John Biggs is reported to have written off a £850,000 loan made to the Rich Mix (an organisation which styles itself East London’s independent arts venue).
Independent councillors have implemented the call in” process which means that the decision will now be reviewed by a representative mix of councillors before it is implemented.
The decision is fraught with controversy, as it centres around:
•whether court proceedings to protect the Council’s right to secure repayment of a loan will be ditched;
•the Labour Party’s involvement in what is supposed to be the decision of a public repre-sentative.
The loan was made to the Rich Mix Centre by a previous Labour Party Administration shortly after the Centre was set up. Mayor Rahman’s Administration took the view that the loan should be repaid – and, as it had been outstanding for so long, took legal proceedings to protect the Council’s rights to reclaim the loan.
His Administration was concerned about whether the “East London venue” provided a service to Tower Hamlets residents (as opposed to merely being located in Tower Hamlets) and why, given a number of commercial facilities in the building, the Centre could not pay back money which, at the time of the loan, it had claimed it would be in a position to re-pay.
Mayor Lutfur Rahman pointed out that if the Rich Mix Centre did not repay the loan, it was, in effect, subverting the grant-awarding process. When organisations approach the Council for grants, they have to provide information about themselves and how many Tower Hamlets residents they serve – and the Council checks that the grant is spent on the basis set out in the application.
On the other hand, when an organisation approaches the Council for a loan, although the Council checks that promises to repay the loan are credible, the application is not considered in the usual grants procedure. If the body which received the loan then doesn’t pay it back, it has in effect received a grant without going through the standard process.
The Rich Mix Centre has always said that it does serve many Tower Hamlets residents and that it will repay the loan – but it could not do so in one lump sum.
However, Mayor Lutfur Rahman’s concern was that nothing had been repaid for years, so it would be irresponsible just to agree to accept phased payment now on a spit and shake basis.
Any repayment plan had to be endorsed by the Courts so that the Council could, in future years, enforce the agreement if necessary. Another reason to sort the matter out formally was that the Council had lost interest on the money loaned – which could have been seen as a loss due to lack of proper processes.
The Rich Mix then launched a petition on Change.org which stated that if the Council insisted on repayment in one go (after waiting for some years since the initial loan was made), the Rich Mix may be forced to close. Over 16,700 people signed the petition, indicating that they did not want the Rich Mix to close.
Although there are a number of concerned citizens in Tower Hamlets, no one started a Council Tax-payers petition indicating that residents wanted the loan repaid.
The John Biggs decision
John Biggs took his decision at a hastily summonsed “Mayor’s Executive Decision Making” meeting on 22nd June – the beginning of his second formal week in office. John Biggs was to chair the meeting himself – with the only others present being Council Officers John Williams (Service Head, Democratic Services) and Matthew Mannion (whose role was unclear, but who often works as a clerk to committees).
The meeting was to be held in secret on the grounds that it would refer to “information relating to the financial or business affairs of any particular person (including the authority holding that information)” – and also because it dealt with matters that were part of an ongoing court case and were therefore legally privileged.
The meeting was called under the Council’s urgency procedures because there was to be a hearing of the court case on 20th July. The meeting considered a report: the Commissioners had been consulted on its contents; and the Chair of the Overview & Scrutiny Committee (a Labour councillor, from the same party as the mayor) had also been telephoned about the matter.
The choice before the meeting (that is, the meeting of John Biggs in the presence of officers) was to:
•go ahead with the court hearing; or
•accept the Rich Mix’s proposals to settle the court claim for the repayment of the loan;
•have further discussions with the Rich Mix.
And that’s about as much as we can tell you. All the background information is secret. The decision is not yet on the Council’s website (see the Council’s comment at the end) – although the “call in” states that John Biggs decided to write the debt off.
The Call in
The “call in” process is the one method councillors have to delay a Mayor’s decision while they scrutinise it at the “Overview & Scrutiny” (O&S) Committee. That Committee can then ask the Mayor to reconsider his/her decision at a Cabinet meeting. At once a problem with John Biggs’s Administration becomes clear.
Under Mayor Lutfur Rahman’s Administration, the Chair of O&S was always a Labour Councillor. Under John Biggs’s Administration, the Chair is… a Labour Councillor. As Labour Councillors and John Biggs meet together to set policies for his Administration, it is hard to see how someone who was part of making a particular policy can be seen to be giving it independent scrutiny.
John Biggs’s decision – whatever it is! – has been “called in” by five independent councillors. The call in will be discussed at the O&S meeting which will be held at 5.30pm on Wednesday, 7th July in the Town Hall.
Transparency in decision-making: John Biggs and Labour
John Biggs has made several public statements confirming his commitment to run a transparent administration and he has given his opinion that Mayor Lutfur Rahman did not do so.
If Mayor Lutfur Rahman had stated that he was going to award a single organisation some £850,000 on the basis of what was said in secret papers, it is certain that there would have been uproar, with mainstream newspapers claiming that this would have been favouritism and cronyism and something between bad practice and downright corruption.
John Biggs must expect his decision to be closely scrutinised by the press and public if he is to avoid suggestions that there was one set of rules for Lutfur and another for him.
In terms of not only been fair but also being seen to be fair, John Biggs does start off on the back foot.
•First, many prominent Labour Party members are involved with the Rich Mix. Professor Michael Keith of the University of Oxford is the Chair of the Board. Professor Keith was a long-serving Labour Councillor in Tower Hamlets and has been seen out with Tower Hamlets party activists campaigning for the Labour Party since he began working in Ox-ford. Labour Councillor Denise Jones is also a Board Member. Baroness Oona King – who was a Labour MP in the borough before losing her seat – is a patron. Labour Councillor Rachael Saunders (now one of John Biggs’s three Deputy Mayors) states, on her formal Council Declaration of Interests dated May 2014, that the Rich Mix Cultural Foundation is one of her “appointments by the Authority” and she is also listed on company websites as a current director of the Rich Mix Cultural Foundation.
•It is an established convention on Councils throughout the UK that when councillors (or mayors) take decisions in a quasi judicial capacity (eg, planning applications) or involving money, they have to take that decision on the basis of the facts presented (usually by officers) at the time the decision, without having allied themselves with lobbying for a particular side beforehand. The second issue, then, is that Labour Councillors have already expressed opinions about the Rich Mix in public. For example, on 28th November 2012, two of Lutfur Rahman’s Cabinet Members put an amendment to a budget motion stating that the Mayor should recover a loan of £850,000 made to the Rich Mix Centre. Labour Councillors voted that amendment down. If this, and other publicly recorded statements and votes, amount to having established a party position, John Biggs would have to show that he is taking his decision purely on the basis of the (secret) reports presented to him by officers and not on the basis of the policies of his party or of his party’s councillors.
•Third, there is the issue of the timing of John Biggs’s decision. John Biggs took the decision at the urgent meeting he attended on 22nd June. On 24th June, the Chair of the Tower Hamlets Labour Party posted a press release on their website announcing the Cabinet and including an exclusive quote from John Biggs. The Labour Party text reads that John Biggs has “instructed that there be a long-delayed settlement [sic] with the Rich Mix Centre in Bethnal Green and that legal action pursued under the previous Mayor the effect of which would have threatened the existence of the centre be ended.” By that stage, there had been no press statement from the Council about the decision having been taken. The Labour Party could not have been present at the meeting itself, as it was not open to the public. How were they aware of what the decision was?
John Biggs is an experienced politician and he will perfectly understand the need to take a decision on whether to recover £1 million of taxpayers’ money or write it off on the facts of the case and not because of Labour Party decisions or policies. The point here is not to suggest that John Biggs has acted in any way improperly, but merely to make clear that in a case like this, with so much prior Labour involvement, he will have to take steps to ensure that how he arrived at his decision is quite clear. The Labour Party, and John Biggs, himself, can have had prior policy that the dispute should be settled: this is quite different for taking a decision on how it should be settled, with the consequent costs to the Council. If John Biggs is to live up to the pre-election promises he made on how he would be accountable for his decisions, he will need to make it clear that he was not influenced by all this Labour Party involvement when he took his decision.
Transparency in decision-making: John Biggs and Rich Mix
There are also issues around whether John Biggs was lobbied by the Rich Mix itself before he took the decision. We mention above that Rich Mix ran a petition on Change.org: they also posted updates about their situation there.
On 12th June they stated that they had had discussions with John Biggs before the previ-ous day’s mayoral election and they were seeking an urgent meeting with him, Council officers and the commissioners about the “dispute”.
On 19th June they stated that they were pleased that John Biggs had made a number of public statements about his desire to settle the legal action commenced by the Coun-cil. They go on to say, “In order to do this there will need to be some formal processes within the Council to ensure that they have met all their proper procedures.”
On 30th June, they stated, “As promised in his election manifesto, new mayor John Biggs took immediate steps to resolve the long-standing litigation between Tower Hamlets Council and Rich Mix. Because of the way in which local councils are required to operate, he made a decision which is then capable of being reviewed by other members of the council. The original decision was published on Monday 22nd June, and yesterday we heard that the decision has been called in for review…”
There are clearly some problems with how the Rich Mix has phrased their comments – although this is not unusual from an organisation which is not thoroughly familiar with how Councils work. John Biggs will need to show that if he did have any meetings with Rich Mix before the election, these did not influence his decision on 22nd June. The Rich Mix seems to believe, as early as 19th June, that the legal action will be settled. They are clearly wrong to state that the Council will have to go through some formal processes just to ensure that procedures have been met. The formal processes and procedures are there to ensure that correct, justified and justifiable decisions are made – not to rubber stamp decisions made beforehand! The procedures are expressly there to ensure decisions are made on the basis of the facts and have not been influenced by prior lobbying!
The Rich Mix’s final statement is also problematic. Rich Mix say that John Biggs took steps to resolve the litigation as he had promised this in his manifesto. They go on to say that John Biggs then took a decision which is capable of review. Again, there are two separate points here, and Rich Mix appear to conflate them. John Biggs may have taken steps to resolve the dispute: but whatever they were (and perhaps we should be told), they were not the steps he took at the meeting he had with himself on 22nd June under the urgency procedures, because that meeting was called to decision not only THAT the dispute should be settled but HOW it be settled. It is the “how” decision that has been called in for scrutiny – not any decision over whether the dispute should be settled in principle.
It is curious that Rich Mix claim that the original decision was published on 22nd June: we are not sure where it was published, as the minutes of the meeting are confidential. It is also curious that the Rich Mix heard on 29th June that the decision had been called in. There has been no official press release about Rich Mix from the Council and the press release from the councillors who did the call in came out on 30th June. It would be helpful to know what the Rich Mix’s lines of communication are.
Again, John Biggs is an experienced Councillor who will know that he cannot be lobbied by an organisation if he is about to take a decision which involves such a large sum of money. The above is not to suggest that he has had any kind of improper communication with Rich Mix: it is, however, to suggest that he must put a confirmation of this into the public arena if he is to live up to his pre-election promises about running an Administration which is clean and seen to be clean.
We asked the Council whether John Biggs has any comment to make on this issue.
A council spokesperson said: “The new Mayor has taken a decision about the future con-duct of the Council’s litigation against Rich Mix. That decision will be reviewed by the Council’s Overview and Scrutiny Committee on 7 July 2015. We are not currently disclosing the details of either the decision or the review, because the High Court case with Rich Mix is ongoing.”
John Biggs stated: “It is no secret that my manifesto indicated a desire to find a way to settle this long running dispute.”
Cllr Oli Rahman, Leader of Independent Group, said:
“It has not been a month and the people of Tower Hamlets are already witnessing yet an-other hypocritical action by the Labour’s part time mayor Biggs. After rejecting to be scrutinised by the Opposition at full Council, he already seems to be paying back some favours behind closed doors. What happened to transparency and accountability?
Unfortunately, Biggs talks a good talk but is incapable of walking the walk. Now we know why Biggs and his Labour Group rejected and shouted down our proposal to be scrutinised by opposition, as was the case when Labour was in opposition.”
Cllr Rabina Khan, Independent runner up in mayoral election, said:
“Rich Mix does a good job overall but it is absolutely wrong for Biggs to allow Rich Mix to keep the loan – local residents’ and tax payers’ money – without even trying to get something for people of Tower Hamlets. Making his first decision behind closed doors, Biggs has set a worrying precedent, shows his double standards and has already broken his pledge to be transparent.”