However, he said the council was not “sufficiently mindful of, or able to assess its own position”, adding that he was concerned the authority had “not understood the severity of its situation”.
Reed referred to reports by the council’s external auditor, Ernst & Young, in December, which identified 10 “significant” weaknesses in how the authority is run.
These included an “absence of an effective internal controls environment to safeguard public money”.
Reed said envoys planned a series of “deep dives” into licensing and planning decisions, the handling of community assets and grants, and “patronage in recruitment and staff promotions”.
A Local Government Association review noted the council’s “overly optimistic” view of its own progress but found evidence of “strong financial management”.
Reed said he would give the council and other interested parties until 2 February to formally respond to the proposals before taking a decision.
A Tower Hamlets Council spokesperson said the council was pleased that the government recognised the council’s willingness to work closely with the envoys and early signs of progress.
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