes. Then the public would know and opposition politicians, journalists, citizen auditors and voters can judge politicians on the decisions they make.

The current situation pretends that there is no political influence in spending money; a position which is obviously not true and because of this pretence denies the public the chance to make their own judgements.

If the Conservatives want to invest £2m in a network run by one of their former staff or Mayor Rahman wants to invest £2m in community groups he believes in we should accept that they were elected to do just that.


The public just have the right to know so that when it all goes wrong we know who to blame.

Original source – We Love Local Government – Blog

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