Thursday 16 November 2023

Barnet Council financial crisis - A disaster years in the making

 Whilst I was doing the Burnt Oak Boogie this morning, I happened to run into one of Barnet's esteemed councillors. After exchanging pleasantries, I asked if there was any truth in the rumours that there was a massive black hole in Barnet's finances. I have been hearing rumours for weeks, with numbers quoted from £10 million to £40 million. I was told that yes, there was a black hole and that the papers were being released shortly for councillors to review various remediations. 

I asked what these were likely to be. I was surprised to hear that there is some speculation that as well as the usual measures, such as recruitment freezes etc, there is talk of Barnet Council taking a holiday from making pension contributions. This rather shocked me. It seems grossly unfair that ordinary staff, who have no responsibility for the crisis will be penalised. My own preference would be to see the quango that is Barnet Homes abolished, with all functions brought in house. That would save a fortune, as directors and CEO's on huge salaries would no longer be required. The ALMO was set up to enable Barnet to obtain funds to refurbish clapped out council properties under the Blair administration. It has become a huge bureaucracy, that has no accountability, but we fund it. In truth the obsession with outsourcing has cost Barnet Council millions, and both Labour and Conservative administrations were responsible. In fact, it was the Labour led adminstration that was booted out in 2002 that first ushered in outsourcing. The Catalyst contract, which administered care homes was a Labour scheme and this resulted in the Council being sued for millions, as the contractors didn't make the anticipated profits. As for the One Barnet/Capita scheme, millions have been siphoned off the taxpayer and jobs relocated out of Barnet. It is slowly coming back in house, but at huge cost. Anyway, after being alerted, I did some digging. 

The Barnet Times has a story stating published today claiming that the deficit is £26 million. The issue will be debated next week. I had a look through the papers and sure enough, there is talk of the council taking a holiday from Pension contributions

➢ Employer Pension Contribution: The Pension Fund is currently 130% funded and therefore in surplus and the MTFS currently includes £5m saving due a temporary easement in employer contribution. Options for increasing this easement are being explored and the mechanism of this are being advised by the actuary, legal advisors and internal policies;

This is on page 19, section 3.19.

The council is also looking to raise Council tax by 2.98% (I believe the maximum possible is 3%)

15. Agrees to consult on the use of the Council’s flexibility to raise the level of General Council Tax by 2.98% in 2024/25 as discussed in paragraph 3.3; 

Given that inflation is running at nearly 5%, the council will be taking a hit on its income in reality. I have long felt that the Council tax system is grossly unfair. It seems to me that a system where a mansion worth a £20 million pounds attracts the same tax as a property worth over £321,000 on the council system is one that puts the wellbeing of the richest people in the Borough ahead of everyone else. 

From 1 April 2023 to 31 March 2024

Valuation bandBarnet CouncilGreater London AuthorityTotal

A: up to £40,000




B: £40,001 to £52,000




C: £52,001 to £68,000




D: £68,001 to £88,000




E: £88,001 to £120,000




F: £120,001 to £160,000




G: £160,001 to £320,000




H: Over £320,001




Property taxes are far from perfect but are easy to administer. Barnet has the widest disparity of any authority in the country. It has some of the richest areas as well as some of the highest deprivation. But those with the broadest shoulders contribute a far lower percentage of the wealth. That cannot be right. 

There are many reasons why the council finds itself in this situation. The One Barnet programme is a major factor, as was the failure to raise taxes when prudent, the failure of national government to properly fund local authorities, the knock on effects of the pandemic, the effects of Liz Truss tanking the economy are just a few. When Labour won in May 2022, anyone who has read this blog over the years would not be surprised that the Council is in a mess. They would also know that the disaster has been years in the making. Councils of all colours Blue, Red and the rest of the rainbow are being hit by the same problems. Sadly in Barnet, much of the scope to sort this out is constrained by ongoing outsourcing contracts, with organisations such as Capita. These budgets can't be cut because contracts are water tight. 

The sad truth is that Barnet Council is in a mess and us residents, who live here and love our neighbourhood know that things are going to get a lot worse before they get better.

1 comment:

Peter Reynolds said...

Their outsourcing of the CCTV to OCS and turning to troublesome microwave transmitting as opposed to the previous BT fibre optic system was an expensive disaster leading to a reasonably reliable control room becoming an unreliable set-up marred with cosntant breakdowns, only now taken back under the coucils control and a completely revamped and modernised local control room along with several hundred new cameras and a return to BT fibre, then there was Barnets financial involvement with Saracens that needs clarifying.