Why can't we use the returned Icelandic money to save services?

Before we discuss this, memo to Barnet Council, especially CEO Nick Walkley and Leader Richard Cornelius. Instead of wasting hundreds of thousands of pounds on producing magazines like this - http://www.barnet.gov.uk/barnet-first-magazine-nov-11-007979.pdf - which are full of spin and propaganda saying amongst other things what a marvellous job Barnet have done fixing potholes (yes really!), why can't they actually take the time to explain and apologise for their cock ups. I'm writing this blog today because people keep asking me the above question.

So this is where I act as a semi apologist for our useless and incompetent council. Why? Because I think the situation should be explained and I'm sick of people asking me and having to explain. As you will recall, back in 2008, the then Leader of Barnet Council, Mike Freer came unstuck when his !"cunning plan"! to borrow money from the public works board at 3% and then invest it in Icelandic banks earning 8% interest came unstuck. The Icelandic banks went bust and Barnet lost £27.4 million pounds. News has come through that Barnet has now been made a preferred creditor and will get most of the original sum back. So that means that Barnet can now save some of the services that they were going to chop? Right? Nope wrong.

 Why you may ask? Because that money was borroweed against various capital schemes in the Borough such as road renewal. Contracts were signed and these projects had to be delivered. To enable the Borough to meet its commitments, they had to borrow some of the money again and take other money from their contingency reserve, which they keep for such cock ups. Barnet have not got all of the money back and they have a legal requirement to ensure their reserves are sufficient to meet "unexpected events", of which there have been quite a few under the Tories (Aerodrome Road Bridges £12 Million, Catalyst £8 million etc). So all that Barnet can realisitcailly do, is pay off a few loans and top up the reserves. I doubt we'll ever see the true scale of the costs (paying double bubble on the loans, etc) but all that has happened is that in future years, the Barnet Taxpayer will have to spend a bit less topping up the reserves.

Like most of the cock ups in Barnet, no one has ever carried the can and no one has ever apologised for this bonkers scheme. When the cash is fully returned to Barnet, I will be seeking an explanation as to exactly how much the fiasco has cost the Barnet taxpayer. In the meantime, don't expect to see your tax bill go down. All we've managed to do is get some way back to where we were before "Banker of the Year" Mike Freer came up with his marvellous scheme.