Sunday, 4 January 2015

Council finances for dummies

If you follow twitter in Barnet you will see endless debates which involve those on the right and those on the left kicking lumps out of each other about the issue of whether we should have Tax cuts or Tax hikes or better or worse services. I find these debates completely idiotic, not least because when the last council budget was set, both Labour and Conservatives proposed a budget which had exactly the same level of spending and exactly the same level of taxation.

What does this tell us? Well it tells me that both the Tories and the Labour Party in Barnet are intellectually and physically lazy. You see what both have done is gone off and asked the council officers to prepare a budget for them. So basically the same bunch of people sat around and used the same equations to come up with an identical set of figures.

There are 63 councillors and we pay them a minimum of £10,000 a year to represent us. They are meant to ensure that Council Officers deliver the best possible value for money for the taxpayers of Barnet. Richard Cornelius told me that as Leader of the Council he has the same level of fiscal responsibility as the leader of any other £1 billion a year business. As such, he is ultimately responsible for carrying the can for the decisions his council makes. The question I have for Richard is whether he has inspirte dhis councillors to deliver the best value council it can.

As I said at the start of this blog, there are people on left/right knocking lumps out of each other on the cuts vs services agenda. The thing is that that Council finances are far more complicated than that. So here, for the sake of these dummies, Barnet Councillors and anyone else who has ever wondered here is a non exhaustive guide to ways councils can balance the books without either cuts or tax increases.

1. Better procurement. Barnet Council has a massive number of suppliers. Last time I asked, there were 9,700 suppliers registered with the council. The organisation needs all manner of regular and one off purchases. Everything from paperclips, to gas and electricity is procured from external suppliers. Some of these payments are pennies and some are several million pounds. All of these are paid by us the taxpayer. whilst for us, getting 0.1p a unit of our electric bill may buy us a cappucino, for the council, it is tens, if not hundreds of thousands of pounds. Barnet Council is the 9th biggest local authority. Do they get the best possible rate for all the electricity for Street lights etc, for the gas for school boilers, for the water for the school showers? Do they get the best deal for fuel for the council dustcarts? Do they get the best deal for anything? Readers of this blog will know the answer to that one. Ensuring that the council gets a good deal on its purchases is the best way of reducing the budget with no pain for anyone (apart from the suppliers).

2. Increasing Income. The council has many commercial activities where it charges people for the services it supplies. Examples of these are parking schemes, licences for licensable activities (alcohol, pet shops, gaming), cemetries and cremations, charges for services for elderly, disabled etc (meals on wheels etc). Income from commercial properties (leases & rents). Planning permission costs. Commercial waste collections. Charges for using parks etc (football/cricket pitches)All of these are examples of ways the council earns money.

3. Interest on money deposited/invested. Councils require reserves and bank accounts. Many of these have large sums of money invested. Ensuring that the money is deposited efficienctly and safely is a key way of maximising council revenue. Sadly in Barnet we had a rather bad experience where Mike Freer's Conservative regime got a little bit too carried away with this and lost £27.4 million in Icelandic banks. Although the council got some of this back, it played havoc with council finances and was a lesson in why those without the expertise shouldn't play with other peoples cash.

4. Income from recycling. Every day we fill our bins with what we consider to be rubbish. Much of this is reusable and by efficient recycling, the council can rasie significant amounts of cash.

5. Selling services to other councils. Some councils have expertise, facilities or assets that other councils require but do not have in house. Councils can develop new and innovative income streams by identifying opportunities and selling services. with outs oursourcing, we have the situation in Barnet where Harrow Council sell Barnet Council legal services.

6. Income from disposal of unused assets. Most Councils are sitting on assets they don't use. Many of these are valuable office space etc. As Councils change the way they work, their requirements will change. A typical example is how IT services used to require huge hangers to house mainframe computers. Many of these buildings are no longer required as technology gets smaller and more efficient. Councils should only retain assets that they require, unless there is a huge commercial advantage in retaining them.

7. Section 106 money. Every property development in the Borough has the potential to yeild Section 106 money. This is cash the developer has to pay the Council for the privelige of making millions of poiunds in Profit.

8. Social Education. There are all manner of things we do which cost the council money (our money). We throw out huge amounts of waste, which it costs the council a fortune to dispose of. The Council has to sort this into things which can be recylced and things which can only be disposed of in Landfill sites that is highly expensive. If the council invested in telling us how we could help them sacve money, it could potentially save tens of millions of pounds. As an example, in Brussels, you get fined 1,000 Euros for putting the wrong rubbish in the wrong bin. Most people only do that once. Sadly the council also spends a fortune on dealing with issues with dysfunctional families. Some of these costs could be cut with better help and support.

9. Use of the third sector. The voluntary sector has taken up some of the slack where the council has withdrawn from providing services. The council are now writing this contribution into business plans. In many cases, the council work with Charities etc to deliver all manner of services.

10. Advertising revenues. The council hs advertising space all over the Borough. Again this is a painless, if at times ugly way for the Council to top up its coffers.

11. Innovation. There are all manner of innovative opportunities for councils to develop new and better ways of working, that deliver better services. 100 years ago, the local council sent a Horse and cart around to collect waste. Vhange can be for the better!  We should not simply resist change for the sake of it. Now we have a diesel powered dust cart. Things change and an innovative council will always be keeping an eye on its peers to

What we need to do is to ensure that the council are doing all of the above as well as they can. Are Barnet Council doing this? I've written this blog for nearly seven years and it is pretty clear to me that they are falling down on most of the criteria above. Perhaps the most alarming thing is the number of times I've discussed this with councillors who are completely clueless as to what Barnet council are actually doing about any of these. Recently a Barnet Councillor told me that the councillor were doing an excellent job at recycling. I asked "So are they the most efficient in the country and if not, have you visited the most efficient council in the country to see what we could be doing" His response was "What on earth would be the point of that?". When I said "So that you could ask the right questions", his response was "You've clearly never dealt with Council officers!".

In this day and age, no organisation is standing still. The sad truth is that the majority of the councillors who make these decisions are undynamic, lazy and out of touch. They are far too happy simply to let the officers run the show and sit back and take their £10,000 + allowance. If Barnet wants to be the best council in the countey they should be doing all of the above as well or better than the best of their peers Councils. If the councillors have no aspirations to do that, they should resign and hand over to people who will.

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