Sunday, 30 March 2014

Barnet Council and the debt time bomb waiting to explode in your wallet

In May there is a council election in Barnet. At stake is who runs the council for the next four years. Historically, most residents of London Boroughs have had little engagement with their local councils. It was just expected that Councils would do what we expect of them, such as provide school places, look after elderly, infirm and handicapped people, fix potholes in the road, collect our rubbish with the minimum of fuss, manage planning applications for the local good and run parking regimes which protect local residents and businesses.

Sadly in recent years all of this has become highly politicised. This is because some local authorities have decided that there are votes to be had in cutting council tax. There are only three ways an efficiently run Council tax can be cut. These are

1. Go into debt.
2. Cut Services.
3. Increase charges (ie Stealth taxes like parking charges and planning charges)

So what has happened in Barnet Council since the Conservatives won the council in 2002? In 2002, Council debt was £38 Million. The Conservatives claimed this was dangerously high and immediately passed a budget that lead to a huge hike in Council Tax. According to the latest accounts in 2013, the net liabilities has risen to over £707 million. It isn't getting better, in 2012 it was £674 million. If you don't believe me have a look at them yourselves (check page six for these figures)

Worryingly, the net assets of the council have declined from £620 million in 2012 to £595 million in 1 year as well. So debt has spiralled up by £34 million ( only £3 million less than the total of £37 million that the Tories claimed was unsustainable in 2002, whilst losing £25 million worth of assets.

With this huge spiralling of debt and depreciation of assets, can you honestly say the Council are managing your money well?

So that is one way they've kept council tax down, but as we all know, sooner or later debts have to be paid. Have you reaped the benefits of this £679 million pound spending spree?

Then we have service cuts. Well since I started this blog, we've had cuts to sheltered housing wardens, which make the elderly and infirm vulnerable. We've had cuts to the transport services for disabled people. We've had huge scaling back of daycentre provision and we've had cuts to personal care packages. The council have been clever and have done this by outsourcing the contracts and hiding behind "contract arrangements" with these provisioners of service as an excuse.

Then there are the stealth taxes. In Barnet the worst of these is the way parking enforcement is used as a cash cow. The parking meter and the yellow line was invented to "improve traffic flow and parking space utilisation" in busy areas. Since 2012, the Conservative administration have milked this cash cow for all its worth. To escape the blame they outsourced parking control to NSL in 2011. Targets are now set for ticketing and you end up paying. There are yellow lines in some rather odd places in Barnet and restrictions in place at some rather odd times. All of these catch unsuspecting motorists.

I've monitored the council account since I started blogging in 2008. Every year the debt goes up, services are cut more and new stealth taxes are sprung on us. Every year I have conversations with local Tories where they start by saying I'm exaggerating. I then refer them to the councils own accounts. Then they say that "it would be worse under Labour". I say to them "Labour wouldn't have spent tens of millions on consultants to outsource and wouldn't have transferred assets to the private sector" to which they say "but then they would cost more". I then point out that the Conservatives refused to do a "public sector comparator" to prove this, when they were doing the One Barnet Outsourcing. I asked why they would not do this if they believed the case was proven.

I asked a senior member of the Barnet Council administration if he believed that the current level of debt was sustainable. He said yes. I asked how he could say this. He said "I've seen nothing to suggest otherwise". I asked how the council would ever pay the debt and he said "it is all being managed". But the point is that it isn't being managed. It is increasing and the asset base is shrinking. On this debt there is interest payments. At the moment, the interest rates are low. Should they rise, what happens to the debt? The stark answer is that when rates rise, we will have to pay a lot more council tax.

The stark truth is that the Barnet Conservatives have sleepwalked in, placed a timebomb under our finances and don't even know what they've done. None of them have said "is a tax cut responsible when debt is spiralling out of control". It is clear to me that the Conservatives need to be kicked out of power, for no other reason than to get some fresh blood in their ranks, who do not act like Ostriches with their heads in the sand when problems come along. If you are a Tory, you should do the local party a  favour and vote out this bunch of incompetents, to clear the way for some new blood who might actually deal with this time bomb before it blows up in all our wallets. You may think that a different administration would be less careful with your cash or your council tax may be a few pennies higher, but the truth is that this timebomb is entirely of the Conservatives own making. There is no prospect of it getting fixed until the people who caused the problem have been kicked out.


Anonymous said...

Let us not forget £16.1 million of this rising debt mountain was handed over to Capita after the One Barnet Contract was signed, for investment in IT and telephone services.

The same IT services that councillors Cornelius , Rams & Thomas repeatedly claimed Capit were going to invest these millions in. This alleged Capita investment that never came and would appear to have been a misrepresentation of the truth by councillors, was used again repeatedly as an excuse not to fund the " in house comparator " you refer to.

The question still remains unanswered, how could councillors claim Capita were investing these millions prior to te signing of OBP, yet before the ink was dry on the contract Barnettaxpayers unwittingly and unknowingly and without consultation invested this £16.1 million in assets only Capita will benefit from.

The handling of this £16.1 million of taxpayers money and growing debt mountain needs to be answered now and without further wriggling and ambiguity.

Don't Call Me Dave said...

Let us call national debt by its real name – theft.

Politicians of all colours, and at all levels of government, local and national, are happy to steal from future generations to pay for their pet projects, safe in the knowledge that when the day of reckoning finally arrives, they will long since have retired (usually with a state funded gold plated pension to fall back on).

Of course there are circumstances where borrowing is desirable and sensible. If a council wants to build a new school, for example, which you would expect to stand for at least 100 years, the cost of paying for it can be fairly spread over a long period.

One of the problems with the current council is that in the early years, a massive resurfacing programme took place using borrowed money. The council borrowed for a term of 40 years, when the life expectancy of the new roads was only 10-15 years. Perhaps 20. Where was the scrutiny that allowed this to go through? The only thing you can say in mitigation is that a Labour council would have undoubtedly done the same thing.