“Tory-run Northamptonshire county council bailed out by government”

Owl says: just as well it is a Tory council that’s allowed to break the rules!

“Permission granted to spend £60m cash received from sale of HQ.

The government has in effect bailed out Tory-run Northamptonshire county council after giving it unprecedented permission to spend up to £60m of cash received from the sale of its HQ on funding day-to-day services.

The highly unusual move – accounting rules normally prevent councils using capital receipts in this way – means the crisis-hit authority is likely to escape falling into insolvency for the third time in less than a year.

Ministers gave the go-ahead for the bailout after commissioners sent in to run the council issued a stark warning that without a cash injection, Northamptonshire would be unable to meet its legal duties to run core services such as social care.

Opposition councillors called it a political move to save ministers from having to directly bail out the council. Labour group leader Mick Scrimshaw said: “It is clearly politics. The Conservative government did not want the political embarrassment and for that reason they have been allowed to use these capital receipts.”

Northamptonshire declared itself effectively bankrupt in February after it realised it could not balance its books. It declared insolvency again in July after a review revealed it had understated the extent of its financial problems. It must make good a £70m deficit by the end of March to avoid insolvency for a third time.

Although the council has already set in train a draconian cuts programme for the current financial year to try and overturn the £70m budget shortfall, the commissioners said this alone would not be enough to prevent insolvency.

In a report to the communities secretary, James Brokenshire, the commissioners Brian Roberts and Tony McArdle said the “extraordinary” scale of cuts to services needed in one year to fill the funding gap would breach councils’ legal obligations.

The report said: “Considered against the concomitant need to maintain the integrity of critical public service delivery, it is a challenge that is beyond being met in a single year. We are compelled to the view that the finding of an alternative mechanism for addressing this legacy will be unavoidable.”

The report notes that the council has been dysfunctional and that morale is poor among “long suffering” staff. It also criticises its “lack of credible leadership and direction over many years”, though it notes there have been some improvements in culture and management over the past few months.

The council’s leader, Matt Golby, said: “I am delighted the commissioners have been successful in their request for a capital dispensation. This will enable us to use our own resources to tackle the £35m deficit from 2017-18 and replenish our reserves to put us on a sustainable financial position.” The council is hoping to save a further a £35m this year from its cuts programme.

Rob Whiteman, the chief executive of the Chartered Institute of Public Finance and Accountancy, said the move was effectively a bail out for Northamptonshire. Although it went against accepted accountancy rules and practice, it could be justified on the grounds that the council was being abolished.

Northamptonshire is to be replaced by two unitary authorities under plans approved by ministers earlier this year after the inspectors’ report concluded that the council’s management and financial problems were so deep-rooted it could not be easily turned around.

Enabling the council to convert some of the £60m it received from the fire sale of its new state-of-the-art HQ earlier this year – just months after it moved in – will allow it to clear an underlying £35m revenue deficit, and removes the need for ministers to pump money into the council directly.

Ironically, a highly critical inspectors’ report in March was scathing of the council’s preparedness to compromise generally accepted accounting principles to present the councils’ finances in a better light. Earlier this month a task force was sent into oversee its failing child protection services.

Brokenshire said: “Clearly, the situation in Northamptonshire is very serious. I am grateful to the commissioners for uncovering the council’s true financial position and the robust steps they have taken to improve its financial management and governance.”

https://www.theguardian.com/society/2018/nov/29/tory-run-northamptonshire-county-council-bailed-out-by-government

“‘Councils and crooks must feel relaxed’: why the loss of local papers matters” [and why blogs have to fill the gap]

Owl says: the article DOESN’T mention those local newspapers (they know who they are) which simply print council press releases, only supportive articles and “good news only” items from councils that keep them afloat by giving them a monopoly on printing their official notices and job vacancy adverts….. becoming quasi-council newsletters.

“This month, with the announcement that Johnston Press, the third-biggest group in the local news industry, had gone into administration, this building in Hendon, along with hundreds of other empty newspaper offices across the country, became a monument to the fragile and shrinking world of regional reporting. More than 300 titles and 6,000 journalists have been lost in a decade, creating what many see as a democratic deficit, never mind a future dearth of trained reporters.

The Times, part of the Newsquest group, still exists, but these days there is just one edition and much of the action happens online. Its webpage invites readers to send in their own news and photos, and the phone number for the news team is harder to find than the GRU’s in Moscow. When I do get through to a reporter, he is silent when I ask where he is. “Do you still have a base you can use in the borough of Barnet?” I persist, at which point he tells me to email his editor.

Newsquest, like Johnston Press, is at the centre of big changes in local journalism, not all of them bad, and it is more than anyone’s job is worth to speak off the cuff to the press. But as Barry Brennan, former group editor of the Hendon Times and my old boss, confirms, all coverage of the boroughs of Barnet and Hertsmere is now run from Watford.

“Councillors and crooks must surely feel relaxed,” Brennan says, “now that so few weeklies have sufficient space or journalists to cover councils and courts. It may sound trite, but we really are missing out on big chunks of knowledge, and that’s bad for a community.”

More cheeringly, Times reporters do still get to some Barnet Council meetings, although not many, according to Labour councillor Claire Farrier: “We don’t see them much any more; maybe when there is a big planning story. They do their best, but they often repeat the press releases we put out fairly closely – which we quite like, of course.” …

Perhaps when the Cairncross report comes out next year it will propose something radical: something akin to a series of tax incentives launched in Canada last week. Over a decade, more than 250 Canadian news outlets have closed and since 2012 newspaper revenues are down by up to 40%. Now the federal government has stepped in, offering C$600m (£350m) in new tax credits to the media industry for the next five years.

Whatever Cairncross recommends, her committee must bear in mind that it will always be hard to show exactly how local reporting aids democracy. Because you can never find out exactly what people have got away with when no one was looking.”

https://www.theguardian.com/media/2018/nov/25/why-local-papers-loss-matters-councils-crooks-feel-relaxed

EDDC gagging orders: council in a hole and digging deeper!

Owl says: does anyone think this press release makes things BETTER for the council! They do them so the other party won’t take them to tribunals!

“Following an article published by an East Devon media outlet this week about settlement agreements between the district council and its employees, the council wants to bring a greater degree of clarity to the headline-grabbing story.

“The article ignores the actual reasons why the council has used settlement agreements from time to time and that these are common practice in both the public and private sector where employers wish to bring employment to an end.

“The council has used settlement agreements to terminate the contracts of 10 individuals since 2014 for a mixture of contractual, performance and sickness issues.

“The reason that any employer enters into these agreements is particularly in circumstances where it wishes to bring employment to an end quickly and pragmatically to avoid unnecessary costs and to protect itself from tribunal costs. The figures quoted include statutory and contractual payments such as holiday and notice periods.

“Such agreements are commonly used throughout the UK and the primary reason is that the individual is required to agree not to take their employer to court. The agreements also contain a confidentiality clause.

“To validly settle statutory employment claims, a settlement agreement must satisfy several conditions that must be met including that the individual must have received legal advice from a relevant independent adviser on the terms and effect of the proposed agreement; and its effect on their ability to pursue any rights before an employment tribunal. Only certain statutory claims can be settled by a settlement agreement such as unfair dismissal or discrimination.”

http://www.exmouthjournal.co.uk/news/council-explains-205-000-gagging-orders-205-000-1-5790143

“Universal credit: Urgent report calls on ministers to push back any votes over ‘major areas of concern’ “

“Major areas of concern remain with , a group of MPs warn today in an urgent report calling on ministers to push back any vote on the flagship welfare reform.

The Commons Work and Pensions Committee claims that getting “managed migration” – the process of transferring claimants from existing benefits to universal credit – wrong when it starts in mid-2019 could “plunge claimants into poverty and even leave them destitute”.

Despite money being allocated for universal credit at the Budget, the committee warns that “major areas of concern” about the welfare reform remain.

It adds that MPs in the Commons have not had a chance to scrutinise and report on the revised regulations brought forward by the government in November, and claims the indicative timetable suggests “there will be no opportunity for expert scrutiny”.

While a specific date has not yet been allocated for the vote by the government, the committee recommends that no vote take place until the Social Security Advisory Committee (SSAC) has been able to report on the regulations.

The report states: “These regulations have a profound effect on the lives of millions of people, including some of the most vulnerable in society. It is impossible to overstate the importance of getting them right.” …

https://www.independent.co.uk/news/uk/politics/universal-credit-vote-report-warns-major-areas-concern-government-ministers-a8645526.html

“Huge amount of taxpayers’ money’ used for gagging orders at East Devon council”

Owl says: 10 people with some very interesting stories we will never know ….. and which will never be scrutinised.

“Figures obtained using a Freedom of Information request show that East Devon District Council has spent more than £200,000 on gagging orders over the past four years.

A total of £205,074 has been spent by East Devon District Council on gagging orders for former members of staff since 2014, according to figures obtained by the Journal.

The information, obtained through a Freedom of Information request, reveals 10 settlement agreements, or gagging orders, were agreed by EDDC between 2014 and October 31, 2018.

Gagging orders are often referred to as confidentiality clauses and are usually agreed when an employee leaves an employer due to redundancy, a work place problem or a disagreement.

A number of opposition councillors have said they are shocked by the amount of money spent on gagging orders.

Independent group leader at EDDC, Ben Ingham, said: “When any one of us is thinking about how we can afford to pay our latest council tax bill, I do not believe we expect one penny to be spent on gagging orders.

“If we did, non payment may become a real expectancy. As Leader of EDDC Opposition, I can tell you at no time has the current leadership contacted me to discuss this issue at all.

“This is not acceptable, but to me not surprising. Merely another piece of evidence against an exhausted regime.”

A spokeswoman for EDDC said: “Settlement agreements are legally binding contracts that waive an individual’s rights to make a claim covered by the agreement to an employment tribunal or court.

“The agreement must be in writing. They usually include some form of payment to the employee and may often include a reference. They are voluntary and have therefore been entered into on that basis by the individuals.

“Part of the agreement is that they must seek independent advice from an employment lawyer.”

Exmouth district councillor Megan Armstrong said: “I am extremely concerned at the huge amount of taxpayers’ money, which should have been used to provide services for the people of East Devon, which has been spent on gagging orders.

“The council has a duty to be open and transparent; yet over £200,000 – a vast sum – has been spent on suppressing information. Exactly what is the Conservative administration trying to hide?”

http://www.exmouthjournal.co.uk/news/gagging-orders-at-east-devon-district-council-1-5785868

What has happened to our politics and politicians (of all three main parties)?

Letter in Independent”:

“Can any UK government get it right? Politicians appear unable to achieve good outcomes on the things that really matter. Only the most self-compromising and self-serving appear to get to the more senior positions and stay there – Gove, Hunt, Johnson, Grayling, Williamson et al. Most are able to add plain vicious or nasty to their approach.

Labour appears unable to pull a robust, costed, action plan together and are more tainted than most with the brush of incompetent fiscal policy and business/financial management. The Lib Dems are just irrelevant most of the time as their “good” policies are undeliverable.

Most government ministers engage in cynical fiscal and financial sleight of hand while smiling wolfishly and proclaiming, yet again, that we have, or will never have had it so good. (The latter may be true, but we need to feel good for it to ring true.)

We keep being promised good politics and yet it never seems even close. Even MPs are abandoning PMQs. The disgraceful budget fix on betting machines, promises of looking after hard-working people, of proper funding for everything from the NHS to schools and social care; building houses, roads, and railways; and dealing with drugs, street crime, hate crime, and illegal immigrants, all suffer from saying one thing and doing another to avoid or reduce the perceived benefit – or, simply, the truth.

Conning the public appears to be seen as acceptable practice. Under-promising and over-delivering appears to have been deemed a mugs game. Decades of this attitude and action has seen the public and public institutions respond in kind – becoming cynical, self-serving, immoral and quasi-criminal, if not actually so. Politics, while supposedly championing fair treatment, has become covertly immoral and promotes hatred instead of tolerance, extremism instead of compromise.

The politics of a UK-style Brexit, when compared to the calm, clear and firm EU approach, is symptomatic – we are combative and threatening when intelligent, cool, calm and pragmatic heads are needed.

I am a Remainer, but could be persuaded by sensible and reasoned argument to Leave (much as I would prefer the EU to change a bit) except for the bile spouted by the “just (expletive deleted) do it” Brexiteers. It’s the ignorance and seemingly blind self-serving stupidity of UK politics that exasperates me.

Our car industry and other industrial productivity is in decline (not wholly due to external strategic decisions in the case of Jaguar Land Rover) and the financial and services sector is going to be damaged by any deal, no matter how “good”.

We refuse to act with moral strength over any matter, citing financial necessity. Instead of acting to remove the stranglehold, we shrug and let it continue while that further degrades our standing. Nowhere can be far enough away to let these things slide in this modern world – you are either decent, or not.

We are told, authoritatively, that we have 12 years to act before millions suffer dreadfully from climate change, with hardly a comment from our leadership and the departments concerned. Same old kick-it-down-the-road, let-someone-else-deal-with-it “leadership”.

We are told that domestic energy prices will be capped, when poorer users just need some help to swap and the companies concerned are making reasonable margins, while the fossil fuel industry is allowed to fleece us and make record profits as the government freezes fuel tax again – enabling further profit to made, just as lifting stamp duty thresholds made no difference to house costs for buyers.

Fiscal policy should be promoting less profit in bad things and making good things worth doing. Throwing money at public institutions is not the answer I seek. Every part of society should be fairly treated against sensible outcomes, and efficiency and improvement rewarded. Taxes must rise, but as little as possible. Gold-plated public service packages and pensions have to go, along with private sector executive super-deals. Free market economics are good, but with sensible limits to provide a balanced reward system for everyone in profitable companies, and a decent safety net for those that need it.

Companies where principals take most of the cake without sharing can simply be taxed to avoid eight figure payouts. No one needs more than £10m over the life of a contract or period of employment without sharing.

On a positive note, politicians such as Tracey Crouch who treat their brief seriously and honourably are to be applauded. If more politicians and civil servants acted honourably we wouldn’t run out of good politicians and managers, we would develop better practices. You reap what you sow.

As the centenary of the First World War is played out it seems not much has changed in practice – the British people are being led by some of the most donkey-like and immoral leaders imaginable, while our “lions” are sacrificed for principles that are being overtaken by wiser countries, and we fail to deliver on our talk of global leadership.

Time for a change.

Michael Mann Shrewsbury”

“CIPFA moots steps to quell commercial property ‘craze’ “

The majority party at our council is also mooting – a move into the commercial property market.

“Forthcoming CIPFA guidance on councils borrowing to invest in commercial property could clarify the definitions of “borrowing in advance of need” and “proportionality”, according to the man drawing it up.

Last month, CIPFA announced it would produce more guidance to address the failure of the government’s revised investment code to curb some instances of councils borrowing to invest in commercial property.

Speaking at the CIPFA Treasury Management and Capital Conference in London this week, Don Peebles, the institute’s head of UK policy & technical, gave more clues as to what the guidance could contain.

Speaking to delegates, he said: “It may well be that we actually specify and think about what exactly is ‘borrowing in advance of need’.

Proportionality parameters

“We may set parameters of what proportionality looks like. We may give guidance on what the appropriate ratios are for commercial income associated with net service expenditure.”

When the guidance was announced last month, Peebles told Room151 that it would be likely to formally incorporate text from the commentary which was released alongside the Ministry of Housing, Communities and Local Government’s (MHCLG’s) revised investment code, which was adopted earlier this year.

On proportionality, that commentary says that each council should set its own “limits that cannot be exceeded for gross debt compared to net service expenditure, and for commercial income as a percentage of net service expenditure”.

However, Peebles’ comments were a hint that the guidance could go further by providing indications on what the appropriate ratios are.

Also speaking at the event, Duncan Whitfield, director of finance and corporate services at London Borough of Southwark, said that any definition of proportionality must take into account the needs of local authorities to properly finance services.

He said: “I am looking at my budget now and seeing how much of it is ring-fenced for social care.

“So are we talking about a proportion of our ring-fenced money in our revenue account or is it the total budget? In different parts of the country that varies wildly…”

Financial freedoms

And Richard Paver, treasurer of the Greater Manchester Combined Authority and chair of the CIPFA treasury and capital management panel, warned that the guidance should not reverse freedoms introduced under the prudential code introduced in 2004.

He said: “I can tell you it was a complete pain in the neck to run anything in the old days when you had annual limits on your capital spend, you could only spend a proportion of your capital receipts generated in any one year. You had to pool your capital receipts and pass them back. We need to remember where we are and protect that. The CIPFA guidance needs to give us the tools to do that.”

During a separate session of the conference, Peebles acknowledged the point, saying: “I am conscious that the guidance [should be] within the flexible framework we have all enjoyed and any steps to minimise that flexibility starts to take away from the 15 years of success of the prudential framework and operation of the prudential code.

“But in the current climate it seems additional guidance is certainly needed.”

Also speaking at the conference, Martin Easton, head of capital and treasury at Birmingham City Council, said that the term “borrowing in advance of need” was “unhelpful” and should be scrapped.

He said: “It originated years ago in the treasury management code in addressing treasury management investment activity which is about managing the cash flows of the authority. In that, there will be some times when the yield curve is such that you can borrow cheaply for a few years or in advance of your need for treasury purposes, and it was possible to reinvest it short term until it was needed for meeting the cash flow needs of the authority.”

He went on to say: “That expression doesn’t really work when you are investing in a community organisation, let’s say, to deliver social or service outcomes, or even when you are making an explicit decision to invest in commercial property.

Investment crazes

“I think you could drop the ‘in advance of need’ from that phrase – the key issue is: is it right or appropriate for your authority or ever for a local authority to borrow purely or mainly to make a financial gain? Is that really the role of local authorities?”

Easton also warned that the current increase in borrowing cheaply to invest in commercial property was another “craze” sweeping the sector, and compared it to investment in Icelandic banks, LOBOs and interest rate swaps.

He said: “What fundamentally might be a sound idea – like a limited proportion of your book could be in LOBOs because it manages risk in a different way and produces a good revenue result, or managing treasury risk through interest rate swaps – is good but doing it excessively is not.

“These things get overdone. They overtake the sector and then a wheel inevitably comes off at some local authority that has gone too far… And I fear that we are in the grip of another one of those crazes, which is called commercial property at the moment.”

Giving a private sector perspective, Howard Meaney, head of real estate UK at UBS Asset Management, said that the real estate market was “quite disparaging about some of the transactions [by local authorities] that have been undertaken recently.”

He said: “I think what the market is generally seeing is local authorities are almost, in some situations, a buyer of last resort.

“They are setting new market levels with some of the transactions and they are buying assets in what to a degree is a buy and hope – hope that tenant stays in your property and continues to pay your money and your rent so you can arbitrage that to increase your revenue and pay your coupon on your debt.”

Councils need to be prepared to invest in their commercial property assets in future in order to maintain rent levels, Meaney warned.

He asked: “Looking down the line, will local authorities have that money to invest into a property to continue to receive the revenue?”

http://www.room151.co.uk/treasury/cipfa-moots-steps-to-quell-commercial-property-craze/