From Mr Stephen Shaw Sir: John Torode ("Bad neighbours in Bow", 12 December) might have a less rosy view of Liberal Democrat Tower Hamlets had he lived here. As a journalist, he should have looked harder for the reasons that a 1990 Liberal majority of 30:20 was turned into a 1994 Labour majority of 43:7.

Under the "neighbourhood" system, as few as five councillors controlled a budget of over £20 million. If two were from a different party, that left power in the hands of three councillors. It was inevitable under such a system that abuses would occur. Corruption could be denounced (for instance by the 1993 Hendy report into local markets), but the complete absence of accountability meant that nothing could be, or was, done. The absence of central strategy meant that Tower Hamlets lost millions of poundsin housing improvement bids which were cobbled together from competing demands by different "neighbourhoods". In contrast, the Labour administration has just secured £28 million under the single regeneration budget. Labour has inherited a borough in which the reserves have been completely spent, with an accumulated deficit from the"neighbourhoods" of some £5 million because proper financial control was impossible.

Whatever their original intention, the Liberals used the "neighbourhood" system ruthlessly to promote parochialism. During the Millwall (Isle of Dogs) by-election in October 1992, every Liberal leaflet carried the slogan "Island homes for Island People",They were clearly understood to mean that (immigrant) outsiders should not be housed in the (white) Isle of Dogs. The national Liberal party inquiry (held after years of inaction in the face of Labour protests) did not just "appear to confirm" this view: it recommended the expulsion of three leading activists. That same report also confirmed that the Liberal "Sons and Daughters" housing allocations policy had been used to the same ends.

Labour is determined to improve its consultation with residents via local forums. We are well aware of the need for high quality, responsive services and are determined to deliver them.

Yours sincerely JONATHAN STERNE Chair Local Government Committee Tower Hamlets Labour Party London, E3

13 December