Liberal Democrat councillors in east London have been accused of wasting almost pounds 1m by the Local Government Ombudsman.

Tower Hamlets council, which was controlled by the Liberal Democrats until the May borough elections, is criticised for paying the sum consultants involved in redesigning a housing estate to reduce crime and increase residents' satisfaction. The consultants were removed from the project at the insistence of its instigator, Professor Alice Coleman of London University. The firm won the pounds 2m contract to assist in redesigning the Ranwell estate in Bow by submitting the lowest tender. It was paid pounds 400,000 for preparing drawings and pounds 550,000 when its involvement was terminated prematurely after Professor Coleman's protests. None of its work was used in the redesign, being completed this summer a year behind schedule.

Professor Coleman said: 'The consultants said they had done everything, but frankly they'd done nothing. The Ombudsman concluded that the authority had failed to ensure they had all the facts before making a decision. Tower Hamlets council said the authority would be considering the report.