Saturday, 14 February 2009

Be very frightened - It's the Boris Zombie Budget - Aaarghhh

Thought I'd tune in to listen to Ken interviewing Roger Evans - GLA Tory leader on his LBC show. A couple of very disturbing facts came out during the course of the show. I'd be rather interested to here what Boris Johnson's cheerleaders have to say about these. Firstly Ken stated that when he lost the election, he left reserves in the kitty of £1.5 Billion. The new Boris budget plans for this to diminish to £150 million. Basically, he's keeping tax down by raiding the piggybank. If anything at all unexpected happens, there won't be the cash to pay for it. This seems to be current Tory policy. Barnet did the same thing with the council tax. Now why would any authority be so stupid as to take such a risk? Well it strikes me that the Tories know there is an election coming. No one stands out in the street protesting against tax cuts paid for out of the budget. The Tories know that if they can keep taxes down, people won't look too hard to see how that's been achieved. There are quite a few marginals in London (not least Finchley, where council leader Mike Freer is standing). Their game plan is to say "Look, Tories keep taxes low".

Well, we are being conned, these aren't tax cuts. They are deferred Tax rises, which risk the family silver. I cannot think of any sound politician cutting reserves by 9/10ths at a time such as this.

Another interesting thing struck me when I heard about this figure. The Mayor had a reserve many times bigger than Barnet. How much did he lose in Iceland? Nothing as far as I can see. It is no secret that I am a Ken Livingstone fan. There are many policies which Ken champions that I support. The one thing I never ever expected to be able to do was hold Ken's financial policies up as an example to the Tories, I always thought this was Ken's one weakness. It seems not.

It won't get the juices flowing or make too many headlines, but we are risking a nightmare with Boris Johnson's policy of destroying the reserves continues. The same can be said of the Tories in Barnet.


Anonymous said...

My only provisional thoughts are to quote Councillor Monroe Palmer. Year after year he 'exploded' at Council meetings, seemingly on the brink of a coronary event, that a properly run Council would need no (ZERO) reserves.

He cited his background in accountancy for this opinion and I think he does have a point. If you look this year at what the Council has dipped its fingers into the reserves pot, these are hardly real emergencies, they could have been planned for or should have been.

£1.5 billion of reserves sounds a staggering amount of money to be squirelled away. How it is used and for what purpose is up for debate but I think that the GLA and Mayor can run effectively with much lower reserves. The money is now going back to the people it was taken from in the first place.

Rog T said...


I'm not an accountant and so I'm not qualified to argue with Monroe Palmer about Barnet, but I'd have thought for London as a whole you need reserves for things such as civil emergencies (ie extra policing, fire services), Transport cost overruns (eg metronet), flooding etc. If there is a sensibly worded explanation as to why Boris only needs 1/10th the reserves Ken did, then fine. Lets hope someone posts a link. Roger Evans didn't really have an answer.

I suppose one advantage of Palmer's scheme is that at least Mike Freer couldn't have lost them.

Don't Call Me Dave said...


Barnet should have reserves of about £15m and we are amongst the largest London boroughs. If all 32 boroughs had the same amount, that would represent £480 million, so for the GLA to have an additional £1.5 billion in reserves does seem somewhat excessive and it is right that it should be returned to taxpayers.

I think there is a difference in using a surplus, as Boris has done, to reduce taxes (because he is simply refunding money where residents have previously been over-taxed by Ken) and raiding the reserves to reduce council tax where your reserves are actually inadequate.

Rog T said...


As I understand it, the GLA is responsible for Police, fire & transport. They are also responsible for disaster planning (no quips about planning one very well with the Olympics please). I was driving so I didn't take down the figures, but ken stated that under Boris plans the reserves will shrink to £150 Million. Even by your measure this is small.

I've not looked at the the way they calculate their finances but I'd have assumed that the reserves are based on estimates of likely scenarios - ie if it floods it costs this much etc. I would have thought that if Boris had found that Ken had got his sums wrong we'd have heard.

It's a valid debate and if he has to bump up the taxes in a couple of years to fix holes, that will help no one. Maybe he's just shrinking the reserves because there 's nowhere safe to keep them. I'd just like to see an explanation -fair enough?

monroe said...

My views on Reserves are somewhat exaggerated. I never said that Barnet needs no Reserves but that there was no need to keep on increasing Reserves. I believe this debate is often misinformed. Barnet has quite rightly substantial Reserves earmarked for possible events which can be quantified. What, in Barnet, we are arguing about is something called ‘Balances’ which is in addition to specified Reserves and for unknown contingencies. External Auditors advise a certain level for these ‘Balances’ and I have said that they are being over cautious in their views as to the large size of these ‘Balances’. It has been my view that it is unreasonable to get current Council Tax payers to contribute to increasing these unspecified ‘Balances’ to be enjoyed by future Council Tax payers who may well not be the same people.

However, in my view I had failed to realise that any Council could have been so careless as to have left £27.4 million in Icelandic banks well after other depositors had withdrawn their funds and accepted penalties for early withdrawal. Despite my public questioning of Barnet Tories they refuse to divulge what the response was to their request for early withdrawal from these Icelandic banks, if indeed they ever made such requests.

As to Boris Johnson’s raiding of Reserves to keep the GLA precept down this year, I think Sir Humphrey of 'Yes Prime Minister' could have said it ‘was a courageous decision’ to reduce Reserves in these difficult times.

Monroe Palmer

Don't Call Me Dave said...

There are two different threads here. As for the balances - or reserves - I think it is entirely reasonable to ask what sums are needed for different emergency situations, so the public can form an opinion as to whether the GLA is holding too little or too much, but the likelihood of several emergencies all happening at once are probably remote so it does seem that £1.5 billion is excessive.

Daniel Hope has raised the valid point that in Barnet we have been dipping into the reserves rather frequently recently to pay for normal items of expenditure - a practice which the Conservatives attacked under the last Labour/LibDem Administration. Cllr Palmer is correct to say that it is unfair for council tax payers today to have pay for benefits to be enjoyed by future generations, but sadly that argument will fall on deaf ears, given that the Labour government has hocked the next generation and the one after with massive debts to bail him out of the financial crisis he caused as Chancellor.

As for Cllr Palmer’s comments regarding Iceland, I again say that it is regrettable that only the LibDems seem to be asking probing questions about the missing millions. There is one numpty councillor who seems to think that praising the LibDems over this matter amounts to treason. I would remind Mr T that when David Cameron became leader, he said the Conservatives would support Labour where it was the right thing to do.

In the absence of an independent investigation into the council’s investment policy, there is no choice but to encourage the LibDems to ask questions because the Conservative councillors are just sitting on their hands and Labour’s efforts have been woeful. There are some issues where it is not in the public interest to be blinkered and partisan, and this is one of them.

Don't Call Me Dave said...

p.s. When I said above “bail him out”, I was, of course, referring to Gordon Brown!

Anonymous said...

Happy to stand corrected.