Government officials will be sent in to oversee the running of an east London council after inspectors uncovered major failings and a “toxic” culture.

An inspection report found a lack of trust and respect among both political parties and management meant the executive at Tower Hamlets Council remained unchallenged, with decision-making dominated by an inner circle around the mayor, Lutfur Rahman.

Mr Rahman was previously banned from public office after a High Court ruling in 2015 found he had won the 2014 election in the borough with the help of “corrupt and illegal practices”.

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

Mr Rahman was elected mayor in 2022 after the ban expired, but the previous government sent in inspectors in February after concerns were raised about the authority’s culture and use of resources.

In a statement on Tuesday, local government minister Jim McMahon said the inspectors’ report detailed serious concerns “across a number of areas” which led to the conclusion that the council is failing in its legal duty to provide best value for taxpayers.

On failures of leadership, inspectors said the lack of respect and co-operation between political parties at the council “prevents councillors from engaging in a culture of genuine improvement”.

It added a lack of trust had led to “churn” at top management levels and inspectors noted “insufficient challenge to the executive and a perception among many staff that many good managers had left the organisation as a result of speaking truth to power”.

Inspectors found the quality of governance was undermined by due process being treated as “an obstacle to priorities rather than as a necessary check and balance”, with the council’s scrutiny culture described as “weak and confused”, and the level of challenge “inadequate”.

A lack of trust across the “entire organisation” led the administration to be “suspicious and defensive in its behaviour”, inspectors said.

This was found to have created a culture in which decisions were being taken on the basis of advice from a small group of the mayor’s trusted associates.

Inspectors added that many “staff and partners” had described the council’s culture as “toxic”.

A culture of patronage, even if not at play in every appointment, is perceived as pervasive enough to undermine trust between members, staff and leadership, as well as with external stakeholders

The statement added: “A culture of patronage, even if not at play in every appointment, is perceived as pervasive enough to undermine trust between members, staff and leadership, as well as with external stakeholders.”

Inspectors noted the mayor had a “strong community focus”, but added the “significant time and energy” spent in local communities appears to “distract from their critical and statutory strategic relationships”.

The report found “insufficient evidence that the council undertook meaningful and comprehensive consultation with key partners, staff and service users before decisions were taken in some key areas”.

The inspectors also said that while the council has made improvements over the last two years, “this has lacked a strategic focus or a cultural prioritisation of continuous improvement”.

“The inspectors are sceptical of the council’s capability to self-improve,” they added.

Mr McMahon said the evidence shows “a broad and supportive intervention package, with robust external assurance” is needed.

He added that “reconfiguration and strengthening” of the council’s Transformation Advisory Board will be a “core element” of the Government’s intervention.

Mr McMahon said: “In order to assist the council to achieve the necessary improvements, I am minded to appoint a ministerial envoy and assistant envoy to act as adviser, mentor and monitor to the council, and to oversee its improvement work.

I am proposing directing the council to co-operate with the ministerial envoys, and to allow them all reasonable access to their premises, documents, employees or members in support of their work

“The ministerial envoys will work comprehensively within the council to oversee the proposed changes to the board, including agreeing its scheme of work and meeting agendas, preparation of the council’s Continuous Improvement Plan and an open recruitment exercise to appoint a permanent lead for the council’s improvement work.

“They will attend meetings, provide ad hoc advice and challenge, and be available to senior leadership for support.

“They will also work closely with the board leads for governance, leadership and culture and partnerships to ensure the realisation of comprehensive programmes of cultural change and political mentoring.

“I am proposing directing the council to co-operate with the ministerial envoys, and to allow them all reasonable access to their premises, documents, employees or members in support of their work.”

In a statement, Tower Hamlets Council said: “Tower Hamlets Council is committed to working with the Government on our continuous journey of improvement.

“We welcome the Government’s decision to appoint an envoy rather than send in commissioners, with a plan to work together with us on a support package, with the council retaining all its powers.

“We look forward to working with the ministerial envoy to build on the good peer review we received from the Local Government Association and an improved Investors in People inspection silver rating.”

The council said the Government had recognised some improvements including “financial stability” and “good progress with service delivery”.

It added that it had “disagreed with the justification” the previous government had given for the inspection, adding: “We appreciate the new Government’s approach to local government improvement.

“We look forward to working in partnership with the new Government and the envoy as equals, along with continuing to deliver for our residents and businesses.”