Tuesday, 27 January 2015

Priory House

One of the most difficult decisions the last Administration had to take was the closure of Priory House. The decision was on the recommendation of a cross party working group supported by officer recommendation. Current Leader Ron Woodley was belatedly opposed to the plan and pushed for the home to retained and operated through a trading company. The evaluation of his proposal included the following conclusions:

A full evaluation of the viability of Councillor Woodley’s final Business Plan was commissioned …. and has now been carried out by LaingBuisson who are one of the UK’s foremost and highly regarded providers of information and market intelligence on the independent health, community care and childcare sectors. LaingBuisson’s conclusions are as follows:
 The revised Business Plan is not viable for the following reasons:

 It is based on weekly self-funding fees that do not reflect market rates.

 It is based on weekly NHS step-down fees that do not reflect market rates.

 The physical structure of Priory House makes it unlikely that it could attract self-funders.

 The revised Business Plan, based on market fees, would lead to a cumulative loss of £754,474 over a three year period.

Even if the revised Business Plan were viable, there are reasons why the Council might not wish to implement it:

 The revised Business Plan envisages a care home primarily for self-funders, a group for whom the Council has no financial responsibility.

 Many care associations have taken Councils to the High Court over the fees they pay care homes: Southend’s position in any action would be seriously weakened if it were seen to be charging residents almost twice what it pays for care home places.

 If the Council offered places in Priory House at £800 it might have the effect of pushing up prices in other care homes and so the Council could have to pay more for the beds it purchases from the independent sector.

 If the Council tried this option and it went wrong the Council would find itself financially liable for all losses incurred assuming the Council had underwritten the trading company and / or suffering reputational damage by walking away from the creditors of a failed company and failing the residents of the home.

The full report is available through the Council’s website. Ron did not like the decision and has now reversed it based on the delivery of a reduced cost base and increased income. I feel sorry for professional officers at times like this who have to deliver against their original advice. The latest report does not address the risks recognised in November 2013. This is in my view a bad decision driven by injured pride rather than informed political judgement.

Labour councillor David Norman has cabinet responsibility for a decision which involves using £100K from the Business Transformation Reserve for a business project previously discounted, spends £225K of precious reserves, and results in a shortfall of savings for 15/16 of £167Kwhich have to be found elsewhere. More importantly it ignores the further and more fundamental risks being played as previously identified by external advisers and the council’s own officers.

At times of financial hardship when difficult decisions on economies need to be made and officers are concentrating on the maintenance of services is it really appropriate to be taking these sort of risks and asking officers to develop a commercial enterprise in difficult circumstances and in a crowded market! The council needs to concentrate on what it does well and cost effectively and not try to outdo the private sector whilst bound in the red tape and regulation inevitable with local government.

Council Budget (6) - Public toilets

When I originally became a councillor on the old Borough Council in the 90’s the regular joke made by friends was that my time would be taken up in dealing with the administration of public toilets, removing dog poo and organising the public allotments. The situation was not helped when my first committee chair was as Chair of the Allotments Working Party! Obviously the reality was far from this although the issues of public toilets and dog excrement were discussed reasonably regularly over the years.

The budget proposals for toilets once again highlight the contradictions and inconsistencies with the thinking of the current Administration and in particular it’s Leader, Independent party member Ron Woodley.

I have previously expressed my concerns about the apparent pro-east bias in cabinet and the potential contradiction of a council Leader who also leads one of the more influential residents associations in the town which represents the Burgess Estate. It is about fairness and the importance of ensuring that decisions are not only fair but are seen to be fair.

We have the decisions on Priory and Shoebury flood defences where it is difficult to see how the appearance of fairness can be maintained bearing in mind the stance previously adopted by Cllr Woodley and/or BERA.

In the budget we then have the stance on public toilets. The proposals include savings of £10K by closing toilet facilities at East Beach and £30K by closure of toilets in Hamlet Court Road, Ness Road and Southchurch Road but increased corporate borrowing of £190,000 to refurbish the toilets at the bottom of Thorpe Hall Avenue, a scheme previously supported by Ron’s ward colleague Mike Stafford. I don’t know what if any revenue implications will arise from this refurbishment.

Whatever the merits of this block it shows that Ron is happy to borrow for a scheme that he or his mates like. This proposal not only undermines his previous stance on borrowing but also suggests priority is being given to Thorpe with an inevitable perception of unfairness. I am surprised that Ron’s non indie cabinet colleagues are content with this.

In the meantime shutting public toilets without adequate alternative facilities is never good, particularly when linked as in this budget with reductions in the spend on the waste collection and street cleaning contract, abandonment of textile recycling collection and removal of litter bins.

Sunday, 25 January 2015

Council Budget (5) - Fee increases all round!

I have already commented on the Rainbow Alliance’s proposals to raise car parking charges but this is not the only example of the Administration avoiding difficult decisions on economies by chasing increased income from fees and charges.

The reality is that in these difficult times, where residents, businesses and visitors continue to struggle to make ends meet, trying to over milk council resources in this way raises major concerns. Some of these proposals threaten some of the less well off in our community, risk undermining our reputation as a cultural, tourist and operational centre for the area and avoid the reality that if you increase fees and charges too high you risk creating user resistance which results in people not using facilities and actually reducing the income you generate. There are some areas, and I believe car parking may be one, where to freeze (which in real terms means reduce) or even reduce fees increases usage and resulting income.

I was surprised that with a Labour cabinet member for housing we should see such significant increases in council house rents (although council Leader Ron Woodley has argued in previous years for larger than the proposed rent increase).

Additionally we see Lib Dem Leader Graham Longley proposing increased charges for entry to the Pier, as well as increases to Bereavement Services charges, increases in hire costs of council facilities, general increases in council commercial rents, attempts to increase income from services to our schools, increased taxi licensing charges, rises in the cost of our businesses locating tables and chairs outside their premises, increased charges for bowling greens, and increasing leisure fees.

So whilst Ron Woodley does not seem to be delivering the promised reductions in “red tape” we are seeing increased demands on our council house tenants, visitors to the seafront, the bereaved, our schools, our taxi drivers, our businesses and those keen to keep fit and active.

Friday, 23 January 2015

Council Budget (4) - Reserves and the 3 card trick

We know from Council Leader Ron Woodley that the economies that Southend Council has to find in the coming year are very much as anticipated. We also know from the pronouncements of both George Osborne and Ed Balls that whatever the outcome of the General Election continuing austerity is inevitable over the next few years.

The current draft budget seeks to close a gap of £12,388M of which £3,090M relates to budget pressures.

I will be looking at some of the specific economies in due course however on the face of it they have balanced the figures but……

Of this gap the sum of £1.888M is being financed from reserves and the report includes this interesting comment:

“Note that the 2015/16 draft revenue budget has been prepared on the basis
of using £1.888m from earmarked reserves to allow for a smoothing of the
budget gap across the next three financial years with a consequent
replenishment of those reserves in 2016/17 and 2017/18”

and in case we missed it the report says at a later paragraph:

"The budget is then balanced by the use of £1.888 million from earmarked reserves to
allow for the smoothing of the budget gap over the next three financial years with
a replenishment to the reserves for this sum over 2016/17 and 2017/18"

And again:

"Members will note that the budget proposals now include the use of some
earmarked reserves to fund the balancing of the 2015/16 budget and items of
one-off project spending. The use of £1.888 million of reserves to allow the
smoothing of the budget gap are to be replenished in 2016/17 and 2017/18"

That’s clear then - except I struggle to see the detail as to how this is to be “smoothed” and what effect this will have on savings targets for the next 2 years.

So when is a saving not a saving? – when you take it out of reserves. I am not quite sure what “smoothing” means in this context but the reality is that they have failed to meet the budget gap (even with an increase in council tax and car parking charges) and are therefore raiding reserves to cover the balance.

Not only is this eroding the level of reserves which should be available for emergencies – which are always possible in areas such as social care – but how are the reserves to be replenished over the next 2 years when further and additional savings will need to be delivered?

This suggests the use of a capital pot to underpin revenue expenditure which is a potential road to disaster.

It seems to be the same old story – the Conservatives create a sound financial base, lose control resulting in Labour and others raiding the piggy bank and leaving a mess that a future Conservative Administration has to sort out. The surprise is that Ron, who has regularly proclaimed himself a Tory at heart, and in previous budget debates has given the impression that on economics he is considerably to my right on budget control, has been willing to p reside over this.

Thursday, 22 January 2015

Council Budget (3) Council Tax increase

The current position on council tax increases is that a local authority can propose any percentage increase it wishes but the Government has imposed a rule that if the proposed rise for any authority is above 2% there must be a referendum to gain public agreement. In addition the Government has introduced a further council tax subsidy which provides that if a council freezes the council tax it will receive an increase in its Central Government grant equivalent to a 1% increase in council tax.

It is this grant which enabled us to freeze council tax on a number of occasions over recent years and whilst there were some concerns as to whether the grants would be incorporated into the Council’s funding on an ongoing basis these fears proved to be unfounded.

So what are the current Administration proposing – well they are rejecting the Government offer and seeking to increase council tax by 1.95% which will therefore be payable in its entirety by our hard pressed council tax payers. I believe this is a very poor decision.

Frankly I am opposed to the Government’s referenda cap. In my view if residents vote for a council that wants to introduce large council tax increases then so be it on the basis that if they don’t like it they can vote them out at the next election. I don’t see why Central Government should feel it appropriate to interfere in the relationship between councils and their voters in a way which inevitably weakens local democracy and reduces the true differences between the party groups as they are forced to work within tight financial restraints.

However if we have a cap, then if parties want to increase spending and feel they have the support of residents they should put their money where their mouth is and risk a referendum. I happen to think they would lose but in Southend I was always being told that residents oppose spending cuts so give them a simple choice.

If the Administration is not prepared to go to the voters then it should accept the subsidy and protect residents from increases in council tax at this difficult time. They will say that it only adds a small sum to bills and that the Government may remove the money in later years. As I have already said we kept the subsidy before and in hard economic times for our residents every little helps.

And in any event why 1.95% and not 2%. If you are rejecting Government money why not go as high as you can if you won’t face a referendum. The reality is that this decision gains about £0.5M in the budget for the coming year – a very small sum in the context of the Council’s overall budget, and could easily be found if the Administration abandoned some of its current vanity projects.

Wednesday, 21 January 2015

Waterstones & HMV

Whilst it may have included an element of PR I was pleased to note the positive post Christmas press releases from both Waterstones and HMV. There seems some evidence that the traditional book is starting to fight back against the electronic book, and that HMV are improving their market share with an increase in demand for cds, but also more interestingly vinyl.

I must admit to owning and using a kindle and for holidays it is difficult to beat with the need to travel with a pile of paperbacks now a thing of the past. However for all the convenience it is not the same as holding an actual book in your hand and turning the pages - which is a physical as well as an intellectual pleasure. This came home to me when I was bought a hardback copy of Bernard Cornwall’s account of the Battle of Waterloo at Christmas. So now it is a question of enjoying the best of both worlds – kindles for holidays and actual books at home.

As for HMV it was a sad moment when it appeared that it would be disappearing from our High Street and over recent weeks I have made a particular effort to support them. I am not a convert to downloaded music – for me nothing beats the pleasure of a new album with artwork and blurb to enjoy and the added benefit of enjoying the tracks in the order intended by the artist. I still miss the sound quality of my old LPs and the added impact of an LP cover but will not be tempted away from my cds. The risk of scratches and the shorter play length don’t quite work although I still have all my old LPs on display even if many of them have been replaced by cds.

So good luck to both Waterstones and HMV over the coming months who remain such important elements of our remaining High Street.

Council Budget (2) - Borrowing

One of the areas that Cllr Woodley and his Independent colleagues have focussed on in recent years has been the level of council borrowing. This reached a head during the council budget debate last year when they were challenged to identify the specific projects which had been wholly or partly funded by borrowing which they would not have undertaken, or to propose variations to the draft budget to remove borrowing funded projects which they would abandon.

Perhaps unsurprisingly they failed to do either although Independent Party Leader Martin Terry came up with 3 schemes which had been primarily or solely externally funded.

With this backdrop it was always going to be interesting to see the new Administration’s proposals on capital which presumably would see no new projects funded by borrowing and proposals to reduce general borrowing levels.

Well it is always difficult to reach any definitive views on the initial cabinet papers but the draft programme which they are seeking to deliver suggests that for 2015-2018/19 they propose a capital programme of £156.9M of which only £57.8M is externally funded. It envisages borrowing of £56M over the period in addition to using £37.1M of reserves.

Particularly the use of reserves from general fund is not greatly different from borrowing as it reduces the size of the safety net available for unexpected expenditure and if it is going to be used could simply repay borrowing to reducing revenue expenditure.

In fact the level of borrowing envisaged for 15/16 in the proposals we pushed forward 12 months ago was £9.3M but with the many new items the current proposals now increase borrowing for capital for the current year to £24.3M. It remains unclear what the total borrowing figure will be by the end of the year but this will no doubt become clear as the debate continues.

So we have a raft of borrowing funded capital schemes and a significant increase in the anticipated new borrowing for the current year!

The final twist on this is that at yesterday’s Business Budget Consultation Cllr Woodley made a throwaway remark that the budget would reduce borrowing by £38M resulting in a revenue saving of £2M pa. I was so surprised by this comment that following the meeting I asked a couple of other attendees whether I had heard him correctly. Their understanding accorded with mine. Clearly this needs to be clarified. I cannot believe that Cllr Woodley would seek to mislead the meeting on the true effect of his proposals but cannot see how his figures tie in with the papers. If he is in reality not only failing to cut borrowing but increasing it then it is reasonable to accept a correction of his comment yesterday and an explanation as to why his position appears to have radically changed.