Harry Fone: Councillors in Walsall give themselves a big increase in allowances

9 Mar

Harry Fone is the Grassroots Campaign Manager for the TaxPayers’ Alliance.

As I’ve argued from day one, many local authorities simply don’t have their priorities right. This seems particularly clear in Walsall where councillors have awarded themselves a pay rise – although opposition members voted against it.

The basic allowance for members will now be set at £11,938 – an increase of over £500. But since 2017-18, remuneration will have risen by over £1,000. When it came to pay for special responsibility allowances (SRAs), there were huge hikes. Four options were proferred by an independent remuneration panel – the least expensive costing taxpayers just shy of £65,000 and nearly £110,000 at the high end. Councillors opted for the most expensive option. The council leader will see his SRA rise from £22,841 to £33,325 – a 45.9 per cent increase. The deputy leader also enjoys a significant bump of £5,698 and cabinet members receive a £5,356 boost to their allowances.

At the same time, a council tax rise of 4.99 per cent has been approved. If you include parish precepts, residents of Walsall have seen their bills shoot up from £1,600 (Band D) in 2015-16 to £2,007 in 2020-21. Bills are likely to exceed £2,100 for the coming year.

This double-whammy of councillor pay rises and tax hikes isn’t fair. Many households have suffered profound economic hardship in the last year. Councillors should consider their plight before awarding themselves lavish allowances.

Saving for a rainy day

With many local authorities increasing tax by the maximum permissible amount, it’s often interesting to read their justifications for doing so. A statement released by Tunbridge Wells Borough Council (TWBC) mentioned it will have to “bear a quarter of the expected £3 million loss of income for 2020/21”. They could have covered the loss easily had they not wasted cash on a vanity project that never left the drawing board.

Back in July 2019, the TaxPayers’ Alliance campaigned against plans by TWBC to spend £108 million on a controversial development. Calverley Square was an ambitious plan to relocate the council headquarters – and build a theatre, office block, and underground car park with plenty of public space. There was a vociferous backlash from the local community even before it was revealed that a loan of £77 million would be required. Worse still, it would take half a century to pay back with yearly interest payments of £2.4 million.

As the TPA pointed out at the time this would have to be paid for by council tax increases and very likely cuts to public services. All the while the TWBC had a perfectly usable town hall that just needed refurbishing. Indeed this is exactly what happened. After cancelling the Calverley Square project, the existing HQ is being re-modernised for a fraction of the cost at £625,000.

Unfortunately, despite a spade never going in the ground, the doomed project still cost the taxpayer £10.6 million in legal fees and compulsory purchases. Things could have been far worse of course had the project gone ahead. But this is why it is so important that councils are careful with every pound of taxpayers’ money. They can’t afford to waste it, otherwise it will come back to bite them in future.

A place to call home

On the subject of council offices, Shropshire County Council has approved plans to build new premises at a cost of £12.5 million. On the face of it, the decision seems very sensible. The current Shirehall building is uneconomical to run and refurbishments are estimated at £24 million, although nearly £400,000 was spent on consultants to establish that.

It already owns the site it plans to develop – Pride Hill shopping centre was bought for £51 million in 2018. At the time it was argued that it would bring returns of £2.7 million of annual income. So the council seems to have given up on that now. Even before the pandemic, many organisations including the TaxPayers’ Alliance, have argued that commercial property is far from a safe investment.

You can’t change history though, the decision has been made and it makes a lot of sense to repurpose the site. But I have to question if the council has fully thought things through. Given the uncertainty around the economy, wouldn’t it be better to wait and see how the cards fall? After all, it is very possible that a glut of cheap office space could come onto the market, following more staff working from home and businesses going bust.

And who knows if £12.5 million will be the final bill. This is the council that splurged £130,000 of taxpayers’ cash to hire a ‘pothole expert’. As I’ve seen across the country, local authorities have a far from perfect record when it comes to big projects. Shropshire council must get it right; otherwise, it’s taxpayers who are left to pick up the tab.

Harry Fone: Whip withdrawn on Conservative councillors in Kent – for opposing Council Tax rise

23 Feb

Harry Fone is the Grassroots Campaign Manager for the TaxPayers’ Alliance.

It’s all kicking off in Kent, after a dispute over Council Tax led to two Conservative councillors having the whip withdrawn. The axe was swift to fall after Paul Cooper and Gary Cooke spoke out against a five per cent rates rise.

Delving into Kent County Council’s budget for 2021-22, it seems clear that a smaller increase could have been implemented. Despite everything that has happened in the last twelve months, KCC “is still forecasting a significant underspend in the current year [2020-21], primarily due to the reduced demand for core services”. Furthemore there will be a £14 million increase in general reserves. As I have argued before, surely this is the perfect time to be using the hoards of cash that councils have squirreled away over the years.

Then we get to what I think many will find to be the most egregious part of the budget. Council staff are to be rewarded with a two per cent pay rise, costing Kent households £4.6 million. Given that private sector workers have endured tremendous hardship, and many can only dream of a boost to their pay, this really isn’t a good look for the council. I don’t doubt that KCC employees have worked hard, but their salaries and pensions have been virtually guaranteed this year. Many in the private sector have not been so fortunate.

Defenders of the Council Tax hike will argue that it only equates to a rise of £1.30 a week for a Band D property but that ignores the countless inflation-busting rises households have suffered in recent years. Councils like Kent must try harder to avert these hikes in future.

Slough’s swanky council offices

An inside source at Slough Borough Council recently sent me photos of the authority’s swanky new headquarters. The interior is rather luxurious and looks like an office you would expect to find in Silicon Valley rather than Berkshire. Staff are able to relax in rooms with bean bags, rocking chairs, designer lighting suspended on ropes and even sprawl out on artificial grass carpet if they desire.

Staff need somewhere decent to work but I suspect local residents will be flabbergasted that the council has splashed their hard-earned cash on such ostentatious offices. If the bean bags aren’t comfortable enough, the photos also reveal more seating available in ‘padded pods’ complete with flat screen TVs. My mole informs me that nearly £30,000 was spent on fake plants and even ping pong tables in an attempt to reduce the amount of staff sick days.

Recently the council revealed it had a £10 million black hole in its budget. Worth noting then that the HQ was purchased in 2018 for £39 million and a further £8.5 million spent on refurbishment, with annual running costs of £1.3 million. Given that council tax increased by four per cent last year (Slough has only cut it once in the last 20 years) perhaps authority bosses should consider focusing funds on essential services rather than lavish workspaces and the accompanying accoutrements.

Very accommodating councils

Last Autumn, I sent freedom of information requests to all councils in the UK, asking for a breakdown of their spending on putting up those affected by homelessness in hotels for 2019-20 and 2020-21.

Across all local authorities spending was at least £198 million. Edinburgh had the largest expenditure at just shy of £24 million, followed by Lewisham at £14.7 million. London councils featured prominently in the top ten biggest spenders. As you might expect, spending dramatically increased due to the pandemic. This isn’t unreasonable, but what I have to question is some of the hotel choices by certain councils.

For example, Basingstoke and Deane Borough Council seems to have a penchant for 4-star accommodation. It booked some 855 nights at luxury hotels such as the Basingstoke Country Hotel & Spa, plus Mercure hotels in Newbury and Winchester. Similarly, councils in Stratford-on-Avon, Broxtowe, Doncaster, Eastleigh, Erewash, Greenwich, and Wakefield also opted for high-end stays. Cambridge City Council even forked out public money on £3,381 worth of  “deep cleaning” and a further £203,505 for “on-site security”.

Now, it may well be that these rooms were the best value for money given the options available at the time. But it doesn’t send the right message to taxpayers, who in many cases can barely afford to pay their Council Tax each month, let alone enjoy a stay in a 4-star hotel. Councils must be able to demonstrate that they achieved the best value for money in these instances.

Harry Fone: Holding council meetings online can save millions in travel expenses

11 Feb

Harry Fone is the Grassroots Campaign Manager for the TaxPayers’ Alliance.

Across the country, local authorities have had to adapt to the challenges the pandemic has brought. One key area has been the ability to continue to hold regular council meetings using online services like Zoom and Microsoft Teams. In order to make this possible, the government has temporarily removed the legal requirement for public meetings to be held in person.

As a result, many councils have made saving courtesy of reduced travel expenses claimed by members. Powys County Council estimates it can save £40,000 per year by using a mixture of online and in-person meetings. Similarly, West Sussex County Council has stopped shelling out “some £6,000 per month” in expenses.

Based on back of the envelope calculations, and using Powys as a guide, across the UK’s 26 county councils and 120 unitary authorities, savings could be just shy of £6 million per year. And that’s before adding borough and district councils into the mix. The environmental benefits shouldn’t be ignored too. A reduction in car journeys would help authorities meet their ambitious green targets.

It begs the question: should things continue this way after the pandemic is over? After all, many in the private sector are embracing the working from home revolution. Especially given the huge savings afforded to them by reducing the size of expensive city centre offices.

There are undoubtedly concerns around whether holding meetings in this way would be good for democracy. Technology should be aiding councils’ decision-making processes, not hindering them. But potential multi-million pound savings shouldn’t be ignored.

Councils must get their priorities straight

One benefit the internet definitely has brought, is the ability to scrutinise local and national government more easily. The TaxPayers’ Alliance frequently scours the Contracts Finder website – which allows anyone to see tenders by the public sector – as part of our efforts to ensure money is spent wisely.

In most cases, contracts put forward by councils are more than reasonable, such as the provision of grass cutting or bin collections. But this week I found two examples that show a worrying attitude to taxpayers’ cash by public officials.

We’re all fed up of covid and can’t wait to see the back of it. But many will question whether Sandwell Metropolitan Borough Council has its priorities in the right place. It plans to spend £10,000 on “suitable experienced lighting companies” to project messages onto buildings that “will encourage the community to think about what they would like to tell themselves in a year’s time once things have changed and some sort of normality is hoped to have resumed.”

Fylde is another council that clearly thinks money grows on trees. It awarded a three year contract worth nearly £65,000 for a mayoral chauffeur. When households are struggling to put food on the table, it is nothing short of outrageous that council bosses think this is an acceptable use of money for what is a largely ceremonial role.

In the scheme of local government spending this is relatively small fry. But wouldn’t it have been far better to put this money into essential frontline services?

Keeping a tight grip on the purse strings

Following a tip off, I sent a freedom of information request to all councils in the UK asking how much money they had overpaid to staff (e.g. in salary, bonuses, expense, pensions etc) and of any excess payments, what amount had been successfully reclaimed. I’m pleased to say that at a majority of authorities only a microscopic sum of money was written off. But there were quite a few that didn’t fare so well.

In total for the financial years 2017-18, 2018-19 and 2019-20, £2.5 million was written off across a total of 57 councils. Much of this was made up by The Highland Council, whose response was particularly concerning. In just three years, it overpaid staff to the tune of £1.1 million but couldn’t say how much had been recovered, stating its “policy is to pursue all overpayments.” It’s worrying that they can’t provide a figure; let’s hope for the taxpayers’ sake, they’ve managed to claw back a decent percentage rather than nothing at all.

There is no doubt that payroll is a complicated area and correcting all errors may be almost impossible. But why is it that some authorities are able to recoup nearly all monies while others lag so far behind? Whatever the answer, councils should remember that they have a tremendous responsibility to taxpayers and must strive to get the best possible value for every penny.

Harry Fone: Parish councils can waste money too

26 Jan

Harry Fone is the Grassroots Campaign Manager for the TaxPayers’ Alliance.

The TaxPayers’ Alliance is well-known for scrutinising spending in the higher tiers of local government such as unitary, county, and city councils. However, over the past few weeks my inbox has been inundated with emails from concerned ratepayers detailing the largesse of their parish and town councils.

These lowest tier authorities are typically not subjected to the same rigour and scrutiny as their larger counterparts – they are not in the scope of the Local Government and Social Care Ombudsman, for example. Indeed, this makes a lot of sense; odds are it would not be efficient to constantly monitor all of England’s approximately 10,000 parish and town councils.

But that doesn’t mean they should be able to get away with wasteful and inefficient spending. For the current financial year, 2020-21, £596 million will be raised through parish precepts which is £42 million higher than the previous year. Based on a band D property, the highest precept was £334.96 (Bodmin) and the lowest just £0.27 (Surfleet).

On average, the charge is £69.89 which may seem small when compared to four-figure council tax bills. But try telling that to a family on a low income – it’s enough to pay for a week’s worth of food. Add to this the parlous state of the country’s finances and every penny of public money matters.

On one end of the scale, Chearsley Parish Council in Buckinghamshire is set to purchase 10 high visibility jackets to be customised with the embroidery of the village emblem at a total cost of £540. Is it necessary that the emblem be added to the jackets? The same number of ‘non-emblemed’ jackets would only cost £200.

Again, critics will argue that such spending is trivial when compared to the millions and billions wasted by successive governments. Whilst true, what really enrages ratepayers is the seemingly thoughtless attitude towards their hard-earned taxes. How can we trust public officials and elected representatives to look after the pounds if they can’t look after the pennies?

At the other end of the scale, just like their larger counterparts, parish councils are borrowing large sums from the Public Works Loan Board (PWLB). Between 2015 and 2020 parish and town councils took out loans totalling £106.5 million. In the last two years alone that figure is £53.9 million across 180 councils. Ten parishes borrowed £1 million or more.

The loans can be used for a variety of reasons – Huntingdon Town Council borrowed £6.7 million to fund construction of a crematorium. Some parishes are engaging in commercial ventures. Pailton Parish Council in Warwickshire has borrowed £525,000 from the PWLB to try and resurrect its village pub which has been closed since 2013. £250,000 was used to purchase the pub and the remaining cash to cover the costs of refurbishment. The council’s business plan states the risk of the venture failing is low because they “visited & corresponded with other local establishments, who are doing very well.” – sounds like they enjoyed a good pub crawl to me.

Just like we have seen in Croydon and Nottingham if the investment isn’t profitable, residents will end up footing the bill through higher taxes. An extraordinary general meeting of Pailton council revealed that the precept would have to increase by £107.23 (Band D) if the business gamble failed – a rise of 161 per cent. Such a huge hike would not require a referendum. Currently, there is no cap on increases for parish and town councils – although the government is set to revisit the issue in the near future after attempting to introduce legislation in 2016.

Not all parishes charge a precept though. Around 1,000 are so-called “non-precepting parishes” and raise revenue through other means such as car parking charges, room hire, and even local lotteries. Perhaps more should use these methods. After all, they could be considered a form of voluntary taxation and might even raise more funds. Parishes might also be discouraged from borrowing huge sums of money for risky investments. The removal of the precept, a virtually guaranteed source of income, could well lead to greater fiscal prudence.

It must be said that parish and town councils play an important role in the upkeep of an area and ensuring that residents’ needs are met. Likewise, I suspect that in the majority of cases most are well run with sound finances. But based on the examples above and with tens of millions of pounds in borrowed cash at stake, I suspect many ratepayers will wonder if more oversight is needed.

Harry Fone: Reserves should be used to limit Council Tax rises. If this isn’t a “rainy day”, what is?

13 Jan

Harry Fone is the Grassroots Campaign Manager for the TaxPayers’ Alliance.

Less than two weeks into January and councils are already telling residents to expect another year of inflation-busting rate rises. Local authorities will be permitted to raise Council Tax by up to 4.99 per cent and many have already indicated they will do so. A typical band D household could see their bills rise by as much as £106.

However, there is promising news from the home of the concrete cows. Milton Keynes Council (MKC) has taken the welcome step of using its sizable reserves to implement a more bearable rise of 2.5 per cent. The council leader has clearly listened to the concerns of local residents, saying, “the time has come to use those emergency reserves during a crisis rather than cut vital services”.

According to the most recent figures, reserves from all councils totalled £25.5 billion. It seems there is plenty of money for a rainy day and residents of Milton Keynes will be grateful for the lowest rate rise in five years. But could the council have done more?

MKC has been no stranger to wasteful spending in recent times. In January 2020 as part of efforts to tackle climate change, £95,000 of ratepayers’ cash was allocated to adorn underpasses and bus shelters with moss. But this pales into insignificance compared to the cost of refurbishing council offices that went at least £7.8 million over budget. Perhaps MKC should focus on stamping out largesse before plundering its coffers.

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In Hampshire, the Police and Crime Commissioner Michael Lane – who enjoys a taxpayer-funded salary of £86,700 – has called for the policing precept, which makes up part of Council Tax bills, to be increased. Both he and the chief constable of Hampshire Constabulary are recommending a rise by the maximum permissible £15. The injection of cash will be used to fund the “early recruitment of 50 new police officers”.

But like Milton Keynes, could this hike have been averted? The Daily Mail discovered that since 2012 Hampshire Police and Crime Commissioners splurged £51,000 on merchandise such as keyrings and stress balls. Unfortunately as is so often the case the wasteful spending didn’t stop there.

In 2014, Thames Valley Police and Hampshire Constabulary combined their efforts and money to create a new 999 call management system. Like most public sector IT projects it has been plagued with delays and cost overruns. In July last year operators in the emergency control centre had to resort to pen and paper after the “cutting edge” system crashed.

Originally forecast to cost £27 million, the bill to the taxpayer has skyrocketed to at least £39 million. That’s £6 million that each force saw go down the drain. Given it costs around £75,000 to train and hire a police officer for one year, Hampshire Constabulary could have put 80 bobbies on the beat, never mind 50. More rigorous oversight and project management could have avoided punishing rate rises for residents and made streets safer.

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In recent years many councils have drastically cut staff numbers in an effort to balance the books and increase efficiency. News that Leeds City Council intends to axe 914 jobs recently caught my eye and made me wonder how the English “Core Cities” (Birmingham, Bristol, Leeds, Manchester, Newcastle, Nottingham and Sheffield) match up in terms of the number of council employees to the number of residents. The results are quite varied but there are some noteworthy observations.

Using the latest data, Leeds had 12,868 full-time equivalent (FTE) staff. Birmingham, the biggest of the core cities in terms of population, had 696 fewer FTE employees, despite having a population around 40 per cent greater than Leeds. To put it another way, Leeds has 1 council employee for every 61 residents, compared to Birmingham’s 93. I was surprised to discover that Liverpool came out on top of all the English core cities, with 1 council employee for every 103 residents.

Of course, fewer employees per head doesn’t necessarily mean better results for ratepayers. But between 1997 and 2017 Council Tax increased by 50.5 per cent (in real terms) for Leeds and only 23.6 per cent for Birmingham.

There are undoubtedly more factors other than the number of employees that affect Council Tax bills. But, as staffing costs make up a large chunk of expenditure, local authorities should ensure they have the most efficient workforce possible – culling non-jobs would be a good start – saving their residents potentially millions of pounds in the process.

Harry Fone: £255 million a year is spent on councillor allowances. That is where the economy drive should begin.

30 Dec

Harry Fone is the Grassroots Campaign Manager for the TaxPayers’ Alliance.

The TaxPayers’ Alliance is well-known for scrutinising the pay of council bosses but our latest research has focused attention on allowances for elected representatives. In 2018-19 alone, the cost of councillors was at least £255 million. As witnessed across numerous local authorities, members vote through an increase in their allowances whilst often claiming they don’t have enough money for statutory services.

There was little surprise when an opposition councillor at West Sussex County Council (WSCC) met with fierce resistance after suggesting that cabinet members have their special responsibility allowances (SRAs) cut by 25 per cent. SRAs are typically paid to chairs of committees, cabinet members, and opposition leaders in addition to a basic allowance.

At the heart of the dispute were plans to cut the SRAs of the opposition leaders whilst cabinet members and committee chairs saw no decrease. It’s always welcome when councils make savings but some will question why the cuts fell almost solely on the opposition.

This spurred one opposition leader to propose an amendment calling for a cut in all SRAs. Even if this was an act of retribution, savings of around £90,000 a year would no doubt be well received by ratepayers. Councillors should be compensated for their efforts but the role should not be treated as a full-time job with a decent salary. Civic duty should be put above all else.

Given WSCC’s recent poor performance – notably “systemic and prolonged” failures in children’s services and the £265,000 golden goodbye to controversial former chief executive Nathan Elvery – you would think councillors would want to do everything possible to make amends with constituents.

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Across the border in East Sussex, Brighton and Hove City Council is forecasting a budget shortfall of around £15 million next year. With residents facing a rate rise of five per cent, it has to be asked if better decision-making might have mitigated such a large increase.

The ongoing saga that is the i360 observation tower is failing to deliver on its promises. Funded by £36.2 million of council loans (via the Public Works Loan Board) to a private management company, the 530 feet “doughnut on a stick” has never really got off the ground. Even before the pandemic, it was plagued with low passenger numbers and frequent breakdowns.

Adding insult to injury, loan repayments have regularly been deferred due to financial difficulties. To date, only £5.9 million has been repaid, with £33 million now outstanding.

One of the key players behind the project, former leader of Brighton council, Jason Kitcat, claimed back in 2014:

 “The project will provide a new source of income to help shore up vital frontline services.”

It seems there’s a long way to go before the council will see the estimated “£1 million a year” profit from its investment.

While residents are still shouldering the burden of this white elephant, Kitcat, a self-described “recovering politician” has fared rather better financially. After being asked to stand down as council leader by his own party, he became the Executive Director of Corporate Development at Essex County Council. A role that remunerated him to the tune of £190,000 in 2018-19 and gifted him a payout of nearly £164,000 when he left shortly after.

Let’s hope for a change in the i360’s fortunes so that local ratepayers see a ‘recovery’ in the council’s balance sheet.

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Following a recent government review, fears are mounting that Nottingham City Council (NCC) could fall foul of bankruptcy. As residents of Croydon and Northamptonshire know all too well, a Section 114 notice is far from desirable.

The similarities between Croydon and Nottingham are disconcerting. Both authorities engaged in ambitious commercial investments with well paid council employees lacking the necessary financial expertise, as borrowing exceeded £1 billion – Nottingham has the third highest debt to net budget of all the core cities.

Over recent years, NCC has seen its reserves dwindle mostly due to the collapse of its ill-judged energy company. Formed in 2015, Robin Hood Energy (RHE) tried and failed to compete in the highly competitive and regulated energy sector. Financed with £43 million of public money, RHE failed to make a profit in every single year of operation. Total losses are estimated at £38 million.

The government’s report is particularly scathing of RHE’s directors who are described as “unable to critically appraise the trading position and a forecast profit [£202,000] outturned as a significant loss [£1.6 million]”. Another damning report by auditors Grant Thornton went further saying there was “institutional blindness within the Council.”

Despite warnings from NCC’s Section 151 officer about RHE’s worsening finances, the authority failed to take action. The report doesn’t specifically blame then chief executive, Ian Curryer, for failing to act but does state, “The Council does not appear to have a mechanism for setting targets and goals for its Chief Executive and holding the postholder to account for it.” Local residents may be irked to learn that between 2012 and 2020 Mr Curryer received total taxpayer-funded remuneration of over £1.3 million.

As Robert Jenrick, the Local Government Secretary, put it:

“Taxpayers and residents have been let down by years of disgraceful mismanagement and inept ventures”.

A series of recommendations have been put in place to turn the ship around but councils all across the country must learn from Nottingham’s mistakes.

Harry Fone: Bristol is consulting on a Council Tax rise. But will it take any notice of the response?

15 Dec

Harry Fone is the Grassroots Campaign Manager for the TaxPayers’ Alliance. This is the first of a new column from him.

With many households struggling to pay their bills, it is hoped that councils across the country are tightening their belts and eradicating wasteful spending to avoid inflation-busting rate rises. Some local authorities are certainly trying but others leave a lot to be desired.

In Bristol, residents are taking part in a consultation on whether or not to increase council tax. Looking at the last five years, Bristol has hiked rates by the maximum permissible sum every time. It’s hard to imagine that council members would freeze tax even if everyone called for it.

The consultation lays out the economic challenges Bristol City Council faces. A shortfall of £9 million is forecast for this financial year – to be expected given the pandemic. But maybe the shortfall didn’t need to be so great given the millions of pounds of wasteful spending uncovered by the TaxPayers’ Alliance.

The council spent over £900,000 on taxis alone between February and September this year. Add to this, £12 million on an entertainment arena that has yet to get off the drawing board and £37.7 million up in smoke on a failed energy company. Perhaps most ridiculous of all, councillors awarded themselves an allowances increase totalling £180,000, just as the pandemic was starting to take hold.

Rates could rise by as much as five per cent – described as “modest” by Bristol Council. Hardly modest when households in a typical band D property would see bills rise by nearly £90 to £1,846 (more than £2,100 when you include parish precepts).

The council asking residents for their feedback is most welcome. But given Bristol’s repeated tax hikes and poor record with taxpayers’ cash will it actually listen?

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In Lincolnshire there has been “fierce backlash” to South Kesteven District Council’s (SKDC) plan to potentially spend £100,000 of public funds to unveil a statue of Margaret Thatcher.

The leader of SKDC, Cllr Matthew Lee said:

“My expectation and that of our Cabinet is that the cost of the event will be fully met through donations and not the public purse. The Council will simply be providing a cash flow situation to support the forward funding of the event of up to £100,000.”

Of course there’s no guarantee that the council will recoup the money in full and there are more pressing local concerns. As one South Kesteven councillor put it to me:

“Some of our tenants have gone through two winters without proper heating in place. Rather than focusing on the needs of our residents, the Cabinet has decided to devote time and resources to a vanity project.”

I’m inclined to agree. Data shows that between 1997 and 2017, council tax has increased by 65 per cent in real terms for South Kesteven residents – every penny of their taxes must be used to procure the best frontline services possible.

The council has history when it comes to vanity projects. In 2019, SKDC announced plans to spend £103,000 on a giant outdoor TV screen “as part of its drive to develop the cultural scene in the district.” Given the threat of another rate rise many people will not be pleased to see precious funds spent on an unveiling ceremony.

Mrs Thatcher was very much a champion of getting the best possible deal for the taxpayer. After all she uttered the famous line:

“There is no such thing as public money, there is only taxpayers’ money.”

It has to be asked, would the Iron Lady herself approve of this largesse?

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Good news east of Lincolnshire though. Reports suggest that Stoke City Council is set to trim the number of staff on its books. The authority is aiming to cut four roles from its senior management team. One idea is to merge the directors of Housing and Place into a single role. The most recent figures reveal each received remuneration in excess of £150,000. No wonder the council estimates savings of £360,000 a year.

Since 2007, the TaxPayers’ Alliance has compiled an annual list of council employees who receive remuneration in excess of £100,000. As of 2018-19, 2,667 individuals across 384 councils enjoyed six-figure pay packets – remuneration totalled £360.1 million. The average salary, excluding bonuses, pension contributions, expenses and loss of office payments, was £116,478. If each of the 384 councils were (on average) to cut just one position, recurring nationwide savings in the years ahead would be around £45 million.

It’s pleasing to see Stoke council taking positive steps to cut down on a bloated management structure. Other authorities must now follow their lead. For the sake of ratepayers who pay their wages, council bosses should be minimising wasteful spending and maximising efficiency wherever possible.

Harry Fone: How to avoid Croydon’s fate

3 Dec

Harry Fone is grassroots campaign manager for the TaxPayers’ Alliance.

Like Northamptonshire before it, Croydon Council has declared itself bankrupt. But what went wrong? Many blame austerity and coronavirus, but this is too simplistic. Through local activists, the Croydon Constitutionalists, I’ve learned of the hapless housing project, ill-judged investments, and wanton waste that sealed the council’s fate.

Is austerity to blame?

Croydon Council’s leader, Hamida Ali, has stated “austerity” is a major reason behind the bankruptcy. On the face of it, she may have a point. As the Council’s 2019-20 statement of accounts makes crystal clear, “since 2010, when austerity began, Croydon has seen its funding from Central Government reduce by 75 per cent”.

But compare it to other London boroughs and a fuller picture emerges. Between 1997 and 2010, before the cuts, Croydon Council raised rates 13 out of 14 years, leaving it with the seventh most expensive council tax charges in London. Residents were consistently asked to dig deeper into their pockets long before the coalition government. Looking at a 20 year period from 1997 to 2017, Council Tax rose in Croydon by 69.3 per cent in real terms, the third highest rise in London and compared to a city-wide average of 42 per cent. Most London councils have lower Council Tax bills and avoided bankruptcy. What’s special about Croydon?

Brick by Brick

One factor that cannot be ignored dates back to 2015. Croydon Council set up Brick by Brick (BBB), a company tasked with building 500 homes a year. Financed by £214 million worth of council loans, BBB made a loss of £774,952 in March 2019, despite obtaining some sites for just £1. It’s yet to make a single repayment on money it borrowed, having completed ony 283 homes in that time (less than half of which are deemed affordable). The latest set of accounts are still pending, but with profits forecast at a measly £250,000, Croydon residents will be waiting a long time for the homes they were promised or the loans to be repaid in full.

PwC summed it up, explaining, “the delays in bringing new homes to the market has put the Council at serious financial risk and resulted in only a handful of new homes being available. As a consequence, savings have not been made.” With almost nothing to show after five years and millions of pounds potentially down the drain, Brick for Brick has undoubtedly had a big role to play in Croydon Council’s downfall.

Risky business

Commercial property investments also failed to deliver. Take just two examples: the Croydon Park Hotel and the Colonnades retail park. Using the Public Works Loan Board (PWLB), the council purchased these for a cool £80 million. The hotel is now in administration and, given the current circumstances, the future of the Colonnades doesn’t look rosy either. But again it’s not simply about covid. As my colleague, Jeremy Hutton, explained in his analysis of local authority commercial property investments, high street retail investments were already struggling before the pandemic.

Frankly, access to loans from the PWLB was all too easy. One former council leader described the process as “absolutely bonkers” having requested hundreds of millions of pounds only to receive it “three days later.” No wonder then the Treasury has just this month imposed tighter restrictions on lending. Sadly it came too late for Croydon. The most recent accounts show the council has over £900 million of outstanding PWLB loans. Their investment fund is forecast to deliver a net return of only £82,000 in 2020-21. Once interest payments are factored in, the council could end up making a loss of around half a million pounds.

A tale of two chief executives

Colm Lacey is chief executive and founding director of underperforming Brick by Brick. He was remunerated to the tune of nearly £150,000 in 2018-19, with fellow directors also enjoying six-figure pay packets.

What did a recent strategic review by PwC make of them? It was scathing. “There is currently no financially qualified member of the Board to provide challenge to BBB’s reported performance or forecasts,” they said, citing the “unavailability of robust financial information from BBB.”

A glance at Mr Lacey’s LinkedIn profile may explain why. It shows a long career in the public sector, with no hint of financial qualifications aside from a degree in Economics and Political Science. If PwC’s assessment is correct, then two questions spring to mind. One, why was he chosen for this role? Secondly, why didn’t he appoint at least one financially literate member to the board? Those responsible for his appointment must have their feet held to the fire.

Until September this year, Jo Negrini was chief executive of Croydon Council. Paid £218,358 in 2019-20, she was one of 15 staff receiving over £100,000. Despite overseeing a rise in debt to £1.5 billion that led to the council’s downfall, she left with a severance package reportedly worth £440,000.

As Council Tax increased, both Negrini and Lacey repeatedly failed local residents, but enjoyed gold plated pay at their expense. Council leaders shouldn’t assume that paying top dollar for chief executives will benefit taxpayers. All too often it ends up costing residents dear.

What can councils learn from Croydon?

For starters, councils should only enter into the investment world if they know what they’re doing. They must remember that public money is at serious risk. It’s very welcome that the Treasury is imposing restrictions on PWLB loans; councils should seek to diversify portfolios and demonstrate financial expertise before any investments are undertaken.

Perhaps most importantly of all, council bosses must focus on their statutory responsibilities and stop trying to reinvent the wheel. They must deliver the best services at the best possible value to residents, relentlessly eradicating waste and ramping up efficiency, in order to keep any rises in council tax to an absolute minimum. There are plenty of places they can make a start. By abiding by these simple principles, councils can avoid Croydon’s fate.