Better hope that new EDDC HQ is nearly finished …

… as its chosen builder (Interserve) is going through a very rough patch:

https://www.constructionenquirer.com/2018/08/07/more-losses-at-interserve-as-debt-levels-top-600m/

Better hope that yew tree spell does the trick:

https://www.devonlive.com/news/devon-news/yew-tree-ward-evil-spirits-1687885

Check that roof … and the walls … and the wiring … and the plumbing … we wouldn’t want it costing more than the “old” HQ to put right would we …!

“Public Works Loan Board loans rise as councils try to shore up financial futures”

This is how EDDC is financing the shortfall of the build of its new HQ – you know, the one that was supposed to be “cost neutral” and was costing around £10 million at the last evaluation.

“Local authority borrowing from the Public Works Loan Board has reached a seven-year high as cash-strapped councils increasingly invest in capital projects.

In the last financial year the PWLB increased the value of loans to local authorities by 42%. It advanced 780 loans with a value of £5.2bn to local authorities, compared to 622 loans with a total value of £3.6bn in 2016-17, the board’s annual accounts, released yesterday showed.

The value of loans has been going up in recent years after dropping to £3.2bn in 2012-13 following a high of £16bn in 2011-12.

Paul Dossett, head of local government at Grant Thornton, said the rise was part of a growing trend of councils borrowing more – and not just from the PWLB.

As a recent analysis by PF showed, local authorities are increasingly looking at methods such as bonds and forward-starting loans for capital projects.

“It reflects the growing increase we have seen in capital investment in local authority infrastructure as a whole,” he said.

“While different councils have different options and approaches to generating income, a small amount of this increase is likely to relate to investment in assets for income generation.”

Although, he believed the rate of councils investing in assets for commercial gain might have slowed since the government responded to its consultation on the prudential code earlier this year.

The Ministry of Housing, Communities and Local Government announced in Feburary it will now require local authorities to produce an annual investment strategy to ensure greater transparency. …”

https://www.publicfinance.co.uk/news/2018/08/pwlb-loans-rise-councils-try-shore-financial-futures

Will EDDC’s new open-plan HQ improve productivity? Probably not!

“In the cartoon strip Dilbert, the boss starts a meeting by pondering a classic dilemma of modern working life. “We’re trying to decide if it’s better to have an open-plan office with too many distractions to be productive,” he says, “or soul-crushing cubicles that will make every employee envy the dead.”

There is important new evidence that could help him in his decision. While cubicles might still be soul-crushing, it turns out that open-plan offices do not — as many advocates argue — actually increase human contact. Instead, a study has found that in an open-plan office, far from being distracted by each other, we create virtual walls. We meet each other far less and communicate by email far more.

This is bad news for one of the most popular fads in office design. One of the chief arguments in favour of open-plan offices has always been that they increase “collective intelligence” by forcing people to meet each other.

When two large companies, which have been kept anonymous, made the shift from cubicles to open plan, researchers took the opportunity to test the theory. For a study in the journal Philosophical Transactions of the Royal Society B, they placed devices on employees that measured where they were standing, whether they were talking and who they were talking to. They also recorded their volume of email and instant messaging use. The results were unambiguous. By looking at a three-week period before the change, and comparing it with a three-week period three months after, they found that face-to-face interaction in the open-plan offices plummeted by 70 per cent.

There was a corresponding rise in email and instant messaging communication. Ethan Bernstein, from Harvard Business School, said that he did not know what to expect when he began the study. “On the one hand, it is hard to believe that people would not have a more vibrant and interactive experience when they work in an open office,” he said. “The sociology of it is clear: ‘proximity breeds interaction’.

“On the other hand, I’ve spent enough time on the Tube at rush hour to see that being packed together doesn’t necessarily lead to interaction.”

He said that the research seemed to show that precisely this paradigm was at play — that when people had too little privacy they were more likely to try to compensate in other ways.

“Look around open-plan offices and you can see why this might be,” he said. “People put on huge headphones to avoid distraction. They stare intently at their screens because they know people are watching and want to look busy. Then people looking at them from across the room see someone working intently and don’t want to interrupt. So they send an email instead.”

Source:The Times (pay wall)

The Great Public Asset Sale!

No mention of community hospital sales – many hospitals having been financed by the local population.

And it begs the question: if the community has no assets and is getting only statutory services which are funded out of general taxation – what are we paying (increased) council taxes for?

“Libraries, swimming pools, youth and community centres, town halls, parks and other open spaces were among more than 4,000 public assets sold by local councils to developers and other private buyers last year.

Sales appear to have risen since George Osborne, who was then the chancellor, changed the rules in 2016 to allow local authorities to use money from sales of publicly owned buildings and land to cover running costs. Campaigners say that authorities facing financial pressures are denying future generations access to many community assets.

Locality, a network of community organisations, submitted freedom of information requests to all 353 local authorities in England asking about asset sales, of which 240 responded. The results showed that councils sold 4,131 buildings or plots of land last year.

Tony Armstrong, the chief executive of Locality, said: “One of the concerns we have is that many local authorities are just selling these assets off, and until now we have not had a clear picture of the scale of this.” He called for more buildings and sites that councils could no longer operate to be transferred to community groups that could run them on a not-for-profit basis.

Richard Watts, of the Local Government Association, said: “With local government facing an overall funding gap in excess of £5 billion a year by 2020, councils face difficult decisions about how best to use their resources to support local services, day-to-day activities and to protect public assets. Before a decision is made to sell an asset, the cost of selling it versus the benefit it could bring is considered carefully.”

Source:Times (pay wall)

Sums on Knowle relocation not adding up for us, the taxpayers

“Remaining at Knowle with essential and basic repairs undertaken would have cost the council £ 4.5m over 20 years. In contrast moving to the new HQ in Honiton will provide a cash saving of £ 1.4m over the same period. That’s a difference of £5.9m.’

The above quote is lifted from the EDDC web-site.

So even using their figures, it will take 20 years to recover half the cost of the new building. Only after 40 years will we get our money back.

So if we see a Devon unitary authority in the next 40 years we will lose money.

But, of course, it’s much worse, because the EDDC numbers assume that there will be no ‘essential and basic repairs’ to the new building over those 40 years. Impossible, of course.

Even worse, no-one wanted EDDC to remain in the whole of the Knowle building. Those opposed to the move recommended that EDDC retrench to the modern buildings that were built in the late 1970s and early 1980s. Half the size of the Knowle as it now stands. So, even using EDDC’s figures, half the size would mean half the ‘essential and basic repairs’, so only £2.25 million, and half the ‘cash saving’ of £1.4 million, so a trifling £700,000 over 20 years. Peanuts.

So even using EDDC’s own numbers, the new building cannot produce any savings for 80 years.

Even, even worse, EDDC has borrowed the money to build the new building. The cost of borrowing £11 million, the notional build cost of Blackdown House, is of the order of £400,000 per annum, dwarfing the expected savings.

Even, even, even worse, the costs of the new building do not include the fees charged by various advisers over many years, the cost of the move itself, compensation to staff forced to travel further, new equipment, officer and councillor time, and the cost in terms of disruption. Plus all the costs of disposing of the Knowle.

The true cost of relocation is almost certainly at least £20 million.

Even, even, even, even worse, those EDDC numbers do not take into account the ‘essential and basic’ repairs conducted at their new Exmouth office, which came in at a whopping £1.7 million. Nor the running costs of Exmouth, which will surely be at least £1.4 million over that 20 year period. Almost certainly much more: Exmouth is, of course, an old building from the 1920s, far older than the modern brick buildings at Knowle.

Blackdown House will be a tremendous drain upon the finances of EDDC from the day it opens, and the expected cost savings thereafter will be microscopic compared to the huge borrowing costs.

But the biggest problem of all is that EDDC’s own consultants informed them that the building constructed at a cost of £20 million would only have an open market value on its completion of £3 million. That included the value of the land on which it sits.

So, if Devon goes unitary any time in the next few years, we will have lost £17 million.

The only good news for residents of East Devon is that the whole of Devon will then have to pay the bill and the borrowing costs.

Do you have a damp home? Do you need an affordable home? Contact Councillor Phil Twiss to get your problems sorted!

It seems councillor Twiss is a modern-day superhero – able to help you with just about any problem you might come across.

So, if you live in Honiton, do contact him:

Email: ptwiss@eastdevon.gov.uk
Telephone: 01404 891327
Address: Swallowcliff, Beacon, Honiton, EX14 4TT

http://eastdevon.gov.uk/council-and-democracy/councillors/honiton-st-michaels/phil-twiss/

or at DCC:
Email: phil.twiss@devon.gov.uk

True, he hasn’t so far sorted East Devon’s broadband not-spots, wasn’t able to halt the closure of Honiton Hospital’s community beds or stop Baker Estates from weaselling out of their affordable housing commitments and the ‘fillip’ to Honiton’s jobs and shops when the EDDC HQ moves to Honiton will be at the expense of Sidmouth … but these are just minor hiccoughs … aren’t they?

More news on EDDC’s new HQ builder

Owl says: EDDC getting a taste of the new build problems many house buyers are getting in East Devon, though this time it’s our taxes paying for them. Hope it is a fixed-price contract with penalty clauses and good insurance!

“… Signing up to a host of loss-making contracts and a disastrous foray into building energy-from-waste facilities have helped to send Interserve tumbling £244 million into the red.

Glyn Barker, chairman of the private sector provider of public services, said that the company had “suffered unprecedented levels of disruption and faced significant challenges” as it reported deep losses and warned that debts could more than double to £680 million this year….

The company’s shares, which have crashed by more than 80 per cent over the past five years, slumped a further 13¼p, or 12.3 per cent, to close at 93¾p yesterday.

The £244 million losses for 2017 included a 62 per cent slump in underlying operating profits to £52 million. Interserve was dragged into the red by writedowns of £98 million on the value of its assets, £67 million of restructuring and property costs and provisions of £86 million for lossmaking contracts.

About 125 of its contracts are in trouble. These are mainly in construction, but also include losses that Interserve is taking for looking after US military bases in Britain and a hit from the part-privatisation of the Probation Service. It took an extra £35 million of charges in the energy-from-waste fiasco that started the company’s crisis after it incurred £160 million of fines and penalties in 2016.

Interserve also reported £14 million of payments to consultants and advisers with a warning that the company would incur another £25 million this year.

Last week Interserve raised £196 million, taking its borrowing facilities to £834 million. Ms White said: “I would not say we are out of the woods. The debt refinancing has taken up a lot of our time.”

Source: Times (pay wall)